House of Commons

Tuesday 15th October 2013 Commons Chamber

Tuesday 15 October 2013

The House met at half-past Eleven o’clock

Prayers

Tuesday 15th October 2013 Commons Chamber

[Mr Speaker in the Chair]

business before questions

London Local Authorities and Transport for London (No. 2) Bill [Lords]

Third Reading opposed and deferred until Tuesday 22 October (Standing Order No. 20).

Hertfordshire County Council (Filming on Highways) Bill [Lords]

Second Reading opposed and deferred until Tuesday 22 October (Standing Order No. 20).

Oral Answers to Questions

Tuesday 15th October 2013 Commons Chamber

The Deputy Prime Minister was asked—

[Paul Blomfield (Sheffield Central) (Lab)]

1. What his policy is on third party campaign expenditure.

[The Deputy Prime Minister (Mr Nick Clegg)]

Before turning to the question, I pay tribute to my hon. Friend the Member for Norwich North (Miss Smith) for her excellent work in the past year on political and constitutional reform. I welcome the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), who will bring unique zeal to decentralisation in particular, which he has championed within Government. I also welcome the hon. Member for Liverpool, West Derby (Stephen Twigg) to his new position on the Opposition Front Bench.

It is of course good that people are motivated to campaign for what they believe in, whether inside or outside a traditional political party. However, it is also important that the integrity of democratic political campaigning is maintained. Campaigning by third parties at general elections should therefore be made more transparent and accountable.

[Paul Blomfield]

I am sure that the Deputy Prime Minister has, like many hon. Members, been contacted by hundreds of people from the voluntary, charity and community sectors who are vehemently opposed to the gagging provisions in the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill. The right hon. Gentleman has assiduously cultivated those groups in the past, and frankly, they feel betrayed. Will he explain to them why he has led the Liberal Democrats in support of this assault on grass-roots politics? Better still, will he recognise, even at this late stage, that he has got this badly wrong and join us in opposing the Bill?

[The Deputy Prime Minister]

My view is that if we did nothing about the increasing trend of big money in British politics, which seeks to influence the outcome of political contests through groups that are not political parties, those very same groups would campaign after the next general election, saying that we should do something about that trend. At the general election, non-party political funds doubled to £3 million. We have seen what happens when that gets out of control. Just look across the Atlantic at the United States: super-PACs—political action committees; the increasing polarisation of politics; and people outside the democratic political process, non-political parties, trying to influence the outcome of elections. We will maintain the rules, as they have existed since 2000, on whether groups are regulated as third party campaign groups. All we are saying is that non-party political parties that want to act like a political party should be asked to fill in the same paperwork as a political party.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Does my right hon. Friend agree that there is nothing in the Bill that stops campaigns on particular policies? Furthermore, we will not end up with third party groups spending more than political candidates are able to spend on their own election.

[The Deputy Prime Minister]

My hon. Friend is exactly right. Under the current rules, a well-funded third party campaign group seeking to influence the democratic outcome in a constituency or constituencies could spend more money than a political party. That, surely, cannot be right. The Labour party, which is run by a third party campaign group, the trade unions, does not think it is a problem if political parties are influenced by third party campaign groups that might have political designs. Nothing in the Bill would stop Make Poverty History spending millions on its campaign. Nothing would stop the Green Alliance grading us all on our green promises—nothing would change that.

[John Cryer (Leyton and Wanstead) (Lab)]

Returning to planet earth, the Deputy Prime Minister regularly bleats on about the value of consultation. Why did that not apply to the lobbying Bill? There was no form of consultation whatever on this wretched Bill.

[The Deputy Prime Minister]

There was extensive consultation and scrutiny on the lobbying provisions in the Bill. The parts on third party campaigning were discussed extensively by the three parties in the cross-party funding talks. It was agreed by all parties, and backed by Sir Christopher Kelly in his recommendations on party funding reform, that any change to party funding arrangements should also include some limits on third party campaign groups when they want to influence the political outcome in a constituency or constituencies.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does the Deputy Prime Minister agree that there is huge public demand for complete transparency in the influence of trade unions, especially during election periods and especially given the allegations concerning the actions of Unite in the affairs of the Labour party earlier this year?

[The Deputy Prime Minister]

I have this old-fashioned view that in all our constituencies candidates from our democratic political parties should be slugging it out on a level playing field and that we should not have people pulling the strings in the background in an untransparent way. That is all the Bill is trying to do. Anyone who believes in the integrity and transparency of democratic, open contest in our constituencies should support the Bill.

[Lindsay Roy (Glenrothes) (Lab)]

2. What steps his Office is taking to improve the completeness and accuracy of the Electoral Register.

[The Deputy Prime Minister (Mr Nick Clegg)]

The Government will shortly publish the results of our confirmation dry run exercise, which matched almost 47 million electors against Department for Work and Pensions data. The results were much better than we anticipated and, using a combination of national and local data, could lead to an overall average match rate of 85%. In addition, we are making registration simpler by enabling online registration, and in June we announced £4.2 million-worth of measures to maximise voter registration ahead of the transition to individual electoral registration.

[Lindsay Roy]

I thank the Deputy Prime Minister for his answer, but will he explain what he is doing to promote voter registration among our armed services personnel, whose percentage registration has been highlighted as a cause for concern?

[The Deputy Prime Minister]

I know that the Cabinet Office has been working with the Ministry of Defence to ensure that efforts are undertaken. Considerable efforts have been made in the past, but where we can do more, we should do more, in order to encourage anyone who is eligible to vote to do so and to enter into the new individual voter registration system, as I explained earlier.

[Mr Philip Hollobone (Kettering) (Con)]

As well as the problem of not enough voters being registered, there is a problem of voters registered under the wrong category. Given the growing number of EU nationals in this country who can vote in local and European elections but not in Westminster parliamentary elections, may we have clearer guidance from his Office to that effect?

[The Deputy Prime Minister]

I am not sure precisely what my hon. Friend is referring to, but the rules are very clear: EU nationals may vote in local and European elections but not national elections, and electoral registration officers are fully aware of that and, in my experience, are scrupulous in ensuring that the system reflects it. If he has any particular reservations, however, he can of course bring them to my attention.

[Dr William McCrea (South Antrim) (DUP)]

Is the Deputy Prime Minister aware that in Northern Ireland there is a new drive for individual registration, and would he find it helpful to monitor the success of that exercise and to learn from the experience?

[The Deputy Prime Minister]

Absolutely; in designing the system of individual voter registration that we are introducing, we looked very carefully at the strengths and weaknesses of the experience in Northern Ireland. The most important innovation on which we have embarked is the one I explained earlier, which is matching the very large databases that we already have with information on the electoral register and, in effect, automatically enrolling millions of people on the individual voter registration system.

[Nick Smith (Blaenau Gwent) (Lab)]

9. What will be the Electoral Commission’s budget for raising awareness of the introduction of individual electoral registration?

[The Deputy Prime Minister]

I will have to write to the hon. Gentleman on the specific figure, but of course we work very closely with the Electoral Commission to ensure that we pull in the same direction to raise awareness of the changes to the new system, and we have allocated just over £4 million to various groups locally working with us and the Electoral Commission to raise awareness among those groups where under-registration has historically been a problem.

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

First, I join the Deputy Prime Minister in congratulating the Minister of State, Cabinet Office, the right hon. Member for Tunbridge Wells (Greg Clark), on his appointment.

The Deputy Prime Minister spoke about the data-matching dry run this summer, which I understand produced an outcome nationally of 78% accuracy. Within that, however, was a range of 47% to 87%. Is there not a risk that even more electors will fall off the electoral register because of the speed at which the Government are introducing the new system? Will he consider delaying the introduction of individual voter registration in order to maximise the completeness and accuracy of the register?

[The Deputy Prime Minister]

As the hon. Gentleman knows, the data-matching tests are a dry run and have exceeded expectations. We think that the use of those central databases, particularly the DWP database, combined with what we do with other databases, should raise the overall figure of automatic enrolment when that finally happens. As he also knows, we have done a considerable amount to ensure that there is a two-year roll-over period, so that people who do not automatically register before the next general election will still have an opportunity to do so, while door-to-door information will be provided to people so that they will know how the new system works. We have put as many belt-and-braces provisions in place as possible, therefore, to ensure that the maximum number of people are on the new IER system.

[Andrew Selous (South West Bedfordshire) (Con)]

3. What his policy is on the level of fees paid to returning officers.

[The Minister of State, Cabinet Office (Greg Clark)]

Returning officers are entitled under the Representation of the People Act 1983 to receive payments for administering election polls, as those responsibilities fall outside their local authority duties.

[Andrew Selous]

These are some of the highest paid public servants in the land, sometimes on salaries of about £200,000. How can we continue to justify paying these people extra sums of £30,000 or so just to do another task, for which their salary should be more than enough to compensate them?

[Greg Clark]

My hon. Friend makes an excellent point, and I look forward to meeting him next week to discuss these matters further. Before the previous Government left office they increased the fees to returning officers, allowing fees to be paid uncapped for multiple constituencies. We in this Government froze those fees from that time. I look forward to our discussions and to hearing my hon. Friend’s views, which I know he has thoroughly researched.

[Helen Jones (Warrington North) (Lab)]

May I also welcome the right hon. Gentleman to his new post and ask him to give consideration to the situation where returning officers have often made numerous mistakes during elections? We had this happen several years ago in Warrington when the wrong people were declared elected for some parish poll, yet there is no provision to reduce or take away the returning officer’s fee when that happens. Should that not happen? Will the Minister consider that?

[Greg Clark]

I am happy to take on board the hon. Lady’s suggestion. Of course, returning officers do not need to accept the fee. There are some honourable examples where returning officers have not taken the full fee to which they are entitled. That option is available to them.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

5. What progress the Government has made in reviewing the law on the funding of political parties; and if he will make a statement.

[Andrew George (St Ives) (LD)]

6. What recent assessment he has made of the need for reforms to party funding.

[The Deputy Prime Minister (Mr Nick Clegg)]

I have always been clear that any reform is best achieved by consensus. Despite seven meetings, I am disappointed that, as on previous occasions, there has been no agreement between the three parties on beginning party funding reform.

[Simon Hughes]

The Deputy Prime Minister and colleagues have managed to get agreement across government to deal with third party big funding and agreement with the official Opposition to deal with the Leveson issues on regulating the press—it was difficult, but we got there. Will my right hon. Friend make a renewed effort to try to get a deal with the Labour and Conservative parties in time for the election to take some very big money out of party politics so that voters, not big funders, decide the outcome?

[The Deputy Prime Minister]

I would love to think that there might be a realistic prospect of that, but, frankly, I do not think that there is. We tested it to destruction in seven meetings that brought the three parties together over a prolonged period on the back of very strong recommendations from Sir Christopher Kelly and his Committee. Not to put it too delicately, the same old vested interests relating to donation caps on the one hand and the financial relationship between the Labour party and the trade unions on the other were, once again, not reconcilable. Until we get those two things aligned, a cross-party agreement on party funding is unlikely—but it will have to happen eventually; otherwise we will be afflicted by scandal after scandal and controversy after controversy.

[Andrew George]

What is my right hon. Friend doing to ensure that company shareholders, co-op members and union members have a reasonable say on political donations made in their name?

[The Deputy Prime Minister]

If I understand it correctly, moves are afoot, although they are rather opaque to an outsider so far as the trade union funding link with the Labour party is concerned. More generally, transparency has to be a good thing when money is sloshing around the system and it could influence democratic electoral contests. To return to my earlier theme, this is what the transparency provisions on third party campaigning are all about—not to stop charities from doing their work or from campaigning, but simply to make them transparent in how the money is used, particularly where they choose to use money for explicitly political ends to engineer or influence a particular outcome in a constituency.

[Sheila Gilmore (Edinburgh East) (Lab)]

The problem with the Deputy Prime Minister’s position is that he was willing to rush out a Bill to capture what amounts to a small problem, which may well damage democracy, but he was not prepared to put the weight of his position behind actually achieving a solution on party funding.

[The Deputy Prime Minister]

Talk about pots and kettles! It is no secret that, in a sense, the Liberal Democrats are not rich enough to have quite the vested interests that are involved in all this. It has always been resistance from the two established, larger parties that has prevented a deal, and that is exactly what happened on this occasion. I do not think that we should beat about the bush.

As for the hon. Lady’s first point, I urge her not to be complacent about the trend towards the funnelling of increasingly large amounts of money into the political process by non-political parties. Look at what has happened in the United States. Do we really want to go in the direction of super-PACS or very well-funded groups trying to influence the political process? I do not think that that would be healthy for our democracy.

[Sadiq Khan (Tooting) (Lab)]

I, too, welcome the right hon. Member for Tunbridge Wells (Greg Clark) to his new position.

As the Deputy Prime Minister will know, Sir Christopher Kelly’s most recent report recommended a reduction in the cap on political parties’ general election expenditure from £19 million to £16 million, and before the last general election the Prime Minister said that it should be £15 million. Sir Christopher’s report also referred to the lobbying Bill, which will reduce what campaigning groups can spend by more than 70% although they spend a fraction of what is spent by political parties. What does the Deputy Prime Minister think the cap should be for political parties’ general election expenditure, and what does he think should be the maximum donation that an individual can make?

[The Deputy Prime Minister]

First, I do not think that it is possible to view one of those figures in isolation. It is not possible to consider the £19 million or the £15 million figure without trying to incorporate it in a cross-party consensus on political party funding, which has eluded us so far. As for individual donations to individual candidates, our Bill increases the limit from £500 to £700.

Secondly, charities and campaign organisations that are not seeking to influence the outcome of an electoral contest in a constituency can spend as much money as they like. They can spend millions and millions of pounds, unregulated, if they are not seeking to enter into the democratic process. If they do seek to enter into the democratic process, why are they not asked to fill in the same paperwork as political parties?

Topical Questions

[Martin Vickers (Cleethorpes) (Con)]

1. If he will make a statement on his departmental responsibilities.

[The Deputy Prime Minister (Mr Nick Clegg)]

As Deputy Prime Minister, I support the Prime Minister on a full range of Government policies and initiatives. Within Government, I take special responsibility for the Government’s programme of political and constitutional reform.

[Martin Vickers]

When my right hon. Friend visited north-east Lincolnshire recently, he must have observed the tremendous investment that has been made in the offshore renewables sector which is helping to boost the local economy. However, much of north-east Lincolnshire in still in recession. Can my right hon. Friend assure my constituents that the Government will do all that they can to support the area during the present difficult times?

[The Deputy Prime Minister]

Having visited the area on numerous occasions, I am acutely aware of the importance of the new green offshore wind industry to the long-term economic prospects of my hon. Friend’s constituents and the region. I know that my right hon. Friend the Secretary of State for Energy and Climate Change is doing a huge amount in trying to secure, for instance, the long-awaited and much discussed investment from Siemens in the Hull area, which will transform the local economy, and I can certainly assure my hon. Friend that those endeavours will continue.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

Will the Deputy Prime Minister acknowledge that his Government’s justification for the bedroom tax—that it will mean tenants moving to smaller homes—cannot work unless there are smaller homes for them to move to? What is his estimate of the percentage of tenants for whom there is no smaller home to go to?

[The Deputy Prime Minister]

I totally accept the premise, which is that a change from one system to another involves hard cases that need to be—[Interruption.] That is why we are providing hard cash for hard cases. We have trebled the discretionary housing payments that are available to local councils. I am not in any way seeking to ignore the fact that some individual cases really do need the flexibility and the money from local authorities to enable their circumstances to be dealt with.

Let me say this to the right hon. and learned Lady. If there is a principled objection to this change, I do not understand why, in all the years during which Labour was in government, exactly the same provisions existed for millions of people in the private rented sector.

[Ms Harman]

This is the central issue in the Government’s justification for a policy that the Deputy Prime Minister has brought forward and voted for. He obviously does not want to admit that for 96% of tenants, there is no smaller home to go to. No wonder councils are saying that the discretionary housing fund is completely inadequate to help all the families who cannot move and are falling into arrears. Does he recognise that this is a cruel and unfair policy that he should not have voted for? He should repeal it now.

[The Deputy Prime Minister]

Of course I accept that for some households the change from one system to another creates real dilemmas that need to be addressed through the money that we are making available to local authorities. The right hon. and learned Lady cites a figure. To be honest, lots of wildly different figures have been cited about the policy’s impact. That is why we are commissioning independent research to understand its impact. I suspect that it varies enormously between one part of the country and another, and one local authority and another. That is why we are trebling the resources that we making available to local authorities.

[Mr Dominic Raab (Esher and Walton) (Con)]

T2. The Deputy Prime Minister has specific responsibility for implementing the programme for government and likes to take special ownership of the chapter on tax, a key aim of which is to help lower and middle-income earners. I have a Lib Dem briefing that states:“£50,000” is “a very large salary: these are not middle income earners.”It also says:“We are looking at how” they “could make a further contribution.”Why does he want to clobber the middle classes?

[The Deputy Prime Minister]

I do not, and as we made clear at the time the £50,000 figure does not represent any policy of my party. However, I will not be shy about parading the fact that it is because of Liberal Democrats in government that we are giving a huge tax cut to over 20 million basic rate taxpayers, a policy that I was warned by the hon. Gentleman’s party leader at the time of the last general election was not deliverable. It has been delivered because of Liberal Democrats in government.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

T3. According to the Papworth Trust, nine out of 10 disabled people are having to cut back on food or heating because of the bedroom tax. The discretionary housing payments are derisory: they give £2.09 to disabled people, compared with the £14 that they are losing through the bedroom tax. How do the Government and the Deputy Prime Minister justify that? Is that the mark of a civilised society? Since it is not in the coalition agreement, will he call for it to be scrapped?

[The Deputy Prime Minister]

I read in the Sunday papers that the Labour party was going to get even tougher on welfare than the coalition, yet it has opposed £83 billion-worth of welfare savings. We have to bring the housing benefits bill down somehow. I assume that our rationale for the change is exactly the reason why, in government for 13 years, Labour maintained the same rules for households receiving housing benefit in the private rented sector.

[Mr Speaker]

I call Harriet Baldwin. Not here.

[Mr Peter Bone (Wellingborough) (Con)]

Could the Deputy Prime Minister let us have the Government’s view on having televised party leader debates before the next general election? Will he ensure that the fourth party is allowed to take part in the debate so that he would be able to speak? [Interruption.]

[The Deputy Prime Minister]

It is the sting in the tail that I always love. The hon. Gentleman must rehearse his questions endlessly—but they are good; it was a good one today. As he knows, that is not a subject, thankfully perhaps, of Government policy. It is a subject for discussion between the broadcasters, who will have their own views, and the political parties. He should speak to his own party leader about his party’s view on these things. I think that the innovation of televised leader debates was a good one. Millions of people found it a good opportunity to see how the party leaders measured up against each other and I think that we should repeat them.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

T5. I listened carefully to the Deputy Prime Minister’s answers about the bedroom tax. He kept referring to “some households”. However, does he agree with his own party that the bedroom tax discriminates against the most vulnerable in our society? Will he join his party in calling for the tax to be scrapped?

[The Deputy Prime Minister]

My party has not called for the policy to be scrapped. It has debated—

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Why not?

[The Deputy Prime Minister]

For exactly the same reason that the hon. Lady and her party maintained precisely the same policy in the private rented sector for 13 years. That spectacular act of inconsistency may seem normal to a party that is used to crashing the economy and then claiming that nothing was wrong, but I hope that she will agree that the benefits bill generally and the housing benefits bill in particular need to be brought under some semblance of control. We need to take difficult decisions. We need to provide hard cash, as we are, for hard cases. That is why we have trebled the discretionary housing payment.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

T6. Given the success of the city deals and the emergence of city regions, what plans does the Deputy Prime Minister have for further decentralisation to include more rural areas?

[The Deputy Prime Minister]

That is one of the reasons why I so warmly welcome the appointment of the Minister of State, because he has demonstrated extraordinary personal commitment to this wider agenda of devolution and decentralisation. As my hon. Friend will know, we are examining the case for 20 more city deals, and we will then be seeking to roll out a much more extensive programme of decentralisation on the back of the Heseltine recommendations, which I hope will leave all of our country far more decentralised now than we found it back in 2010.

[Yvonne Fovargue (Makerfield) (Lab)]

T10. In the borough of Wigan over 100 tenants have moved into the private rented sector since April, where rents are between £700 and £1,200 higher than council rents. Can the Deputy Prime Minister confirm therefore that, rather than falling, the housing benefit bill is likely to rise as a result of the bedroom tax?

[The Deputy Prime Minister]

I hope the hon. Lady will accept that there is an underlying problem. We have lots of people on the social rented sector waiting list. There are 1.8 million households on the waiting list and about 1.5 million bedrooms in the social rented sector are not being used. We need somehow to make sure that those people who do not have homes are better matched with available homes. At the same time we have many families living in very overcrowded conditions. Those are the problems: those are the imbalances of the system that we are trying to straighten out. I accept that that leads to some hard cases. They need to be treated fairly and compassionately.

[Andrew George (St Ives) (LD)]

T7. What is my right hon. Friend doing to ensure the UK maximises the opportunity for green growth and green jobs across the UK?

[The Deputy Prime Minister]

My view is that an island such as ours has a huge commercial opportunity, particularly with the capacity for offshore wind that we have as a country. It might sound odd to say that there is a commercial opportunity in the face of such a grave threat as climate change, but there is a commercial opportunity if we can show that we have the technologies, the science, the companies and the strategies to adapt to these new environmental realities. I think that that would be a great opportunity to create jobs for many thousands of people throughout the country.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

T11. My right hon. Friend the leader of the Labour party has stated strong support for lowering the voting age and giving a voice to our 16 and 17-year-olds. Their futures are decided by many of the decisions that are taken in this House. The Deputy Prime Minister said he supports this position, but three years after taking up his post no action has been taken. When can Britain’s young people expect him to live up to his commitments?

[The Deputy Prime Minister]

Government Members have always been very open about the fact that there is disagreement between the two coalition parties. I strongly believe that the voting age should be brought down to 16. I do not see why 17-years-olds are not able to vote when they have so many other roles and responsibilities in British society. It is not something we have included in the coalition agreement, but my views on the matter have not changed.

[Stephen Gilbert (St Austell and Newquay) (LD)]

T8. “Drekly” is a Cornish expression that means doing something maybe some time in the future, possibly never. Can my right hon. Friend assure me that in terms of devolving greater powers to the people of Cornwall, drekly is not an answer he will ever give from the Dispatch Box?

[The Deputy Prime Minister]

Since I only just heard that term I doubt very much I would use it at the Dispatch Box, and it is absolutely not our intention to delay further progress on devolving powers and decentralising control over how money is raised and spent across all parts of the United Kingdom, including Cornwall. We are doing that in the steps I described earlier: a first wave of city deals, a second wave of city deals, and then implementing the recommendations of the Heseltine review.

[Kelvin Hopkins (Luton North) (Lab)]

T12. A number of countries have abolished the second Chambers of their Parliaments, and Ireland has just decided to follow suit. About half of all Labour Back Benchers in a recent previous Parliament voted for a unicameral Parliament. Will the Deputy Prime Minister now accept that that is one reasonable option for reform of the House of Lords?

[The Deputy Prime Minister]

Notwithstanding my frustration that we did not manage to introduce even a smidgeon of democracy into the other place, I am not going to throw the baby out with the bathwater and say that therefore we should scrap the place altogether. I remain of the view that there are virtues in having a tension—a balance—between two Chambers. That is the virtue of bicameral systems all over the democratic world. I just have this old-fashioned view that it is best done when both Chambers are elected by the people they purport to represent.

[Mr Philip Hollobone (Kettering) (Con)]

T9. In his keynote speech to the National House-Building Council on 22 November last year, the Deputy Prime Minister highlighted the 5,500 unit housing development to the east of Kettering as a major project that needed infrastructure support, but since then its £30 million bid to the regional growth fund for a related junction improvement has been turned down. Will he agree to meet a delegation from Kettering to discuss how, across government, heads could be knocked together to ensure that local people get the infrastructure they need to cope with all these extra houses?

[The Deputy Prime Minister]

I can certainly ensure that officials who run the bidding process in the regional growth fund are able to meet those who put together the application in Kettering. As my hon. Friend knows, this is, thankfully, not something that politicians decide; it is decided on an objective basis and a panel, chaired by Lord Heseltine, filters and assesses the bids before they come before Ministers. More generally, I know that colleagues in the Department for Communities and Local Government would be more than happy to meet him and his colleagues from Kettering to look at making sure that the infrastructure is indeed available to the local community.

[Huw Irranca-Davies (Ogmore) (Lab)]

T14. Is the desperate scarcity of one-bedroom and two-bedroom properties for rent in Ogmore, coupled with the growth in the number of abandoned three-bedroom houses and added to the rise in debt arrears of every housing authority, which prevents them from making the necessary refurbishments, an intended consequence of his policies on benefits and the bedroom tax?

[The Deputy Prime Minister]

The whole system is not working as it should—[Interruption.] The whole system we inherited from the hon. Gentleman’s Government was one where we had 1.8 million people on the housing waiting list, hundreds of thousands of families living in overcrowded accommodation and other people receiving housing benefit for more bedrooms than they actually needed. That is the system we are trying to sort out. There are many features to this, which is why we decided that, in exactly the same way as his Government supported the rules in the private rented sector, we would apply the same rules in the social rented sector.

[Andrew Stephenson (Pendle) (Con)]

T13. My right hon. Friend will be aware of the excellent Speaker’s parliamentary placement scheme run by the Social Mobility Foundation and supported by many across this House. I will shortly be welcoming a new member of staff through that programme. Will he join me in welcoming its success in getting more people from a diverse range of backgrounds into politics and advancing the cause of social mobility?

[The Deputy Prime Minister]

I strongly endorse what my hon. Friend said. The scheme is excellent and it is part of a creeping culture change, whereby everyone is realising, in the private sector, the public sector, Parliament and Whitehall, that work experience places and internships should, wherever possible, be based on what people know rather than who they know. That is reflected in this truly excellent scheme.

[Valerie Vaz (Walsall South) (Lab)]

What discussions has the Deputy Prime Minister had with the Justice Secretary about his recent announcement that he is going to repeal the Human Rights Act as early as next year?

[The Deputy Prime Minister]

There will be no repeal of the Human Rights Act during the course of this Parliament under this coalition Government.

[Rehman Chishti (Gillingham and Rainham) (Con)]

T15. The Deputy Prime Minister recently warned the United Nations that it was in danger of becoming a “relic of a different time” and that the Security Council should be reformed. Does he believe that the reform should also include limiting the veto?

[The Deputy Prime Minister]

The primary focus of reform of the UN Security Council, which is an anachronism—it is based on an international pecking order that has changed out of all recognition since it was formed—needs to be on the composition of its permanent members, rather than on their respective voting rights. That remains the focus of this Government; we seek to champion the case of other nations—Germany, a member from Africa and one from other hemispheres—to be represented at the top table of the United Nations.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Is the Deputy Prime Minister in any way uneasy about the manner in which large cash donors to some political parties still find their way into the House of Lords—a situation that would disgrace any banana republic?

[The Deputy Prime Minister]

I do not think that it is wrong by definition to say that someone who is committed to or has supported a political party should somehow be barred for life from showing their support by serving that party in the House of Lords. In general terms, not only should we reform the House of Lords and make it not a plaything for party leaders but something for the British people, but we should take big money out of British politics more generally.

[Simon Wright (Norwich South) (LD)]

What role does the Deputy Prime Minister envisage that successful city deals, such as that proposed for Norwich, will play in the development of local growth funds from 2015, particularly in relation to the skills agenda?

[The Deputy Prime Minister]

I know that the Minister of State is deep in discussions on the Norwich city deal this very week. I hope that will lead to a successful conclusion soon enough. The first wave of city deals—I have seen this for myself in Sheffield—shows that the devolution in powers over skills from Whitehall to the town hall and the local enterprise partnerships is providing a fantastic boost to the provision of skills, particularly for young people who are seeking to get into work.

[Ian Lavery (Wansbeck) (Lab)]

The introduction of the dreaded bedroom tax has hammered thousands of people, mainly disabled, up and down the UK. Recent research shows that the Government wildly exaggerated the potential savings—why is that?

[The Deputy Prime Minister]

I think the hon. Gentleman is referring to the study from the university of York that was published recently. The details of that study show that it is based on partial information. We simply do not know yet whether the impact or the purported savings are as big or small as the university of York study has implied, but we need to ensure that they are considered independently and objectively so that we can all agree on the basic facts, whatever our disagreements about the policy.

[Julian Smith (Skipton and Ripon) (Con)]

Given the Deputy Prime Minister’s welcome recent criticisms of The Guardian newspaper and its potential breaches of the Official Secrets Act and the Terrorism Acts, will he encourage the Cabinet Office to take a tougher line than hitherto as matters proceed over the month ahead?

[The Deputy Prime Minister]

My view is that as a matter of course any publication of technical details that are, frankly, not of a great deal of interest to the non-technical reader of our newspapers but might be of huge interest to people who want to do this country harm are not a good thing. Having said that, however, I think that there is an entirely legitimate debate about whether the laws we have in place were properly framed for the power of the technologies available to our agencies and to those who wish to harm us and about whether our oversight arrangements for the work of the agencies are as strong, transparent and credible as they need to be.

[Graham Stringer (Blackley and Broughton) (Lab)]

Every right hon. and hon. Member has been elected on a constituency basis; nobody has been elected on a national basis. Would it not revitalise democracy if we changed the balance of allowed funding in general elections from a national level to a constituency level and got away from these pseudo-presidential elections?

[The Deputy Prime Minister]

The recommendations of Sir Christopher Kelly’s committee on party funding reform, particularly with their strict limits on donation caps, would have an analogous effect as they would significantly decrease the ability of large individual donations to be siphoned directly to national parties. As I said before, however, the cross-party consensus necessary to underpin any party funding reform has eluded us once again.

[Mr Mark Williams (Ceredigion) (LD)]

In the spirit of what my right hon. Friend said earlier about devolution, when will we finally hear the Government’s response to the recommendations of the Silk commission, which are of critical importance to the people of Wales?

[The Deputy Prime Minister]

I understand the impatience for progress on the adoption of the Silk recommendations. As my hon. Friend knows, we have done some work latterly on the implications of devolution of aspects of the system of stamp duty. I am a huge supporter of the thinking behind the Silk commission, I am acutely aware that it is supported by all parties in Wales and I hope that we will be able to make progress on it without further delay.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Has the Deputy Prime Minister seen the recent research that shows that the High Speed 2 rail line, rather than bringing strength and resurrecting the cities of the midlands and the north, will mean that more power will be sucked back to London and the south-east?

[The Deputy Prime Minister]

I find such research utterly specious. I wish the Labour party would decide whether it is for or against HS2. It is betraying the north of England and the great cities of the north by being so equivocal about HS2. In my view that is the most important infrastructure projects for this country’s future and it will play a crucial role in healing the long, long divide that has existed between the north and the south of our country.

[Several hon. Members]

rose—

[Mr Speaker]

I am sorry to disappoint colleagues, who can try to be accommodated elsewhere on other question sessions. We must now move on.

The Attorney-General was asked—

[Andy Sawford (Corby) (Lab/Co-op)]

1. What recent discussions he has had with the Director of Public Prosecutions on increasing the number of prosecutions for rape and domestic violence.

[Rehman Chishti (Gillingham and Rainham) (Con)]

5. What recent discussions he has had with the Director of Public Prosecutions on the prosecution of cases involving allegations of domestic violence.

[Peter Aldous (Waveney) (Con)]

8. What recent discussions he has had with the Director of Public Prosecutions on the prosecution of cases involving allegations of domestic violence.

[The Solicitor-General (Oliver Heald)]

The Attorney-General and I regularly discuss the effective prosecution of cases of violence against women and girls, including both domestic violence and rape, with the Director of Public Prosecutions. Discussions also take place between the DPP, the police and the Home Office. In 2012-13 the proportion of such cases resulting in conviction increased to 74.3% for domestic violence and 63.2% for rape.

[Andy Sawford]

Under this Government more and more cases of both rape and domestic violence are being dropped by the police without being referred to the Crown Prosecution Service for prosecution, leaving offenders unpunished and free and leaving victims vulnerable. What are the Government going to do about this?

[The Solicitor-General]

The hon. Gentleman is right. The Government are aiming to increase the number not only of prosecutions, but of successful ones which result in conviction. On 26 September this year the Director of Public Prosecutions held a meeting with all the other stakeholders—the police, the Home Office, the College of Policing and the Attorney-General’s Office—to look at why the referrals from police to the CPS had fallen. Six actions were agreed at that time.

[Rehman Chishti]

Does the Solicitor-General share my concerns that for 2012-13 around 30% of defendants for domestic violence were aged under 24, and more than 2,000 were between 14 and 17 years old? What are the Government doing to tackle domestic violence among young people?

[The Solicitor-General]

My hon. Friend has a strong record of campaigning on this issue and he is absolutely right: it is of concern that young people are perpetrating domestic violence. The Government’s action plan for violence against women and girls includes a programme to increase understanding and awareness of these issues, and the DPP’s national scrutiny panel last year focused on teenage relationship abuse. The CPS is putting together specific training for prosecutors on issues to take into account when they are prosecuting cases and also to support the victims.

[Peter Aldous]

Taking into account the gravity of the offence, there is a concern that too many cautions are being issued in domestic violence cases. If this is established to be happening, will the Solicitor-General work with the Home Secretary to address it?

[The Solicitor-General]

My hon. Friend raises an important point. As he will know, the Secretary of State for Justice has announced a wider review of out-of- court disposals, but at the recent meeting which I mentioned, convened by the Director of Public Prosecutions, it was agreed that there needs to be a closer analysis of domestic violence figures and how out-of-court disposals are being dealt with. That is ongoing.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

The Solicitor-General has given us a rather tantalising answer, telling us that in September there was a meeting on ensuring that more cases were taken by the police and given to the Crown Prosecution Service for charging. We are all concerned that the CPS is not getting enough cases in front of it on which to make decisions. The Solicitor-General tells us that six actions have been agreed. Would he like to tell us what they are?

[The Solicitor-General]

I did not want to trespass on Mr Speaker’s good will, but I am delighted to set out the six actions. First, Her Majesty’s inspectorate of constabulary will carry out a themed inspection of domestic violence, liaising closely with the Home Office and the CPS. Secondly, the evidence that I have just mentioned about how out-of-court disposals are dealt with will be examined in more detail to see what is happening in this area. Thirdly, the performance of the CPS is being closely examined to see whether there are differences between areas in the way in which cases are referred. The fourth action entails looking at the independent domestic violence adviser network and making sure that it is performing consistently across the country. Fifthly, six areas are being reviewed and cases which were not referred to the police are being examined closely to see why. Sixthly, the Crown Prosecution Service is going to give further advice to the police about how to pursue cases without the witnesses giving evidence.

[Mr Speaker]

I call Mr Robert Halfon, assuming that he can still remember the original question.

[Robert Halfon (Harlow) (Con)]

Just about, Mr Speaker.

In 2012 there was the tragic death in my constituency of Eystna Blunnie, a victim of domestic violence. The CPS admitted that there had been a failure to prosecute the murderer for a previous assault. What steps are my hon. and learned Friend and the Government taking to ensure that the CPS properly follows through prosecutions of perpetrators of domestic violence?

[The Solicitor-General]

Of course, the key is to have regular meetings and to issue the sort of guidelines that the Director of Public Prosecutions has done. If my hon. Friend wishes to write to me about the case he mentioned, I will certainly ensure that any review that is still available is undertaken.

[Fiona Mactaggart (Slough) (Lab)]

As the hon. Member for Harlow (Robert Halfon) pointed out, this is a serious matter, and the consequences are serious. In Thames Valley last year there were 9,804 recorded incidents of crime involving domestic violence, but a further 22,627 incidents were reported to the police, and we know that such cases sometimes end in a tragic death. I fear that the hon. and learned Gentleman’s six actions are a bit laid back. What is he going to do?

[The Solicitor-General]

First, the six actions relate to one important aspect: ensuring that referrals come through from the police to the CPS. But let us be clear that over recent years huge progress has been made, in both the proportion of cases that are prosecuted and the conviction rates achieved. The hon. Lady is absolutely right that we need a cross-governmental strategy, which we have in the action plan of the interministerial group on violence against women and girls, so there is no complacency in that regard, but she must recognise that there are achievements as well as areas that need improvement.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

3. What steps the Crown Prosecution Service is taking to ensure that adequate provision is made to support vulnerable witnesses in sexual abuse or domestic violence cases.

[Neil Parish (Tiverton and Honiton) (Con)]

7. What steps the Crown Prosecution Service is taking to ensure that adequate provision is made to support vulnerable witnesses in sexual abuse or domestic violence cases.

[The Solicitor-General (Oliver Heald)]

The Crown Prosecution Service takes allegations of sexual abuse and domestic violence very seriously and ensures that prosecutors are well equipped to handle those cases. There is also the national network of witness care units, whose role is to support victims. The House will want to know that the Director of Public Prosecutions will publish final guidelines on prosecuting cases of child sexual abuse shortly.

[Stephen Metcalfe]

I thank the Solicitor-General for his answer. Will he also look at what more can be done to support those who have been the victims of psychological or emotional abuse, because although there is no physical effect, the mental trauma can be quite debilitating?

[The Solicitor-General]

My hon. Friend’s contribution is timely, as we have recently had mental health day. He is right that it is important to support such victims and witnesses, which is what the witness care units do. In addition, there is a range of guidance for prosecutors on issues such as the provision of therapy to vulnerable and intimidated witnesses. With regard to victims who have suffered mental trauma, there is guidance on how to help victims and witnesses with mental health issues, and the CPS also contributed to the Mind toolkit.

[Neil Parish]

Will my hon. and learned Friend outline what the special measures will be, how they will be granted for vulnerable witnesses and how they will help the court process to ensure that the trial is fair for all, particularly those witnesses in these very difficult cases?

[The Solicitor-General]

The special measures available for vulnerable or intimidated witnesses include: giving evidence from behind a screen, by live television link or in private by clearing the court room of the public; removal of wigs and gowns by judges and lawyers; use of video-recorded evidence-in-chief; examination of the witness through an intermediary; and provision of communication aids. Many of us are strong supporters of one special measure, pre-recorded cross-examination, for which I think there is a measure of support across the House. It has not yet been implemented, but it is coming soon.

[Ann Coffey (Stockport) (Lab)]

rose—

[Mr Speaker]

The hon. Lady is almost overcome with excitement. I call Ann Coffey.

[Ann Coffey]

Thank you very much, Mr Speaker.

Children have particular difficulty in communicating, and registered intermediaries are crucial in enabling them to give the best possible evidence in court, but they are being appointed in a tiny minority of cases. What more can the Solicitor-General do to make sure that the Crown Prosecution Service appoints better registered intermediaries for children at an early stage?

[The Solicitor-General]

As the hon. Lady will remember, that is one of the six issues that is being considered. I agree that it is important to ensure that the right support is given in every case. Of course, support would not be needed in every case, but where it is, it should be available.

[Andrew Gwynne (Denton and Reddish) (Lab)]

The Solicitor-General will know that the specialist domestic courts that were established under the previous Labour Government helped to speed up prosecutions and reduce attrition. Why, then, have his Government gone about closing them down?

[The Solicitor-General]

Although referrals are down, the proportion of the caseload that is domestic violence or rape cases has held up strongly, so I do not think the hon. Gentleman’s allegation stands up. However, it is certainly true that we need to ensure that these cases are dealt with expeditiously.

[Margot James (Stourbridge) (Con)]

I thank the Attorney-General for the report he commissioned, following our meeting with the Crown Prosecution Service inspectorate, on the disclosure of medical and counselling records of victims of sexual abuse and rape. Will he or the Solicitor-General meet me to discuss the implementation of these recommendations and the need for further action in related areas?

[The Solicitor-General]

As my hon. Friend knows, the Attorney-General and I were very grateful for her intervention in this regard. The report from Her Majesty’s inspectorate bears that out, and either one or both of us would be happy to meet her to discuss taking this forward.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

May I draw the Solicitor-General’s attention to the experience of one of my constituents who has been identified as a potential witness in a case of serious sexual abuse going back over many, many years? This has caused him great distress, and, frankly, he is not receiving the support that he desperately needs. Will the Solicitor-General and the Attorney-General look again at what more can be done to support vulnerable witnesses over the many months they have to wait while their case comes to trial?

[The Solicitor-General]

If the right hon. Gentleman writes to me I will make sure that the case is given whatever extra support is needed. As regards the point he makes, he is absolutely right. As somebody who has prosecuted these cases, I know that having a properly supported witness who feels confident in giving evidence is key.

[David T. C. Davies (Monmouth) (Con)]

I am currently dealing with a case where a vulnerable witness has been forced to leave her own home as a result of the abuse she has suffered, and the offender is now walking around and living in that house. Does the Solicitor-General agree that that is an absolutely disgraceful situation? If I send him the full details, will he look into it and find ways in which I can help this constituent?

[The Solicitor-General]

I would be more than happy to discuss the case with my hon. Friend. Obviously it is difficult for me to comment, not having seen the papers, but I make that offer.

[Mr Andy Slaughter (Hammersmith) (Lab)]

4. If he will discuss with the Director of Public Prosecutions ways of limiting public expenditure on exit payouts at the Crown Prosecution Service.

[The Attorney-General (Mr Dominic Grieve)]

I regularly meet the Director of Public Prosecutions, and this subject has been discussed. The CPS has reduced its staff numbers by 1,902, or 21%, during the current spending review period, while improving overall performance in its delivery of a public prosecution service. These reductions will save the public purse a forecast £77.8 million per annum by 2015-16. Expenditure on staff exits will substantially reduce in the next financial year as the CPS will have completed its major programme of achieving significant staff reductions.

[Mr Slaughter]

Given that, by his own admission, the Attorney-General is losing a quarter of all prosecutors, perhaps it is not surprising that he spent £50 million getting rid of them, but why has £10 million of that gone on packages of more than £100,000, including ones of up to £300,000, when the rump of the service is starved of resources?

[The Attorney-General]

The payments in each case were those to which the individuals were contractually entitled. I am aware of the recent press coverage of two payments, but it relied on a series of assumptions that have been shown not to be accurate. Moreover, in the case of one of those two cases, the payments were in fact made in 2009 and were part of the redundancy payments approved by the previous Government, which we changed.

[Gareth Johnson (Dartford) (Con)]

6. On how many occasions during the last 12 months his Department has referred a criminal sentence to the Court of Appeal for review on the grounds that it was unduly lenient.

[The Attorney-General (Mr Dominic Grieve)]

As my hon. Friend will be aware, the power to refer sentences is an exceptional remedy reserved for those cases in which the sentence is so far below the range of sentences it was reasonable to impose that public confidence in the criminal justice system risks being damaged. For 2012, the most recent period for which statistics on unduly lenient sentence cases have been published, we received 435 requests for sentences to be reviewed, of which 82 were referred as unduly lenient and heard by the Court of Appeal. For the period ending 30 September 2013, we have received 352 requests for sentences to be reviewed, of which 57 have been referred to the Court of Appeal and have been, or are due to be, heard by the Court.

[Gareth Johnson]

In that case, could the Attorney-General please assure the House that he will give due consideration to widening the scope to appeal against unduly lenient sentences? I am sure he will agree that weak sentences by our courts let down the victim, the judiciary and the whole of society.

[The Attorney-General]

My hon. Friend will be aware that the scheme is currently restricted to a list of serious offences. It is right to say that we have added to that list in recent years. In August 2012, the offence of trafficking people for exploitation was added, as were racially or religiously aggravated assaults in October 2003 and various offences under the Sexual Offences Act 2003 in 2006. It is always possible for cases to be added to the list, but it is important to bear in mind that references take up court time and there must be a limit to the number of cases that the Court of Appeal can hear. One must also bear in mind that there has to be a degree of finality and these things have to be balanced out. If my hon. Friend knows of any cases or types of offences that he thinks might be added, I am always happy to consider such matters. It is, obviously, ultimately a matter for my right hon. Friend the Lord Chancellor, but we discuss these matters and will act if we think it necessary.

[Keith Vaz (Leicester East) (Lab)]

I am usually a great fan of the Attorney-General, but the way in which he has handled the case of Elena Fanaru is very disappointing. She now lies in a grave in Romania. The man who knocked her down and killed her, having fled the scene of the accident, got only one year and four months in prison. When are we going to make sure that such people really do face justice?

[The Attorney-General]

I am not going to comment on an individual case. I am quite satisfied that, in so far as I have been able to have any role in this matter, I have acted properly. In so far as it is a matter of where the law needs to be changed, that is for this House to decide.

[Philip Davies (Shipley) (Con)]

May I urge the Attorney-General to work with the Lord Chancellor to extend the period in which an appeal can be made against an unduly lenient sentence from the current 28 days? Could he also give a word of encouragement to campaigners such as the excellent Families Fighting for Justice who claim it would make a big difference to victims of the most serious offences?

[The Attorney-General]

My hon. Friend makes an important point. Certainly, the question of the time limit will be looked at by my right hon. Friend the Lord Chancellor. I am certainly open to suggestions, although it is right to say that if we have a new time limit there will always be the risk that it will also be exceeded in some cases. It is important that cases should be reviewed quickly. In some cases the defendant/offender may not have been given a custodial sentence, and to have a long period of delay before a custodial sentence is then imposed is clearly undesirable.

[Caroline Nokes (Romsey and Southampton North) (Con)]

9. What steps the Director of Public Prosecutions is taking to raise awareness amongst prosecutors of how to deal with cases of human trafficking; and what assessment he has made of whether current legislation is being used to prosecute such cases effectively.

[The Solicitor-General (Oliver Heald)]

Guidance is issued by the Crown Prosecution Service and it is regularly updated. There is a training programme for the CPS and the Director of Public Prosecutions will host a round-table event later this year to consider how best to strengthen prosecutions.

[Caroline Nokes]

I thank the Solicitor-General for that response. This Friday 18 October is anti-slavery day, which aims to highlight human trafficking and modern-day slavery. Does my hon. and learned Friend agree that one of the key problems is that those crimes are very well concealed and seldom brought to the attention of the authorities and the police, and that wider public awareness, as well as the awareness of GPs and teachers, is required.

[The Solicitor-General]

I absolutely agree with my hon. Friend. The Government are committed to publishing a draft modern-day slavery Bill later this year. There have been amendments to the law to enable more prosecutions to occur. The round-table event later this year will be important in raising awareness, as she suggests.

[Jim Shannon (Strangford) (DUP)]

The Northern Ireland Assembly has recently brought in legislation on human trafficking that is perhaps unique in the United Kingdom. Has the Solicitor-General had any discussions with the Northern Ireland Assembly and, if so, what was the outcome?

[The Solicitor-General]

I have not had such a discussion, but if the hon. Gentleman would like to talk to me about the issue, I would be happy to do so.

[Mr Peter Bone (Wellingborough) (Con)]

Will the Solicitor-General press the Home Secretary to consider this matter in drafting the modern-day slavery Bill?

[The Solicitor-General]

The details of the Bill will be published in draft, so my hon. Friend will have an opportunity to contribute at that point. I pay tribute to the work that he does with the all-party group on human trafficking.

Elections in Zimbabwe

Tuesday 15th October 2013 Commons Chamber

Fiona Mactaggart (Slough) (Lab)

- Hansard - - Excerpts

I rise to present a petition on behalf of 68 of my constituents and people living near Slough.

I thank the Under-Secretary of State for Foreign and Commonwealth Affairs for writing to me about the issue before I presented the petition and want to tell the House how important my constituents, and largely those of Zimbabwean origin, believe the petition to be.

The petition states:

The Petition of the supporters of Zimbabweans who love peace, resident in the UK,

Declares that the Petitioners believe that elections held in Zimbabwe this summer were not free, peaceful and fair; further that the Mugabe regime has a long history of manipulating the entire process including pre-election, during voting and post-election and in 2008 Mugabe refused to accept the results in which his party was heavily defeated, he intimidated people, battered and killed MDC supporters before claiming victory; further that the 2013 elections have again been marked with massive irregularities and incomplete participation and there are serious questions about the credibility of the elections due to the number of irregularities both in the run-up to the ballot and on polling day.

The Petitioners therefore request that the House of Commons makes the world aware that the 2013 Zimbabwean election results are not credible and are not an expression of the will of the Zimbabwean people; and further requests that the House do all in its power to prevent the country plunging into another era of poverty and human suffering as it did in 2008, we ask for help to see human rights restored and support in the fight for a new Zimbabwe.

And the Petitioners remain, etc.

[P001223]

Mr Speaker

- Hansard - - Excerpts

It is heartening to note that the hon. Member for Westmorland and Lonsdale (Tim Farron) has toddled into the Chamber in time by a few moments. We will enable him now to catch his breath, as I call Dr Thérèse Coffey to present her petition.

Replacement of Blaxhall Post Box (Suffolk)

Tuesday 15th October 2013 Commons Chamber

Dr Thérèse Coffey (Suffolk Coastal) (Con)

- Hansard - - Excerpts

The petition requests the replacement of the Blaxhall post box. To give some context, a beautiful Victorian post box was stolen and has not been replaced, despite the fact that it is more than half a mile away from the nearest post box.

The petition states:

The Petition of residents of Blaxhall,

Declares that Royal Mail has declined to replace the stolen post box in the village despite Ofcom’s recent measures to protect rural post boxes from removal.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Business, Innovation and Skills to support residents of Blaxhall in their request to Royal Mail to replace the post box.

And the Petitioners remain, etc.

[P001227]

The Save Coniston and Hawkshead GP Surgeries Campaigns

Tuesday 15th October 2013 Commons Chamber

Tim Farron (Westmorland and Lonsdale) (LD)

- Hansard - - Excerpts

I wish to present petitions on behalf of residents of the Hawkshead area and of the Coniston area—two separate petitions calling for the same thing, the retention of their two GP surgeries. I present the petitions on behalf of 928 people in the Coniston area and 1,228 people in the Hawkshead area.

The petitioners declare that they believe that the GP surgeries in Hawkshead and Coniston in Cumbria will close unless the Government’s funding formula is changed to support rural practices, and further declare that the petitioners believe that the GP surgeries in Hawkshead and in Coniston are vital to the local community and therefore request that the House of Commons urge the Government to change their funding formula.

Following is the full text of the petitions:

[The Petition of a resident of the UK,

Declares that the Petitioner believes that the GP Surgery in Coniston, Cumbria will close unless the Government’s funding formula is changed to support rural practices and further declares that the Petitioner believes that the GP Surgery in Coniston is vital to the local community as those in Ambelside and Ulverside are not easily accessible to Coniston residents.

The Petitioner therefore requests that the House of Commons urge the Government to change its funding formula.

And the Petitioners remain, etc.]

[P001229]

[The Petition of a resident of the UK,

Declares that the Petitioner believes that the GP Surgery in Hawkshead, Cumbria will close unless the Government’s funding formula is changed to support rural practices and further declares that the Petitioner believes that the GP Surgery in Hawkshead is vital to the local community.

The Petitioner therefore requests that the House of Commons urge the Government to change its funding formula.

And the Petitioners remain, etc.]

[P001230]

Regulation of the Private Rented Sector

Tuesday 15th October 2013 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

12:35

[Jeremy Corbyn (Islington North) (Lab)]

I beg to move,

That leave be given to bring in a Bill to provide for the regulation of letting agents; to protect tenants’ deposits; to require the enforcement of environmental and energy-efficiency standards in private-sector rented accommodation; to amend the law on secure tenancies; to provide for fair rent to be applicable to all rented accommodation; to require landlords not to discriminate against people in receipt of state benefits; to require local authorities to establish a private rented sector office; and for connected purposes.

I first introduced this Bill earlier this year on 26 February. Since then, the debate about the regulation of the private rented sector has gathered pace. It is now much more commonplace for all of us to be invited to endless seminars on the private rented sector and stories abound about the way in which people are treated in the sector. This matter ought to be part of the mainstream political debate on housing in this country.

There are essentially three elements to housing in this country: owner-occupation, housing provided by local authorities or housing associations, and the private rented sector. I will take them in turn. Owner-occupation has been the cornerstone of the housing policies of successive Governments for a long time. However, the rate of owner-occupation is steadily and steeply in decline, to the extent that it is well below the high point of 70%. There is every sign that it will continue to drop over the decades, as mortgages become more expensive and more difficult to secure for people on average incomes or below, despite the Government’s home-ownership objectives.

The second area is council housing and housing association properties. Council housing provides good quality, secure accommodation, but it is in desperately short supply, particularly in London and the south-east. I am the first to admit that the solution to our housing problems lies in the much more rapid development of much more council housing all over the country. That would provide a good quality way out of housing desperation for many people. I hope that that policy is increasingly accepted and developed.

Although I recognise that housing associations were founded to bring in good quality housing on a similar basis to council housing, I am becoming increasingly concerned about their behaviour and conduct. Increasingly, they act like housing companies, not social landlords, and see themselves as being in the property market, rather than in the provision of housing for people who are in desperate need. That area is in need of tight regulation.

The third area is the private rented sector, which has traditionally been very small in this country. It has now started to rise rapidly. Nationally, it makes up 17% of the housing stock. That is predicted to rise to 22% by 2025. It is an extremely different story in some parts of the country. In the borough of Islington, which I am happy to represent with my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry), who is here to indicate her approval of the Bill, the make-up is very different. Owner-occupation now makes up less than 30% of housing stock across the borough and is declining fast. Social housing—housing association and council housing—is about 40% of the stock and rising, as the local authority, to its great credit, manages to undertake some building programmes to ensure that people have a decent roof over their head. However, the private rented sector makes up well over 30% of the housing in the borough.

Some who rent in the private sector in London are very wealthy, can afford to pay any price that is offered and do not particularly care about it. There are also those on middle incomes—young, professional people who move into London and pay an extraordinarily high proportion of what ought to be a decent wage on private rents. Then there are people on very low incomes who cannot get anywhere near the housing ladder but cannot get anywhere near getting a council property either. They are stuck in expensive private rented accommodation, often paying half their take-home pay just to keep an inadequate, expensive roof over their head.

There are also people who are placed in private rented accommodation by the local authority, and they are the ones who suffer the most. They are often in inadequate, badly maintained accommodation with landlords who know that the tenants are in no position to complain about anything.

The one thing that unites all those groups is insecurity about their housing. I guess that most Members are owner-occupiers and do not feel any great insecurity about their housing situation. It is not so for a large number of people in this country. We therefore need effective regulation of all private rented accommodation, so that there are decent environmental standards and not excessive energy bills. We need strict regulation of what letting agents do, because currently anyone can set up as a letting agent straight away. At the very least, we need Criminal Records Bureau checks, and we need anti-discrimination legislation to be enforced on letting agencies—not just when there is discrimination against people on housing benefit, but when there is discrimination against people of minority ethnic communities, which is absolutely disgraceful and is illegal under general anti-discrimination law.

We also need the guaranteed return of deposits and much longer tenancies. Traditionally, assured shorthold tenancies last for six months in this country. Sometimes they are repeated and sometimes they are not, but they are almost never repeated if the tenant complains about conditions or requires the landlord to make some repairs during the first six months. The tenant finds that their tenancy is simply terminated. We therefore also need tenancies of at least five years, to reduce the level of insecurity.

When the Government tell me that the cost of private rented accommodation is one of the main drivers of this country’s large housing allowance bill, I absolutely agree with them. However, the way to deal with it is not by restricting the level of housing benefit paid to tenants but by controlling the level of rent that is paid. Other countries seem to manage that well, and I feel deeply angry when I meet people in my advice bureau every week who tell me that they are, in effect, being socially cleansed out of an area they have lived in for a long time because the housing benefit is inadequate for the level of rent that is charged. They are being forced to scatter all over London and all over the country.

Some colleagues tell me that regulation of the private rented sector and rent levels is not a problem in their constituency, and I understand that. There is a vast discrepancy in rent levels across the country, from £300 to £400 a week in London to £100 a week, or in some cases even slightly less, in other parts of the country. However, if the House does not pass strict regulation of the private rented sector now, starting in London and the south-east, the problem will spread across the country as the sector gets bigger and bigger.

My Bill would bring about better security, such as there is in Germany, where tenancies last almost a lifetime. It would bring about better conditions for tenants and much more stable communities. In some wards in my constituency, population turnover is 30% a year, almost all occasioned by the insecurity of the private rented sector. What does that do to the stability of a community? Where does it get its community activists, school governors and movers and shakers from if there is no security and no investment in that community?

Finally, the Bill would bring about rent regulation. Some people are not keen on that—some landlords do not like it, but some recognise that the stability provided by a fair rent formula of the sort we used to have in this country would be a useful step forward. My Bill seeks to establish local authority-run, fair-rent regulation authorities, the first of which would cover the whole of Greater London. We would start with the principle that rent should bear some resemblance to the cost of a property—often it bears none whatsoever—and ensure that we gain the security of tenure required to bring about a much better and fairer society.

I hope the House will support this Bill today to end the insecurity and injustice, and recognise that some local authorities such as Newham and Oxford have made enormous steps forward to try and bring about some degree of regulation and stability in the private rented sector. The Bill is not a threat to good landlords who seek to do the right thing and look after their tenants; it is a threat to the cowboys, bad landlords, discriminators and those who refuse to repair their properties or return deposits at the end of a tenure. I hope the House will support the Bill.

Question put and agreed to.

Ordered,

That Jeremy Corbyn, Mark Durkan, Sir Bob Russell, Mr Elfyn Llwyd, Caroline Lucas, John Healey, John McDonnell, Katy Clark, Grahame M. Morris, Ms Diane Abbott, Mr David Lammy and Mr David Ward present the Bill.

Jeremy Corbyn accordingly presented the Bill.

Bill read the First time; to be read a Second time on 28 February 2014, and to be printed (Bill 114).

Anti-social Behaviour, Crime and Policing Bill

Tuesday 15th October 2013 Commons Chamber

[2nd Allocated Day]

Further consideration of Bill, as amended in the Public Bill Committee

New Clause 9

Offence of forced marriage: Scotland

‘(1) A person commits an offence under the law of Scotland if he or she—

(a) uses violence, threats or any other form of coercion for the purpose of causing another person to enter into a marriage, and

(b) believes, or ought reasonably to believe, that the conduct may cause the other person to enter into the marriage without free and full consent.

(2) A person commits an offence under the law of Scotland if he or she—

(a) practises any form of deception with the intention of causing another person to leave the United Kingdom, and

(b) intends the other person to be subjected to conduct outside the United Kingdom that is an offence under subsection (1) or would be an offence under that subsection if the victim were in Scotland.

(3) “Marriage” means any religious or civil ceremony of marriage (whether or not legally binding).

(4) It is irrelevant whether the conduct mentioned in paragraph (a) of subsection (1) is directed at the victim of the offence under that subsection or another person.

(5) A person commits an offence under subsection (1) or (2) only if, at the time of the coercion or deception—

(a) the person or the victim or both of them are in Scotland,

(b) neither the person nor the victim is in Scotland but at least one of them is habitually resident in Scotland, or

(c) neither the person nor the victim is in the United Kingdom but at least one of them is a UK national.

(6) “UK national” means an individual who is—

(a) a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen;

(b) a person who under the British Nationality Act 1981 is a British subject; or

(c) a British protected person within the meaning of that Act.

(7) A person guilty of an offence under this section is liable—

(a) on summary conviction, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum or both;

(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine or both.’.—(Norman Baker.)

Brought up, and read the First time.

Motion made, and Question proposed, That the clause be read a Second time.—(Norman Baker.)

[Mr Speaker]

With this it will be convenient to discuss the following: Government amendments 49, 50, 62, 64, 72, and 75 to 77.

12:47

[The Minister of State, Home Department (Norman Baker)]

I will be brief because, as Members will recall, clause 104 introduces a new offence of forced marriage. The new offence is an important part of our efforts to stamp out that appalling practice, and will send a clear message that it will not be tolerated. I am pleased the Scottish Government has also decided that forced marriage should be a criminal offence, and new clause 9 introduces a similar provision for Scotland. Breach of a forced marriage protection order is already a criminal offence in Scotland, so there is no need for a similar amendment to mirror clause 103, which makes that the case in England and Wales. The other amendments in the group are consequential on new clause 9.

[Helen Jones (Warrington North) (Lab)]

I was not in the Chamber yesterday, so may I welcome the Minister to his new post and let him know that any conspiracy theories he comes up with about me will probably be true?

The Opposition accept the need to deal decisively with forced marriage in Scotland, as in England, and we are pleased that the Government are extending to Scotland provisions that make forcing someone into a marriage a criminal offence. We therefore support the new clause and its consequential amendments. It was clear from evidence taken in Committee that there are differing views on the issue, and some who are active in the sector oppose the use of criminal law in that area because they believe it would deter victims from reporting what is happening to them. That is an understandable view, but not one I share. Victims of forced marriage are British. They are of many ages, although many are young people. British boys and girls, of whatever colour, deserve the same protection as every other British boy and girl.

It is important to make the point that forced marriages are not about religious beliefs—they are not condoned by any of the major faiths, whether Christianity, Islam or Hinduism. Forced marriages are about abuse, often of children. What we condemn as abuse in any other sector of society cannot be condoned because of the colour of a person’s skin, their ethnic background or their parents’ culture. I am therefore glad that new clause 9 will make coercing someone into a marriage a criminal offence in all parts of the UK. I hope we will give young people, their communities and others the confidence to challenge forced marriage and to stand up and say no, knowing that they are supported by the law throughout the country, and, I would hope, by others in the community.

It is fair to say that, in some respects, Scotland has moved ahead of the rest of the UK on the matter because, as the Minister has said, breach of a forced marriage protection order is a criminal offence in Scotland, as it will be in the rest of the UK when the Bill becomes law. It is therefore clearly right that new clause 9 extends the criminal offence of coercing someone into a marriage into Scottish law. However, the UK Government and the Scottish Government need to do much more. No forced marriage protection orders have been issued in Scotland since its current legislation came into force, and yet no one would seriously argue that there were no forced marriages last year. In fact, the UK forced marriage unit gave support in 1,483 cases related to possible forced marriage. That is a high number, but the National Centre for Social research report published in 2009 estimated that there were between 5,000 and 8,000 reported cases throughout the UK each year. Of course, many cases go unreported.

The Opposition therefore support the Government’s legislation for Scotland and the rest of the UK, but I should tell the Minister that the legislation by itself is not enough. We need to put in place a system that allows people to report when they are at risk of forced marriage, that encourages them to report, and that offers them the support they need. Currently, that is sadly lacking. For example, much more work needs to be done in schools, so that teachers are alert to the signs that a pupil might be being forced into marriage. Young people need to be educated so that, if they or one of their friends are at risk, they know where to seek help.

I therefore ask the Minister to say what the Government are doing to raise awareness of forced marriage. Where is the money to fund such a campaign? In 2012, the forced marriage unit said that many agencies, whether those dealing with children or with vulnerable adults, still did not recognise forced marriage as a safeguarding issue. That is totally unacceptable. There is evidence that police throughout the UK recognise the need to deal with forced marriage proactively, but other agencies—not just schools, but colleges and health organisations—still have a long way to go. I hope Ministers discuss the measures needed with the Scottish Government, so that we can develop a common approach throughout these islands.

We must have training not only for teachers to allow them to recognise the signs that their students are at risk, but for others. Teachers are important because, sometimes, they are the only person outside the family with whom a victim has contact at first. I remember the tragic case of Shafilea Ahmed in my area—she lived in the constituency of the hon. Member for Warrington South (David Mowat). She was so desperate that she drank bleach when she was taken to Pakistan. Later, she was missing for a week before anyone from the school raised the fact that she was not there, despite the warning signs she had given. Teachers did not intervene, and health workers did not follow up or ask the right questions. In the end, she was tragically murdered. I tell the Minister that, although the legislation is welcome, the Opposition want to know what he will do to ensure there is not another Shafilea.

Social services provision is struggling because of the draconian cuts the Minister’s Government are making to council services. Women’s refuges have lost a third of their budget, and refuges and specialist advice services are closing. There is evidence that services that cater for women from black and ethnic minority communities are particularly hard hit. One test of the willingness of both the Scottish Government and the coalition Government to enforce the provisions will be whether they provide the services that people need.

[Jim Shannon (Strangford) (DUP)]

Is the hon. Lady’s submission to the House that more focus should be on certain cultural or ethnic groups rather than having a generic focus? I ask because the examples she gives—other hon. Members will give similar ones—come from certain cultural areas. Should the financial focus be on those areas to help them?

[Helen Jones]

The hon. Gentleman needs to differentiate services that protect women from violence and specialist provision for those dealing with forced marriages. They are two parts of the same thing, but the current evidence is that specialised services for black and ethnic minority women—services that they feel more comfortable accessing because the people there understand the cultural background—are being closed at a greater rate than other refuges. That is a worry.

My point to the Minister is that the legislation is all very well, but unfortunately, unless he ensures that there are services to allow women and girls to make use of the legislation and access the services they need, the Opposition will be forced to conclude that the Government will the ends but are unwilling to fund the means. We need a much more joined-up approach from the Home Office, the Department for Education, the Department of Health and the Department for Communities and Local Government if the legislation is to protect people in future. We do not oppose but welcome the Government’s new clauses, but that is the test we will apply to the Government.

Question put and agreed to.

New clause 9 accordingly read a Second time, and added to the Bill.

New Clause 10

Fees for criminal record certificates etc

‘In Part 5 of the Police Act 1997 (criminal record certificates etc), in section 125 (regulations), after subsection (1) there is inserted—

“(1A) In prescribing the amount of a fee that—

(a) is payable in relation to applications under a particular provision of this Part, but

(b) is not payable in relation to applications made by volunteers,

the Secretary of State may take into account not only the costs associated with applications in relation to which the fee is payable but also the costs associated with applications under that provision made by volunteers.”’.—(Damian Green.)

Brought up, and read the First time.

[The Minister for Policing and Criminal Justice (Damian Green)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

Government new clause 28—Court and tribunal fees.

Amendment 184, page 115, line 19, leave out clause 143.

Amendment 95, in clause 143, page 115, line 26, leave out

‘the person was innocent of the offence’

and insert—

‘no reasonable court properly directed as to the law, could convict on the evidence now to be considered.’.

Government amendments 137, 138, 66, 139, 74 and 83.

[Damian Green]

I will first deal with the Government’s proposals, although I am aware that hon. Members will wish to speak to other amendments. I will deal with those at the end of the debate on the group.

The Government proposals in the group are on the setting of fees for two distinct public services. New clause 10 concerns fees charged by the Disclosure and Barring Service. It is Government policy—I imagine and hope that this is supported by hon. Members on both sides of the House—to encourage volunteering in our communities. To that end, it has long been the case that criminal record checks, where needed, such as in respect of work with children, are provided free of charge to volunteers. The new clause puts on a clear statutory basis the ability of the Home Secretary to take into account the cost of providing criminal record certificates and other services covered by part V of the Police Act 1997 when determining the fees charged for those services.

[Dr Julian Huppert (Cambridge) (LD)]

The Minister is making important points about ensuring that people are able to pay. As I understand it, it is not currently possible to get a basic disclosure within England and Wales—it has to go through Scotland. Will he look at ensuring that, where appropriate, basic applications are available and free?

13:00

[Damian Green]

I am conscious that at various times there have been difficulties with the practicalities of the system, and I take on board my hon. Friend’s point.

The other services covered by part V of the Police Act 1997 when determining fees charged for services also apply to the new update service that was launched earlier this year. This will enable employers to verify whether existing criminal record certificates for those signed up to the service remain up to date, allowing us to ensure that the overall costs of the service now provided by the disclosure and barring service are fully recovered through fee income, and not subsidised by the taxpayer.

Earlier this year, when the update service was introduced, we made interim arrangements under the Finance (No. 2) Act 1987 to provide the legal gateway for this measure to apply. However, the overall arrangement was complex and not entirely transparent. For that reason, we believe the new clause will benefit volunteers and the people and communities they support.

New clause 28 contains substantive provisions to replace clause 147, which, as we made clear, was a placeholder clause. The new clause provides the Lord Chancellor with a general power to set fees at a level that exceeds the cost of the related services. The services are those provided by the courts in England and Wales, including the Court of Protection, the tribunals for which the Lord Chancellor is responsible and the Office of the Public Guardian. The primary focus of our proposals for using this power will be the courts of England and Wales. The courts play a vital role in our society, providing access to justice so that the public can assert their legal rights. Ensuring that they are properly resourced is essential to maintaining access to justice. This must be delivered when public spending is required to fall—deficit reduction is one of the Government’s key priorities—and the courts and those who use them must make a contribution.

As new clause 28 makes clear, the purpose of enhanced fees is to finance an efficient and effective court system. This change to the way that fees are set will help to ensure that courts are properly resourced to deliver modern, efficient services so that access to justice is protected. The proposed legislation provides a general power; specific fees would be increased through secondary legislation. When a specific fee or fees are set at an enhanced level for the first time, the order will be subject to the affirmative resolution procedure—there will be full debate in both Houses. Any subsequent changes to those fees will be subject to the negative procedure.

We will shortly be consulting on proposals to achieve full cost recovery, less remissions, in the civil and family courts. However, even on this basis the running of the court system in England and Wales costs more than £1 billion a year, so we need to go further in reducing the burden on taxpayers. We believe it is fair and proportionate that those who use the courts and can afford to do so should make a greater contribution to their overall funding. That is why we are bringing forward this provision to allow fees to be set above cost in some circumstances.

Let me assure the House that we will not be using the power to set excessively high fees. In setting fees, the Lord Chancellor must have regard to the principle that access to the courts must not be denied. The new clause requires him to have regard to the overall financial position of the courts and tribunals, and the international competitiveness of the legal services market. We are not bringing forward specific plans for charging enhanced fees at this stage. We want to take some time to ensure that we get the measures right. As I said, we will consult widely on the proposals and look carefully at how any proposed court fees might compare with the overall cost of litigation, the value of the issues at stake and the fees charged by our international competitors. Following the consultation there will, as I have indicated, be full parliamentary scrutiny of any enhanced fees that we decide to introduce.

Amendments 184 and 95 relate to the tests for eligibility for compensation following a miscarriage of justice. I propose that the House hears from the hon. Members who tabled them before I respond.

[Jeremy Corbyn (Islington North) (Lab)]

I, with my hon. Friend the Member for Foyle (Mark Durkan), tabled amendment 95. Does the Minister not recognise that he is proposing a dangerous step forward that would actually reduce the chances of overturning a miscarriage of justice case? Would the Guildford Four or the Birmingham Six have been declared innocent under his proposals?

[Damian Green]

As I said, I think it would be sensible, for the purposes of the debate and the convenience of the House, if the hon. Gentleman makes his case and I then respond to it at the end of the debate. I think that is better than pre-responding to the speech I suspect he will make. [Interruption.] I am happy to make the same speech twice, but you, Mr Speaker, might feel that that was out of order. If the hon. Gentleman wants a taste of what I am going to say, I do not agree with him, but I will wait to hear his fuller analysis to see if he can convince me in the course of the debate.

[Mr Speaker]

Order. I note the spirit in which the Minister of State made his remarks, but the hon. Member for Islington North (Jeremy Corbyn) has said nothing disorderly. He might not have said as much as he has to say or as the Minister would like to hear, and we wait with bated breath to see whether the hon. Gentleman will spring from his seat to seek to catch my eye, but his behaviour has been orderly and respectful, as always.

[Jack Dromey (Birmingham, Erdington) (Lab)]

I rise to speak on two matters; first, briefly, on enhanced fees. We are not opposed to the principle of what is being proposed, but it is clear from what the Minister has said that this is about more than full cost recovery, the kind for which we argued yesterday in respect of firearms. This is a revenue-raising measure. We will therefore scrutinise carefully any orders brought forward under the proposed legislation to ensure that any charges are reasonable, and that the interests of the administration of justice are best served.

Amendment 95 relates to miscarriages of justice. I am proud to serve the city of Birmingham. In 1974, the city saw the most appalling terrorist outrage when, as a consequence of bombings by the Provisional IRA, 21 innocent citizens died. Six innocent people were then convicted of that terrorist outrage. I should make it clear that I have been a lifelong opponent of violence by the Provisional IRA. My mother and father were both Irish. I was also on the executive of the National Council for Civil Liberties for many years, and served as its chairman. In that period, we campaigned against terrorist violence and for justice at a time when it was sometimes difficult to stick one’s head up and say that what had happened to the Birmingham Six and the Guildford Four was unacceptable. Sixteen years after the Birmingham Six were sent to prison, they were released and found to have been wrongly convicted.

On behalf of the Opposition, I warmly welcome the fact that my hon. Friends the Members for Foyle (Mark Durkan) and for Islington North (Jeremy Corbyn) are bringing this important issue to the Floor of the House. We are rightly proud of our judicial system, but we know that it is not perfect. The Birmingham Six and the Guildford Four are but two examples of miscarriages of justice that highlight in extremis the consequences of getting it wrong; taking away years of a person’s life and damaging their reputation, their friends, family and colleagues. It is therefore entirely right that when such a miscarriage of justice occurs, the innocent people who have suffered are entitled to compensation.

At the heart of our legal system lies the principle of innocent until proved guilty, and rightly so. However, Government changes to redefine the compensation test, limiting it to

“if and only if the new or newly discovered fact shows beyond reasonable doubt that the person was innocent of the offence”

seem to fly in the face of this age-old principle. Under the Government’s new narrowed compensation tests, none of the Birmingham Six or Guildford Four would have been entitled to payments. Billy Power, one of the six men wrongly convicted in the 1970s for the Birmingham pub bombings, has warned that the changes would mean that

“the standard presumption of innocence would be abolished”.

And he is not alone. A report from the Westminster joint human rights commission said:

“In our view, requiring proof of innocence beyond reasonable doubt as a condition of obtaining compensation for wrongful conviction is incompatible with the presumption of innocence, which is protected by both the common law and Article 6(2) ECHR. We recommend that clause 143 be deleted from the Bill because it is on its face incompatible with the Convention.”

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

As the hon. Gentleman will hear if I have a chance to say a word, I am very supportive of what he is arguing for and of the amendment that his hon. Friends have tabled. With respect, though, I would like to correct something that he said. The opinion that he just quoted was that of the Joint Committee on Human Rights—not the Westminster convention, or whatever he called it—which is making exactly the argument that he is putting to the House.

[Jack Dromey]

I am grateful to the right hon. Gentleman for his intervention; he is of course right.

We support a rigorous and fair justice system, but it must ensure that where a serious miscarriage of justice has happened, innocent people receive fair compensation for all that they have suffered, which, in the more extreme cases, can involve years of their lives. If a miscarriage of justice has taken place, it is the justice system’s mistake, and it should be its job to put it right, not to make it harder for innocent people to do so. If—God forbid!—we ever saw a repeat of what happened with the Birmingham bombings and the subsequent convictions, it would be absolutely unthinkable that those people would not be entitled to compensation.

I very much hope that the Minister will respond constructively to the amendment and our representations. We intend to support the amendment in the other place, where we believe that further detailed scrutiny should take place, because the Government have got it wrong and we must put that wrong right.

[Dr Huppert]

It is a pleasure to speak in this debate and to follow the opening comments.

I thoroughly support new clause 10, because it is right that we recognise volunteers. Too often, people have had to pay far too much to go through the processes necessary to volunteer, as I know from my own voluntary work, although that was more of a problem when people needed separate certificates for everything they did. I am glad that we have made some progress at least.

There is an issue, however, about the availability of the right level of disclosure for criminal record certificates. I thought I knew this area reasonably well, but I did not realise until recently that it was not possible to get a basic certificate—there are three levels: basic, standard and enhanced—listing unspent convictions in England and Wales; the only body that does it is Disclosure Scotland. While getting the pricing correct, therefore, we must also ensure availability. It seems perverse that only under Scots law can somebody get what most employers ought to have access to. Most employers do not realise that they should have the basic, rather than standard or enhanced certificate. I hope that Ministers will consider that point and ensure that while providing the right costings, we also get that right, and that the Government implement the relevant provisions in the Rehabilitation of Offenders Act 1974.

On new clause 28, the Minister made a strong case for having some fees. I think we would all agree that if a Russian oligarch makes great use of our courts, they should make some contribution. None of us would suggest that their having to pay £1,000 or so would inhibit their ability to get justice. Perhaps the cost of using the courts should be a fraction of the fees going to the lawyers; that might be a safe way of ensuring that we make our fair share. That is not the route chosen, however, although it is quite tempting, given how large the legal fees are in many of these cases. It is not just Russian oligarchs, of course; it is anybody with a very big transaction. It seems right that they should contribute to the costs of our fantastic court system.

We need to ensure, however, that people not in a position to pay are not hit. It should still be possible for people without money to access the courts, and in that, the fees system could help, because by taking more money from those who have lots of it, we could subsidise those who do not. I note that there is broad support for the idea that any money made should be reinvested in improving our court system and ensuring that it works well. Broadly, therefore, I am pleased to see the new clause.

13:15

Clause 143 has been discussed passionately by the shadow Minister and the hon. Member for Islington North (Jeremy Corbyn). I share their huge concern about effectively requiring somebody to demonstrate their innocence, which in very many cases would be extremely hard to prove to the level required. It is not hard to think of cases where it would have been problematic; the shadow Minister described some of them, and I will not detain the House with a long list, but people have written to me with examples.

[Mark Hunter (Cheadle) (LD)]

Go on!

[Dr Huppert]

It is nice to be encouraged by the Whips to speak at greater length, but I am sure we have enough to debate and I do not want to take time from the important debates coming up.

On the concerns about clause 143, the hon. Member for Islington North has, of course, tabled his amendment, but the Joint Committee on Human Rights has also tabled an amendment that would get rid of the clause completely. I am not a lawyer, but my assessment is that the JCHR approach is probably a cleaner one, but both amendments aim to achieve exactly the same thing. I agree with the shadow Minister that we should flag this up as a big issue, but leave it to the other place to find the right answer. By then, I hope that the Government will have reflected on it and accepted the principle that it is incredibly hard for anybody absolutely to prove their innocence. That is a really tough threshold. I hope that the Minister will reflect on that and that we can strike a better balance in the other place.

[Jeremy Corbyn]

I will be brief; because of the odd timetable we have for the Bill, there is not much time to debate any of it. My remarks are concerned solely with amendment 95, which stands in my name and that of my hon. Friend the Member for Foyle (Mark Durkan), and for which, as my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) explained, there is strong support.

Clause 143 will fundamentally overturn the huge changes made after the release of the Birmingham Six and the Guildford Four. For many years, along with Chris Mullin and many others, I was one of those who, from this position in the House, raised questions about the Birmingham Six and the Guildford Four, and I could paper the walls of my house with the letters of abuse we received for taking up their cases. None of us who took up those miscarriages of justice was ever in favour of the bombing and killing of civilians in any circumstances; we were, however, in favour of justice.

The first person arrested under the Prevention of Terrorism (Temporary Provisions) Act 1974 was Paul Hill, one of the Guildford Four, who had been a constituent of my constituency before I was elected, but was in prison when I was elected. Meeting him and the others in prison, I was struck by the sheer hopelessness of being locked up for an offence they did not commit, when every newspaper and commentator in the country said they were guilty and when their family members were abused in the street and vilified because they had a son, nephew or cousin in prison for an offence they did not commit. It made that campaign very difficult, but some very brave people stood up, and eventually those happy days when they were finally released brought about a fundamental change in the whole narrative of justice in this country.

[Dr Huppert]

I congratulate the hon. Gentleman on his work on this issue over many years; it is a great tribute to him that he took it seriously. Does he agree that a fundamental principle underlies this point, which is that no matter what somebody has been accused of, however heinous it might be, they are still entitled to due process and due legal protections? That is an essential principle from which we should not vary, whether a person be accused of terrorist activities, sex crimes or anything else. Due process is important, because errors are made.

[Jeremy Corbyn]

The hon. Gentleman is absolutely correct. However heinous the crime, however vile the accusation against an individual, unless they are treated as innocent until proven guilty, we undermine everything we believe in as a democratic society.

The big change that came after the release of the Birmingham Six and the Guildford Four—and Judith Ward for that matter—was the Criminal Cases Review Commission, which immediately started looking at 600 miscarriage of justice cases that had not received the sort of publicity that we had managed to engender in the three cases I just mentioned.

[Hywel Williams (Arfon) (PC)]

I wish to refer to one of those cases. The Cardiff Three, who were accused of a non-terrorism crime, suffered the same injustice and vilification, but eventually got some sort of justice.

[Jeremy Corbyn]

Absolutely. I recall that campaign very well. Although I was not centrally involved in it, I certainly supported it.

The question really goes back to the Minister. I intervened on him during his opening remarks to give him a chance—a double chance; not double jeopardy, but a double chance—to provide us with good reasons why he is introducing a provision that we, along with Liberty and many others, believe will fundamentally undermine much of what has been achieved through the Criminal Cases Review Commission and by the ability to overturn miscarriages of justice.

Justice can go wrong. The media can get it wrong. There can be a campaign of vilification that gets it wrong. We should not be too holier than thou in this country as we already have a considerable number of people held indefinitely under immigration law, and we have anti-terror laws that I believe are highly questionable in many ways when it comes to justice. I hope that the Minister will explain in his reply exactly how a serious campaign on a miscarriage of justice case would be dealt with in the future and how many more people could indeed be locked up for a long period for offences that they did not commit and could not have committed.

If amendment 95 is not accepted—I support the suggestion of my hon. Friend the Member for Birmingham, Erdington that the whole of clause 143 be deleted—I hope that the House of Lords will look at the provisions in forensic detail. Many of those who did such incredible work, including Baroness Helena Kennedy, in representing these causes and cases over many years, sit in the other place and I hope they will ensure that this legislation is fundamentally changed so that we recognise that mistakes can happen, that terrible injustices can take place and that unless we provide the opportunity and ability to remedy them, they will happen again and again and again. That is very dangerous in any democratic society.

[Simon Hughes]

I apologise to you, Mr Speaker, to the Minister and to colleagues because I had to slip out briefly at the beginning of this debate, albeit for what I hope are appropriate reasons. I had to meet a press deadline to pay tribute to one of our party members—not a parliamentarian, but a man called Stan Hardy who had been a great campaigner on these sorts of issues. He died last Thursday at the ripe old age of 93. Not just Liberal Democrats or liberals but Labour and Conservative colleagues in London and beyond recognised Stan as a doughty campaigner for civil liberties as well as for the rights of the under-privileged.

It is always a pleasure to follow the hon. Member for Islington North (Jeremy Corbyn) on these sorts of issues, and I join my hon. Friend the Member for Cambridge (Dr Huppert) in paying tribute to his doughty campaigning throughout all the time he and I have been together in the place—now more than 30 years in both our cases. The hon. Gentleman’s amendment, supported by his hon. Friends, is designed to deal with a wrong in this Bill that I hope we can remedy.

There is a difference between amendment 95, tabled by the hon. Member for Islington North, and amendment 184, tabled by the hon. Member for Aberavon (Dr Francis) and me. We argue for our amendment in our own right, but also on behalf of the Joint Committee on Human Rights. Amendment 95 would amend clause 143, taking out from line 26 the words

“the person was innocent of the offence”

and inserting the words

“no reasonable court properly directed as to the law, could convict on the evidence now to be considered.”

The Joint Committee’s collective view was that we would do better to remove clause 143 as a whole—exactly the issue for which the hon. Member for Birmingham, Erdington (Jack Dromey) argued. I have been here long enough to remember and to have supported numerous campaigns to deal with miscarriages of justice, many of them very unpopular for the reasons we have all identified. Having looked at the issue again, I honestly believe that the removal of the clause would be the better way to deal with the problem. There are technical problems with amendment 95, so I strongly commend to the Minister the amendment to remove clause 143.

Finally, I shall not press the Joint Committee’s amendment to a vote, but we feel strongly about this issue as a Committee. I am sure the Minister knows that we will listen respectfully to what he says, but I hope he can be helpful and confirm that the principle of the Government’s proposal—that the provision should apply

“if and only if the new or newly discovered fact shows beyond reasonable doubt that the person was innocent”—

will be changed because that is not the test that should be applied to deal with miscarriages of justice.

[Mark Durkan (Foyle) (SDLP)]

I, too, rise to speak to amendment 95, to which my name is attached, along with that of the hon. Member for Islington North (Jeremy Corbyn).

As the right hon. Member for Bermondsey and Old Southwark (Simon Hughes)and others have said, the history of serious cases of miscarriages of justice should bear very heavily indeed on all Members. I include in that the cases that were fought, promoted and championed against very difficult headwinds here in Parliament by Members of all parties. I recall Conservative Members like the late John Biggs-Davison and others championing those cases alongside Labour and Liberal MPs—but little thanks did they get for it from sections of the media and others.

My own predecessors and party colleagues in Parliament fought on those issues at that time. I remember working in John Hume’s office writing all sorts of letters to the Home Office. Of course, we were told that new facts and new evidence did not qualify as new facts and new evidence. Perhaps that issue still applies to clause 143. Even if amendment 95 were accepted, the question of what counts as a

“new or newly discovered fact”

still arises, although I hope that the wording of the amendment, which would provide that

“no reasonable court properly directed as to the law, could convict on the evidence now to be considered”,

would help. There were historical arguments about whether new evidence was indeed a new fact or a material consideration, and I would not want to legislate to produce more circular arguments or obfuscations like that for the future.

Clause 143 is pernicious. It seeks completely to reload the basic, long-standing presumption of innocence until proven guilty. It basically provides qualification of the notion of a miscarriage of justice, suggesting that when someone has suffered what most people would call a miscarriage of justice and when their conviction has, on subsequent judicial appraisal of relevant evidence, been overturned, they should still not be able to proclaim their innocence. There is an insinuation that if they were previously convicted, they are innocent and entitled to compensation as innocent only where they can prove that they are innocent “beyond reasonable doubt”.

For the people affected, many of their convictions will have taken place many years previously and they will be in no position to marshal all the evidence that could necessarily prove their innocence beyond what someone would call a reasonable doubt. Nobody has to meet that criterion at their proper and due initial trial, so why should anybody have to do that to receive compensation after a conviction has been overturned? Compensation is not the only issue here because it is not the monetary value that motivates the fundamental objections to this proposal.

Before I became a Member in 2005, I worked on the cases of the Guildford Four and the Maguire Seven when they still needed and wanted a full and proper proclamation of their innocence, not least because many sections of the media and others were retelling the slur that these people had somehow secured just a technical acquittal. Their conviction was quashed, but the insinuation remained that they were not really innocent. That problem arose from issues surrounding compensation and other factors.

I recall being asked by Gerry Conlon, a friend of mine and one of the Guildford Four, if I could get a direct and clear statement of apology and a proclamation of the innocence not just of himself but of his late father, Giuseppe Conlon. I was also asked the same by Sarah Conlon, Gerry’s mother and Giuseppe’s widow. It was plain that Gerry Conlon wanted that clear proclamation of their innocence for his mother, that his mother wanted it for Gerry, and, of course, that they both wanted it for Giuseppe.

13:29

It is hugely important for people to be able to engage in the proper legal process in order to have their innocence properly affirmed. They should not have to engage in all sorts of ulterior processes to secure, for instance, declarations in the House of Commons or in the precincts of Parliament, which is what happened at the time to which I have referred. We must recognise that miscarriages of justice have had a fundamental impact not just on the people whose lives have been marred and blighted by years of jail and the ignominy that they and their families have suffered, but on the wider community—and not just in the context of British-Irish relations and all those historic difficulties.

It is mean-minded of the Government to use the Bill to try to qualify the definition of whether people have been victims of miscarriages of justice, and to impose an undue burden on them to prove their innocence “beyond reasonable doubt”. Those words were chosen very deliberately. How can any of us prove our innocence of anything beyond reasonable doubt? Many of us might be accused of saying things, insinuating things, meaning things, or doing things relating to our expenses or all sorts of other things, but it would be enormously difficult for us then to prove beyond reasonable doubt that we had not done those things, particularly if we had been subject to a lot of media reportage, profiling and distorted coverage. It is beyond me to imagine why the Government chose to use such wording.

In amendment 95, my hon. Friend the Member for Islington North and I seek to modify the damage done by clause 143, proposing that the words

“the person was innocent of the offence”

after the words

“if and only if the new or newly discovered fact shows beyond reasonable doubt that”

should be replaced by the words

“no reasonable court properly directed as to the law, could convict on the evidence now to be considered”.

I think that that is an important and measured qualification.

I also agree with what was said by the right hon. Member for Bermondsey and Old Southwark on behalf of the Joint Committee. In many respects, clause 143 as a whole is the problem. I certainly am not minded to become involved in a contest relating to whether the House should divide on whether to keep the whole clause or on whether to amend it in the way suggested by amendment 95. On the basis of what I have heard from Liberal Democrat Members, as well as the important statements that we have heard from the Opposition Front Bench, I will say that—although my party has no Members in the House of Lords, and will have none until it has become a reformed and democratic Chamber—if there are other worthy heads there that are able to concentrate on this clause in its fullest and important sense, I shall give them every encouragement to do so.

We cannot treat this issue lightly. The Government may say, “It is all about the compensation culture: it is simply about cutting costs.” They may say that they do not want compensation to be automatically provided in cases with which people might not be comfortable because they might find the recipient unattractive, and because it might relate to a crime about which there was a great deal of deep and understandable public feeling. However, none of those considerations should allow us to indulge a clause that would fundamentally tilt the presumption of innocence—that would tilt the balance away from someone’s guilt having to be proved beyond reasonable doubt. People who have been convicted and deemed guilty may be able to challenge that decision subsequently, but, even if they are released, they may in a sense be unable to escape from the original conviction.

Inherent in the Government’s proposal is the notion that the fact that someone is not guilty does not necessarily mean that that person is innocent, which is a very dangerous wedge to start inserting in public assumptions and perceptions. However, it is what we as legislators are being asked to do, and the hon. Member for Islington North and I tabled amendment 95 so that we could register our view properly today. We hope that it will be registered further, in terms such as those that we have already heard from the Opposition Front Bench and, indeed, from some on the Government Benches.

I hope that the Minister is sensitive to some of the issues that have been raised—not just in relation to cases that have already happened, but in relation to those that may happen in the future—and to the deep concern that is felt about the possibility that the “tilting” is part of some other ulterior agenda. This is certainly not something that we can allow to pass lightly, and I shall listen very carefully to what the Minister says.

[Hywel Williams]

I will support amendment 184, or, failing that, amendment 95.

Clause 143 in its present form marks a significant and hugely detrimental shift in the law which would make it far more difficult for individuals to gain compensation for wrongful conviction and imprisonment. Non-governmental organisations concerned with human rights, including the Committee on the Administration of Justice, as well as highly respected organisations such as Justice and Liberty, have expressed major anxieties about the clause. As the hon. Member for Foyle (Mark Durkan) explained very eloquently, an individual who applies for compensation for a miscarriage of justice must currently demonstrate that a court could not have established beyond reasonable doubt that he or she was guilty of the offence. Clause 143, however, shifts the burden of proof to the individual, and compels that individual to prove that he or she is innocent of the offence. A miscarriage of justice would henceforth be proved to have taken place only if newly discovered facts showed beyond reasonable doubt that that person was innocent.

As Justice has pointed out, since 2006 section 133 of the Criminal Justice Act 1988 has provided the only avenue for individuals to obtain financial redress after miscarriages of justice have occurred. It is chilling to think that, had the proposed change in the law been in place at the time, none of the Birmingham Six, the Guildford Four, the Maguire Seven or the Cardiff Three—I have some interest in that case, and indeed referred to it earlier—would have satisfied the innocence test.

Those infamous cases, of course, paved the way for the establishment of the Criminal Cases Review Commission. The individuals involved won compensation because it was proved that the evidence that had been brought against them was flawed, and that a jury could not have found them guilty had the case been retried. As was made clear by the hon. Member for Foyle, the justice system of England and Wales is unlike the Scottish system in that a case cannot be found to be “not proven”, although there have been arguments about that position.

In the notorious cases that I have just listed, the rule of thumb for the awarding of compensation was always that the individuals would receive the amount that they would have earned had they been working during the time when they were wrongfully imprisoned. The purpose of that was to ensure that they would not be impoverished when they were released. It would be wicked indeed to deny individuals that compensation when the justice system has gone wrong.

Under the current law, it is already exceptionally difficult to persuade the criminal Court of Appeal to review new evidence. For cases to qualify, the Criminal Cases Review Commission is required to apply section 13(1) of the Criminal Appeal Act 1995, which provides that individuals must satisfy a “real possibility test”. Arguably, both the Criminal Cases Review Court and the Court of Appeal adopt an excessively strict interpretation of this test. They restrict reviews to new evidence that was not available at the time of the trial or appeal, which means in practice that evidence that was available at the time of the trial or appeal cannot be considered, even in cases in which it was suppressed by the police. Given how difficult it is to get cases referred to the Court of Appeal under both the “real possibility test” and the need for fresh evidence, it is harsh indeed that the Government are attempting further to restrict people’s ability to gain compensation. Innocence is far too high a test and would be virtually impossible to prove after many years, which is when such cases are usually heard.

If this matter is not pressed to a successful Division this afternoon, I sincerely hope that Members in the other place will apply the most stringent attention to the clause. My noble Friend Lord Wigley will certainly do so.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I am grateful to be called, Mr Speaker. Thank you for letting me speak in the debate. I appreciate that my role as a shadow law Minister means that it is an indulgence to allow me to speak. I appreciate it.

I have been in the House for eight years and I thought that I was unshockable, but the way in which the Government are seeking to amend section 133 of the Criminal Justice Act 1988 to redefine a miscarriage of justice is truly shocking. They wish to change it so that, if and only if newly discovered facts show beyond reasonable doubt that the person is innocent, there has been a miscarriage of justice. Nothing less than that will do. Only in those circumstances can someone be given compensation.

I am sure that the Minister will have noted, as anyone else watching the debate will have done, that no one has yet spoken in favour of clause 143, not even the Minister himself yet. If the matter is not dealt with this afternoon, I hope that there will be the opportunity to deal with it in another place. We need to marshal our forces, because the essence of our liberal society is threatened.

The Government’s arguments for introducing an innocence test—there are many arguments; I want to concentrate on the Government’s justification—are, first, that it is needed for the sake of clarity; and, secondly, that it will save money. Neither of those arguments is remotely convincing. Let me turn to the first, about clarity.

The law at the moment is perfectly clear. Three recent authoritative judgments have rejected the innocence test as an affront to the presumption of innocence. The Supreme Court did so in the case of Adams in 2011, in which Lady Hale said:

“a person is only guilty if the state can prove his guilt beyond reasonable doubt...He does not have to prove his innocence at his trial and it seems wrong in principle that he should be required to prove his innocence now.”

That was reiterated in the High Court in the case of Ali earlier this year. There was an attempt to widen the definition, but that attempt was well and truly quashed by the High Court. This summer, moreover, the European Court of Human Rights, in the case of Allen v. the UK, made it perfectly clear that any legislation that calls into question the innocence of an acquitted person would be a breach of article 6(2) of the European convention on human rights on the presumption of innocence.

Therefore, the law is clear. That law has been reiterated by our own Joint Committee on Human Rights, which has been able to assert that

“it is now clear beyond doubt”

that the proposed new test in clause 143 is incompatible with the right to be presumed innocent in article 6(2). Therefore, rather than clarifying the law, it seems that the Government are having a pitched battle with the settled, established law.

The second argument is about saving money. The Bill’s own impact assessment reveals the expected savings to be negligible. According to that MOJ assessment—the Minister looks puzzled; it is on page 4—the effect of the clause will be to reduce by two per annum the number of judicial reviews of Secretary of State decisions, which it estimates will save around £100,000 per annum. Therefore, for the sake of saving £100,000 per annum, we will be trading in the centuries-old principle of the presumption of innocence. The courts have rejected an innocence test not out of some quibbling legalistic technicality. They have rejected it because it is a cornerstone of a fair justice system. We have a fair justice system and a free society where it is for the state to prove guilt, not for the individual to prove innocence.

The reason for that is obvious. Proving a negative is very difficult and the burden of proof it would place on the individual is extremely onerous. It is for the state with all its resources to make the case of a person’s guilt. The presumption of innocence applies before an acquittal. As Lord Phillips said in the Adams case, any test that requires innocence

“will deprive some defendants who are in fact innocent and who succeed in having their convictions quashed on the grounds of fresh evidence from obtaining compensation. It will exclude from entitlement to compensation those who no longer seem likely to be guilty, but whose innocence is not established beyond reasonable doubt. This is a heavy price to pay for ensuring that no guilty person is ever the recipient of compensation”.

13:45

It is unfair and unreasonable to demand that, after years of being wrongfully imprisoned, an acquitted person should produce some evidential rabbit out of a hat that proves beyond doubt their innocence. They should be able to seek redress for the years of their lives that have been wasted and the years in which they have been the victim of abuse of state power. It is wrong for them to be expected to come out of prison after 16 years, turn into some sort of Inspector Clouseau and find some nugget that will prove beyond doubt that they are innocent. In most cases, that will be a technical impossibility, given the amount of time that will have elapsed since their imprisonment. That means that it will often be the most deserving and the longest suffering who are denied compensation. The point has already been made that the Birmingham Six would not have been able to get justice and compensation under the test that the Government are proposing.

This proposed change is wrong and we need to ensure, either in this place or in the other place, that it does not pass into law. There seems to be general agreement on both sides of the House among those who are against the change that another place may be the best place to deal with it. We wish Members in another place the best of luck.

[Damian Green]

This has been a serious debate, appropriately, because these are serious issues. Having listened carefully to the views of Members on both sides of the House, I believe that there are some genuine misunderstandings about what is proposed and what its effect will be. I will seek to deal with those as briefly as I can. It is a complex issue.

As we have heard, amendment 95 seeks to maintain the current definition of a “miscarriage of justice” derived from case law, which is therefore subject to ongoing litigation. Amendment 184 goes further and would prevent us from creating a statutory definition of a “miscarriage of justice” at all, leaving the definition subject to the shifting view of the courts. Over the years, the courts have provided complicated definitions of a miscarriage of justice, which are often confusing to a lay person and are by definition subject to change over time. In this instance, it is unlikely that an applicant for compensation would know what

“properly directed as to the law”

means in a particular case. That would have disadvantages for applicants, who will find it difficult to know whether they have a valid claim, or to understand the Secretary of State’s decision on their case.

[Emily Thornberry]

Does the right hon. Gentleman agree that, although there has been a challenge in respect of the case of Adams in the Supreme Court, the position has not moved and the law on the definition of miscarriage of justice has been settled since 2011?

[Damian Green]

I will come to the Adams case in a moment, if the hon. Lady will be patient.

Many disappointed applicants seek judicial review of the Secretary of State’s decision, because they do not fully understand its basis or because the case law is unclear. In practice, very few such claims succeed, and they place a significant burden on the applicant involved and on the taxpayers who have to fund them. Therefore, the purpose of clause 143 is to restore the law to the pre-2011 position and to make the definition of a miscarriage of justice more consistent, clearer and easier for the public and potential applicants to understand. That is fairer than using an obscure and confusing definition, or continuing to work, as we have to now, with a definition that is subject to unpredictable change. We are firmly of the view that the provision is compatible with our international obligations and the convention rights. I am conscious that we are in discussions with the Joint Committee about that and that we hold different views on the matter.

[Simon Hughes]

Although this issue is being dealt with very carefully, there is clearly a difference of view, and the hon. Member for Islington South and Finsbury (Emily Thornberry) made the case for the legal justification. Rather than just have a battle at the other end of the building and a lottery of an outcome, will my right hon. Friend undertake to facilitate a meeting of all those interested in both Houses with members of the relevant Committees so that we can hear evidence and try to do the job properly, and see whether the Government have adopted the right position or we need to do something else? I would far rather we got it right and were really clear and all signed up than we had a maverick outcome that satisfied very few or nobody.

[Damian Green]

I am happy to continue to engage in the discussions that the Departments have been having with the Joint Committee or anyone else, but I regret to say that I am not sure that having a meeting at which a definitive view could be arrived at would be possible, as that would be subcontracting the right of Parliament to be that Chamber—that is the purpose of this House and the other place, and I do not think it is constitutionally right to try to subcontract that to a meeting of experts.

The nub of Members’ complaints about clause 143 is that it is in some way incompatible with the presumption of innocence—I do not think I am traducing hon. Members in saying that—and that is the issue we need to address. Of course the Government recognise the fundamental constitutional importance of the presumption of innocence and we would not introduce legislation that cuts across that. We consider that article 14.6 of the International Covenant on Civil and Political Rights, to which section 133 of the Criminal Justice Act 1988 gives effect, provides only for compensation to be paid to those persons whose convictions have been overturned because a new fact shows that they did not commit the offence. In the Government’s view, that is the proper definition of a miscarriage of justice. Compensation should not be payable where the basis for the conviction being overturned does not demonstrate the applicant’s innocence.

The hon. Member for Islington South and Finsbury (Emily Thornberry) brought up the European Court of Human Rights. We are aware of its decision on this issue and we have written in some detail to the Joint Committee on Human Rights about it. However, we continue to consider that this provision would not interfere with a person’s fundamental right to be presumed innocent until proven guilty. We take firm support for this view from the Supreme Court in the Adams case, which held unanimously that the presumption of innocence is not infringed by the current arrangements for compensating a miscarriage of justice. In our view, the proposed change does not alter that analysis. As the European Court acknowledged, more than an acquittal is required to establish that there has been a miscarriage of justice. Through clause 143, we are determining where that line should be drawn.

Under clause 143, there is no requirement for a person applying for compensation for a miscarriage of justice to “prove” their innocence. What is determinative is the fact on which the conviction was overturned. So, for example, if a person’s conviction is overturned because DNA evidence comes to light showing they could not have committed the offence, it is only right that they should be compensated. Following the coming into force of clause 143, they will, as now, be eligible for compensation.

The proposed new test for determining eligibility for compensation does not require the applicant to demonstrate his or her innocence; it focuses on the new fact. When the Grand Chamber of the European Court of Human Rights recently ruled in the case of Allen that the presumption of innocence is engaged when deciding whether to pay compensation for a miscarriage of justice, the Court made it clear that states were entitled to conclude that more than an acquittal was required. This clause will enable us to say, for the first time in statute, what beyond an acquittal is necessary for there to have been a miscarriage of justice. It introduces for the first time some certainty in the process.

I should say in response to a point made by the hon. Member for Islington North (Jeremy Corbyn) that the clause will have no impact at all on the very valuable work being done every day by the Criminal Cases Review Commission, and nor will it change the basis on which a conviction is overturned.

[Emily Thornberry]

I hope the right hon. Gentleman recognises that the wording of amendment 95 reiterates the wording in the settled case law I have been telling him about.

[Damian Green]

Yes, indeed, and I have addressed directly the cases the hon. Lady raised.

We are returning the law to where it was in 2008 under the previous Government, where following the decision of the House of Lords in Mullen, compensation was held to be payable only where a person could be shown not to have committed, or to have been demonstrably innocent of, the offence for which he was convicted.

As has been pointed out by the Supreme Court in Adams, it is difficult to glean exactly what the framers of the ICCPR intended on this point from the papers now available, and nor is there international consensus on what the ICCPR requires in this regard. Signatories to the ICCPR have some latitude in determining the requirements of article 14.6. For example. New Zealand and Canada restrict the payment of compensation for a miscarriage of justice to cases where the applicant was innocent. Further, while the Supreme Court in Adams ultimately held that eligibility for compensation was not limited to cases of innocence, four members of the Supreme Court, including the current Lord Chief Justice, considered that compensation should be payable only in cases of innocence. We are therefore confident that what we are doing achieves the aim of creating a more readily comprehensible test which meets the Government’s policy objectives, while also complying with our international obligations.

We recognise the fundamental constitutional importance of the presumption of innocence, and there may simply be a disagreement in this Chamber as to whether we are breaching it, but I can assure the House that there is no intention of doing so, and I am firmly of the belief that clause 143 does not do that. All it does is require compensation to be paid to those persons whose convictions have been overturned because a new fact shows that they did not in fact commit the offence. This, in the Government’s view, is the proper definition to be given to a miscarriage of justice

I hope I have cleared up what I think are genuine misunderstandings about the effect of clause 143, and I urge the Members concerned not to press their amendments.

Question put and agreed to.

New clause 10 accordingly read a Second time, and added to the Bill.



New Clause 11

Power of community support officer to issue fixed penalty notice for cycle light offence

‘(1) Part 1 of Schedule 4 to the Police Reform Act 2002 (powers of community support officers) is amended as follows.

(2) In sub-paragraph (2)(b) of paragraph 1 (power to issue fixed penalty notices)—

(a) for “in respect of an offence” there is substituted “in respect of—an offence”;

(i) an offence”;

(b) at the end there is inserted “, or an offence, under section 42 of the Road Traffic Act 1988, of contravening or failing to comply with a construction or use requirement about lighting equipment or reflectors for cycles;”.

(i) an offence, under section 42 of the Road Traffic Act 1988, of contravening or failing to comply with a construction or use requirement about lighting equipment or reflectors for cycles;”.

(3) In sub-paragraph (2) of paragraph 11A (power to stop cycles)—

(a) for “has committed an offence” there is substituted “has committed—

(a) an offence”;

(b) at the end there is inserted “, or

(b) an offence, under section 42 of the Road Traffic Act 1988, of contravening or failing to comply with a construction or use requirement about lighting equipment or reflectors for cycles;”.’.—(Damian Green.)

Brought up, and read the First time.

[Damian Green]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 16—Control of new psychoactive substances—

‘(1) Any person supplying, or offering to supply, a synthetic psychoactive substance including but not restricted to—

(a) a powder;

(b) a pill;

(c) a liquid; or

(d) a herbal substance with the appearance of cannabis,

which is likely to be consumed by a person for the purpose of causing intoxication will be subject to a Synthetic Psychoactive Product Order prohibiting its supply.

(2) Any subsequent breach of that Order will be an offence.

(3) A person guilty of an offence under this section shall be liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding level 5 on the standard scale.

(4) This section does not apply to alcohol, tobacco, or any drug currently scheduled under the Misuse of Drugs Act 1971 or the Medicines Act 1968.’.

New clause 26—Assault on workers in public facing roles—

‘(1) A person, being a member of the public, who assaults a worker—

(a) in the course of that worker’s employment, or

(b) by reason of that worker’s employment, commits an offence.

(2) No offence is committed—

(a) under subsection (1)(a) unless the person who assaults knows or ought to know that the worker is acting in the course of the worker’s employment;

(b) under subsection (1)(b) unless the assault is motivated, in whole or in part, by malice towards the worker by reason of the worker’s employment.

(3) In this section—

“worker” means a person whose employment involves dealing with members of the public, to any extent, but only if that employment involves—

(a) being physically present in the same place and at the same time as one or more members of the public; and

(b) (i) interacting with those members of the public for the purposes of the employment; or (ii) providing a service to either particular members of the public or the public generally.

“employment” in this context means any paid or unpaid work whether under a contract, apprenticeship, or otherwise.

(4) Evidence from a single source is sufficient evidence to establish for the purpose of subsection (1) whether a person is a worker.

(5) A person guilty of an offence under this Act is liable, on summary conviction, to imprisonment for a period not exceeding 12 months or to a fine not exceeding level 5 on the standard scale.’.

New clause 27—Long-term police authorisation requiring independent approval—

‘( ) The Regulation of Investigatory Powers Act 2000 is amended as follows—

(a) after section 32A (Authorisations requiring judicial approval) insert—

“32AA Long-term police authorisations requiring independent approval

(1) This section applies where a relevant person has granted a long-term authorisation under section 29.

(2) The authorisation is not to take effect until such time (if any) as the relevant independent body has made an order approving the grant of the authorisation.

(3) The relevant independent body may give approval under this section to the granting of an authorisation under section 29 if, and only if, the relevant independent body is satisfied that—

(a) at the time of the grant—

(i) there were reasonable grounds for believing that the requirements of section 29(2), and any requirements imposed by virtue of section 29(7)(b) are satisfied in relation to that authorisation, and

(ii) the relevant conditions were satisfied in relation to that authorisation, and

(b) at the time when the relevant independent body is considering the matter, there remain reasonable grounds for believing that the requirements of section 29(2), and any requirements imposed by virtue of section 29(7)(b) are satisfied in relation to that authorisation.

(4) For the purposes of subsection (3) the relevant conditions in relation to a grant by an individual holding an office, rank or position in a relevant law enforcement agency, that—

(a) the individual was a designated person for the purposes of section 29,

(b) the grant of an authorisation was not in breach of any prohibition imposed by virtue of section 29(7)(a) or any restriction imposed by virtue of section 30(3), and

(c) any other conditions that may be provided for by the Secretary of State were satisfied.

(5) In this section—

“relevant law enforcement authority” means—

(a) a police force in the United Kingdom, and

(b) the National Crime Agency.

“relevant judicial authority” means—

(a) in relation to England and Wales, the High Court of Justice in England and Wales,

(b) in relation to Scotland, the Court of Session, and

(c) in relation to Northern Ireland, the High Court of Justice in Northern Ireland.

“relevant person” means—

(a) an individual holding an office, rank or position in a police force in the United Kingdom, and

(b) an individual holding an office, rank or position in the National Crime Agency.

(6) In this section—

“relevant independent body” must be set out by the Home Secretary in a motion passed by both Houses of Parliament before this Clause is enacted.

“long-term” must be set out by the Home Secretary in a motion passed by both Houses of Parliament before this Clause is enacted.”.’.

New clause 31—Annual review of Schedule 7 to the Terrorism Act—

‘(1) The Independent Reviewer of Terrorism Legislation shall monitor and publish a report to Parliament providing an analysis of the application of Schedule 7 to the Terrorism Act 2000.

(2) The report shall include an assessment of those persons stopped, questioned or detained who have protected characteristics within the meaning of section 4 of the Equality Act 2010 (The protected characteristics).

(3) A Minister of the Crown, must not later than 3 months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.’.

New clause 32—Sunset provision for Schedule 7 to the Terrorism Act 2000—

‘(1) Schedule 7 to the Terrorism Act 2000 shall be repealed, five years after the commencement of this Act, unless continued in force by an order under subsection (2).

(2) The Secretary of State may by order made by statutory instrument provide—

(a) that those provisions which are in force shall continue in force for a period not exceeding five years from the coming into operation of the order; or

(b) that those provisions which are for the time being in force shall cease to be in force.

(3) No order shall be made under subsection (2) unless a draft of the order has been laid before and approved by a resolution of both Houses of Parliament.’.

New clause 34—Public order offences committed against constables in private dwellings—

‘(1) In section 4A of the Public Order Act 1986, after subsection (3) there is inserted—

“(4) Subsection 2 and subsection 3(a) do not apply where the person who is harassed, alarmed or distressed is a constable who is present in the dwelling in the execution of his duty.”.

(2) In section 5 of the Public Order Act 1986, after subsection (3) there is inserted—

“(4) Subsection 2 and subsection 3(b) do not apply where the person who is harassed, alarmed or distressed is a constable who is present in the dwelling in the execution of his duty.”.

(3) In section 18 of the Public Order Act 1986, after subsection (2) there is inserted—

“(3) Subsection 2 and subsection (4) do not apply where the person who is harassed, alarmed or distressed is a constable who is present in the dwelling in the execution of his duty.”.’.

Government amendments 51 to 55

Amendment 148,  in clause 127, page 98, line 17, leave out lines 17 and 18 and insert

‘Schedule 7 to the Terrorism Act 2000 is repealed.’.

Amendment 150, page 98, line 18, at end add—

‘(2) The Secretary of State shall by order make any amendments to Schedule 7 or 8 to the Terrorism Act 2000 recommended by the Independent Reviewer of Terrorism Legislation to limit the scope of its application.’.

Amendment 136,  in clause 144, page 116, line 4, leave out subsection (2).

Government amendments 61, 65, 67, 69, 70, 71, 73, 78 and 79 to 81.

Amendment 149, page 146, line 26, leave out schedule 7.

Amendment 151,  in schedule 7, page 147, line 15, at end insert—

‘Power to stop, question and detain

1A (1) Schedule 7 to the Terrorism Act 2000 is amended as follows.

(2) Paragraph 2(4) is repealed.

(3) After paragraph 4 there is inserted—

4A An examining officer must ensure that all questioning, beginning at the commencement of the examination, is recorded and retained for as long as is deemed necessary, which must be no less than one year, so that it may be used in any complaints process that may follow.’.

Amendment 179, page 147, line 16, at end insert—

‘Limits on duty to give information and documents

1A In paragraph 5(1) of Schedule 7 to the Terrorism Act 2000, before “A person who is questioned” there is inserted “Subject to paragraph 9A below”.’.

Amendment 178, page 147, line 25, at end insert—

‘(2A) A person questioned under paragraph 2 or 3 may not be detained under paragraph 6 unless the examining officer has reasonable grounds to suspect that he is a person falling within section 40(1)(b).’.

Amendment 180, page 147, line 33, before paragraph 3 insert—

2A In paragraph 8(1) of Schedule 7 to the Terrorism Act 2000, before ‘An examining officer’ there is inserted ‘Subject to paragraph 9A below.’.

Amendment 181, page 148, line 20, at end insert—

3A In paragraph 9(1) of Schedule 7 to the Terrorism Act 2000, before “An examining officer” there is inserted “Subject to paragraph 9A below.”.

3B In Schedule 7 to the Terrorism Act 2000, after paragraph 9 there is inserted—

“Data stored on personal electronic devices

9A (1) For the purposes of this Schedule—

(a) the information or documents which a person can be required to give the examining officer under paragraph 5,

(b) the things which may be searched under paragraph 8, and

(c) the property which may be examined under paragraph 9,

do not include data stored on personal electronic devices unless the person is detained under paragraph 6.

(2) “Personal electronic device” includes a mobile phone, a personal computer and any other portable electronic device on which personal information is stored.”.’.

Amendment 156, page 148, line 38, at end insert—

‘(4) The copy, and information derived from it, may be used for no other purposes than those specified in subparagraph (3).’.

Amendment 182, page 148, line 38, at end insert—

‘Audio and video-recording of interviews

4A In paragraph 3(6) of Schedule 8 to the Terrorism Act 2000, the words “if the interview takes place in a police station” are omitted.’.

Amendment 157, page 148, line 38, at end insert—

‘Right to silence

4A In Schedule 7 to the Terrorism Act 2000, after paragraph 18 there is inserted—

18A Right to silence

Nothing in this Schedule—

(a) imposes a duty on a person to respond to questioning; or

(b) allows inferences to be drawn from their silence.”.’.

Amendment 152, page 148, line 42, at end insert—

‘(2A) In paragraph 6(1) the words “Subject to paragraph 8” are omitted.’.

Amendment 153, page 148, line 43, after ‘7(1)’, insert—

(a) the words “Subject to paragraphs 8 and 9” are omitted;

(b) ’.

Amendment 154, page 148, line 43, at end insert—

‘(3A) Paragraph 8 is omitted.’.

Amendment 155, page 149, line 1, at end insert—

‘(4A) Paragraph 9 is omitted.’.

Amendment 183, page 150, line 2, after ‘officer’ leave out

‘at such intervals as may be specified in, and otherwise in accordance with, the code of practice’

and insert—

‘(2A) The first review shall be carried out as soon as is reasonably practicable after the time of the person’s detention and not more than one hour from that time.

(2B) Subsequent reviews shall be carried out at intervals of not more than 2 hours.’.

Government amendments 84 to 86 and 91.

[Damian Green]

I propose to run through the Government amendments in this group briskly, so that other Members can speak to their amendments. Given the linkage to the Government amendments on low-value shop theft, I also intend to touch on amendment 136 tabled by my hon. Friend the Member for Shipley (Philip Davies). With the leave of the House, I propose to respond to the other non-Government amendments in this group when winding up.

New clause 11 follows up a debate in Committee initiated by my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay), who raised some important points about the powers of police community support officers. In particular, he proposed that two new powers should be conferred on PCSOs: first, that they should be able to issue a fixed penalty notice for riding a bicycle without lights; and, secondly, that they should be able to search someone for controlled drugs.

I gave a commitment to consider my hon. Friend’s proposals over the summer, in the context of the specific role that PCSOs play in our communities. As my hon. Friend pointed out, there is an inconsistency in PCSOs’ powers around cycling. They can issue a penalty notice for riding on a footway, but not for riding without lights. Extending their powers in respect of cycling, as provided for in new clause 11, would end this anomaly and complement their important engagement role. Being on foot patrol, they are well-placed within their communities to increase awareness and educate people about the importance of cycle safety. Backing this up with the power to issue a penalty notice could enhance the impact they have in their neighbourhoods.

The power to search for controlled dugs is more complicated. We do need to keep a clear distinction between the role of a PCSO and that of a constable. We need to be mindful of the risk that new powers could increase the element of confrontation in the role of PCSOs and detract from their presence on the streets. It is vital that we get this right and, accordingly, we are still considering whether such an expansion of powers is appropriate. I assure my hon. Friend that I will let him and the House know the outcome of that consideration as quickly as possible.

14:00

Amendments 51 to 55, 65, 70, 71, 77 and 84 to 86 simply make various consequential amendments to the provisions in the Bill relating to the creation of the police remuneration review body, which will operate in England, Wales and Northern Ireland, to take account of the fact that the Scottish Government have now introduced their own legislation to establish the police negotiating board for Scotland. The amendments ensure that various statutory references to the Police Negotiating Board for the United Kingdom which are being amended by the Bill, will now apply to the PNB for Scotland.

Amendments 79 to 81 relate to the new powers to seize invalid travel documents. They do not change the powers, but simply improve the drafting to ensure that there is absolute clarity. The amendments clarify that, although a constable, immigration officer or a designated customs official may authorise a person to carry out a search for travel documents on their behalf at a port, this power may only be exercised away from a port by a constable. The amendment restates that reasonable force may be used if necessary when exercising the new search and seizure powers.

On low-value shop theft, clause 144 is intended to improve the management through the courts of the high volume of shop thefts involving goods to the value of £200 or less by enabling them to benefit from procedures applying to summary only cases. In particular, offenders will be able to plead guilty by post and, in turn, the police will be able to prosecute suitable cases directly as “specified proceedings”, without the need to involve the Crown Prosecution Service. That will simplify procedures and enable swifter justice in such cases. Although clause 144 makes low-value shop theft “summary only”, it preserves the defendant’s right to be tried at the Crown Court, through subsection (2) of new section 22A of the Magistrates’ Courts Act 1980. Amendment 136, tabled by my hon. Friend the Member for Shipley, would remove that subsection. The Government have been clear that they will defend the right to trial by jury; it is an historic freedom that is rightly protected by the coalition’s programme for government. Although the statistics suggest that the right is not often exercised in cases of shop theft—last year, only 700 out of 77,000 cases went to the Crown Court—we see no reason to depart from that general principle. In this instance, I urge my hon. Friend to reconsider his amendment.

Government amendments 61, 69 and 73 are consequential on those changes. Amendment 61 will ensure that a range of powers in the Police and Criminal Evidence Act 1984 available to the police and others to deal with indictable offences, which currently includes all theft from shops, will remain available to deal with the theft of goods of a value of £200 or less. That means that magistrates will still be able to issue search warrants, the police will be able to enter premises to search for evidence or arrest suspects, and store detectives will still be able to arrest suspects. I hope that that provides some reassurance to some retailers that I know have been anxious about this. The amendment also ensures that the equivalent PACE provisions applying to service personnel are similarly amended to preserve relevant powers of investigation. This will ensure that cases of shop theft can continue to be investigated and pursued appropriately and rigorously by the police, while providing that where individuals are to be prosecuted in court, that can be done more efficiently and effectively.

[Jack Dromey]

I wish to speak to new clauses 27, 26 and 16 and, given the time available, I will do so as quickly as possible.

Today, in another place, the remarkable Doreen Lawrence will be ennobled. Twenty years ago her son was cruelly murdered. The son of Neville, a carpenter, and Doreen, a special needs teacher, Stephen was but 18 years old, excelling at school and at sport, and with a whole life ahead of him, when he was cruelly murdered by racists. To add insult to injury—I say this with regret—there was clear evidence of racism in the way in which the police inquiry was conducted. As if that were not bad enough, serious allegations have now been made that the police then spied on the Lawrence family with a view to discrediting them. That has prompted the ongoing Operation Herne.

What happened to the Lawrence family is not the only situation that gives rise to concern. I am thinking, for example, of the long-running infiltration of peaceful protesters in the environmental movement by Mark Kennedy; serious questions have been asked about the accountability of the undercover police operation that was undertaken. Let me make myself clear: undercover policing is vital in the fight against serious organised crime and terrorism, and is a key part of the police’s ability to keep communities safe. I pay tribute to the work done by brave police officers in dangerous and often difficult circumstances. However, undercover operations are also incredibly sensitive and have a substantial impact on the lives of members of the public. As such, they require the highest ethical and operational standards. That is why we have tabled new clause 27 to ensure that all long-term undercover operations would be signed off by a relevant independent body, to ensure that this important tool is used proportionately, sensitively and only when necessary, and with clear and improved accountability arrangements. That type of sign-off for police operations has precedent. If the police or security services want to break in and bug a room or intercept a phone call, they have to have a justification in the interests of national security—

[David T. C. Davies (Monmouth) (Con)]

Will the hon. Gentleman give way?

[Jack Dromey]

Having taken several interventions yesterday, I say with great regret that, because of the time and because other issues are down for debate, I will not take interventions today. That will not be a precedent for the future.

On other kinds of police operation a sign-off is necessary, but the oversight of the existing arrangements in this regard is inadequate. That cannot be right, so our new clause would help to ensure that unacceptable operations such as the alleged smear campaign against the Lawrence family cannot take place and that each operation undertaken is accountable, justifiable and in the wider public interest.

Let me now deal with new clause 26. Last year alone, 4% of retail staff were attacked at work and 34% were threatened with violence. Our new clause seeks to address a discrepancy in sentencing policy regarding people who suffer serious assaults during the course of their daily employment. At present, sentencing guidelines are explicit that an aggravating factor in determining a sentence for common assault on a public-facing worker should be whether the offence was committed against an individual working in the public sector or providing a service to the public. Whereas assaulting a police constable while they are discharging their duty is a separate offence that carries an additional sentence, an attack on those in public sector employment, such as nurses, is an aggravated offence. However, that consideration does not apply in respect of the millions of hard-working people in our shops, petrol stations and restaurants. That leaves the judge to decide under which of the three categories of harm and culpability, the 19 aggravating factors and the 11 factors reducing the seriousness, assaulting a staff member falls. That is why there is real concern, particularly but not exclusively in the retail sector, about the level of attacks on employees and the sentencing guidelines—or lack thereof. This is a real problem, brought to the public attention not only by unions such as the Union of Shop, Distributive and Allied Workers but by the British Retail Consortium, who have come together to advance the Freedom from Fear campaign.

Although some progress has been made—of that there is no doubt—there remains an unacceptable level of assaults against public-facing workers, with 30,000 attacks on shop staff reported last year. Indeed, the British Retail Consortium estimates that the figure could be as high as 35,000. That does not include those that were not reported. Our new clause simply makes it clear that attacking an individual in the course of their employment should be considered an aggravating factor, whether they work in the public or the private sector.

It cannot be right that we have an unacceptable level of assaults on staff, some of which are very serious with lasting traumatic effects. That includes a machete raid on a corner shop in which an individual suffered severe lacerations. Only £150 was stolen, but the impact on the individual has been profound and lasting. The evidence from many of the attacks shows that they impact on the mental and physical well-being of the staff who were trying to do their jobs, and that should not be underestimated.

Of course it is right that we should give particular consideration to police officers and nurses and doctors in hospitals, but our new clause says that if someone is working in a betting shop, an off-licence or a supermarket, or on a bus run by a private company, their job is also important. They serve the public, even if they are not public servants. Does the Minister not agree that they should be afforded the same support and protection in the workplace? We believe that the time has come to send an unmistakable message that all citizens are entitled not just to dignity at work but to security at work.

We hope that the Minister will respond positively to new clause 27 and that further consideration will be given to the idea in the other place. Our intention on new clause 26, if the Minister does not agree to it, is to press it to a vote.

New clause 16 is about the control of new psychoactive substances or legal highs. The problem with legal highs is exactly that—they are legal, so people do not see them as dangerous or feel they need to be careful about them or about the regulation around them. One such case involved Maryon Stewart, whose child tragically died and who established the Angelus Foundation. We need to ensure that anyone who uses a legal high knows the effect and that there is proper regulation to ensure that we do not have legal highs that lead to a high number of deaths. There were 29 such deaths in 2011 and 52 in 2012. All the indications suggest that that figure is growing.

We have proposed the new clause because the number of new psychoactive substances is on the rise. It is estimated that more than 500,000 people, predominantly young people, use them and there is profoundly worrying research, including from the European Monitoring Centre for Drugs and Drug Addiction, on their impact.

Our country is almost at the top of the league in the European Union and it is the second biggest market in the world, not just because of the online operators but because of the hundreds of highstreet legal high sellers.

[Lady Hermon (North Down) (Ind)]

rose—

[Jack Dromey]

I will not give way, because of the time that I have available.

In conclusion, I recognise that some progress has been made and I also recognise the action that has been taken by many trading standards officers. It is absolutely clear, however, that the Government need to go further. Their approach should be flexible but determined, with the necessary powers to take us beyond the existing arrangements, under which only a handful of legal highs are scrutinised every year. This is a marketplace where new products constantly evolve, many of which put those who use them seriously at risk, and in the future we should tackle the problem, banning the use of such products, while, where appropriate, putting out of business those who promote and sell them. I hope that the Government will respond positively to this powerful case, not least because it is being put by many of those whose sons and daughters have died as a consequence of using substances that they never believed for one moment would put their lives at risk.

14:15

[David T. C. Davies]

I know that the hon. Member for Stockport (Ann Coffey) and other hon. Members wish to speak, so I shall be as quick as I can.

I declare an interest as a special constable with the British Transport police, which is why I wanted to speak. My speech can be short, because I agree with most of what the hon. Member for Birmingham, Erdington (Jack Dromey) said. I particularly support new clause 26 on public-facing workers. I have little need to add anything. He was absolutely right in everything he said. In fact, only yesterday, I dealt with a lady, a retail worker, who had been spat at at close range. Obviously, I meet many rail staff who—the hon. Gentleman did not mention this—are the victims of daily verbal and physical abuse. We have already heard about nurses, too. I absolutely agree with the new clause and told my Whips that I would support it and vote for it, if it came to a vote.

I am saddened that I am unable to do so, however, because of new clause 34, about which the hon. Member for Stockport will speak in a minute. I ask her to think very carefully about that, because the clause would reverse some of the good work that would be done by new clause 26. It would take away some of the rights that police constables, who are, after all, public sector, public-facing workers, should have. They should have the same rights as nurses, rail staff, bus drivers and the rest. That is important because police officers are often called to domestic dwelling houses late at night, in cases where drugs and drink can be involved, and they will suffer horrendous verbal abuse and, sometimes, threats of physical abuse. I do not think that police officers should have to put up with that any more than social workers or anyone else who goes into a private dwelling house.

New clause 34 might also have unintended consequences. I am not trying to suggest that anyone is doing anything wrong, but sometimes neighbours might ring to allege that domestic violence is taking place and, when the police officer arrives, they might find one angry male—I am sorry if that is a stereotype, but it is often the case—under the influence of drink and shouting, swearing and so on. If neither of the people in that house is able to make an accusation, the fact that one person is drunk and shouting might be enough to allow a police officer to remove them from the premises by arresting them under the Public Order Act 1986. That is not something that police officers do lightly because they know that any arrest needs to be proportionate and that they will have to take somebody in front of a custody officer, who will not take kindly to arrests made without due cause. I ask the hon. Lady to think very carefully about her new clause.

If the hon. Member for Birmingham, Erdington wishes to propose his new clause on some other occasion or to table an early-day motion, I will fully support him. I offer him my public support and I will vote for such protection for public sector workers. I would not do so, however, at the expense of police officers, who are also public sector workers like all the others.

[Ann Coffey (Stockport) (Lab)]

I want to say a few words on new clause 34. I thank the hon. Member for Monmouth (David T. C. Davies) for giving me his views on it, but I think there might have been a misunderstanding.

The new clause would change the law to make the use of racist or other abusive language in a dwelling house an offence when it was directed at a policeman. I was recently contacted by a serving police officer from my constituency who was present when a colleague from the Greater Manchester police was called a “nigger” in a private house. Under section 4A of the Public Order Act 1986, no offence is committed if the “harassment, alarm or distress” takes place inside a dwelling house—that is, somebody’s house or flat. I was surprised by that because, like many people, I was under the impression that racist abuse was an offence wherever it was committed. However, this is not the case. I was shocked to hear that somebody could not be charged with the offence because it took place in a dwelling against a police officer pursuing his duty.

My amendment would make it an offence to use racist or other abusive language against a police constable who was present in a dwelling in the execution of his duty. The police officer from my constituency described attending a property where two men were aggressively arguing. One was very drunk and called one of the police officers a nigger. The officer described seeing her colleague abused and she told me, “I was quite horrified he had to endure this kind of abuse. I felt very frustrated and helpless that we could not charge the offender with any offence.” I am sure that this is by no means an isolated case and I suspect that other professionals such as social workers and health visitors have also been subject to racist abuse when visiting a person at their home address. It does not seem right to me or, I suspect, to the public that if the police officer had been called a nigger in the street, an offence would have been committed, but none was committed because it happened inside a house. I hope the Minister will feel able to consider the amendment that I propose.

[Simon Hughes]

I shall be very brief as we are short of time, and I know that my hon. Friend the Member for Cambridge (Dr Huppert) also hopes to catch your eye, Madam Deputy Speaker.

I draw the attention of the House and those watching our proceedings to amendments 178 to 181 and 183. I do that not just in my own name, but on behalf of the Joint Committee on Human Rights, which examined the issue as part of its consideration of the Bill. The Joint Committee is disappointed that the Government have not yet published in full their responses to their consultation on schedule 7. These are controversial issues. Of course, we need anti-terrorist legislation and there is always a balance to be worked out between the civil liberty of the subject and the powers of the authorities.

We believe, however, that it is very important that legislation distinguishes between the conventional powers to stop, to search, and to question, which can be exercised without reasonable suspicion, and more intrusive powers, such as those of detaining and taking biometric samples, for which the Committee believes the Government have not yet made a persuasive case. The Joint Committee recommends introducing a reasonable suspicion requirement for the more intrusive powers under schedule 7. I know that some argue that schedule 7 should go altogether. That is not the position of the Joint Committee nor, coincidentally, is it the position of my party, which debated this at our conference in Glasgow a few weeks ago and took a view that there should be amendment broadly along the lines set out by the Joint Committee.

The issue came to prominence, as the House will remember, in August, when Mr David Miranda was stopped at Heathrow when coming into this country on his way back home to Brazil and was detained for nine hours under the anti-terror laws. There were protests by the Brazilian Government and widespread concern about whether the powers were used extensively. We hope we can persuade the Government to take the position of the Joint Committee on Human Rights, but we will not seek to divide the House this afternoon, hoping there might be a chance not just for my hon. Friend, but even for the Minister to respond to our concerns.

[Dr Huppert]

I shall do my best to be brief to allow the Minister time to respond to the debate.

I welcome Government new clause 11. It is right to extend powers to PCSOs, allowing them to issue fixed penalty notices to cyclists riding without lights. I am a huge champion of cycling. I was delighted when the House passed a motion to get Britain cycling. One of the banes of my life in that context is cyclists who do not obey the rules of the road. Anything that we can do to get people to cycle safely and legally will make it easier for those of us who want to extend facilities for cyclists. There are sensible ways forward. In Cambridge we have been using a “lights instead of tickets” campaign to make sure that people get their lights. I welcome the new clause as a sensible step forward.

I shall spend most of my time talking about schedule 7 to the Terrorism Act 2000, to which I have tabled a series of amendments. There has been particular controversy recently, as my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) mentioned, because of the detention of David Miranda, the partner of The Guardian journalist working on the Edward Snowden leaks. This has led to the Independent Police Complaints Commission taking the Met to the High Court over failure to address complaints and how schedule 7 is used. This is a very broadly written power. It should not be a surprise that it has expanded from its original use in Northern Ireland in the 1970s to become worse and worse as illiberal Governments have made it even heavier.

It seems to me that it is not right for people who “look like terrorists” to be detained. That is exactly what happens under schedule 7. StopWatch has done a huge amount of work on this. Last year there were 64,000 schedule 7 stops—a huge number. Twenty-seven per cent. of those stopped for under an hour were Asian, much more than their proportion in the community, and 77% of those stopped for more than an hour were from ethnic minority populations. We should not consider that acceptable. StopWatch cites some chilling quotes from one man Glasgow who said that

“the first thing you ask your friend is . . . not how was the holiday, it’s did you get stopped and what did they ask you?”

If we are setting up a power that creates huge concern in the Muslim and ethnic minority populations, that will separate people from the bulk of our country and is deeply alarming. The Equality and Human Rights Commission and David Anderson QC have also commented on how damaging that is.

This is a matter that Liberal Democrats have been concerned about for a long time. It is not just about David Miranda, who has the support of The Guardian. It is also about people who are detained routinely. That is why my party has debated this and why I tabled a range of proposals. There are many concerns about schedule 7. One option would be to get rid of it. There are alternative powers in section 47A. I hope the Minister will comment on that. There are other options that we have looked at. I would like to see us committed to David Anderson QC’s proposals to limit the scope of schedule 7. The Government should introduce provisions to that effect in the other place.

I have also proposed implementing proposals that my party made at our conference. They include getting rid of the principle that authorities can stop people without any suspicion at all, restoring the right to silence for those who are detained, and questioning to be recorded from start to finish. Restoring confidence and the basic principles of the rule of law to that process and making sure that data collected are not used inappropriately should be important in the case of David Miranda. I also propose a statutory principle of annual review and a sunset clause. The Government should look at these proposals and I hope they will take advantage of the process to make sure that that happens. I am glad that that is supported by the Joint Committee on Human Rights.

I would love to deal with the proposals made by the Opposition and their proposals to ban synthetic caffeine, but in the interests of time I will allow the Minister to respond.

[Damian Green]

I am grateful. I shall be brief.

On new clause 26, as I said in Committee, I entirely agree with the sentiments behind the clause. The work of a great number of people, whether within the public or the private sector, brings them into face-to-face contact with members of the public, and we know that some of these people suffer violence in the course of their jobs. It is essential that we are satisfied that the law adequately addresses this issue. However, I do not think the new clause is necessary to achieve that. There is already a range of offences that have general application and that criminalise violent behaviour and they would already apply in the context envisaged by the clause. Sentencing guidelines specify that where an assault is committed against someone providing a service to the public, whether in the public or private sector, this is an aggravating factor and so could well result in a higher sentence within the current maximum. So I do not think the clause is necessary, although as I said, I sympathise with the sentiment behind it.

New clause 27 seeks to introduce a system of independent authorisation for undercover policing operations. I announced to the Home Affairs Committee in June our intention to legislate to enhance oversight of undercover law enforcement officer deployments. This can be done through secondary legislation and I will lay the appropriate order before the House shortly.

The changes will mean that law enforcement agencies will need to notify the Surveillance Commissioners, all retired senior judges, at the outset of undercover operations and get their prior approval for every deployment that lasts longer than 12 months. In addition, I am increasing the rank of the authorising officer. Deployments of undercover law enforcement officers will be authorised at assistant chief constable level or equivalent. Deployments lasting longer than 12 months will be authorised by a chief constable or equivalent. The rank of an authorising officer for emergency deployments will increase from inspector to superintendent level or equivalent. These changes will promote the highest standards of professionalism and excellence in this most sensitive area of policing and therefore achieve the aims of new clause 28. I hope they will be welcomed by the House.

On schedule 7, there is clearly debate on whether this requires further modification along the lines proposed in some of the amendments tabled by my hon. Friend the Member for Cambridge (Dr Huppert) and others. For the purposes of the debate today, I put it to my hon. Friend and to the Chair of the Joint Committee that it is premature to consider making such changes because the Independent Reviewer of Terrorism Legislation, David Anderson QC, has decided to investigate and report on the exercise of these powers in the case of David Miranda. The Government, sensibly, will want to examine carefully any recommendations he makes in his report, and I am sure that the Joint Committee on Human Rights and my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) will want to do likewise. It would be wrong to pre-empt that report or commit now to implementing its recommendations. It is for the independent reviewer to make recommendations, but it is for the Government and Parliament to decide what legislative changes should flow from them.

Given the importance of these issues, any such legislative proposals should be subject to full parliamentary scrutiny, as with the provisions in the Bill, rather than being implemented through secondary legislation, as my hon. Friend the Member for Cambridge suggests in amendment 150. Although I welcome this contribution—

14:30

Debate interrupted (Programme Order, 14 October).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.

Question agreed to.

New clause 11 accordingly read a Second time, and added to the Bill.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 12

Credit for time in custody awaiting extradition to United Kingdom to serve sentence

‘In section 49 of the Prison Act 1952 (persons unlawfully at large), after subsection (3) there is inserted—

“(3A) Where—

(a) a person is extradited to the United Kingdom from a category 1 territory for the purpose of serving a term of imprisonment or another form of detention mentioned in subsection (2) of this section, and

(b) the person was for any time kept in custody in that territory with a view to the extradition (and not also for any other reason),

the Secretary of State shall exercise the power under that subsection to direct that account shall be taken of that time in calculating the period for which the person is liable to be detained.

(3B) In subsection (3A) of this section “category 1 territory” means a territory designated under the Extradition Act 2003 for the purposes of Part 1 of that Act.”’.—(Damian Green.)

Brought up, and added to the Bill.

New Clause 28

Court and tribunal fees

‘(1) In prescribing a fee under an enactment specified in subsection (2), the Lord Chancellor may with the consent of the Treasury prescribe a fee of an amount which is intended to exceed the cost of anything in respect of which the fee is charged.

(2) The enactments are—

(a) section 92 of the Courts Act 2003 (Senior Courts, county courts and magistrates’ courts fees);

(b) section 54 of the Mental Capacity Act 2005 (Court of Protection fees);

(c) section 58(4)(b) of that Act (Public Guardian fees);

(d) section 42 of the Tribunals, Courts and Enforcement Act 2007 (tribunal fees).

(3) Before prescribing a fee by virtue of subsection (1) under an enactment specified in subsection (2)(a), (b) or (d), the Lord Chancellor must have regard to—

(a) the financial position of the courts and tribunals for which the Lord Chancellor is responsible, including in particular any costs incurred by those courts and tribunals that are not being met by current fee income, and

(b) the competitiveness of the legal services market.

(4) For the purposes of subsection (3)(a), the courts and tribunals for which the Lord Chancellor is responsible are the courts listed in section 1(1) of the Courts Act 2003 and the tribunals listed in section 39(1) of the Tribunals, Courts and Enforcement Act 2007.

(5) A fee prescribed by virtue of subsection (1) under section 58(4)(b) of the Mental Capacity Act 2005 must be used to finance the efficient and effective discharge of functions of the Public Guardian.

(6) A fee prescribed by virtue of subsection (1) under any other enactment specified in subsection (2) must be used to finance an efficient and effective system of courts and tribunals.

(7) A statutory instrument—

(a) containing an order or regulations under an enactment specified in subsection (2), and

(b) setting a fee for the first time in excess of the cost of anything in respect of which the fee is charged,

may not be made unless a draft of the instrument has been laid before both Houses of Parliament and approved by a resolution of each House.—(Damian Green.)

Brought up, and added to the Bill.

New Clause 26

Assault on workers in public facing roles

‘(1) A person, being a member of the public, who assaults a worker—

(a) in the course of that worker’s employment, or

(b) by reason of that worker’s employment, commits an offence.

(2) No offence is committed—

(a) under subsection (1)(a) unless the person who assaults knows or ought to know that the worker is acting in the course of the worker’s employment;

(b) under subsection (1)(b) unless the assault is motivated, in whole or in part, by malice towards the worker by reason of the worker’s employment.

(3) In this section—

“worker” means a person whose employment involves dealing with members of the public, to any extent, but only if that employment involves—

(a) being physically present in the same place and at the same time as one or more members of the public; and

(b) (i) interacting with those members of the public for the purposes of the employment; or (ii) providing a service to either particular members of the public or the public generally.

“employment” in this context means any paid or unpaid work whether under a contract, apprenticeship, or otherwise.

(4) Evidence from a single source is sufficient evidence to establish for the purpose of subsection (1) whether a person is a worker.

(5) A person guilty of an offence under this Act is liable, on summary conviction, to imprisonment for a period not exceeding 12 months or to a fine not exceeding level 5 on the standard scale.’.—(Jack Dromey.)

Brought up,

Question put, That the clause be added to the Bill.

The House divided: Ayes 224, Noes 286.Division No. 98][2.31 pmAYESAbbott, Ms DianeAbrahams, DebbieAinsworth, rh Mr BobAlexander, rh Mr DouglasAli, RushanaraAllen, Mr GrahamAshworth, JonathanAustin, Ian Bailey, Mr AdrianBain, Mr William Balls, rh EdBarron, rh Mr Kevin Beckett, rh MargaretBegg, Dame AnneBenn, rh HilaryBerger, LucianaBetts, Mr CliveBlackman-Woods, RobertaBlears, rh HazelBlenkinsop, TomBlomfield, PaulBradshaw, rh Mr BenBrennan, KevinBrown, LynBrown, rh Mr NicholasBrown, Mr RussellBryant, ChrisBuck, Ms KarenBurden, RichardBurnham, rh AndyByrne, rh Mr LiamCampbell, Mr AlanCampbell, Mr GregoryCampbell, Mr RonnieCaton, MartinChampion, SarahChapman, JennyClark, KatyClarke, rh Mr TomClwyd, rh AnnCoaker, VernonCoffey, AnnConnarty, MichaelCooper, RosieCooper, rh YvetteCorbyn, JeremyCrausby, Mr DavidCreagh, MaryCreasy, StellaCruddas, JonCryer, JohnCunningham, AlexCunningham, Sir TonyCurran, MargaretDakin, NicDanczuk, SimonDarling, rh Mr AlistairDavidson, Mr IanDavies, David T. C. (Monmouth)De Piero, GloriaDenham, rh Mr JohnDonaldson, rh Mr Jeffrey M.Donohoe, Mr Brian H.Doran, Mr FrankDromey, JackDugher, MichaelDurkan, MarkEagle, Ms AngelaEagle, MariaEfford, CliveElliott, JulieEllman, Mrs LouiseEngel, NataschaEsterson, BillEvans, ChrisFarrelly, PaulField, rh Mr FrankFitzpatrick, JimFlello, RobertFlint, rh CarolineFlynn, PaulFovargue, YvonneFrancis, Dr HywelGardiner, BarryGilmore, SheilaGlass, PatGoggins, rh PaulGoodman, HelenGreatrex, TomGreenwood, LilianGriffith, NiaGwynne, AndrewHain, rh Mr PeterHamilton, Mr DavidHamilton, FabianHanson, rh Mr DavidHarman, rh Ms HarrietHarris, Mr TomHavard, Mr DaiHealey, rh JohnHendrick, MarkHermon, LadyHeyes, DavidHillier, MegHilling, JulieHodge, rh MargaretHodgson, Mrs SharonHood, Mr JimHopkins, KelvinHowarth, rh Mr GeorgeHunt, TristramIrranca-Davies, HuwJackson, GlendaJamieson, CathyJarvis, DanJohnson, rh AlanJohnson, DianaJones, GrahamJones, HelenJones, Mr KevanJones, Susan ElanJowell, rh Dame TessaKaufman, rh Sir GeraldKeeley, BarbaraKendall, LizLammy, rh Mr DavidLavery, IanLazarowicz, MarkLeslie, ChrisLewell-Buck, Mrs EmmaLewis, Mr IvanLove, Mr AndrewLucas, CarolineLucas, IanMactaggart, FionaMahmood, Mr KhalidMahmood, ShabanaMalhotra, SeemaMann, JohnMarsden, Mr GordonMcCabe, SteveMcCann, Mr MichaelMcCarthy, KerryMcClymont, GreggMcCrea, Dr WilliamMcDonald, AndyMcGovern, AlisonMcGovern, JimMcKechin, AnnMcKenzie, Mr IainMcKinnell, Catherine Meale, Sir AlanMearns, Ian Miller, AndrewMitchell, Austin Morden, JessicaMorrice, Graeme (Livingston)Morris, Grahame M. (Easington)Mudie, Mr GeorgeMunn, MegMurphy, rh PaulMurray, IanNandy, LisaO'Donnell, FionaOnwurah, ChiOsborne, SandraOwen, AlbertPerkins, TobyPound, StephenPowell, LucyQureshi, YasminRaynsford, rh Mr NickReed, Mr JamieReed, Mr SteveReeves, RachelReynolds, EmmaReynolds, JonathanRiordan, Mrs LindaRitchie, Ms MargaretRobertson, JohnRobinson, Mr GeoffreyRotheram, SteveRoy, Mr FrankRoy, LindsayRuane, ChrisRuddock, rh Dame JoanSarwar, AnasSawford, AndySeabeck, AlisonShannon, JimSharma, Mr VirendraSheerman, Mr BarrySheridan, JimSimpson, DavidSkinner, Mr DennisSlaughter, Mr AndySmith, AngelaSmith, NickSmith, OwenSpellar, rh Mr JohnStringer, GrahamStuart, Ms GiselaSutcliffe, Mr GerryTami, MarkThornberry, EmilyTrickett, JonTurner, KarlTwigg, DerekTwigg, StephenVaz, rh KeithVaz, ValerieWalley, JoanWatson, Mr TomWatts, Mr DaveWhitehead, Dr AlanWilliams, HywelWilliamson, ChrisWilson, PhilWilson, SammyWinnick, Mr DavidWinterton, rh Ms RosieWright, DavidWright, Mr IainTellers for the Ayes:Heidi Alexander andStephen DoughtyNOESAdams, NigelAfriyie, AdamAldous, PeterAmess, Mr DavidAndrew, StuartArbuthnot, rh Mr JamesBacon, Mr RichardBaker, NormanBaker, SteveBaldwin, HarriettBarclay, StephenBarker, rh GregoryBarwell, GavinBebb, GutoBellingham, Mr HenryBenyon, RichardBeresford, Sir PaulBerry, JakeBingham, AndrewBinley, Mr BrianBlackman, BobBlackwood, NicolaBoles, NickBone, Mr PeterBottomley, Sir PeterBrady, Mr GrahamBrake, rh TomBray, AngieBrazier, Mr JulianBridgen, AndrewBrine, SteveBrokenshire, JamesBrooke, AnnetteBrowne, Mr JeremyBruce, FionaBruce, rh Sir MalcolmBuckland, Mr RobertBurley, Mr AidanBurns, ConorBurns, rh Mr SimonBurrowes, Mr DavidBurstow, rh PaulBurt, LorelyByles, DanCairns, AlunCarmichael, rh Mr AlistairCarmichael, NeilCash, Mr WilliamChishti, RehmanChope, Mr ChristopherClappison, Mr JamesClark, rh GregCoffey, Dr ThérèseCollins, DamianColvile, OliverCrabb, StephenCrockart, MikeCrouch, TraceyDavies, GlynDavies, Philip de Bois, NickDjanogly, Mr JonathanDorrell, rh Mr StephenDorries, Nadine Doyle-Price, JackieDrax, Richard Duddridge, JamesDunne, Mr PhilipEllis, MichaelEllison, JaneEllwood, Mr TobiasElphicke, CharlieEustice, GeorgeEvans, GrahamEvans, JonathanEvans, Mr NigelEvennett, Mr DavidFabricant, MichaelFallon, rh MichaelFarron, TimFeatherstone, LynneField, MarkFoster, rh Mr DonFox, rh Dr LiamFrancois, rh Mr MarkFreeman, GeorgeFreer, MikeFullbrook, LorraineFuller, RichardGale, Sir RogerGarnier, Sir EdwardGarnier, MarkGeorge, AndrewGibb, Mr NickGilbert, StephenGillan, rh Mrs CherylGlen, JohnGoldsmith, ZacGoodwill, Mr RobertGraham, RichardGrant, Mrs HelenGray, Mr JamesGreen, rh DamianGriffiths, AndrewGummer, BenGyimah, Mr SamHalfon, RobertHames, DuncanHammond, StephenHands, GregHarper, Mr MarkHarris, RebeccaHaselhurst, rh Sir AlanHayes, rh Mr JohnHeath, Mr DavidHeaton-Harris, ChrisHemming, JohnHenderson, GordonHendry, CharlesHerbert, rh NickHinds, DamianHoban, Mr MarkHollingbery, GeorgeHollobone, Mr PhilipHolloway, Mr AdamHopkins, KrisHorwood, MartinHowell, JohnHughes, rh SimonHunt, rh Mr JeremyHunter, MarkHuppert, Dr JulianHurd, Mr NickJackson, Mr StewartJames, MargotJenkin, Mr BernardJohnson, GarethJones, AndrewJones, rh Mr DavidJones, Mr MarcusKawczynski, DanielKelly, ChrisKirby, SimonKnight, rh Mr GregKwarteng, KwasiLaing, Mrs EleanorLamb, NormanLancaster, MarkLatham, PaulineLaws, rh Mr DavidLeadsom, AndreaLee, JessicaLee, Dr PhillipLeech, Mr JohnLefroy, JeremyLeigh, Sir EdwardLeslie, CharlotteLewis, BrandonLewis, Dr JulianLloyd, StephenLong, NaomiLord, JonathanLoughton, TimLuff, PeterLumley, KarenMacleod, MaryMain, Mrs AnneMaude, rh Mr FrancisMaynard, PaulMcCartney, KarlMcIntosh, Miss AnneMcLoughlin, rh Mr PatrickMcPartland, StephenMenzies, MarkMercer, PatrickMetcalfe, StephenMilton, AnneMitchell, rh Mr AndrewMoore, rh MichaelMordaunt, PennyMorgan, NickyMorris, Anne MarieMorris, JamesMosley, StephenMowat, DavidMulholland, GregMunt, TessaMurray, SheryllNewmark, Mr BrooksNewton, SarahNokes, CarolineNorman, JesseNuttall, Mr DavidO'Brien, rh Mr StephenOllerenshaw, EricOpperman, GuyOttaway, rh RichardPaice, rh Sir JamesParish, NeilPatel, PritiPaterson, rh Mr OwenPawsey, MarkPenrose, JohnPerry, ClairePhillips, Stephen Pickles, rh Mr EricPincher, ChristopherPoulter, Dr Daniel Prisk, Mr Mark Pugh, JohnRaab, Mr Dominic Randall, rh Mr JohnReckless, MarkRedwood, rh Mr JohnRees-Mogg, JacobReevell, SimonReid, Mr AlanRifkind, rh Sir MalcolmRogerson, DanRosindell, AndrewRudd, AmberRuffley, Mr DavidRussell, Sir BobRutley, DavidSanders, Mr AdrianSandys, LauraScott, Mr LeeSelous, AndrewShapps, rh GrantSharma, AlokShelbrooke, AlecSimpson, Mr KeithSkidmore, ChrisSmith, Miss ChloeSmith, HenrySmith, JulianSmith, Sir RobertSpelman, rh Mrs CarolineSpencer, Mr MarkStanley, rh Sir JohnStephenson, AndrewStevenson, JohnStewart, BobStewart, IainStreeter, Mr GaryStride, MelStuart, Mr GrahamStunell, rh Sir AndrewSturdy, JulianSwales, IanSwayne, rh Mr DesmondSyms, Mr RobertThornton, MikeThurso, JohnTimpson, Mr EdwardTomlinson, JustinTredinnick, DavidTruss, ElizabethTurner, Mr AndrewTyrie, Mr AndrewUppal, PaulVaizey, Mr EdwardVara, Mr ShaileshVickers, MartinVilliers, rh Mrs TheresaWalker, Mr CharlesWalker, Mr RobinWalter, Mr RobertWard, Mr DavidWatkinson, Dame AngelaWeatherley, MikeWebb, SteveWharton, JamesWheeler, HeatherWhite, ChrisWhittaker, CraigWhittingdale, Mr JohnWiggin, BillWilliams, RogerWilliams, StephenWilliamson, GavinWilson, Mr RobWollaston, Dr SarahWright, JeremyWright, SimonYoung, rh Sir GeorgeZahawi, NadhimTellers for the Noes:Karen Bradley andJenny WillottQuestion accordingly negatived.

Clause 104

Offence of forced marriage

Amendments made: 49, page 75, line 17, after ‘offence’ insert

‘under the law of England and Wales’.

Amendment 50, page 75, line 22, after ‘offence’ insert

‘under the law of England and Wales’.—(Damian Green.)

Clause 112

Abolition of Police Negotiating Board for the United Kingdom

Amendment made: 51, page 80, line 24, at end insert—

‘( ) The Secretary of State may secure the reimbursement of payments made under section 61(5) or (7) of the Police Act 1996 (payment by Scottish Ministers or Department of Justice in Northern Ireland towards expenses incurred by the Police Negotiating Board for the United Kingdom) to the extent that, by reason of the abolition of the Board, the payments are not needed.’.—(Damian Green.)

Clause 114

Consultation about regulations: England and Wales

Amendments made: 52, page 83, line 22, leave out

‘Police Advisory Board for England and Wales’

and insert

‘appropriate advisory or negotiating body’.

Amendment 53, page 83, line 24, at end insert—

‘(1A) In subsection (1) above, “the appropriate advisory or negotiating body” means—

(a) as regards England and Wales, the Police Advisory Board for England and Wales;

(b) as regards Scotland, the Police Negotiating Board for Scotland.’.

Amendment 54, page 83, line 25, after ‘above’ insert

‘as regards England and Wales,’.

Amendment 55, page 83, line 37, leave out from ‘paragraph’ to end of line 40 and insert

‘3, for sub-paragraph (3) there is substituted—

‘(3) The Secretary of State shall—

(a) consult with the Police Advisory Board for England and Wales before exercising the power as regards England and Wales;

(b) consult with the Police Negotiating Board for Scotland before exercising the power as regards Scotland;

(c) consult with the Northern Ireland Policing Board and the Police Association for Northern Ireland before exercising the power as regards Northern Ireland.”’. —(Damian Green.)

Clause 129

Date of extradition hearing

Amendment made: 56, page 99, line 6, leave out from ‘But’ to end of line 8 and insert ‘if proceedings in respect of the extradition are adjourned under section 8A or 8B, the permitted period is extended by the number of days for which the proceedings are so adjourned.”’.—(Damian Green.)

Clause 134

Appeals

Amendments made: 57, page 103, line 2, at end insert—

‘( ) In section 28 of that Act (appeal against discharge at extradition hearing: category 1 territory)—

(a) in subsection (4), for “section may” there is substituted “section—

(a) may”;

(b) at the end of that subsection there is inserted “, but

(b) lies only with the leave of the High Court.”’.

Amendment 58, page 103, line 13, at end insert—

‘( ) In section 105 of that Act (appeal against discharge at extradition hearing: category 2 territory)—

(a) in subsection (4), for “section may” there is substituted “section—

(a) may”;

(b) at the end of that subsection there is inserted “, but

(b) lies only with the leave of the High Court.”’.

Amendment 59, page 103, line 20, leave out from ‘subsection’ to third ‘the’ in line 22 and insert ‘(7) there is inserted—

‘(7A) Where a person gives notice of application for leave to appeal after the end of the permitted period (whether or not the application is for leave to appeal on human rights grounds),”.’.

Amendment 60, page 103, line 25, at end insert—

‘( ) In section 110 of that Act (appeal against discharge by Secretary of State)—

(a) in subsection (4), for “section may” there is substituted “section—

(a) may”;

(b) at the end of that subsection there is inserted “, but

(b) lies only with the leave of the High Court.”’.—(Damian Green.)

Clause 144

Low-value shoplifting

Amendment made: 61, page 117, line 13, at end insert—

‘(5A) Any reference in the Police and Criminal Evidence Act 1984 to an “indictable offence” has effect as if it included a reference to low-value shoplifting (as defined in section 22A(3) of the Magistrates’ Courts Act 1980).

(5B) In section 84 of the Armed Forces Act 2006 (definitions), after subsection (2) there is inserted—

“(2A) In subsection (2)(a), the reference to an “indictable offence” has effect as if it included a reference to low-value shoplifting (as defined in section 22A(3) of the Magistrates’ Courts Act 1980).”’.—(Damian Green.)

Clause 147

Court and tribunal fees

Amendment made: 137, page 118, leave out clause 147. —(Damian Green.)

Clause 149

Orders and regulations

Amendment made: 62, page 119, line 21, at end insert

‘, but this does not apply to a power of the Scottish Ministers to make an order under section 152’.

Amendment 138, page 119, leave out line 23.—(Damian Green.)

Clause 151

Extent

Amendments made:: 63, page 120, line 11, at end insert—

‘() section [Violent offender orders];’.

Amendment 64, page 120, line 12, leave out ‘Part 9’ and insert ‘sections 103 and 104’.

Amendment 65, page 120, line 14, leave out ‘114’ and insert ‘114(1), (2) and (4)’.

Amendment 66, page 120, line 17, leave out ‘section 128’ and insert

‘sections 128, [Fees for criminal record certificates etc]’.

Amendment 67, page 120, line 17, at end insert

‘and [Power of community support officer to issue fixed penalty notice for cycle light offence]’.

Amendment 68, page 120, line 18, leave out ‘section’ and insert

‘sections [Credit for time in custody awaiting extradition to United Kingdom to serve sentence] and’.

Amendment 69, page 120, leave out line 19 and insert—

‘(j) section 144 except subsection (5B);

‘(k) section 146.’.

Amendment 105, page 120, line 23, after ‘100’ insert

‘, [Functions of Scottish Ministers under Firearms Acts]’.

Amendment 70, page 120, line 23, at end insert—

‘() section 114(3);’.

Amendment 71, page 120, line 32, at end insert—

‘() section 114(5);’.

Amendment 139, page 120, line 37, leave out ‘147’ and insert ‘[Court and tribunal fees]’.

Amendment 72, page 120, line 37, at end insert—

‘( ) Section [Offence of forced marriage: Scotland] extends only to Scotland.’.

Amendment 73, page 120, line 38, at end insert—

‘(5A) Section 144(5B) has the same extent as section 84 of the Armed Forces Act 2006, and the powers conferred by section 384 of that Act (power to extend Act to the Channel Islands and powers to make provisions of that Act apply with modifications in relation to the Channel Islands, British overseas territories and the Isle of Man) are exercisable in relation to the amendment of that Act made by section 144(5B) of this Act.’.—(Damian Green.)

Clause 151

Extent

Amendments made: 92, page 120, line 11, at end insert—

‘() section [Saving and transitional provision];’.

Amendment 93, page 120, line 31, at end insert—

‘() section [Sexual harm prevention orders and sexual risk orders, etc] and Schedule [Amendments of Part 2 of the Sexual Offences Act 2003];’.

Amendment 74, page 121, line 9, at end insert—

‘() section [Fees for criminal record certificates etc], which comes into force at the end of the period of 2 months beginning with that day;’.

Amendment 75, page 121, line 11, at end insert—

‘( ) section [Offence of forced marriage: Scotland].’.

Amendment 76, page 121, line 19, at end insert—

‘( ) Section [Offence of forced marriage: Scotland] comes into force on whatever day the Scottish Ministers appoint by order.’.

Amendment 77, page 121, line 27, at end insert—

‘( ) The Scottish Ministers may by order make whatever saving, transitional or transitory provision they think appropriate in connection with the coming into force of section [Offence of forced marriage: Scotland].’.

Amendment 78, page 121, line 27, at end insert—

‘( ) An order under this section bringing into force on a particular day a provision which refers to the Police Negotiating Board for Scotland may, if it appears to the Secretary of State that no body of that name will be in existence on that day, bring the provision into force subject to whatever consequential amendment or transitional provision the Secretary of State thinks appropriate.’.—(Damian Green.)

Schedule 6

Powers to seize invalid passports etc

Amendments made: 79, page 145, line 2, at end insert—

( ) may if necessary use reasonable force for the purpose of exercising a power under this paragraph;

( ) may authorise a person to carry out on the officer’s behalf a search under this paragraph.’.

Amendment 80, page 145, line 29, at end insert—

‘( ) A constable—

(a) may if necessary use reasonable force for the purpose of exercising a power under this paragraph;

(b) may authorise a person to carry out on the constable’s behalf a search under this paragraph.’.

Amendment 81, page 146, line 5, leave out paragraph 5. —(Damian Green.)

Schedule 8

Minor and consequential amendments

Amendment proposed: 96, page 155, line 32, leave out paragraphs 24 to 27.—(Jack Dromey.)

Question put, That the amendment be made.

14:45

Division 99

Ayes: 229

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Labour: 220
Democratic Unionist Party: 6
Social Democratic & Labour Party: 2
Independent: 1
Alliance: 1
Plaid Cymru: 1

Noes: 296

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Conservative: 250
Liberal Democrat: 43
Independent: 2

Amendments made: 82,  page 158, line 20, at end insert—

‘Government of Wales Act 2006 (c. 32)

In Schedule 7 to the Government of Wales Act 2006 (legislative competence of Welsh Assembly), in the list of exceptions in paragraph 12, for “Anti-social behaviour orders” there is substituted “Orders to protect people from behaviour that causes or is likely to cause harassment, alarm or distress”.’.

Amendment 94, page 161, line 8, at end insert—

‘Part 1A

Amendments relating to Part 8A

Criminal Procedure (Scotland) Act 1995 (c. 46)

In section 19AA of the Criminal Procedure (Scotland) Act 1995 (samples etc from sex offenders), in subsection (1)(c), after “an order under section” there is inserted “122A or”.

In section 19AB of that Act (supplementary provision in risk of sexual harm order cases), in subsection (7), at the end of the definition of “risk of sexual harm order” there is inserted—

“and also includes an order under section 122A of the 2003 Act (sexual risk orders);”.

Police Act 1997 (c. 50)

(1) Section 113CA of the Police Act 1997 (suitability information relating to children) is amended as follows.

(2) After paragraph (f) of subsection (2) there is inserted—

“(fa) if a sexual harm prevention order, made under section 103A of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which the prohibitions have effect by virtue of section 103C(2) or 103D(1) of that Act;

(iv) details as to whether the order has been varied or renewed under section 103E(5) of that Act;

(fb) if an interim sexual harm prevention order, made under section 103F of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which that order has effect by virtue of section 103F(4) of that Act;

(iv) details as to whether the order has been varied or renewed under section 103F(5) of that Act;”.

(2) After paragraph (i) of that subsection there is inserted—

“(ia) if a sexual risk order, made under section 122A of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which the prohibitions have effect by virtue of section 122A(7) or 122C(1) of that Act;

(iv) details as to whether the order has been varied or renewed under section 122D(4) of that Act;

(ib) if an interim sexual risk order, made under section 122E of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which that order has effect by virtue of section 122E(4) of that Act;

(iv) details as to whether the order has been varied or renewed under section 122E(5) of that Act;”.

(1) Section 113CB of that Act (suitability information relating to protected adults) is amended as follows.

(2) After paragraph (f) of subsection (2) there is inserted—

“(fa) if a sexual harm prevention order, made under section 103A of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which the prohibitions have effect by virtue of section 103C(2) or 103D(1) of that Act;

(iv) details as to whether the order has been varied or renewed under section 103E(5) of that Act;

(fb) if an interim sexual harm prevention order, made under section 103F of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which that order has effect by virtue of section 103F(4) of that Act;

(iv) details as to whether the order has been varied or renewed under section 103F(5) of that Act;”.

(2) After paragraph (i) of that subsection there is inserted—

“(ia) if a sexual risk order, made under section 122A of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which the prohibitions have effect by virtue of section 122A(7) or 122C(1) of that Act;

(iv) details as to whether the order has been varied or renewed under section 122D(4) of that Act;

(ib) if an interim sexual risk order, made under section 122E of the Sexual Offences Act 2003, is in effect in respect of the applicant—

(i) the prohibitions described in that order;

(ii) the date of that order;

(iii) the period for which that order has effect by virtue of section 122E(4) of that Act;

(iv) details as to whether the order has been varied or renewed under section 122E(5) of that Act;”.

Crime and Disorder Act 1998 (c. 37)

(1) Section 8 of the Crime and Disorder Act 1998 (parenting orders) is amended as follows.

(2) For “sexual offences prevention order” there is substituted “sexual harm prevention order”—

(a) in subsection (1)(b);

(b) in subsection (6)(a).

(3) For subsection (9) there is substituted—

“(9) In this section ‘sexual harm prevention order’ means an order under section 103A of the Sexual Offences Act 2003 (sexual harm prevention orders).”

Sexual Offences Act 2003 (c. 42)

In section 88 of the Sexual Offences Act 2003 (section 87: interpretation), in subsection (4)(c), after “interim notification order,” there is inserted “sexual harm prevention order, interim sexual harm prevention order,”.

In section 89 of that Act (young offenders: parental directions), in the Table in subsection (1), after “interim notification order,” there is inserted “sexual harm prevention order, interim sexual harm prevention order,”.

In section 91A of that Act (review of indefinite notification requirements: qualifying young offender), in subsection (2)(b), after “not subject to” there is inserted “a sexual harm prevention order under section 103A, an interim sexual harm prevention order under section 103F,”.

In the cross-heading before section 104 of that Act (sexual offences prevention orders: application and grounds), after “orders” there is inserted “(Scotland and Northern Ireland)”.

In section 108 of that Act (SOPOs: variations, renewals and discharges), in subsection (8)(b) the words “2 or” and “England and Wales or” are omitted.

In section 109 of that Act (interim SOPOs), in subsection (7)(a) the words “2A or” and “England and Wales or” are omitted.

(1) Section 110 of that Act (SOPO and interim SOPOs: appeals) is amended as follows.

(2) For the heading there is substituted “Appeals in relation to SOPOs and interim SOPOs: Northern Ireland”.

(3) In subsections (1)(c), (2) and (3)(b), for “the Crown Court” there is substituted “a county court”.

(4) In subsection (4), for “the Crown Court” there is substituted “the county court”.

(5) For subsection (5) there is substituted—

“(5) Any order made by a county court on an appeal under subsection (1)(c) or (2) (other than an order directing that an application be re-heard by a court of summary jurisdiction) is for the purposes of section 108(7) or 109(6) (respectively) to be treated as if it were an order of the court from which the appeal was brought (and not an order of the county court).”

(1) Section 113 of that Act (offence: breach of SOPO or interim SOPO) is amended as follows.

(2) In the heading, at the end there is inserted “etc”.

(3) In subsection (1), in paragraph (d) the words “2, 2A or” and “in England and Wales and” are omitted.

(4) After that subsection there is inserted—

“(1A) A person commits an offence if, without reasonable excuse, he contravenes a prohibition imposed by—

(a) a sexual harm prevention order, or

(b) an interim sexual harm prevention order,

other than a prohibition on foreign travel.”

In the cross-heading before section 114 of that Act (foreign travel orders: applications and grounds), after “orders” there is inserted “(Scotland and Northern Ireland)”.

(1) Section 117A of that Act (foreign travel orders: surrender of passports) is amended as follows.

(2) For the heading there is substituted “Surrender of passports: Northern Ireland”.

(3) In subsection (2), after “at a police station” there is inserted “in Northern Ireland”.

(4) In subsection (3), at the end there is inserted “(unless the person is subject to an equivalent prohibition under another order)”.

In section 117B of that Act (surrender of passports: Scotland), at the end of subsection (3) there is inserted “(unless the person is subject to an equivalent prohibition under another order)”.

(1) Section 119 of that Act (foreign travel orders: appeals) is amended as follows.

(2) For the heading there is substituted “Appeals in relation to foreign travel orders: Northern Ireland”.

(3) In subsection (1), for “the Crown Court” there is substituted “a county court”.

(4) In subsection (2), for “the Crown Court” there is substituted “the county court”.

(5) For subsection (3) there is substituted—

“(3) Any order made by a county court on an appeal under subsection (1)(a) (other than an order directing that an application be re-heard by a court of summary jurisdiction) is for the purposes of section 118(5) to be treated as if it were an order of the court from which the appeal was brought (and not an order of the county court).”

(1) Section 122 (offence: breach of foreign travel order) is amended as follows.

(2) In the heading, at the end there is inserted “etc”.

(3) In subsection (1)—

(a) for “excuse, he” there is substituted “excuse—

(a) he”;

(b) at the end there is inserted “, or

(b) he contravenes a prohibition on foreign travel imposed by a sexual harm prevention order.”

(4) In subsection (1B)(a) the words “England and Wales and” are omitted.

In the cross-heading before section 123 of that Act, after “orders” there is inserted “(Northern Ireland)”.

(1) Section 123 of that Act (risk of sexual harm orders: application, grounds and effect) is amended as follows.

(2) In subsection (1)—

(a) for “A chief officer of police” there is substituted “The Chief Constable of the Police Service of Northern Ireland”;

(b) for “a magistrates’ court” there is substituted “a court of summary jurisdiction”;

(c) for “his police area” (in both places) there is substituted “Northern Ireland”;

(d) for “the chief officer” (in both places) there is substituted “the Chief Constable”.

(3) Subsection (2) is repealed.

(1) Section 125 (RSHOs: variation, renewals and discharges) is amended as follows.

(2) In subsection (2), for paragraphs (b) to (d) there is substituted—

“(b) the Chief Constable of the Police Service of Northern Ireland.”

(3) In subsection (3), for “and (if they wish to be heard) the other persons mentioned in subsection (2)” there is substituted “, and the other person mentioned in subsection (2) (if that person wishes to be heard)”.

(4) In subsection (5), for the words after “without the consent of the defendant and” there is substituted “the Chief Constable of the Police Service of Northern Ireland”.

(5) In subsection (7), for paragraphs (b) and (c) there is inserted—

“(b) a court of summary jurisdiction for the petty sessions district which includes the area where the defendant resides;

(c) where the application is made by the Chief Constable of the Police Service of Northern Ireland, any court of summary jurisdiction.”

In section 126 (interim RSHOs), in subsection (2)(b), for “the person who has made that application” there is substituted “the Chief Constable of the Police Service of Northern Ireland”.

(1) Section 127 (RSHOs and interim RSHOs) is amended as follows.

(2) In subsection (1), for “the Crown Court” there is substituted “a county court”.

(3) In subsection (2), for “the Crown Court” there is substituted “the county court”.

(4) For subsection (3) there is substituted—

“(3) Any order made by a county court on an appeal under subsection (1)(a) or (b) (other than an order directing that an application be re-heard by a court of summary jurisdiction) is for the purposes of section 125(7) or 126(5) (respectively) to be treated as if it were an order of the court from which the appeal was brought (and not an order of the county court).”

(1) Section 128 (offence: breach of RSHO or interim RSHO) is amended as follows.

(2) In the heading, after “interim RSHO” there is inserted “etc”.

(3) For subsections (1) and (1A) there is substituted—

“(1) A person who, without reasonable excuse, does anything that the person is prohibited from doing by—

(a) a risk of sexual harm order,

(b) an interim risk of sexual harm order,

(c) a sexual risk order,

(d) an interim sexual risk order,

(e) an order under section 2 of the Protection of Children and Prevention of Sexual Offences (Scotland) Act 2005 (risk of sexual harm orders in Scotland), or

(f) an order under section 5 of that Act (interim risk of sexual harm orders in Scotland),

commits an offence.”

(1) Section 129 (effect of conviction etc of an offence under section 128) is amended as follows.

(2) In the heading, after “section 128” there is inserted “etc”

(3) In subsection (1A)(a), after “an offence under section” there is inserted “122H or”.

(4) For subsection (5) there is substituted—

“(5) In this section ‘relevant order’ means—

(a) where the conviction, finding or caution within subsection (1) is in respect of a breach of a risk of sexual harm order or a sexual risk order, that order;

(b) where the conviction, finding or caution within subsection (1) is in respect of a breach of an interim risk of sexual harm order or an interim sexual risk order, any risk of sexual harm order or sexual risk order made on the hearing of the application to which the interim order relates or, if no such order is made, the interim order.

(6) In subsection (5)—

‘risk of sexual harm order’ includes an order under section 2 of the Protection of Children and Prevention of Sexual Offences (Scotland) Act 2005;

“interim risk of sexual harm order’ includes an order under section 5 of that Act.”

(1) Section 133 of that Act (Part 2: general interpretation) is amended as follows.

(2) In subsection (1), at the appropriate places there is inserted—

“‘Interim sexual harm prevention order’ has the meaning given by section 103F(2);”;

“‘interim sexual risk order’ has the meaning given by section 122E(2);”;

“‘prohibition on foreign travel’ has the meaning given by section 103D(2) or 122C(2);”;

“‘sexual harm prevention order’ has the meaning given by section 103A(1);”;

“‘sexual risk order’ has the meaning given by section 122A(1);”.

In section 136 of that Act (Part 2: Northern Ireland), for subsection (8) there is substituted—

“(8) The reference in section 101 to the Crown Court is to be read as a reference to a county court.”

Protection of Children and Prevention of Sexual Offences (Scotland) Act 2005 (asp 9)

(1) Section 7 of the Protection of Children and Prevention of Sexual Offences (Scotland) Act 2005 (offence: breach of RSHO or interim RSHO) is amended as follows.

(2) In the heading, after “interim RSHO” there is inserted “etc”.

(3) In subsection (2), after “an order made under” there is inserted “section 122A or 122E or”.

(1) Section 8 of that Act (effect of conviction etc under section 7 of that Act or section 128 of the Sexual Offences Act 2003) is amended as follows.

(2) In the heading, after “or section” there is inserted “122H or”.

(3) In subsection (1)(a), for the words after “an offence under section 7 above” there is substituted “, section 122H of the 2003 Act (breach of sexual risk order or interim sexual risk order in England and Wales) or section 128 of that Act (breach of risk of sexual harm order or interim risk of sexual harm order in Northern Ireland)”.

(4) In subsection (1)(b), after “an offence under section” there is inserted “122H or”.

(5) In the definition of “relevant order” in subsection (5)—

(a) in paragraph (a), for “section 123” there is substituted “an order under section 122A or section 123”;

(b) in paragraph (b), after “a breach of” there is inserted “a sexual risk order under section 122A of the 2003 Act or”;

(c) for paragraphs (c) and (d) there is substituted—

“(c) where the conviction or finding referred to in subsection (1)(a), (c) or (d) above is in respect of a breach of an interim risk of sexual harm order under section 5 above or an interim order under section 122E or 126 of the 2003 Act—

(i) any risk of sexual harm order or sexual risk order made upon the application to which the interim order relates; or

(ii) if no risk of sexual harm order or sexual risk order has been made, the interim order;

(d) where the caution referred to in subsection (1)(b) above is in respect of a breach of an interim order under section 122E or 126 of the 2003 Act—

(i) any order under section 122A or 123 of that Act made upon the application to which the interim order relates; or

(ii) if no order under section 122A or 123 of that Act has been made, the interim order.”

Violent Crime Reduction Act 2006 (c. 38)

In section 56 of the Violent Crime Reduction Act 2006 (cross-border provisions relating to sexual offences), subsection (2) is repealed.

Amendment 83, page 161, line 36, at end insert—

“Police Act 1997 (c. 50)

In section 137 of the Police Act 1997 (extent), in subsection (2) (provisions extending to England and Wales only), after ‘sections’ in paragraph (e) there is inserted ‘125(1A),’.”

Amendment 84, page 163, line 35, at end insert—

“Police and Fire Reform (Scotland) Act 2012 (Consequential Provisions and Modifications) Order 2013 (S.I. 2013/602)

In article 14 of the Police and Fire Reform (Scotland) Act 2012 (Consequential Provisions and Modifications) Order 2013 (pensions: special constables and police cadets), in paragraph (2), for ‘the Police Negotiating Board for the United Kingdom’ there is substituted ‘the Police Negotiating Board for Scotland’.”

Amendment 85, page 164, line 4, leave out ‘The’ and insert ‘In the Schedule, the’.

Amendment 86, page 164, line 32, at end insert—

‘Police and Fire Reform (Scotland) Act 2012 (Consequential Provisions and Modifications) Order 2013 (S.I. 2013/602)

In Schedule 1, paragraph 5(4) to (6).’.

Amendment 87, page 165, line 4, at end insert—

“In section 28 of that Act (appeal against discharge at extradition hearing: category 1 territory), in subsection (5), for ‘Notice of an appeal’ there is substituted ‘Notice of application for leave to appeal’.”

Amendment 88, page 165, line 23, at end insert—

“In section 105 of that Act (appeal against discharge at extradition hearing: category 2 territory), in subsection (5), for ‘Notice of an appeal’ there is substituted ‘Notice of application for leave to appeal’.”

Amendment 89, page 165, line 24, leave out paragraph 74 and insert—

“74 (1) Section 108 of that Act (appeal against extradition order: category 2 territory) is amended as follows.

(2) In subsection (4), for the words before ‘is 14 days’ there is substituted ‘Notice of application for leave to appeal under this section must be given—

(a) in accordance with rules of court, and

(a) subject to subsections (5) and (7A), before the end of the permitted period, which’.

(3) In subsection (5)—

(a) for ‘But notice of an appeal’ there is substituted ‘Notice of application for leave to appeal’

(b) after ‘if it is an’ there is inserted ‘application for leave to’.

(4) In subsection (6), for the words before ‘before the person is extradited’ there is substituted ‘Notice of application for leave to appeal on human rights grounds given after the end of the permitted period must be given’.

(5) In subsection (7)—

(a) for ‘notice of an appeal’ there is substituted ‘notice of application for leave to appeal’;

(b) for ‘consider the appeal’ there is substituted ‘grant leave’;

(c) for ‘to consider the appeal’ there is substituted ‘for the appeal to be heard’.

(6) In subsection (8), for ‘“appeal on human rights grounds” means an appeal’ there is substituted ‘“to appeal on human rights grounds” means to appeal’.”

Amendment 90, page 165, line 26, at end insert—

In section 110 of that Act (appeal against discharge by Secretary of State), in subsection (5), for “Notice of an appeal” there is substituted “Notice of application for leave to appeal”.’.

Amendment 91, page 166, line 33, at end insert—

‘Part 4

Amendments consequential on establishment of Police Service of Scotland

Terrorism Act 2000 (c. 11)

(1) Schedule 8 to the Terrorism Act 2000 (detention) is amended as follows.

(2) In paragraph 20B(10), for paragraph (b) of the definition of “a specified chief officer of police” there is substituted—

(b) the chief constable of the Police Service of Scotland, where—

(i) the person who provided the material, or from whom it was taken, resides in Scotland, or

(ii) the chief constable believes that the person is in, or is intending to come to, Scotland.”

(3) In paragraph 20J—

(a) for paragraphs (d) and (e) of the definition of “police force” there is substituted—

(d) the Police Service of Scotland;

(e) the Scottish Police Authority;”;

(b) in the second of the three definitions of “responsible chief officer of police”, for the words after “the chief constable of” there is substituted “the Police Service of Scotland”.

Counter-Terrorism Act 2008 (c. 28)

In section 18D of the Counter-Terrorism Act 2008 (use of retained material), in subsection (2) for “the Scottish Police Services Authority” there is substituted “the Scottish Police Authority”.

In section 18E(1) of that Act (interpretation of sections 18 to 18E), for paragraph (d) of the definition of “police force” there is substituted—

(d) the Police Service of Scotland;”.’.—(Mr Harper.)

New Clause 3

Dog control notices

(1) Where an authorised officer has reasonable cause to believe that a dog is not under sufficient control and requires greater control in any place, as a preventative measure to protect the public, the dog itself, or another protected animal, he or she may serve on the owner, and if different, person for the time being in charge of the dog a written control notice which—

(a) states that he or she is of that belief;

(b) specifies the respects in which he or she believes the owner, and if different, the person for the time being in charge of the dog is failing to keep the dog under sufficient control;

(c) specifies the steps he or she requires the owner, and if different, the person for the time being in charge of the dog to take in order to comply with the notice;

(d) specifies the date by which the terms of the notice must be complied with; and

(e) specifies the date that the notice expires which will not be for a period which exceeds six months.

(2) In a control notice pursuant to subsection (1)(c) an authorised officer must require a dog to be microchipped (if not already done) and the owner, and if different, the person for the time being in charge of the dog, register the dog with a microchip database, and may require the following steps, where appropriate, but not limited to—

(a) keeping the dog muzzled as directed;

(b) keeping the dog on a lead when in public or under control as directed;

(c) requiring the owner, and if different, the person for the time being in charge of the dog, to seek and implement expert advice about training and behaviour for the dog;

(d) having the dog neutered where appropriate; and

(e) keeping the dog away from particular places or persons.

(3) Failure to comply with the steps required in a control notice within the time period specified, to the satisfaction of the authorised officer may lead to a complaint to a magistrates’ court under section 2 of the Dogs Act 1871.

(4) The provisions of section 2 of the Dogs Act 1871 shall have effect if the owner, and if different, the person for the time being in charge of a dog fails to comply with the steps required in a control notice within the time period specified in accordance with subsection (3) above as they would apply if a dog was dangerous and not kept under proper control.

(5) An “authorised officer” is a person that has been appointed by the local authority or police for the purposes of this Act.

(6) A “protected animal” is one that is commonly domesticated in the British Islands, is under the control of man whether on a permanent or temporary basis, or is not living in a wild state.—(Mr Reed.)

Brought up, and read the First time.

[Mr Steve Reed (Croydon North) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dawn Primarolo)]

With this it will be convenient to discuss the following:

New clause 6—Dog number control notice—

(1) This section applies where more than one dog is being kept in a domestic property in England or Wales.

(2) Where an authorised officer has reasonable cause to believe that the number of dogs being kept in a domestic property gives rise to a risk that any one or more of the dogs may become dangerously out of control while in or partly in the domestic property (“the risk”), he or she may serve on the person in charge a written control notice which—

(a) states that the authorised officer is of that belief;

(b) specifies the maximum number of dogs which, in the opinion of the authorised officer, are capable of being kept in the domestic property such as to sufficiently reduce the risk;

(c) requires the person in charge to reduce the number of dogs kept in the domestic property to no more than the number specified under paragraph (b) and;

(d) specifies the date by which the terms of the control notice must be complied with.

(3) A control notice may be served on more than one person in respect of one domestic property.

(4) It is an offence for a person without reasonable excuse to fail to comply with a requirement under subsection (2).

(5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(6) An authorised officer may make a complaint to a Magistrates’ Court if a person in charge fails, to the satisfaction of the authorised officer, to comply with the steps required in a control notice within the time period specified.

(7) A Magistrates’ Court receiving a complaint under subsection (6) shall, if it finds that the person in charge has failed to comply with the steps required in a control notice, make an order in a summary way directing any of the dogs kept in the domestic property to be destroyed.

(8) In this section—

“authorised officer” means a person appointed by a local authority within whose area the domestic property is situated for the purposes of this section;

“domestic property” means a building, or part of a building, that is a dwelling or is forces accommodation (or both);

“person in charge” means the owner or owners, and if different, person or persons for the time being in charge of the dogs.

New clause 17—Community protection notices (dogs)—

(1) An authorised person may issue a community protection notice (dogs) to the owner or person for the time being in control of the dog if they have reasonable cause to believe that—

(a) the dog is not under sufficient control, and

(b) preventative measures are required to protect the public, the dog itself, or another protected animal.

(2) An “authorised person” means a police officer, local authority dog warden, or other authorised person.

(3) A community protection notice (dogs) is a notice that imposes any of the following requirements on the owner or person for the time being in control of the dog—

(a) a requirement to have the dog microchipped;

(b) a requirement to obtain third party liability insurance;

(c) a requirement for the dog to be kept on a leash in public;

(d) a requirement for the dog to be muzzled in public;

(e) a requirement for the transferring or relinquishing of ownership of the dog without notifying the enforcing authority.

(4) A community protection notice may be issued—

(a) without notice, and

(b) with immediate effect.

(5) A person issued with a community protection notice (dogs) who fails to comply with it commits an offence.

(6) A person guilty of an offence under subsection (5) is liable on summary conviction to a fine not exceeding level 4 on the standard scale.

New clause 18—Requirement to fit a post box guard where a dog is present—

(1) The Secretary of State shall bring forward regulations to require householders to fit a guard to their letterbox if—

(a) the householder owns a dog,

(b) the dog is kept in residential premises to which the letterbox is fitted,

(c) the letterbox opens directly into those premises, and

(d) a person may reasonably conclude that there is the possibility of the dog causing harm to someone using the letterbox.

(2) Regulations made under subsection (1) shall include provision in respect of—

(a) the size and style of the guard to be fitted, and

(b) the householder to be liable to a civil penalty for any harm caused as a result of failing to comply with this requirement.

(3) Regulations under this section—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by a resolution of each House of Parliament.

New clause 19—Written control notice—

(1) Where an authorised officer has reasonable cause to believe that a dog is not under sufficient control and requires greater control in any place, as a preventative measure to protect the public, the dog itself, or another protected animal, he or she may serve on the owner, and, if different, person for the time being in charge of the dog a written control notice which—

(a) states that he or she is of that belief;

(b) specifies the respects in which he or she believes the owner, and if different, the person for the time being in charge of the dog is failing to keep the dog under sufficient control;

(c) specifies the steps he or she requires the owner, and if different, the person for the time being in charge of the dog to take in order to comply with the notice.

(d) specifies the date by which the terms of the notice must be complied with; and

(e) specifies the date that the notice expires which will not be for a period which exceeds six months.

(2) In a control notice pursuant to subsection (1)(c) an authorised officer must require a dog to be microchipped (if not already done) and the owner, and if different, the person for the time being in charge of the dog, register the dog with a microchip database, and may require the following steps, where appropriate, but not limited to—

(a) keeping the dog muzzled as directed;

(b) keeping the dog on a lead when in public or under control as directed;

(c) requiring the owner, and if different, the person for the time being in charge of the dog, to seek and implement expert advice about training and behaviour for the dog;

(d) having the dog neutered where appropriate; and

(e) keeping the dog away from particular places or persons.

(3) Failure to comply with the steps required in a control notice within the time period specified, to the satisfaction of the authorised officer may lead to a complaint to a magistrates’ court under section 2 of the Dogs Act 1871.

(4) The provisions of section 2 of the Dogs Act 1871 shall have effect if the owner, and if different, the person for the time being in charge of a dog fails to comply with the steps required in a control notice within the time period specified in accordance with subsection (3) above as they would apply if a dog was dangerous and not kept under proper control.

(5) An “authorised officer” is a person that has been appointed by the local authority or police for the purposes of this Act.

(6) A “protected animal” is one that is commonly domesticated in the British Islands, is under the control of man whether on a permanent or temporary basis, or is not living in wild state.

(7) A person served with a dog control notice may appeal against the notice to a magistrates’ court within the period of 14 days beginning with the date on which that person was served with the notice.

(8) The grounds on which a person served such a notice may appeal are one or more of the following—

(a) that the notice contains required steps which are unreasonable in character, or extent, or are unnecessary; or

(b) that there has been some defect or error in, or in connection with, the notice.

(9) On hearing of the appeal the court may—

(a) quash the dog control notice to which the appeal relates; or

(b) vary the notice in such a manner as it thinks fit; or

(c) dismiss the appeal.

New clause 29—Improving the welfare of seized dogs—

(1) Where an expert examination is required for a dog that is alleged to be one to which section 1 of the Dangerous Dogs Act 1991 applies that examination must be carried out and completed by both the defence and prosecution within 28 days of seizure of the dog and a written report produced within one week of the examination.

(2) If the prosecution or defence fail to carry out the examination as described in subsection 1 within the requisite period the prosecution or defence, as the case may be, may not rely in evidence on any expert report involving an examination of that dog after the 28 day period unless the Court extends this period.

(3) In considering any application to extend the examination period the Court must take into account the welfare of the dog, the costs of kennelling the dog and any other relevant matters.

New clause 30—Rehoming of prohibited types of dog—

(1) The Dangerous Dogs Act 1991 is amended as follows.

(2) In section 4B(1)(b) (Destruction orders otherwise than on a conviction) after the first “owner” there is inserted “or prospective owner”, and after the second “owner” there is inserted “or prospective owner”.

Amendment 143, in clause 98, page 69, line 43, leave out subsection 2(a).

Amendment 140, page 70, leave out line 3 and insert—

(ii) for “injures any person” there is substituted “injures or kills any person or assistance dog”.’.

Amendment 144, page 70, line 6, after ‘householder’, add ‘or business’.

Amendment 145, page 70, line 7, after ‘householder’, add ‘or business’.

Amendment 146, page 70, line 11, after ‘(or is both)’, add

‘or in premises used partially or wholly for business purposes’.

Amendment 147, page 70, line 17, at end insert—

(iii) D (if not present at any time) could have reasonably believed V to be in, or entering the building or part as a trespasser if they had been present.’.

Amendment 134, page 70, line 23, at end insert—

‘(1C) A person (“D”) is not guilty of an offence under subsection (1) in a case where they, or an associated person, are being attacked by another person or another dog at the relevant time.

(1D) A person (“D”) is not guilty of an offence under subsection (1) if they are a vet or someone working in a veterinary practice at the relevant time.

(1E) A person (“D”) is not guilty of an offence under subsection (1) if they themselves are the victim of any incident involving their dog.

(1F) A person (“D”) is not guilty of an offence under subsection (1) if they are in charge of a dog they are removing in connection with their work.

(1G) A person (“D”) is not guilty of an offence under subsection (1) if they are in charge of a dog they are required to maintain in any police or court proceedings or if they are assisting the courts as a witness (expert or otherwise).

(1H) A person (“D”) is not guilty of an offence under subsection (1) if they are in charge of a dog that they are authorised or required to look after in connection with their work.

(1I) A person (“D”) is not guilty of an offence under subsection (1) if they are in charge of a dog they are looking after by virtue of the dog being in their kennels.

(1J) A person (“D”) is not guilty of an offence under subsection (1) if the dog is a police dog or a dog being used in an official capacity to assist with their work.

(1K) A person (“D”) is not guilty of an offence under subsection (1) if the dog is an assistance dog.

(1L) A person (“D”) is not guilty of an offence under subsection (1) if they are registered blind.

(1M) A person (“D”) is not guilty of the aggravated offence under subsection (1) if, as a result of any disability, they were not able to physically prevent the offence.

(1N) A person (“D”) is not guilty of the aggravated offence under subsection (1) unless they encouraged the dog in its actions.’.

Amendment 133, page 70, line 28, at end insert—

‘(2A) If an owner of a dog, and if different the person for the time being in charge of a dog unreasonably omits to keep the dog under proper control, or if he causes, or encourages the dog to attack a protected animal, and any of those things lead to the injury or death of a protected animal he shall be guilty of an offence.

(2B) A “protected animal” has the same meaning as in section 2 of the Animal Welfare Act 2006.’.

Amendment 141, page 70, line 28, at end insert—

(iii) for “two years” there is substituted “fourteen years”.’.

Amendment 142, page 70, line 28, at end insert—

‘(1C) In proceedings for an offence under section 3(1) it shall be a defence for the accused to prove that he took reasonable steps to prevent the dog being dangerously out of control.’.

Amendment 135, page 70, line 41, at end insert—

‘(1B) Anyone authorised to seize a dog under subsection 1A is exempted from the provisions of the Dangerous Dogs Act 1991.’.

Amendment 98, page 70, leave out lines 45 and 46 and insert

‘for the purposes of this Act, “assistance dog” means a dog which has been accredited to assist a disabled person by a prescribed charity or other organisation.’.

Amendment 97, page 70, line 46, at end insert

‘“dwelling”, for the purposes of section 3, includes enclosed buildings within the curtilage of the dwelling and associated with it, where a person might reasonably expect to find a dog, such as garages, sheds and other outbuildings;’.

Amendment 132, page 70, line 47, leave out subsection (6)(b).

Amendment 99, in clause 99, page 71, line 33, at end add—.

‘(5) After section 7 there is inserted—

“7A Fit and proper person code of practice

(1) The Secretary of State must prepare a draft code of practice giving guidance about the matters to be considered when determining whether someone is a fit and proper person for the purposes of sections 1, 4 and 4B.

(2) The Secretary of State must lay before Parliament—

(a) any draft code of practice prepared under this section; and

(b) an order to be made by statutory instrument providing for the code to come into force, subject to subsection (4).

(3) Before preparing such a draft code, the Secretary of State must consult such persons as the Secretary of State thinks appropriate.

(4) Where a draft is laid before Parliament under subsection (2)(a), if neither House passes a resolution disapproving the draft within 40 days—

(a) the Secretary of State may issue the code in the form of the draft; and

(b) it shall come into force in accordance with provision made under subsection (2)(b).”.’.

[Mr Reed]

It is a pleasure to speak in this debate and to move this new clause, which stands in the names of my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) and my right hon. Friend the Member for Oxford East (Mr Smith).

Dangerous dogs, or, perhaps more accurately, irresponsible dog owners, are a serious public threat. Not only do we have a duty to act, but there is widespread agreement on what form that action should take. I regret to say that the Government are the only ones standing meekly on the sidelines, refusing to take the necessary action. Having failed to lead from the start with this Bill, the Government refused to act in Committee, despite the support of their own Back Benchers for such action, but I hope, with a new Minister in place, there will be a fresh approach and a chance to move forward and tackle this menace.

I want to start by speaking to amendment 141, which was tabled by the hon. Member for Bedford (Richard Fuller). I have strong sympathy with the case he is making, and which he made in Committee, for a much stronger punishment for irresponsible dog owners who allow their dogs to maim and kill. We were deeply disappointed, however, that the Government failed to meet their own promise, made in an open Committee, to publish the findings of a consultation on what level of sentencing would be appropriate in such cases before the Bill returned to the Chamber.

As it was, the Minister wrote to members of the Committee last Friday, after the tabling deadline. An e-mail was sent at 5.50 in the evening, stating that the Government had not had time to review the consultation responses, and that therefore no Government amendment would be put before the House. It was in good faith that the Opposition did not table an amendment, as we believed his predecessor’s word that the consultation would result in a Government amendment. Announcing that he would not do anything after the tabling deadline was not a welcome start to the Minister’s tenure in the Home Office. I hope that we will not see a repeat of those tactics.

15:00

[Richard Fuller (Bedford) (Con)]

Does the hon. Gentleman agree that the families and loved ones of victims who have been injured or killed by out-of-control dogs will be very disappointed that their representatives in this House will not be able to vote on the precise measures and changes that are required to increase the sentences for such actions?

[Mr Reed]

I thank the hon. Gentleman for his intervention. I have read the comments that he made in Committee and sympathise with his views. I hope to address them further in my comments.

The Opposition supported increasing the guideline prison terms for manslaughter under the Dangerous Dogs Act 1991 in Committee. We continue to support an increase, although we would prefer to have the consultation response before the House so that an informed decision can be made. Our starting point is that the current maximum sentence of two years’ imprisonment for allowing one’s dog to kill someone is far too lenient. I hope that the hon. Member for Bedford will accept our support in principle for toughening the sentencing guidelines and work with us in the other place to agree on appropriate sentencing guidelines, informed by the consultation response when the Government get around to publishing it.

New clause 3 would introduce dog control notices. I believe that this measure enjoys widespread cross-party support in the House and near-unanimous support from outside organisations with an interest in dangerous dogs and animal welfare. When reading the Committee transcripts, I was struck by the strength of support from Government Back Benchers, in addition to the support from Labour Members. However, that should not be surprising. Taking responsible, tough action to protect people from dangerous dogs and irresponsible dog owners is plain common sense and something that Members on all sides of the House should support.

Yesterday, I joined my hon. Friend the Member for Bolton West (Julie Hilling) to meet the father of Jade Anderson, who was savaged to death by four dogs when she was just 14 years old. Michael Anderson and his friend Royston had cycled down from Bolton in support of the Justice for Jade campaign. They came to lobby Members of this House because they want dog control notices to be introduced in England and Wales, as they have been in Scotland. To lose a child is bad enough; to live with the knowledge of the appalling circumstances in which they died is almost too much to bear. I can offer Mr Anderson only my support, sympathy and admiration that he is seeking to make something good out of such desperate and tragic circumstances.

Sadly, Jade’s case is not an isolated one. Since 2005, nine children and seven adults have died as a consequence of dog attacks. In the three years to February 2013, 18,000 people were admitted to hospital in England and Wales after dog attacks. That is almost 20 attacks a day that result in someone ending up in hospital. Not only could many of those attacks be prevented by dog control notices, but the cost of those attacks to the NHS, the police and communities is an avoidable drain on already overstretched resources.

Dog control notices are not punitive. They provide a menu of options that local authorities and the police can use to act in the interests of their local communities against dangerous dogs and irresponsible owners.

[Huw Irranca-Davies (Ogmore) (Lab)]

I commend my hon. Friend and those who tabled new clause 3, which would improve the Bill. May I also commend to him and other hon. Members new clause 17, which was tabled by my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith)? It would dovetail nicely with new clause 3 and would allow the notices to be published there and then at the point when they are needed, rather than waiting for an attack to take place.

[Mr Reed]

I thank my hon. Friend, who has an abiding interest in this issue, for that most helpful intervention. I will seek to address his point further in my comments.

Dog control notices include the following measures: requiring a potentially dangerous dog to be muzzled whenever it is in a public place; requiring it to be kept on a lead in places to which the public have access; neutering male dogs; and requiring dogs and dog owners to attend training classes to bring potentially dangerous animals back under control. A dog control notice would also require the dog to be microchipped and registered, so that any dogs that were found to be in breach could be identified clearly and unambiguously—something that is absolutely necessary for effective enforcement.

[Mr Mark Spencer (Sherwood) (Con)]

May I draw the hon. Gentleman’s attention to new clause 19, which appears in my name and that of my hon. Friend the Member for Thirsk and Malton (Miss McIntosh)? It talks about not only the dog owner, but the person who is in control of the dog at the time. I hope that he will recognise that it is important to hold that person responsible.

[Mr Reed]

The hon. Gentleman makes a sensible and helpful point. I recognise the sense of what he says.

It is disappointing that on Second Reading and in Committee, the Government resisted dog control notices and said that community protection notices would be sufficient. I can only hope that, having read the Committee transcripts, the new Minister will bring fresh eyes to the issue and use fresh ears to listen to the experience of outside organisations, the victims of dog attacks and Members from all parts of the House who want tougher action.

The use of community protection notices, as advocated by the Government, is simply not sufficient. They are slow to serve, can be challenged in the courts, causing further delays, and have been described by one outside organisation as a sledgehammer to crack a nut. The Government had a perfect opportunity to show leadership on this issue. They could have led this House and this country to act to protect children and adults alike from further dog attacks. However, the powers in the Bill and the limited changes to which the Government are clinging are not sufficient—not even close.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

My hon. Friend is making an excellent case for new clause 3. Does he agree that one of the successes of devolution is that we in Westminster can learn from the experiences of the devolved authorities in various matters and do not have to reinvent the wheel? Will he refer later in his speech to the experiences of Northern Ireland and Scotland?

[Mr Reed]

I thank my hon. Friend for that helpful reference to the situation in Scotland. Given that the experience of dog control notices in Scotland shows that they work effectively, it is all the more baffling that the Government refuse to support them. I hope that the House can persuade the Minister to change his position.

The position for which I am arguing is not just a Labour one. The Environment, Food and Rural Affairs Committee, which has a coalition majority, considered the Bill and concluded:

“We consider there to be strong evidence that targeted measures would be more effective in tackling dog-related problems than the general powers proposed under the Government’s anti-social behaviour and crime legislation…We recommend that the Government reconsider its rejection of our recommendation and legislate to introduce Dog Control Notices to provide law enforcers with tailored powers to tackle aggressive dogs before they injure people and other animals.”

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

My hon. Friend has eloquently set out the Environment, Food and Rural Affairs Committee’s response on this serious issue. I do not know whether he saw the Chair of that Committee’s summary of what was in the report, in which she said that what the Government had brought forward was “woefully inadequate”. She said that unless we have a measure that deals effectively with prevention, we will not tackle the problem at its source. Does my hon. Friend agree that without the introduction of dog control notices, what the Government propose is indeed woefully inadequate?

[Mr Reed]

I am grateful to my hon. Friend for putting that sensible view on the record. Of course, I am sympathetic to it. Indeed, I will add another sensible view, that of the chief executive of the Royal Society for the Prevention of Cruelty to Animals, who said:

“We remain unconvinced that CPNs will fulfil the same purpose as bespoke Dog Control Notices.”

I could go on to read the evidence to the Bill Committee of organisation after organisation: the Kennel Club, Battersea Dogs and Cats Home, police and crime commissioners, the Local Government Association and the Association of Chief Police Officers. Although that would support my argument, I fear that a lengthy recitation would weary the House. However, two further sources of support for dog control notices are worth drawing to the House’s attention.

First, the hon. Member for Chatham and Aylesford (Tracey Crouch) helpfully drew the Bill Committee’s attention to the fact that before the general election, the Conservative party pledged to give police and councils more power to tackle the problem of dangerous dogs through the introduction of dog control notices. As it happens, the same is true of the Liberal Democrats, who also supported such notices when in opposition. We are used to the policies of one or other Government party being lost in coalition fudges, but I am not aware of a policy supported by both parties being lost in such a way. On this occasion, not only do I agree with Nick, but I am willing to agree with Dave as well. If we all agree, for goodness’ sake let us act and bring in long-overdue and much-needed tough but fair measures to deal with dangerous dogs. Six thousand hospitalisations a year is too many simply to look the other way. I would challenge any Member to sit down with Michael Anderson, Jade’s father, as I did yesterday, and not conclude that the measures that we suggest must be on the statute book.

I commend my hon. Friend the Member for Bolton West, who is in her place, for tabling new clause 6, which is similar to new clause 3 in many ways. It highlights her commitment to bringing her constituency issues to the House in the most powerful way possible.

New clauses 17, 29 and 30, tabled by my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith), were mentioned earlier. They include a number of further sensible and proportionate measures to deal with dangerous dogs, and I am sure that Members of the other place will want to study them carefully in their less time-pressured environment and take up many of them.

I must push the Minister to accept new clause 3. To date, the Bill has been a missed opportunity for the Government. The need for tougher action is clear and well evidenced, and the desire to act has been endorsed not just by the parties of government before the last election but by the cross-party Environment, Food and Rural Affairs Committee and by every major organisation that deals with dangerous dogs, animal welfare and irresponsible owners. The means to act are now before the Minister, and I urge him to take the chance to do so.

[Huw Irranca-Davies]

In the many months since the Government brought forward their provisional proposals, they have failed to persuade any of those good and sensible people and organisations of their case. Those are not stupid organisations and people, and I urge Members to support them and support new clause 3.

[Mr Reed]

We wait with bated breath to see whether the new Minister has now been convinced.

[Mr Spencer]

I rise to speak to new clause 19 and amendments 97 to 99, which I and my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) tabled. Like the hon. Member for Croydon North (Mr Reed), we are keen to ensure that there is provision for written notices so that not only dog owners but those in charge of a dog at any time have control of that animal and prevent it from causing injury or damage to any person or any other animal.

15:15

Of course, there has to be a balance in the process, and I emphasise the need for home owners to be able to protect their property using a dog. Dogs must be allowed to protect property from burglars or trespassers who may be there to commit a crime. It is important that we get that balance right and that home owners are allowed to protect their property. Dogs must be allowed to defend property and act in a territorial manner, as they are inclined to do, without a home owner having to fear prosecution.

I also wish to draw attention to the plight of those who are disabled and have a guide dog or hearing dog. People who are fortunate enough to be able-bodied can only imagine what it must be like for a blind person if their guide dog is attacked in the street. Not only do they lose their means of getting home, but the animal for which they care is disabled or injured, and they are unable to get it the assistance it requires. I hope the Minister will ensure that the Bill protects and provides adequately for people who have a guide dog or hearing dog. For a disabled person to be in those circumstances is absolutely intolerable.

Finally, I seek the Minister’s assurance that he will look long and hard at the new clauses and amendments on written notices, take on board Members’ comments and consider the position.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

We have all heard the tragic tales of those who have been injured or even killed by dogs that are out of control, and the issue is of growing concern to the public. I am therefore glad at least to see that the Government are prepared to do something to tackle the problem.

The cases that have stuck out in the debate that has taken place over the past few years relate to children such as John Paul Massey, from Liverpool, who died three or four years ago; the girl from Chingford who was in the park and nearly lost part of her ear because of an attack by a dog that was running free, unrestrained by its owner; and Jade Anderson, who died recently and about whom we have heard today. There was also the case of Keith Davies, the postman in Cambridgeshire who was attacked in a cul-de-sac by two rottweilers that had escaped from behind the gates of a private residence, and who nearly lost an arm. It was saved only through the skilful intervention of surgeons. Paul Coleman, the Sheffield postman who got me involved in this campaign, nearly lost his leg as a result of an attack on the street where I used to live by a dog that was roaming free on the public highway.

All those cases indicate to me that enough is enough. We spend £9.5 million a year on NHS costs alone to deal with the injuries inflicted on human beings by dogs that are out of control, and that is before considering the costs incurred by the police and other bodies in dealing with the issue. Any progress, however slight, is therefore welcome. I particularly welcome the Government’s decision to extend the law to private property. The onus will now be on owners to exercise responsible control of their dogs at all times, which will be welcomed not just by postal workers but by other delivery workers, health visitors, doctors, party members canvassing at election times and a whole range of other people. That really important safeguard will be more than welcome, because 6,000 postal workers a year alone are injured as a result of attacks on private property.

I believe that a strengthening of the defence must be built into the proposed legislation. The Bill currently includes the defence of general household protection, but amendment 142 would strengthen the defences given to householders who do their utmost to ensure they keep their dogs under reasonable control. It is my contention, and that of bodies such as the RSPCA, that the current defence does not do enough to protect householders who do their best to keep their dogs under control at all times. We can never legislate for all possibilities, and it is important that we include the best possible defences in the Bill to ensure that householders do not, for example, adopt the habit of keeping dogs imprisoned in the house for most of the day because they have visitors. That would be unreasonable, but the Bill as currently drafted could make dog owners feel vulnerable to the proposed legislation, and therefore adopt those unfortunate welfare standards. Amendment 142 is reasonable and I hope the Minister will take it seriously.

My general point about the content of the Bill is that we need more than currently exists. What we do have is not necessarily best designed and in many ways is inadequate for encouraging responsible dog ownership and improving the welfare of dogs more generally. We need not only consolidation of the legislation but a comprehensive look at what measures we need for dog control. That position is supported by a grand coalition of charities and trade unions, including the RSPCA, the Dogs Trust, the Blue Cross, and Battersea Dogs and Cats Home. The Dogs Trust pointed out that 12 pieces of legislation in statute deal with dog control, but little emphasis is placed on the prevention of attacks and there is little focus on responsible dog ownership.

We need legislation that deals with dog ownership in the broadest possible sense, which is why I am working with animal welfare charities on a strategy to take a long-term look at what needs to be done, and at how charities work together to improve welfare standards and responsible dog ownership. Once finalised, legislation will inevitably be part of that strategy, focusing not only on dog control by the dog owner but on the breeding and sale of dogs, and the responsibility of all involved in dog welfare, including dog owners.

The Bill does not tackle that issue holistically or comprehensively, and along with animal welfare charities I remain disappointed that we have not had a dedicated Bill to update the legislation. Community protection notices are a blunt and unwieldy measure, not suited to the task of tackling irresponsible dog ownership. As indicated by the changes in new clause 17, the Bill contains no power to issue notices instantly so as to get on top of a dog that is potentially dangerous or out of control as soon as the situation occurs. In some cases, inevitably, the authorities will wait until an attack has been committed before issuing a notice, because they will not feel they should intervene and go through the unwieldy procedure to get a written notice before they can make that move. I do not believe that the Bill tackles those issues. New clause 3, tabled by my hon. Friend the Member for Croydon North (Mr Reed), contains the important requirement that an owner whose dog is potentially out of control should be made to engage in training and behaviour courses related to their ownership of the dog, and in that sense the new clause is helpful.

New clause 17 provides for a bespoke community protection notice modelled on the dog control notices recommended by the Environment, Food and Rural Affairs Committee. Guidance has already been issued on community protection notices and the measures in the Bill, but so far that guidance is long and difficult to interpret, and much of the support offered is found in the annexes to the guidance, not the guidance itself. As far as animal welfare charities are concerned, there will be an issue about the interpretation of that guidance, and a risk that animal welfare standards will be compromised as a result of the way it has been drafted. The guidance has not been produced properly in consultation with animal welfare charities.

Finally—you have been patient, Mr Deputy Speaker—I will refer quickly to the new clauses that relate to section 1 of the Dangerous Dogs Act 1991. Clearly, section 1 on breed-specific legislation is not working. In a consultation run by the Department for Environment, Food and Rural Affairs on that Act and the measures before us today, 71% of those consulted thought that the breed-specific section of that Act should be repealed because it is not working. It costs a tremendous amount of money to kennel dogs seized under section 1 of the Act, with an annual cost over the past three financial years of £2.6 million for the Metropolitan police alone.

The new clauses relate to the need to ensure that a time limit is imposed on the courts regarding how long a banned-breed dog can be held before the issue of whether it should be exempt from the legislation is dealt with, to ensure that animal welfare standards are not compromised. That is critical. There should also be the power to rehome dogs that are fit for exemption but have nowhere to go. The only other choice available to animal welfare charities at the moment is euthanasia, which is not good enough. It is the deed not the breed, and I look forward to hearing the Minister’s comments on that important issue, which I know the Metropolitan police, as well as animal charities such as the RSPCA, are keen to see dealt with.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I will not impose a time limit, but we must finish by 4.30 pm and we need 10 minutes for the Minister. I will try to get everybody in, but can we try to stick to five minutes wherever possible?

[Tracey Crouch (Chatham and Aylesford) (Con)]

I rise to address amendment 133 tabled in my name, which looks specifically at extending the Bill to include protected animals. I tabled a similar amendment—slightly differently worded—in Committee, and it has been redrafted by animal welfare charities for consideration today. The amendment is intended to be limited in scope, and would not capture a genuine, accidental attack by a dog on a protected animal—that was one concern raised in Committee. For example, some dogs chase cats or other small animals, and that would not be caught by the amendment, which refers specifically to attacks.

From previous discussions in Committee we know there has been an increase in attacks on protected animals. Charities, law enforcement agencies and the general public are concerned about the increase, yet we do not have a public record of the number of attacks and must rely on press reports. We know that there have been 66 reports of attacks—mostly fatal—on cats, including one last week, when the death of Caspar, which was devastating for the family involved, was reported in the Bolton News.

The problem is genuine for people who love their pets—it is incredibly important to them. My proposal is designed to deal not only with dog-chasing-cat events; attacks are often aggravated. The argument in Committee was that the current legislation deals with the problem, but some animal welfare charities beg to differ. For example, it is true that the RSPCA has used section 4 of the Animal Welfare Act 2006 on occasion to prosecute following dog attacks on other animals, but there is often incitement by the animal’s keeper or a history of other attacks. It can therefore be difficult to obtain information or prove a case, which means that section 4 is not a straightforward mechanism for prosecution.

15:30

We discussed the Dogs Act 1871 in Committee. It is true that the Act can be used for attacks on protected animals, but it is limited in scope and application in the case of one-off incidents. The current legislation is not conducive to early intervention or a preventive approach, or to dealing with less severe problems. We therefore need to look at the Act again.

There has been an increase in the number of attacks on horses, which I mentioned in Committee on behalf of the British Horse Society. The Dogs (Protection of Livestock) Act 1953 is applicable, but, under that Act, the attack must take place on agricultural land for an offence to be committed. Horses on bridleways are therefore not included. It is also not clear whether the Act is applicable when attacks take place on private property—it depends whether land is considered grazing land.

Animal welfare charities do not believe that the current legislation is sufficient, which is why I have felt compelled to table amendment 133 again on Report. I believe that that will send a strong message to the other place that many people—not just scrutinisers of legislation, but those who love their companion animals—are concerned.

Briefly, on dog control notices and community protection notices, the hon. Member for Croydon North (Mr Reed) was right to indicate that I said in Committee that there was a manifesto commitment. I stand by that commitment, and the Government have gone a long way to address the problems with dog control notices. Tellingly, organisations such as the Dogs Trust have made it clear that they are assured that the principle of DCNs could be applied within a CPN. However, the Dogs Trust has said—I am sympathetic to this—that the draft guidance on CPN enforcement is vague, particularly with regard to application. The Minister therefore needs to reassure the House, the charities that have been in touch with hon. Members on DCNs, and trade unions such as the Communication Workers Union, which provided an excellent briefing in advance of the debate, that CPNs will do as much if not more than DCNs. It is important that we send a clear message that we take the problem seriously.

Finally, my hon. Friend the Member for Shipley (Philip Davies) is not in his place to speak to the amendments he has tabled, but they are interesting and worthy of consideration, specifically on exemptions—for example, should a person who is the victim of an attack and whose dog then attacks the other person be liable? I am not suggesting that the Minister should accept all the exemptions proposed by my hon. Friend, but I urge him to consider them in a meaningful way.

This is an incredibly important issue and one that drives a great deal of emotion and passion, not only among victims of attacks but among those who care very much about their companion animals. The fact is that the dangerous dogs and animal welfare legislation is incredibly complex. I am not convinced that the Bill simplifies it in any way, shape or form, but I hope the Minister acts on the concerns with regard to protected animals.

[Ann Coffey]

I shall speak to new clause 18, which is in my name and those of my hon. Friends. Rightly, there is a lot of concern about serious injury and death caused by aggressive dogs, and I support the measures proposed by my hon. Friends to tighten the current criminal law and introduce stricter penalties.

New clause 18 deals with a different situation—it is a simple preventive measure to stop injuries to many people who, every year, post millions of bits of paper through letterboxes. It is not unknown for dogs to regard fingers put through letterboxes as curiosities and fair game for fastening their teeth on. Some dogs are aggressive, but others might simply believe they are being playful. The thought of a dog hurtling itself at a letterbox might conjure up visions of an hilarious scene from a sitcom, but for the real-life recipient, it can be traumatic and painful. People can sustain injuries ranging from bite marks and minor bruising to fingers or nerves being severed, causing long-term injury. Some years ago, I had to take my constituency assistant to accident and emergency for a serious injury to her hand sustained while leafleting.

The amendment requires householders who keep a dog in their house to put up a wire mesh guard around their letterbox where there is a reasonable probability that, either through aggression or playfulness, it could go for somebody’s hand. I am not saying that every dog owner must rush out and buy a wire guard—if they have a good dog there is no need to worry. However, if there is a chance that their dog might jump up and, for whatever reason, bite someone through the letterbox, it would be up to them to take responsibility to prevent accidents and put in a simple wire guard.

[Kelvin Hopkins (Luton North) (Lab)]

I strongly support what my hon. Friend is saying. While delivering leaflets during the previous general election campaign, I was bitten by a dog. It took an hour out of my life to have a tetanus injection at the hospital.

[Ann Coffey]

I thank my hon. Friend for that intervention. I am sure his experience is shared by a lot of hon. Members.

If dog owners fail to comply with the requirement and there is an incident, the person bitten would be entitled to take a civil court action against them. By this simple measure, I believe that many injuries could be averted every year, and it has the added advantage of protecting householders from the hostility generated if their dog bites someone, particularly if that happens to be a child.

I understand that there may not be much public sympathy for politicians who get bitten by dogs, but this is not simply a problem for politicians. Many people push leaflets and letters through doors, including: postmen and women; newspaper boys and girls; people starting up new businesses or advertising pizza and other fast food services; neighbours posting Christmas and birthday cards; and people posting leaflets advertising community events.

I support the other amendments that have been tabled that aim to change criminal law, to make owners manage their dogs better and to put stricter penalties in place. However, my amendment is designed with safety, not the criminal law, in mind and I hope the Government will feel able to accept it. If they do not, I hope they will include the proposal in any future consultation.

[Richard Fuller]

I rise to speak to amendments 140 and 141 in my name, which would increase the maximum sentence to 14 years for owners of an out-of-control dog that kills or injures a person or assistance dog. I am happy that the Government responded to the requests of the Committee and conducted a consultation over the summer. However, I am disappointed that the results are not available.

People have the right to see their representatives debate fully and vote on what sentences they feel are appropriate to be imposed on the owners of out-of-control dogs. Those people include the constituents of the hon. Member for Bolton West (Julie Hilling), who has been an outstanding campaigner on behalf of her constituents and the victims of out-of-control dogs across the country. They include the families who have lost loved ones over the years, as hon. Members have mentioned in their speeches, and the 13-year-old boy who was attacked in Bradford a couple of months ago. As reported by the Daily Mail, he suffered a 10-minute attack which ended with the young boy saying, “I’m going to die, I’m going to die.” These people have the right to see us debate how we intend to increase sentences.

The Communication Workers Union has a lot on its plate these days, but like any good union it is thinking first and foremost about the safety and well-being of its members. Five thousand postal workers are attacked each year by dogs. They have the right to have the House debate the right sentence. It is important for the Minister to understand that the CWU supports a 14-year sentence for the killing of a person by an out-of-control dog. The police also have a right to see us debate and vote on this issue today. In their evidence to the Committee, they raised the total and utter inadequacy of the current legislation in dealing with the important and increasing problem of attacks by out-of-control dogs. I will listen carefully to the Minister’s comments. I do not want to hear any flim-flam from him about how he is not sure where this is going and how we should just trust the Government to get it right.

[Jim Fitzpatrick]

rose—

[Richard Fuller]

If the hon. Gentleman does not mind, I will not give way, because others want to get in.

I believe that 14 years is the right maximum penalty. I am grateful to my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay) and my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) for saying that, in many ways, it is equivalent to the maximum penalty imposed for dangerous driving. I believe that 14 years would send a strong message that owners must now take responsibility, and not just assume that it lies with the dog, and to judges, who today, even with the inadequate maximum penalty available, are not handing out very significant sentences when they should.

I want us to provide reassurance that this would be a maximum penalty, not a mandatory penalty, and that we are not asking people to lock up their dogs, as the hon. Member for Penistone and Stocksbridge (Angela Smith) mentioned; we have to get the balance right. I will listen to the Minister, who is casting a fresh set of eyes on this, but let us not forget that at the moment the dog gets a death penalty, but the owner walks away pretty much scot-free. That is not responsible. The Government need to be responsible today and say what they intend to do.

[Julie Hilling (Bolton West) (Lab)]

I want to speak specifically to new clause 6, other new clauses in my name and some of the amendments.

The House will be aware of the tragedy that occurred in my constituency on 26 March, when 14-year-old Jade Lomas-Anderson was killed by four out-of-control dogs in the house of a friend where she was staying overnight. My hon. Friend the Member for Croydon North (Mr Reed) has paid tribute to Jade’s dad and his friend Royston Brett, who cycled from Atherton to Westminster over the weekend to add their voice to those calling for the legislation to be strengthened in this area.

By all accounts, Jade was a smashing girl, full of life, kind to everyone and a good friend to many. When her parents were asked what Jade would have thought about their campaign for justice, they answered that she would have been the first to campaign, as she was such a caring girl. Her life was cut tragically short, but because of shortcomings in current legislation, no one can be held accountable. The tragedy has had a profound effect, not only on Jade’s mum and dad, Shirley and Michael, and her immediate family, but on the whole community of Atherton.

Jade’s parents have bravely led a campaign supported by the community and by Wigan council to ensure that no other family suffers like they have. As Michael says, this is a problem of epidemic proportions. According to the People’s Dispensary for Sick Animals, 1 million dogs have displayed dangerous behaviour towards people and animals in the past year. About 250,000 attacks are made by dogs each year and 12 postal workers will have been attacked by dogs today. The cost to the NHS and taxpayers is about £9.5 million. According to my figures, more than 6,000 people are hospitalised each year, many of whom will have received life-changing injuries, although my hon. Friend the Member for Croydon North said the number was higher. There have been 16 deaths since 2005 and I cannot even say that Jade was the last person to die, because in May 79-year-old Clifford Clarke was killed in Liverpool. In the area around Hag Fold, where Jade was killed, I know of three serious attacks since March. It is endless.

I am pleased that the Government are taking the issue seriously and that people could now be prosecuted for attacks on private property, and I sincerely hope that they will bring forward proposals to increase the penalties when the Bill goes to the other place, in the way that the hon. Member for Bedford (Richard Fuller) just described. I still believe, however, that they are missing a trick by ignoring the call from all the dog charities, the CWU, vets, nurses and the police to introduce straightforward legislation on dog control notices. I am sure that they believe their proposals will tackle this issue, but when all the dog charities and other vested interests are telling them they have got it wrong, they should listen. Fears that the Government’s proposals are too bureaucratic; that there would have to be more than one incident; that they would not apply if the dog had already been brought under control; and that they would not tackle the problem of dogs first becoming dangerously out of control must be taken seriously and be addressed either today or when the Bill goes to the other place. I hope that the Government see sense today and accept new clause 3.

Let me move on to new clause 6. I believe that the issue of having too many dogs in a household should be tackled as part of dog control notices. I wish I could talk in detail about the dogs that killed Jade, but unfortunately I cannot because the dogs’ owner still awaits sentence on dog cruelty charges. This demonstrates well how dog welfare and community safety are closely linked. For that reason, I will have to speak in the abstract.

15:45

First, it is well documented that dogs will act in packs and that unless they are well trained, well socialised and kept under control, they will act together to the detriment of the community.

Far too many people do not think through what sort of dog they should have in their household. Are there children? Do they have time to exercise the dogs? How much room do they have? Can they afford to keep and feed the dogs and get them veterinary treatment? Should they get small or big dogs? These questions are not even considered by far too many people when they purchase their puppy. Clearly, then, we need better education. What happens when people make the wrong choice? I believe, as do Jade’s parents, that there should be the ability to take quick and immediate action to instruct an owner to reduce the number of dogs they have. The number of dogs people have is not a problem only for community safety.

[Angie Bray (Ealing Central and Acton) (Con)]

What the hon. Lady says about the number of animals sometimes kept in the home is extremely important. On a lot of estates, it is the number of animals that often leads to a lack of control. Does she agree that one of the most important ways of trying to tackle the problem is to get local authorities to engage with housing tenancies and use the management of those tenancies to control the number of dogs in houses and perhaps to say that the top of a tall building, for example, is entirely unsuitable for keeping pets?

[Julie Hilling]

I want to say more about that. I agree with the hon. Lady, but the issue does not apply only to social housing, which is why we need legislative change so that the problem of people having too many dogs can be tackled wherever somebody lives. She is right that we need to do more for people in social housing and other rented properties.

The number of dogs creates a problem not just in relation to community safety. A recent event was organised on Hag Fold estate by Wigan council to micro-chip dogs and promote responsible ownership as part of the Jade campaign. Two volunteers, Councillor Karen Aldred and the wonderful local resident Sandi Lucas, went knocking on doors to try to find dog owners to encourage them to attend the event. When they knocked on one door, they were told, “Well, I haven’t got any dogs, but go over there because the owner has loads of dogs and is creating mayhem in the community.” That owner had seven dogs in a small house, creating noise, unpleasant smells and making life a misery for the neighbours. I am working with Wigan and Leigh Housing on tenancy clauses for dog ownership, but as I said, the issue is not confined to social housing; we need simple remedies for all.

The new clause does not specify how many dogs should be in a household because I am not trying to restrict the responsible ownership of dogs. Frankly, if someone lives on a country estate with vast grounds, they can have as many dogs as they want, as long as they do not cause danger or disturbance to anyone else. I hope that the Government will listen to calls from communities to give them the powers they need for people to live peaceful and safe lives.

Let me touch briefly on the issue of breeding dogs. We know that a strong contributory factor to dogs becoming out of control is how they are socialised in the first few weeks of their lives—whether, for example, they are taken away from their mother too soon or are appropriately socialised with other dogs and people or are sold to people who know how to train and look after them. This may be an issue for the urgently needed dog welfare and control Act, which I shall continue to press the Government to introduce because, whatever the results of these provisions, we still need holistic legislation to deal with those issues.

Finally, I want to press the Government to extend the legislation to cover attacks on all protected animals. Attacking other animals is a sign that dogs are becoming dangerously out of control and therefore a threat to people. Why should a responsible pet owner have to face the trauma of an attack and the related veterinary expenses and heartache? Many owners are actually injured while trying to protect their beloved pets, such as the woman in Atherton who, just two weeks ago, lost part of her finger when she picked up her dog to protect it from a ferocious dog.

There is much in the Bill to be welcomed, but it does not go far enough. I ask the Government to look again and to support our new clauses and amendments to strengthen the Bill. Jade, her parents and all the other victims of dog attacks deserve no less.

[Martin Horwood (Cheltenham) (LD)]

It is an honour to follow the hon. Member for Bolton West (Julie Hilling). I am sure that she spoke for the whole House in relation to the case of poor Jade Anderson. Sadly, that is just the latest and most tragic example of what the hon. Lady rightly described as an epidemic of dog attacks which are hospitalising thousands, and injuring thousands of postal workers and others. I am afraid that there have been many distressing cases in my own constituency, which led me to become involved in what has been quite a long campaign. I pay tribute to, in particular, the hon. Members for Penistone and Stocksbridge (Angela Smith) and for Ealing Central and Acton (Angie Bray), both of whom have campaigned very persistently.

For many years it seemed as if the Government were not budging at all on the issue, so it is enormously welcome that we are considering it in the context of this Bill, and that the Government are taking action. Their action is being taken step by step—it is rather gradualist—and that may be frustrating for some of us, but we should not make the best the enemy of the good. We should recognise the positive steps that are being taken in the Bill, not least in the context of the Government’s earlier action in setting a timetable for the introduction of universal microchipping. That will help us to identify the real culprits, who—as many Members have pointed out—are irresponsible dog owners as much as the dogs themselves, some of which are just more victims of this phenomenon.

The hon. Member for Croydon North (Mr Reed) and others have made a strong case for dog control orders. I have been sympathetic to that idea for many years, but I should be content if we could achieve the same outcome by other means. I understand the Government’s position; I realise that their main purpose is to simplify and rationalise antisocial behaviour legislation without sacrificing flexibility. The Bill underlines the important point that the issue of dangerous dogs is inextricably linked with that of human antisocial behaviour. If we can tackle one by tackling the other, I shall be satisfied, even if the legislation does not include the actual words “dog control order”.

One of the most important provisions involves the extension of liability for dangerous dogs to private property. Liberty has expressed some concern about the so-called “bite a burglar” provisions, and I think that Ministers need to consider those carefully. Our two contradictory instincts are to say, quite rightly, that burglars who enter other people’s properties with malicious intent should do so entirely at their own risk, and to support the extension to private property of liability for the dangerous behaviour of animals. Both are worthy instincts, and resolving that conflict will be a difficult task for Ministers. I speak as the brother of a postal worker who is very keen for the Bill to proceed.

[Mr Spencer]

Will the hon. Gentleman give way?

[Martin Horwood]

I am sorry, but I will not, because of the time.

Another important provision, which has not been mentioned much in the debate so far, is clause 99, which begins the necessary shift from breed to deed. It requires a court to establish whether a dog is

“a danger to public safety”,

given

“the temperament of the dog and its past behaviour”,

and to establish whether the dog’s owner is a “fit and proper person” to own a dog. I agree with the criticism by the hon. Member for Penistone and Stocksbridge of the rather strange list of obscure breeds, which I am not sure that most police forces would recognise even if they came across them. I do not know whether we will eventually abolish that list, but I certainly think it significant that the Bill is embarking on that shift towards tackling deed and behaviour rather than just breed.

I have some sympathy for the amendments tabled by the hon. Member for Bedford (Richard Fuller). They seek tougher sentencing, underlining the fact that in many instances dogs are used as lethal weapons, and that we should see that in the context of the responsibility of their owners. I also have some sympathy for the amendment tabled by the hon. Member for Stockport (Ann Coffey), as, I think, will legions of Liberal Democrat “Focus” deliverers. My constituent Councillor Rob Reid provided me with a paddle which I now use to push leaflets through letter boxes. A deliverer can take some responsible action. The paddle now bears a good many teeth marks, which could have been on my fingers. Councillor Reid made it by cutting up old “Yes to the alternative vote” campaign placards, which is probably one of the lesser but more positive outcomes of that campaign.

[Angela Smith]

Is it not true that, if we legislate specifically to require dog owners to put guards on their letter boxes, we will run the danger of neglecting the other risks that people face when they go on to private property, such as dogs running free in back gardens? Is it not the case that there are a number of possibilities in terms of dog attacks once someone passes the boundary of the gate?

[Martin Horwood]

It is important that the Government consult carefully on all these things. We do not want to intrude too much into the realm of private property and what people are allowed to do with their dogs in their property, but the point that the hon. Lady makes is well made.

I ask the Minister to consider carefully the campaign by Naturewatch, which is based in my constituency and led me to table early-day motion 412 to address the issues of irresponsible breeders and the need to regulate the advertising and selling of pets. That could be the next important step that the Government take in their rather gradualist approach to the issue. In many ways, that is one of the root causes of the phenomenon of dangerous and trophy dogs and dogs used as weapons.

For now, however, we should congratulate the Government on taking some important steps to tackle the issue. The steps we are voting on today will help to save lives. They will potentially save the lives of children like poor Jade Anderson and the lives of adults. They will certainly save the lives of pets. Those steps are overwhelmingly to be welcomed.

[Luciana Berger]

In November four years ago, my constituent, John Paul Massey, was killed by a dog in Wavertree. He was four. It happened during the run-up to the general election. I remember the impact that his death had not only on his family and their friends but on the wider community. To this day, I have people who come to talk to me about the experience of that happening in our community and how it has impacted on them, even though they may just have been a neighbour or someone who lived in a neighbouring street. It is not just John Paul Massey who tragically lost his life. Hon. Members on both sides of the House have mentioned many other victims. One life lost because of a dog is one life too many. I hope that the Minister will reflect on that in his response.

I am going to echo many of the comments made by hon. Friends and Members on the Government Benches. I notice that there are people present who have been long-standing campaigners on the issue for far longer than I have following my election in May 2010. I pay tribute to my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) for the hard work that she has done for so many more years than I have on the issue. My hon. Friend the Member for Bolton West (Julie Hilling) has been affected in more recent times. We have heard the worst examples and seen evidence in newspapers and on television of the most tragic injuries and of people who are permanently disfigured. As we have heard, every year, thousands of people are hospitalised. Every year, hundreds of thousands of people are attacked by a dog and may not present themselves to the NHS. For many of those people, there are long-term psychological consequences. For people on the front line who go into homes, be they social workers, BT workers, meter readers or energy company staff, such attacks can have a long-term impact on their ability to work.

As we have heard, the attacks come at a great cost. The estimates that we have are very conservative. There is a cost of £10 million a year to the NHS. That should cause any Government concern. Equally, as the hon. Member for Sherwood (Mr Spencer) said, people who are visually impaired will be affected if their guide dog is attacked. I do not think that enough of us know—I learned this only recently—that it costs £50,000 to train and look after a guide dog over its lifetime. That is all charitable money. If a guide dog is attacked by a dog, not only will there be a cost and long-term consequences for the guide dog, but the owner, who has spent time bonding with the guide dog and has depended on it, will no longer have a friend. That can also have long-term consequences.

I support new clause 3, which is in my name and that of many hon. Friends, because I share the criticism by the Select Committee on Environment, Food and Rural Affairs and many hon. Members on both sides of the House. Although I welcome what the Government have done on the issue, the clear message that I have heard from professionals in the field is that we should prevent dog attacks from happening in the first place.

I have listened very closely to the contributions of Members on both sides of the House, in particular those on the Government Benches who spoke in support of what the Government have come forward with thus far. I have also looked very closely at the community protection notices and I have listened to the professionals who know far better than I do how this will operate in practice, and I will listen very carefully to the Minister’s response, too, but I have strong concerns. As it stands, CPNs are very bureaucratic and practitioners will need a lot of time and resource to implement them. They will not sufficiently address dog behaviour and welfare. That is, essentially, what all of us here are talking about today. There are also concerns that the CPN will come too late, because the dog owner must be served with a written warning before they can be issued with a CPN.

16:00

I support dog control notices as I believe they would increase the profile of the issues and awareness of them among the target audience. They would also serve to impress upon enforcers the need to ensure expertise among those authorised to issue notices. We have not spoken about what a DCN would specifically do. It would place a responsibility on an owner to undertake requirements tailored to the need of the individual and their dog. That could be something as simple as the use of a lead or a muzzle at an appropriate time, or the maintenance of a dog-proof fence, or a request to undertake some training. I have attended events the Dogs Trust puts on for free, so I have met many people who love their pet but do not have the skills or expertise to best look after it. A DCN could address that very well.

The focus of a DCN is on education and supporting the individual, rather than being punitive to the owner or dog. I urge the Minister to think very seriously about this issue because we have a problem in this country. We see it in communities all the time, and not just in inner-city urban communities, but in rural communities too. We need something that is going to deal with dog attacks effectively, so we never again open a newspaper or switch on our TV and learn of somebody tragically being maimed or losing their life because of a dog.

I know the Minister is new in his post, and I urge him to listen to the professionals, including the Royal Society for the Prevention of Cruelty to Animals, the Dogs Trust, the Kennel Club, the British Veterinary Association and others, and also to the Communication Workers Union, which represents thousands of postmen and women who deliver our mail every day, and up to 20 of whom are attacked just delivering our post. I ask the Minister to consider the new clause again. If the Government are not going to support it today, I urge them to consider it in the other place, because we need serious action to prevent dog attacks in the first place.

[Mr Robert Syms (Poole) (Con)]

I welcome what the Government are doing. It is quite brave. Dealing with any topic such as this one fuels great passions. All of us love dogs, but those of us who are parents feel slight fear when we see an unruly dog in a playground or somewhere else.

We have to strike a proper balance. The whole thrust of what the Government are doing in this area is to simplify and make flexible antisocial behaviour legislation so it can be more easily used. Therefore I urge the Minister to resist most of the amendments, although I accept they have been tabled for understandable and strong reasons, and the hon. Member for Bolton West (Julie Hilling) certainly made a very good contribution. We ought to go forward with what is being proposed, which is CPNs, and see whether they deliver what the Government have assured us they will.

There are DPNs in Scotland and Northern Ireland and the Government have looked at them and concluded they would rather have CPNs. If devolution is to mean anything, it must allow Scotland and Northern Ireland to go their own way and the rest of the United Kingdom to go a different way if it perceives that is a better way to deal with the problem.

[Jim Shannon]

Will the hon. Gentleman give way?

[Mr Syms]

No.

We all know the problem is irresponsible dog owners, and the Government’s raft of proposed legislation ought to be able to deal with that effectively. I therefore urge the Minister to resist most of the amendments, but I also urge him to give special attention to what my hon. Friend the Member for Bedford (Richard Fuller) said. The Committee came up with some refreshing ideas. Some of the Back-Bench Members had meetings with Ministers, including the Department for Environment, Food and Rural Affairs Minister Lord de Mauley. The refreshing thing was that they were prepared to look at the issue of the tariff and sentencing. A consultation took place in the summer, and although my hon. Friend is disappointed that it has not yet been published and any changes will be made in the House of Lords, by Whitehall standards this is the speed of light: we have a Bill, we meet a Minister, the Minister undertakes to have a consultation, we have the consultation and in a matter of weeks something will come back to the other place. That is pretty good, so I welcome what the DEFRA officials and the Minister have said.

[Richard Fuller]

I join my hon. Friend in commending Lord de Mauley for his speed of reaction in DEFRA. We are just looking for the same speed of reaction from the Home Office.

[Mr Syms]

Absolutely. Progress has been made and the Government listened to our Committee debates. I was surprised that my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), who mentioned cats, did not mention Mungo and Basil, as they got a mention in Committee. It was an interesting Committee and things were well debated. We made proposals that will improve the Bill. I urge the Minister to resist most of the amendments, but to consider the amendment to do with the tariff, which needs to be given serious consideration.

To go back to my first point, the Bill is about simplifying things and making them more flexible, and I urge the Minister to resist more complicated legislation. Let us get on with the job and let us make it easier for legislators. This is a good Bill, extending the Dangerous Dogs Act 1991 to private property and protecting assistance dogs. It contains a lot of good things and if we can get the tariff up as well, it will be a result for those who served on the Committee and for this House.

[John Healey (Wentworth and Dearne) (Lab)]

It is a pleasure to follow the hon. Member for Poole (Mr Syms) and it was good to hear him speaking in the House, after a period in the Whips on the Front Bench, although what he had to say was still a little too loyal for my taste.

I welcome clause 98 and the extension of the offence of allowing a dog to cause injury or the fear of injury to all places, including all private property. That is long awaited and closes a significant loophole in the law. Ministers have simply been much too slow to make this change. Today, however, particularly with new clause 3, the new Minister has the opportunity to act ahead of a serious and growing problem, instead of just giving a long-delayed response to a problem, as we have seen so far. I am talking about the introduction of dog control notices.

We know that thousands of victims are injured and hospitalised each year as a result of dog attacks. We know that the number of owners sentenced for offences related to dangerous dogs has increased by more than one third since 2009. Just in South Yorkshire the police tell me that in the past year they have responded to 464 dog attack incidents, and that just in 2013 they have so far taken out 26 court cases pursuing prosecution against those owners.

The latest case reported to me was that of Rebecca Lowman of Goldthorpe, who was attacked and badly injured in the arm and leg last month when she was defending a woman who was being attacked by her own dog in her own house. While Becky was still in hospital, I sat down with her husband John, who was very upset by Becky’s injuries and very angry that the police had no ability to act on that dog because the attack took place in that private house.

Since I started campaigning on this issue in the past few weeks, a lot of people have contacted me, including Norma Saunders, who told me that she knows someone who was a victim of a dog attack. She said:

“After the dog attacked several times, our community felt terrorized. I did not let my little boy play in the garden & I did not walk to the shops, but the authorities were not interested.”

I pay tribute to Hallam FM in South Yorkshire, which has taken up this campaign, aired the problems and given listeners the chance to give their experiences over the past week. A couple have phoned in with very powerful points. One said that the law must be changed:

“I was mauled by an American Pitt bull crossed with a Bull mastiff at my friend’s house and as it was in its rightful house nothing could have been done…I have been left with traumatic memories and ugly scars, this dog has not been put down and has in fact bitten someone else”.

Another caller simply said that we should

“just do what is definitely necessary to prevent any more horrific and fatal attacks on innocent people and children.”

The Minister has the chance to do just that this afternoon.

I urge the Minister, taking advantage of his fresh mandate as a new Minister in a new post, to accept new clause 3. Dog control notices have been legislated for in Scotland for three years and this represents a sensible extension of the scope for local authorities, courts and the police to take action against a person in control of a dog whose behaviour is out of control. My hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) has explained some of the steps and sanctions available to the authorities when a dog control notice is in place.

Labour has been arguing this case but Ministers have been dragging their feet for three years now. During that time, thousands more have suffered serious and often debilitating injuries. Most dog owners are responsible and their dogs are well behaved, but a minority see dogs as status symbols or even offensive weapons. The Government must go further than this Bill. Closing the loophole in the legislation over attacks on some private property is a sensible step, but one that they have been pushed to take. Let us see Ministers take the next sensible step this afternoon, introduce and accept the principle of dog control notices and help to reverse the rising trend of attacks and to head off some of the attacks we will otherwise definitely see, which will leave adults and children badly scarred, badly injured, badly traumatised and, in some cases, dead.

[Sir Edward Leigh (Gainsborough) (Con)]

I support the Government’s gradualist and sensible approach and I urge the Minister to resist new clause 3. We all regret and are desperately unhappy about vicious attacks by dogs, particularly on children—although also on anybody else—and if legislation could solve that problem and new clause 3 could deal with it without causing massive potential inconvenience to millions of peaceable people who own dogs, I would be in favour of it. However, like all such amendments, it would probably, sadly, do little to control the vicious people who use dogs as weapons and it could impact severely on millions of ordinary, peaceable dog owners.

I declare an interest because, like you, Mr Deputy Speaker, I am a dog owner. My dog, a little border terrier called William, is a lot smaller than yours. I saw yours in the Westminster dog show last year and many people think that your breed of dog is quite powerful, but I know from having witnessed your dog that it is well brought up and peaceable.

Let us be sensible about this. I know that new clause 3 is well intentioned, but it could have draconian effects. All it states is:

“Where an authorised officer has reasonable cause to believe that a dog is not under sufficient control”.

It requires a reasonable belief—that is not probability. We all know that there are disputes between neighbours, or that people have rows with other people. That is such a small bar to get over for an “authorised officer”.

[Luciana Berger]

rose—

[Sir Edward Leigh]

I had better not give way, because I do not want Mr Deputy Speaker to set his dogs of war on me. I shall be very brief and will not take any interventions.

Let me make a simple point. Who is this “authorised officer”? What is this “reasonable cause”? Simply because that officer of the state has some sort of belief, which might have been motivated by other people, the dog might have to be muzzled, neutered or prevented from going in particular places. I am very worried about that.

I am also very worried about the other amendments. I do not agree with my hon. Friend the Member for Bedford (Richard Fuller), who was talking about 14-year sentences. It was in the papers last year that somebody had driven their car dangerously and killed somebody while they were looking at their global positioning system device. They did not look out of the window for 18 seconds and they killed a cyclist, and they went to prison for three years. We all think that is ridiculous. Are we really going to send someone to prison for 14 years for this offence?

Let us be honest about it. Dogs have been bred for thousands of years to be guard dogs. Even my pathetic little border terrier, William, barks when people come up the garden path. That is what dogs are bred to do. All this nonsense about Liberal party canvassers who are scared of getting their fingers bitten when they put a leaflet through the door—I have delivered thousands of useless Conservative party pamphlets through the door. When I see a dog behind the door, I am delighted not to put the pamphlet through the letterbox. Just show some common sense. Dogs are dogs. We cannot change dogs with legislation.

New clause 3 is just one extra bit of legislation that will not impact on the people who really cause trouble, but will, as I said, impact on millions of dog owners. We should be calm, take a gradualist approach and support what the Government are doing.

16:15

[Norman Baker]

We have had a good wide-ranging debate. In the time left available to me, I will try as always to address the points that have been raised, but if I am unable to respond to all of them, I will write to the individual Members who have raised points and have not had those addressed as part of my response.

Let me say first that we are very sympathetic to the calls from many people for an increase in the maximum penalty for a dog attack. The Government agrees that two years’ imprisonment is not a sufficient penalty for the devastation and damage that a serious dog attack can do. There were over 3,000 responses to the consultation, and although there was strong support for an increased maximum penalty, there was no consensus as to where to set the bar. Given the volume of responses, I regret that it has not been possible for the Department to conclude its consideration of the issue in time to table a Government amendment on Report, but I can reassure my hon. Friend the Member for Bedford (Richard Fuller) that the Government will table an amendment to increase the maximum penalties for dog attacks when the Bill is in the other place. The response to the consultation on changes will, I can assure the shadow Minister, be published in good time to inform the debates on the issue in the other place.

The Government amendment will reflect the high public concern that two years is an insufficient penalty for these offences, and the fact that some 16 adults and children have died in dog attacks since 2005, and some 10 assistance dogs are attacked by other dogs every month. As the consultation made clear, we will be looking to distinguish between attacks on people and attacks on assistance dogs. For attacks on people and where a person is killed or seriously injured, I am attracted—perhaps given my former role as a Transport Minister—by the comparison with penalties for causing death or serious injury by dangerous driving. Where a dog attacks an assistance dog, we will be looking at a lower maximum penalty, but one that is higher than the present one that applies.

I should say to my hon. Friend the Member for Gainsborough (Sir Edward Leigh) that some people are breeding dogs deliberately to use as weapons. It is under those circumstances that higher penalties would be applicable. I hope that in the light of the reassurances that I have given on this matter, and the commitment that I am giving to a Government amendment, my hon. Friend the Member for Shipley (Philip Davies) will not press his amendments today.

New clauses 3, 6, 17, 18 and 19 deal with dog control notices, dog number control notices and the requirement for all households with a dog to fit letterbox guards. I understand the intentions of hon. Members who tabled these amendments. There is a genuine need for an additional tool to address poor dog ownership and to enable early action to prevent dog bites and attacks. I understand the point made by the hon. Member for Stockport (Ann Coffey), who sought to take matters forward with her new clause 18. Every day thousands of postal workers and others, including those who deliver political literature, face uncertainty and apprehension as they approach houses with dogs to deliver mail and so on. The Government believe that such individuals must be able to go about their duties without fear of injury.

It is paramount for local officers from the police or the local council to have at their disposal the right tools so that they may take action in cases of irresponsible dog ownership. But as was made clear when the issue was raised on Second Reading and again in Committee, the measures in parts 1 to 4 introduce powers that will allow exactly the type of early intervention that the new clauses seek to provide.

Those measures can address all types of such irresponsible behaviour with a dog, regardless of the specific manifestation. For example, a community protection notice can be served in cases where there are too many dogs in one home—the point made by the hon. Member for Bolton West (Julie Hilling)—where an owner does not have proper control of his or her dog, where a dog strays and in many other scenarios. Those measures are in addition to existing statutory measures, notably offences under the Animal Welfare Act 2006 relating to welfare standards, the law on statutory nuisance and, for commercial dog breeders, any licence requirements.

I want to reassure Members—this is an important point—that all the requirements they suggest under new clauses 3 and 6, such as muzzling, neutering, microchipping, keeping a dog on a lead, attending training classes, fitting a letterbox guard to the door of a property and seeking expert advice, can be required under a community protection notice. The new clauses, although well intentioned, are simply not necessary. The powers are already there in the Bill. To pick up on a point made by the shadow Minister, that is how the Liberal Democrat and Conservative manifesto commitments are being delivered.

[Luciana Berger]

Will the Minister acknowledge that, as the legislation is currently drafted, individuals will still require a written warning before they can receive a community protection notice, which will add delays? Who knows what could happen during the intervening period?

[Norman Baker]

I want to address that point. Only this month the Department for Environment, Food and Rural Affairs published a draft practitioners’ manual—it is a draft because we are inviting comments on it—entitled, “Tackling irresponsible dog ownership”. It gives an example on page 15. If a dog is out of control in a park, a written notice can be issued on the spot by the relevant officer who has control in that situation. The owner would then be given a “reasonable time”, which might be just five minutes, to respond. If the dog is not brought under control in that time, the community protection notice can be issued right away. I do not understand why the Opposition think that there could be huge delays in the process, because there could not. It is a simple piece of legislation to make it effective and quick, and that relates to the issues to which attention is rightly being drawn.

[Mr Spencer]

I am concerned about the term “owner”, because the person in control of the dog in the park might not be the owner, so the “It’s my cousin’s dog” defence could deflect the notice.

[Norman Baker]

The provision might specify the person in control of the dog, so if I have that wrong I will correct it. I absolutely accept my hon. Friend’s point and will reflect on it.

The measures in the Bill go further and allow officers to make innovative requirements based on the specifics of the case they are dealing with, for example by requesting that signage be put up to warn visitors to a property of the presence of a dog, or that a letterbox guard be fitted. I have genuinely heard nothing during the course of the debate to suggest that there is a gap in what is proposed in the Bill.

The Local Government Association stated in written evidence to the Public Bill Committee:

“The LGA remains to be convinced that separate tools are necessary as no details have been provided of the specific gaps in the provisions for the injunctions, community protection notices or public space protection orders that a dog control notice is needed to fill.”

We all share the objective of trying to do something about this matter, but Opposition Members seem to think that a measure cannot be effective if it does not have the word “dog” in the title, which is simply wrong.

[Mr Steve Reed]

Will the Minister give way?

[Norman Baker]

I will give way one more time.

[Mr Reed]

It is not just the Opposition who are making those points; so too are many experienced organisations, including the Royal Society for the Prevention of Cruelty to Animals, the Association of Chief Police Officers, the British Veterinary Association, Battersea Dogs and Cats Home and this House’s Environment, Food and Rural Affairs Committee. All of those organisations have more experience in this area than either the Minister or I have, yet he is not taking their views on board.

[Norman Baker]

The shadow Minister made that point in his opening remarks. I have not been a Home Office Minister for long, but I dealt with dog legislation for many years in opposition, so I think I know what the legislation says. I have given him an absolute assurance that the issues the Opposition are concerned about, as am I, such as microchipping and neutering, could all be dealt with under the community protection notice. I have given the hon. Member for Liverpool, Wavertree (Luciana Berger) an assurance that those matters can be dealt with very quickly. Those are the two points that the Opposition are perfectly correct to pursue, and I have given answers that I had hoped would satisfy them. I guess the proof of the pudding is in the eating. As far as I am concerned, the measures they want to deal with the problem that they, and we, have identified are in the Bill.

Notwithstanding that, I understand the concern that, as Labour Members have said, any dog issues may be lost in the breadth of these measures. However, these powers recognise, first, that antisocial behaviour does not come packaged into distinct areas, and secondly, that what matters is whether it can be dealt with quickly and effectively, which is what the Bill does. The practitioners’ manual from DEFRA is the Government’s attempt to reassure people that these matters will be dealt with properly.

[Angie Bray]

Does the Minister recognise that sometimes it is not the attacks themselves that cause anxiety but the intimidating nature of some of the dogs that are attached to what I would call dangerous owners? That blights the lives of people trying to use the parks. Just the presence of this intimidating animal with its owner can do some damage.

[Norman Baker]

I do recognise that. That is a good reason why it is better to have flexible, general legislation rather than specific legislation that then creates loopholes. That is what the Opposition, who are well intentioned, would do if they had their way in the construction of antisocial behaviour legislation.

[Angela Smith]

Will the Minister give way?

[Norman Baker]

I must not, because I have lots of people to try to reply to. I am sorry.

I hope that I have been able to persuade Opposition Members that the approach put forward in the new clause is already provided for in the Bill. If they were minded to press it, I would invite the House to reject it. [Interruption.]

The hon. Member for Penistone and Stocksbridge (Angela Smith), who is seeking to intervene while I am trying to respond to her points, proposes to reduce the time delay that can take place following the seizure of a suspected section 1 dog, such as a pit bull terrier, before it is examined by expert witnesses for the defence or prosecution to assess whether it is a prohibited dog. I understand her concerns about the impact that such delays can have on the welfare of dogs. That is why we are committed to bringing forward regulations next year to make it clear that when the police seize a suspected prohibited dog they will not be required to kennel it, but only in cases where they are satisfied that the situation of dog and owner do not present a risk to public safety. It is right to give the police this discretion, and that is the aim that we intend to take forward. It will be a condition of release, if release occurs, that the owner consents to the dog being muzzled and on a lead in public, as well as being microchipped and neutered before it can be released back to the owner. This is to ensure public safety and to prevent breeding from section 1 dogs. On that basis, we do not consider the hon. Lady’s new clause 29 to be necessary.

I now want to deal with the amendments eloquently presented by my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), which seek to extend the offence in section 3 of the Dangerous Dogs Act 1991 to cover incidents where a dog injures or kills a protected animal. I entirely understand and sympathise with her reason for proposing that measure. She listed some of the existing legislation, which does have an effect and can be used in certain circumstances, including the Animal Welfare Act 2006, the Animals Act 1971, the Dogs Act 1871, and the Dogs (Protection of Livestock) Act 1953. It is rather unfortunate that the Criminal Damage Act 1971 classifies animals as goods or property in this respect.

I understand the concern of people whose cat is savaged by a dog, but the way forward is to consider other solutions. Instead of more legislation, we want better education for owners, training for dogs, and increased awareness among the public and the authorities who can use the new antisocial behaviour powers to address these incidents and help to prevent them before they happen.

I draw my hon. Friend’s attention to particular resources in legislation in respect of horses, which she mentioned. The Dangerous Dogs Act would apply in a situation where a dog threatens or attacks a horse and a rider, because the rider is likely to have “reasonable apprehension” that the dog will injure them, and therefore an offence would be created. My hon. Friend also referred to the livestock issues that I mentioned earlier. We are keen to make sure that other animals are protected. However, as I said, the general nature of the legislation provides options through, for example, the injunction procedure to see whether there are other avenues that can be taken to deal with dogs that present a danger to the public and, indeed, to other animals.

On amendment 142, tabled by the hon. Member for Penistone and Stocksbridge, I regret that because of the lack of time I will have to write to her with a specific response to the point she raises.

The actions that this Government are taking in tackling dangerous dogs are absolutely right. Everybody in the House agrees that that needs to happen better than it has done in the past, and I believe the Bill will achieve that. The provisions will enable all the dreadful acts that have been taking place to be tackled in a sensible and effective way.

[Mr Steve Reed]

I have listened carefully to the Minister, but I am afraid I remain unconvinced and we will press new clause 3 to a vote.

Question put, That the clause be read a Second time.

16:30

Division 100

Ayes: 236

---

Labour: 230
Scottish National Party: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1
Plaid Cymru: 1

Noes: 315

---

Conservative: 257
Liberal Democrat: 48
Democratic Unionist Party: 6
Independent: 3

Third Reading

16:44

[Damian Green]

I beg to move, That the Bill be now read the Third time.

I take the opportunity to welcome for his last hurrah on this Bill the right hon. Member for Delyn (Mr Hanson), before he moves to the equally exciting field of immigration policy. It is an area that—I say this with some experience—I know he will find life enhancing.

The Bill has been much improved by the scrutiny of this House. We often beat ourselves up—and are beaten up by people outside—about the level and quality of scrutiny we apply to legislation in this House, but I think the Bill is now in better shape than it was when it entered Committee, and for that I thank hon. Members from across the House. Foremost among the improvements is the insertion of a whole new part of the Bill at the instigation of my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood), and 67 other right hon. and hon. Members from across the House who supported new clause 5. I pay tribute to my hon. Friend for the energy and perseverance she has shown in pursuit of her Childhood Lost campaign.

In 2012-13, well over 1,000 people were convicted in this country of offences relating to child sexual exploitation. It is a horrible and repulsive crime and we owe it to the victims, and to all children, to do all we can to eliminate it. Prosecutions and convictions are essential, but by then, of course, the damage is done—or, as my hon. Friend put it, a childhood has been lost. We must therefore do more to prevent such horrendous crimes from occurring in the first place.

Civil orders, which help protect the public from individuals whose behaviour means there is a risk that they will sexually abuse or otherwise sexually harm others, play an important part in our prevention strategy. Although provision for such orders has been in statute for 10 years, and there are many cases in which they have been used effectively, it is clear that the current regime in the Sexual Offences Act 2003 is too inflexible. Instead of supporting the protection of vulnerable children, it places unreasonable obstacles in the way of keeping them safe. The new sexual harm prevention order and sexual risk order will simplify and strengthen the current powers available to the police, rebalancing the scales of justice in favour of children and vulnerable adults.

In many respects, the approach we are taking to the reform of civil prevention orders under the Sexual Offences Act mirrors our approach to antisocial behaviour powers, and as in that case, the Bill sweeps away the complex and bureaucratic array of powers that put unnecessary obstacles in the way of front-line professionals taking fast and effective action to protect vulnerable people and communities. With the ASBO, however, there was an additional problem because the existing powers simply do not work. ASBOs can take many months to obtain, and, once secured, most are breached with more than four in 10 breached repeatedly. We need powers that will not only offer fast and immediate protection for those at risk of harm, but drive a change in behaviour and provide a long-term solution.

In her article in The Independent last month, the hon. Member for Ashfield (Gloria De Piero) bemoaned the fact that the ASBO is “much maligned”. She has recently moved on from the Home Affairs brief, on which I congratulate her, but I put it to her and to her colleagues who remain on the Front Benches that it is also time to move on from the ASBO. The ASBO is maligned for the good reason that it has been ineffective, and the Bill will rightly see the back of it.

As well as ensuring that front-line professionals have the powers they need, our reforms place the victim at the heart of the response to antisocial behaviour. The community remedy will be enhanced if it is developed locally within a national framework. Out-of-court disposals must be seen to be a fair and effective way of dealing with offending behaviour if they are to have the confidence of the community. To achieve that, each and every one should have a punitive, restorative or rehabilitative element, or a combination of those. I commend my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) for his comments about strengthening the provisions of the Bill to that end. Out-of-court disposals must be used appropriately, and as I have repeatedly said, they should only be used as the first response to low-level offending. When the seriousness of an offence, or the frequency of the offending behaviour, warrants prosecution, prosecution is what should happen.

Under the Bill, victims of antisocial behaviour will be able to take advantage of the community trigger. No one should have to suffer repeated incidents of antisocial behaviour because the police, local authority or landlord repeatedly fails to respond to the victim’s call for action.

The community trigger will give victims the power to demand a case review. That case review must assess whether further action is required, and it can result in the relevant authority being required to take appropriate action. That is real accountability. It gives ordinary people real power to compel the authorities to respond in a way that will stop them being victimised.

After the debate on Report and the House’s clear rejection of new clause 3, I hope we can move on from the debate about dog control notices. Hon. Members on both sides of the House agree on the need for more effective preventive powers to tackle irresponsible dog owners. The Department for Environment, Food and Rural Affairs has published the draft of a comprehensive practitioners manual that shows how the new antisocial behaviour powers in the Bill can be used to tackle dog-related problems. I put it to the House that the time has come for all parties, including animal welfare groups, the police, local authorities and others, to work together to ensure that the provisions in the Bill deliver the outcomes we all want.

[Lady Hermon]

The Minister will know very well that responsibility for policing and justice was devolved to the Northern Ireland Assembly in 2010, but bits of clause 98, on dangerous dogs, appear to apply to Northern Ireland. I do not understand why some bits and pieces apply to Northern Ireland when other bits and pieces do not, but on the bits that apply, what consultation was there with the Northern Ireland Department of Justice and the Northern Ireland Department of Agriculture and Rural Development, which is responsible for dogs?

[Damian Green]

I am happy to assure the hon. Lady that, throughout the passage of the Bill and on many other matters, there has been regular, continuous contact at all levels. I see the Northern Ireland Minister of Justice regularly, and our officials are in contact on detailed matters. We work closely with the Northern Ireland Department of Justice.

[Julie Hilling]

The Minister says he hopes the charities and so on get behind the Bill. It is not too late for him to reconsider and listen to what they say on how to improve the Bill rather than asking them to support measures that they believe are second best.

[Damian Green]

I sense the hon. Lady is trying to lure me into a debate she has just had with my hon. Friend the Minister. I heard his speech, in which he replied fully to the points made by her and others. She says it is not too late, but, in practical terms, it is—we have just had a Division and have moved on to Third Reading. [Interruption.] There will indeed be debates in other places.

The examination and detention of David Miranda at Heathrow airport in August has put a renewed spotlight on the changes we are making in the Bill to the powers in schedule 7 to the Terrorism Act 2000. Schedule 7 remains a key part of the UK’s border security arrangements and is vital to preserving the safety of the public. I welcome the renewed scrutiny of the provisions. It is right that, as part of his function of reporting on the operation of the Terrorism Acts, the independent reviewer of terrorism legislation, David Anderson QC, has decided to investigate and report on the exercise of the powers in Mr Miranda’s case. The Government will carefully consider his report when it is received.

[Dr Huppert]

We had a slightly truncated debate on that earlier. The Home Secretary has rightly expressed concern about the use of stop and search—it disproportionately affects the ethnic minority population— and taken steps to deal with it. Given that a huge proportion of people who are stopped under schedule 7 are ethnic minorities—it is massively disproportionate—does the Minister agree that similar actions should be taken on schedule 7 stops?

[Damian Green]

The sensible thing to do is to wait for Mr Anderson’s report and then decide what changes, if any, are needed. Let us look at the evidence and then decide what changes are necessary, because the police need the power to stop, question and, when necessary, detain and search people travelling through airports and ports if they are to be able to determine whether an individual is, or has been, involved in terrorism. That power is essential to the prevention of terrorism because it enables the police to detect and disrupt individuals who might be travelling for the purposes of planning, financing and training for terrorist attacks.

The amendments to schedule 7 are in line with the Government’s continuing commitment to ensure that respect for individual freedoms is balanced appropriately and carefully against the need to reduce the threat of terrorism to the British public and British interests overseas. I have no doubt that the other place will want to examine the provisions particularly closely, including in the light of Mr Anderson’s report, but we should wait until we have all had the opportunity to look at the report before rushing to make a judgment on whether we have the balance right.

I should say a few words about the much expanded part 11, which deals with extradition. The ability to extradite people to and from this country is an important component of our criminal justice system. Those who commit serious crimes should not be able to evade justice by crossing international borders to escape arrest. We owe it to the victims of crime to ensure that there are efficient and effective arrangements in place to prevent justice being denied in that way.

[Nick de Bois (Enfield North) (Con)]

The Minister says that the Bill was improved in Committee and on the Floor of the House. While I am sure that that is the case for most of the Bill, he is well aware that we did not have the opportunity to scrutinise Government new clauses on extradition, or discuss the amendments tabled by my hon. Friend the Member for Esher and Walton (Mr Raab) and 28 other hon. Members from across the House. How confident is the Minister that we are providing protections that British citizens have lacked in the past?

[Damian Green]

I am conscious of my hon. Friend’s particular constituency interest, which he has pursued diligently. I am sure that he and I agree that our extradition arrangements need to be fair and proportionate. It is a big step to extradite a person from one country to another. The impact on family life and employment will be far greater than in cases where a person is prosecuted in his or her own country of residence. We should not, therefore, be hoovering up British residents and dispatching them to all corners of Europe to spend months in prison awaiting trial for minor offences. I am sure he would agree with that. That is why in July I recommended to the House that the United Kingdom opt back into the European arrest warrant, but only on condition that we first rectify a number of serious weaknesses in the way it has operated. That is what we are now doing.

Part 11 introduces a new proportionality bar to extradition to prevent people from being extradited for trivial offences. It also introduces a new bar to extradition where the prosecuting authorities in the requesting state have not yet taken a decision to charge and try the accused. That will stop extradited persons languishing in a foreign jail while an investigation takes place. We will amend the Extradition Act 2003 so that a British citizen cannot be extradited for conduct that is not a crime in this country.

These are all important new safeguards that will help to ensure that our extradition arrangements with other EU member states are fair both to the victims of crime and the accused. They are not particularly difficult or onerous. They could and should have been included in the Extradition Act 2003. To leave them out was a mistake, which is being rectified by this Government.

This is a significant piece of legislation, one much enhanced as it has made its way through the House. It will help us to cut crime further, to protect the public and to extend the modernisation of the police. I commend the Bill to the House.

16:58

[Mr David Hanson (Delyn) (Lab)]

I thank the Minister for thanking me for my service as shadow spokesperson on police. It is a privilege to move on to another shadow Home Office role. He and I appear to have job swapped in the course of our time on the Bill. I thank my hon. Friend the Member for Ashfield (Gloria De Piero), who has now joined the shadow Cabinet, for her work on the Bill. I thank my hon. Friends the Members for Birmingham, Erdington (Jack Dromey), for Croydon North (Mr Reed) and for Warrington North (Helen Jones), who joined the shadow Home Office team and worked on the Bill in the past two days. I thank my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) for her work on Report. I also thank my hon. Friend the Member for Sedgefield (Phil Wilson) for his efforts in Committee.

I thank the Minister for his consideration during the Bill’s progress and the Minister of State, Home Department, the hon. Member for Lewes (Norman Baker), for his consideration over the last couple of days. I also thank the former Ministers, the hon. Member for Taunton Deane (Mr Browne), and, in particular, the hon. Member for Poole (Mr Syms), whom I think, in a challenging Committee full of very different views, did his job with integrity; I personally was sorry to see him leave his post in the recent reshuffle. Members of the Committee, some of whom are present today, know that it was an interesting and exciting time, and I thank them also.

Third Reading is about what is in a Bill, not what might have been, and with that in mind, I will first welcome those aspects of the Bill with which the Opposition agree. We welcome the instigation of the College of Policing, which is an opportunity to provide training and investment and to set standards. We perhaps want to see it develop in different ways from the Government, but it is a positive and forward-looking initiative, and I wish both the chair and the chief officer well in their task.

I welcome the measures on firearms and the intent to supply, which, as I mentioned in Committee, had their genesis even before the last general election. These important provisions will help to reduce the supply of guns, and therefore deaths and criminality.

I welcome the extension of the role of the Independent Police Complaints Commission to private contractors and staff working for police authorities, particularly because my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) proposed such a measure last year. I am pleased that the Government have taken it up. Again, we would like to see further action, but I welcome the provision none the less.

I welcome the measures on terrorism and on terrorists travelling abroad and the long-overdue measures on forced marriage, which, in my view and that of the Committee, will strengthen the legal basis for tackling this immensely challenging problem.

I particularly welcome new clause 5 and the measures on sexual harm prevention notices, to which my hon. Friend the Member for Kingston upon Hull North gave a fair wind yesterday. Their introduction to the Bill was a positive development, and I am pleased that the hon. Member for Oxford West and Abingdon (Nicola Blackwood) brought them forward, with support from across the House.

I welcome the measures on witness protection and, as far as they go—I will return to this shortly—the measures on dogs, although we think they could have gone further. I particularly welcome the measures against dog attacks in the home.

I welcome the policing pay review body, which we will give a fair wind, but we need to look again at the commissioning of victims’ services by police and crime commissioners, as I still worry that it will lead to the fragmentation of victims’ services across the country.

We therefore welcome several measures in the Bill. We challenged them in Committee, but they remain and broadly have the Opposition’s support. I have to say, however, that I do not welcome the changes to the ASBO regime or the developments on the injunctions to prevent nuisance and annoyance. I cannot for the life of me understand why a party that, during my formative political years, prided itself on being the party of law and order continues to bring forward measures that reduce the ability of the police and communities to tackle elements that need tackling in our communities. We have seen it on DNA and CCTV, and we are now seeing it on ASBOs. The changes are a reprehensible and retrograde step.

On the same theme, I do not welcome the same party’s introducing thresholds for low-value shoplifting, which we had a strong discussion about in Committee. When the Association of Convenience Stores, which represents 33,000 shopkeepers across the country, is worried about such criminality and the changes relating to low-value shoplifting, the party of law and order—as was, but not anymore—needs to give some serious consideration to the matter.

We support aspects of the Bill, then, but firmly do not support other aspects. On balance—to let you into a secret, Madam Deputy Speaker—Labour Members will give the Bill an unopposed Third Reading, but we will seek to take those matters forward. As I have said, we have to deal with what is in the Bill on Third Reading. We have identified important shortcomings, but we will grant the Third Reading. The Government must reflect further on the issues that have been debated, which have been raised by Members of all parties. Some issues have seen cross-party co-operation—for example, on the importance of dog notices, on the points about covert policing raised by my hon. Friend the Member for Birmingham, Erdington and on how to protect shop workers and other staff from assaults at work. Domestic violence and gun control are other serious issues debated in Committee on which I hope the other place will reflect carefully. Another issue to be considered is that of legal highs and reducing their availability in our communities.

While we are giving fair wind to the Bill, I hope that the other place will look carefully at the improvements we have suggested and listen not just to what Members have said today about dog notices, but to what all organisations have said about them. We want the other place to look at bringing forward measures to tackle covert policing, to protect people from assaults at work and further to reduce and stop the potential for gun use, for domestic violence and for legal highs.

I thank the Minister for his consideration in Committee, but we think there is more to be done. We think that we have been constructive on Second Reading, in Committee and on Report about the changes that need to be made. Ultimately, we think that the issues I have mentioned that are not covered by the Bill now will be part of it following consideration in the House of Lords.

I have enjoyed my role as shadow policing Minister and move on now to shadow Minister on immigration. I thank my colleagues for their support over the three years in opposition and one year in government in which I have discharged this role. I look forward to watching from afar as this Bill is further improved following consideration by the other place.

17:07

[Tracey Crouch]

It was a pleasure to serve on the Committee that considered this Bill. It was indeed the first Public Bill Committee on which I served. After my active participation, I am in no doubt that it may well be my last! I was pleased to play a role and I think that we Back Benchers sometimes underestimate and undervalue the work we do in scrutinising legislation, which is an incredibly important aspect of our job. I am proud to have been part of a team that has, as the Minister said, improved the Bill before it goes to the other place.

I am particularly proud to have made some progress on the issue of bullying—a subject on which I feel strongly, and I believe that the House should continue to feel strongly about it. It is an issue that affects many children and their parents throughout the country. Building advice on bullying into Home Office guidance is a very positive step forward. I would have liked to see more, but that is for another day. We can continue to discuss online safety and cyber-bullying via the Select Committee on Home Affairs and the Select Committee on Culture, Media and Sport, and I have no doubt that we will come back to those issues at some future date.

As I said many times in Committee, I have a great deal of respect for the right hon. Member for Delyn (Mr Hanson), but I disagree that we should be harking back to the halcyon days of ASBOs. Although they might have started off as a very good measure for tackling antisocial behaviour, the simple truth is that the breach rates are far too high. Clearly, then, because it is broke, it needs fixing. We can argue about how best to fix it, but I think that the Government proposals will strengthen our response to antisocial behaviour.

The Minister and the House will be pleased to hear that I recently attended a residents’ meeting in Chatham at which we discussed the significantly high levels of antisocial behaviour in one small part of a ward. The police told residents that new provisions were going through Parliament as they spoke that would enable them to deal much more effectively with this problem in the future, including by ensuring some sort of community punishment. We have introduced what I consider to be sensible measures to ensure that people who commit crimes do not go into the stocks, but I can tell the Minister that my residents were very keen to put some of those perpetrators of antisocial behaviour into the stocks. I am pleased that we have amended the Bill to provide for proportionality of response, but I am also pleased that there will be an opportunity to impose community punishments such as cleaning up all the litter or getting rid of all the graffiti. That will be greatly welcomed in parts of my constituency.

I have no doubt that the House of Lords will improve the Bill further through its precise scrutiny of specific clauses, and that it will consider some of the matters raised by the right hon. Member for Delyn, including legal highs and aspects of the dog legislation with which we have dealt at such length this afternoon, not least the sentencing issues.

I am pleased to have played my part in the Bill’s passage so far, although I am not sure that the Ministers and the former Whip would be so delighted by my active participation. I think that this is a good Bill, and I look forward to its return from the House of Lords.

17:11

[Mr Syms]

It is a pleasure to follow my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch). She has done valuable work in raising the issue of bullying, which blights many children’s lives and is a very important subject for politicians to consider.

This is a Christmas tree of a Bill. When a Bill has so many aspects it makes it difficult to provide enough time for discussion of important issues. However, I think that it has been improved during its passage so far, and it has certainly been given a great deal of scrutiny. I always enjoy the exchanges between the right hon. Member for Delyn (Mr Hanson) and the Minister for Policing and Criminal Justice, which are sometimes robust, and certainly—in the good parliamentary tradition—provide answers to the question of why a Government and an Opposition take particular points of view.

The main changes that have been made relate to extradition. There was a fair degree of consensus on the Bill, which was why at one point we had to slow down a little so that the extradition clauses could be tabled. The Committee had also considered the issue of extradition. In recent years, we have seen a number of examples of why the European arrest warrant is sometimes a good thing for Britain. We have seen gangsters extradited from Spain very quickly, sometimes within hours, and identified. One can understand why the Home Secretary is minded to opt back in to the arrest warrant, following an opt-out, subject to reassurances.

However, we are also aware of many constituency cases in which people have not been treated so well, and human rights have not been dealt with according to the good old British tradition of allowing someone his day in court. People have been whipped out of the country somewhere abroad, have spent a period in prison, and have ended up either not being charged or being acquitted. It is a pity that we did not have an opportunity to explore that more fully today, although I know that a good many Members will be doing so. Of course, the House of Lords is stuffed full of experts—lawyers and others who are au fait with the issues—and I am sure that there will be proper scrutiny in the other place.

I thank the Members who served on the Committee, and I thank the Ministers—including the hon. Member for Taunton Deane (Mr Browne)—for their contribution. We have considered some important issues, including antisocial behaviour, which blights many of our constituencies, and the National Crime Agency, which I think will be a great addition to crime-fighting, particularly across borders. Let us hope that they are considered further, and that we receive the reassurances on extradition that I think the House needs. I think that our constituents and the House will welcome many of those developments.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. There are two Members left to speak. Given that the debate will end at 5.30 pm, I hope that they will agree to share the remaining time, and that each will speak for seven or eight minutes.

17:13

[Dr Huppert]

I am sure we can do that, Madam Deputy Speaker. It seems positively generous, given some of the discussions that we have had today. I am very glad that we agreed yesterday to extend the debate to a second day, although I think that we could have used the time more productively.

There is clearly a great deal of common ground, and the scrutiny process has clearly been useful. It began with pre-legislative scrutiny by the Home Affairs Committee. The Bill was examined very carefully, and I commend the Government for that. A great deal has been added since then, but it was good to start in that way.

I think that the large disagreement that remains ultimately comes down to whether we think that antisocial behaviour orders were an effective solution. I very much think that they were not effective. Yesterday, we heard that they were not effective in terms of breaches and that young people often used them as a badge of honour. We have also heard that the public do not think that they were effective. Last year, about 8% of people in an Angus Reid poll said that ASBOs were an effective way of reducing antisocial behaviour. Therefore, I am pleased that we are moving away from them. Unlike the shadow Minister, I am pleased that we are moving from sounding tough on antisocial behaviour to trying to reduce it. There is a difference between the two.

I still have a number of concerns that I hope their lordships will have a chance to consider. I hope that the Government will reconsider those issues during the passage of the Bill in the Lords. I was pleased by the attitude of my hon. Friend the Minister in his maiden speech in his new role. He highlighted that we must not allow injunctions to prevent nuisance and annoyance to

“become a means of targeting young people simply for being young people.”—[Official Report, 14 October 2013; Vol. 568, c. 541.]

That is right. I am sure that the Government would not want that to happen. We must ensure that it does not. However, the breadth of the IPNA still concerns me. What counts as behaviour capable of causing nuisance or annoyance? I think that some draft guidance is going out. That needs to work. IPNAs should not be used to stop reasonable, trivial or benign behaviours that have not caused and are not likely to cause harm to victims or communities. Guidance can be misinterpreted and I hope that their lordships will look further at that issue. We must also ensure that any positive requirements granted are practicable and will not force people into a position where they simply cannot do what they are required to do and hence breach the IPNA.

I remain concerned about the naming and shaming issue. Judges should do that only where it is necessary. We should have legislation to deal with that. Failing that, the guidance must be expressly clear, but I hope that their lordships will look more carefully at that.

On eviction, the Joint Committee on Human Rights noted

“the seriousness of riot-related offences”,

but correctly questioned whether we need a special rule for riot-related antisocial behaviour, because it looks like

“a punishment rather than a genuine means of preventing harm”.

It punishes the entire family. I was pleased that my hon. Friend the Minister told the House that he would reflect on the issue. I hope that he will do so in the right direction.

On schedule 7 to the Terrorism Act 2000, I was pleased to hear the Minister make some commitments, having looked at David Anderson’s recommendations. That will take us forward. I am pleased that the Government saw the problem with the existing legislation before it became a massive media story. However, the Government can go a lot further. I have tried to itemise a series of amendments that would make a substantial difference. The time has already been reduced from nine hours to six. However, we should go further. We should get rid of the idea of holding people without reasonable suspicion.

One thing we do know is that, with all the people who have been convicted after being held, there has been intelligence ahead of that. I am told that not on a single occasion has someone been stopped and searched, effectively randomly, without suspicion, and been convicted. Therefore, if it is not working, we do not need it to be sure that we are convicting people. There is a series of processes—the right to silence, the right to a lawyer—which should be taken further in another place.

I am pleased that the Government have shown throughout the passage of the Bill, from pre-legislative scrutiny to now, that they are listening and will reflect. I hope that that will continue in the other place and that this can be the right sort of Bill that helps us to deal with the genuine problem of antisocial behaviour, but also protects, indeed enhances, civil liberties by retreating from some of the things that the previous Government introduced—antisocial behaviour orders, schedule 7 to the Terrorism Act and much more.

17:18

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

I do not wish to detain the House for any great period. I had the great privilege and honour of serving on the Bill Committee with my hon. Friend the Member for Poole (Mr Syms), who was not always given an easy time by those whom he was whipping, even on his own Benches. As a number of hon. Members have done, I pay tribute to the proceedings in the Bill Committee. It was a great pleasure of course to work with the right hon. Member for Delyn (Mr Hanson) and with the Minister for Policing and Criminal Justice and the hon. Member for Taunton Deane (Mr Browne), who was also taking the Bill through Committee.

The Bill has shown the House at its best. It has been improved throughout the Bill Committee, both by Opposition amendments that the Government have taken on board—they have brought changes to the Bill before the House on Report—and by amendments tabled by Government Back Benchers, which the Government have also taken into account. I want to pay particular tribute to my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) for her work during the passage of the Bill, which a number of us were pleased to support and which has led to the vast improvement of the Bill before it leaves this place.

I am grateful to the right hon. Member for Delyn for indicating he will not divide the House on Third Reading, but insofar as there is any difference between the two sides of the House on the Bill, it appears principally to centre on whether ASBOs have been a good thing. I understand that there is politics around this and the Labour party is deeply attached to the idea, but as I pointed out in our debate yesterday, whether or not ASBOs were originally effective, as matters now stand they have turned out not to be effective at all. As the hon. Member for Cambridge (Dr Huppert) pointed out, they have become a badge of honour for some teenagers, and the breach rates of ASBOs among teenagers in particular have risen to such levels that they have proved completely ineffective at controlling antisocial behaviour. It is therefore entirely right that the Government have moved to tackle this issue—as, I say to the right hon. Member for Delyn, I suspect that that would have been the position even if his party were in government.

[Lady Hermon]

We had to wait and wait impatiently for years for the Labour party to introduce ASBOs in Northern Ireland, and we were very grateful indeed when we had them extended to Northern Ireland and we have found them very effective.

[Stephen Phillips]

I hear what the hon. Lady says, but the breach rates among teenagers have in some places reached as high as 90% and in those circumstances it is absolutely plain, at least in England and Wales, that ASBOs are not working to control antisocial behaviour. The poll to which I referred yesterday and to which the hon. Member for Cambridge has referred today found that the vast majority of people in this country do not see ASBOs as an effective way of tackling antisocial behaviour. The position in Northern Ireland may be different, but the reality is that whichever party was in government, this issue had to be grappled with. I am pleased the Government have done so and have brought forward measures to deal with antisocial behaviour that are largely welcome on both sides of the House.

As the Bill leaves the House, there are great sadnesses. One of them is that we are yet to have a proper debate on the extradition provisions. We have had the Scott Baker report, yet that has never been debated at length in this House. My hon. Friends the Members for Enfield North (Nick de Bois) and for Esher and Walton (Mr Raab) have repeatedly sought to have a proper debate on extradition, and it remains a matter of great sadness to me—and, I know, a number of other colleagues—that we have not yet had that debate. I therefore hope that, as this Bill leaves the House with these effectively undebated provisions relating to extradition, they will receive a great deal of scrutiny in the other place.

When my right hon. Friend the Minister opened the Third Reading debate he pointed out that one of the things this Bill will do is put the victim at the absolute heart of tackling antisocial behaviour. That is greatly to be welcomed. I had some concerns about the way in which community remedies were going to be dealt with in the Bill, but the Government have listened to the concerns I and a number of others had around how those provisions were to be interpreted and whether or not guidance should be given. That is one of the ways in which the Bill has been improved, and it serves to show this House in its best light.

The Government have listened and brought forward measures designed to improve the Bill, so that when it is rolled out across the country, it tackles the things it is designed to tackle. I have paid a number of tributes already, but may I pay a final one? It is fair to say that the officials at the Home Office and the Department for Environment, Food and Rural Affairs were given a great deal of work to do by the Bill Committee during the passage of this Bill, and I am sure that my right hon. Friend the Minister would wish to join me in congratulating them on all the work they did. As this Bill goes to the other place for further consideration, I can say that, in its drafting and the way in which it has been improved, it is, in my short tenure in this House, one of the best Bills the House has considered.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Deep Sea Mining Bill (Ways and Means)

Tuesday 15th October 2013 Commons Chamber

10:00

[The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)]

I beg to move,

That, for the purposes of any Act resulting from the Deep Sea Mining Bill, it is expedient to authorise:

(1) the imposition of charges in connection with licences granted as a result of the Act, and

(2) the payment of sums into the Consolidated Fund.

The House debated the Bill on Friday 6 September and it received its Second Reading unopposed. I pay tribute to my hon. Friend the Member for South East Cornwall (Sheryll Murray) for her work on the Bill thus far and to Members from across the House who took part in the debate. The former Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), signalled the Government’s support for the Bill on Second Reading, and in order for the Bill to progress to Committee it is necessary for a Ways and Means resolution to be agreed by the House.

As I have said, this motion allows for charges to be imposed in connection with licences granted as a result of the Act. Under the Act, licences would be granted for the exploration or exploitation of any of the certain mineral types for which the International Seabed Authority has regulations—currently, those are polymetallic nodules, polymetallic sulphides and ferromanganese cobalt-rich crusts. The licence would be specific to a particular area of the deep sea bed and it would not have effect until the ISA issued a corresponding contract to the same applicant. The application fee for an exploration licence currently stands at £10,000.

[Lady Hermon (North Down) (Ind)]

Have mining companies expressed any interest in exploiting the deep sea bed around the coast of Northern Ireland? The Bill extends to Northern Ireland but not to Scotland, as is helpfully explained in the explanatory notes.

[Mr Swire]

I am not aware that there has been any such interest, but, as the hon. Lady says, the new licensing regime applies to Northern Ireland as much as it does to anywhere else. Of course, all this motion is doing is committing the Bill to Committee, where she will have a chance to use her forensic powers of examination to tease that and other information out.

As I was saying, the application fee for an exploration licence stands at £10,000. The company then pays an annual fee for three years to continue to hold the licence; those fees are £15,000 for the first year, £25,000 for the second year and £25,000 for the third year. Those are substantial sums; indeed the fee for an application to the ISA is $500,000. Those involved are not small-scale companies but businesses that are prepared to make significant investments in the search for minerals on the deep sea bed. Two licences have been issued under the Deep Sea Mining (Temporary Provisions) Act 1981, and should this Bill become law we hope it will encourage other companies to apply. The fees go into the Consolidated Fund. The ability of the UK Government to issue these licences, in a manner that is fully compliant with international law, will ensure that British companies benefit from the opportunities available in this new industry. The country as a whole will benefit, too.

[Lady Hermon]

I was particularly struck by the Minister’s phrase that the Bill will benefit “British companies” and allow them to exploit the deep sea bed. The Bill runs to only two clauses, but does it contain a clause that I have not noticed which reduces those who can mine the deep sea bed around England, Wales and Northern Ireland—but not Scotland—to British companies only?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the Minister answers, it may be helpful if I remind the House that we are not discussing the Bill. This is about the charging regime for the licences; the debate is on the Ways and Means motion. I fear that we are in danger of debating the Bill, which would not be in order this evening. I know that the Minister is trying to keep in order.

[Mr Swire]

I am most grateful to you for that ruling, Madam Deputy Speaker. I would normally give the hon. Member for North Down (Lady Hermon) as straight an answer as I possibly could, but your injunction prevents me from doing so, so I will continue my speech.

The country as a whole will benefit, too, from the associated revenue, supply chain jobs and science and technology development. I therefore commend the motion to the House.

17:29

[Jim Shannon (Strangford) (DUP)]

I had hoped to intervene on the Minister before he sat down. I shall keep closely to the parameters you have outlined, Madam Deputy Speaker, but I have a question about the Northern Ireland Assembly. The Bill will extend to England, Wales and Northern Ireland. Has there been any interest from companies in Northern Ireland to obtain licences for deep sea mining and will there be close control from the Northern Ireland Assembly?

[Mr Swire]

I am most grateful to the hon. Gentleman but I fear that I would be under the same injunction from you, Madam Deputy Speaker, were I to debate exploration around the sea in Northern Ireland. There will be an opportunity to explore these matters further in Committee; the motion is about allowing the Bill to proceed in Committee.

[Madam Deputy Speaker]

Mr Shannon, if you could stand up and thank the Minister for his intervention and clarification, that would help us.

[Jim Shannon]

I thank the Minister for his clarification on those matters and stand graciously admonished.

[Madam Deputy Speaker]

Thank you for your assistance, Mr Shannon, as the Minister would otherwise have spoken twice.

Question put and agreed to.

Petitions

Tuesday 15th October 2013 Commons Chamber

17:31

[Fiona Mactaggart (Slough) (Lab)]

I rise to present a petition on behalf of 68 of my constituents and people living near Slough.

I thank the Under-Secretary of State for Foreign and Commonwealth Affairs for writing to me about the issue before I presented the petition and want to tell the House how important my constituents, and largely those of Zimbabwean origin, believe the petition to be.

The petition states:

The Petition of the supporters of Zimbabweans who love peace, resident in the UK,

Declares that the Petitioners believe that elections held in Zimbabwe this summer were not free, peaceful and fair; further that the Mugabe regime has a long history of manipulating the entire process including pre-election, during voting and post-election and in 2008 Mugabe refused to accept the results in which his party was heavily defeated, he intimidated people, battered and killed MDC supporters before claiming victory; further that the 2013 elections have again been marked with massive irregularities and incomplete participation and there are serious questions about the credibility of the elections due to the number of irregularities both in the run-up to the ballot and on polling day.

The Petitioners therefore request that the House of Commons makes the world aware that the 2013 Zimbabwean election results are not credible and are not an expression of the will of the Zimbabwean people; and further requests that the House do all in its power to prevent the country plunging into another era of poverty and human suffering as it did in 2008, we ask for help to see human rights restored and support in the fight for a new Zimbabwe.

And the Petitioners remain, etc.

[P001223]

[Mr Speaker]

It is heartening to note that the hon. Member for Westmorland and Lonsdale (Tim Farron) has toddled into the Chamber in time by a few moments. We will enable him now to catch his breath, as I call Dr Thérèse Coffey to present her petition.

17:33

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

The petition requests the replacement of the Blaxhall post box. To give some context, a beautiful Victorian post box was stolen and has not been replaced, despite the fact that it is more than half a mile away from the nearest post box.

The petition states:

The Petition of residents of Blaxhall,

Declares that Royal Mail has declined to replace the stolen post box in the village despite Ofcom’s recent measures to protect rural post boxes from removal.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Business, Innovation and Skills to support residents of Blaxhall in their request to Royal Mail to replace the post box.

And the Petitioners remain, etc.

[P001227]

17:34

[Tim Farron (Westmorland and Lonsdale) (LD)]

I wish to present petitions on behalf of residents of the Hawkshead area and of the Coniston area—two separate petitions calling for the same thing, the retention of their two GP surgeries. I present the petitions on behalf of 928 people in the Coniston area and 1,228 people in the Hawkshead area.

The petitioners declare that they believe that the GP surgeries in Hawkshead and Coniston in Cumbria will close unless the Government’s funding formula is changed to support rural practices, and further declare that the petitioners believe that the GP surgeries in Hawkshead and in Coniston are vital to the local community and therefore request that the House of Commons urge the Government to change their funding formula.

Following is the full text of the petitions:

[The Petition of a resident of the UK,

Declares that the Petitioner believes that the GP Surgery in Coniston, Cumbria will close unless the Government’s funding formula is changed to support rural practices and further declares that the Petitioner believes that the GP Surgery in Coniston is vital to the local community as those in Ambelside and Ulverside are not easily accessible to Coniston residents.

The Petitioner therefore requests that the House of Commons urge the Government to change its funding formula.

And the Petitioners remain, etc.]

[P001229]

[The Petition of a resident of the UK,

Declares that the Petitioner believes that the GP Surgery in Hawkshead, Cumbria will close unless the Government’s funding formula is changed to support rural practices and further declares that the Petitioner believes that the GP Surgery in Hawkshead is vital to the local community.

The Petitioner therefore requests that the House of Commons urge the Government to change its funding formula.

And the Petitioners remain, etc.]

[P001230]

Welsh Assembly Legislation (Attorney-General)

Tuesday 15th October 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Gyimah.)

17:35

[Paul Flynn (Newport West) (Lab)]

I am extremely grateful to the Conservative party. Because of the social event that Conservative Members are attending tonight, it managed to engineer a little under two hours for me to make the important points that I wish to make, which is just about adequate time.

We have a Government who are Janus-faced on a vital issue. I had the pleasure last Thursday of listening to the new Minister of State, Cabinet Office, the right hon. Member for Tunbridge Wells (Greg Clark), talking about his view of the principle of devolution. He is the one that is facing forward, but I believe there is another face to this Janus. Lurking in the Attorney-General’s Office is a little nest of devolution deniers who are doing great damage.

The Minister of State said last week:

“This has been something that, as you know, I have always been passionate about. Way back in Opposition, I wrote books on the need to transfer power from the centre to the places in our country. As you probably know, I am Middlesbrough born and bred, and the founders of the infant Hercules did not need to ask permission from central government to grow and prosper. I think we need to get back to the spirit of people, the leaders of our cities, towns and counties across the country, feeling that they have the right to initiate policies, do things differently, and have greater control of financial resources.”

Hallelujah. Amen to that.

But what has happened in Wales has been extraordinary. We have seen the other face of Janus that is looking backwards. That is where the devolution denial is coming from. The Attorney-General’s Office is suffering from an acute case of CPR—it is chronically power retentive in an era of devolution. This is not something that has come about as party propaganda. We have had votes on this. We have been through the whole process. We had a referendum to get devolution in Wales and we had a referendum to get greater powers.

I speak with some pedigree on this because I can fondly recall the day in 1953 when I marched through Cardiff with people from several parties. I had a Labour party banner that said “Senedd i Gymru”, “a Parliament for Wales”. It did not say, “hanner Senedd i Gymru”. It did not say, “LCOs i’r bobl”. It did not say, “half-baked policies that can be shredded by a national Government.” It said, “a Parliament for Wales”. We still do not have one, sadly. We have a form of democracy, but it is not tax-raising and the limited powers that it has for passing laws have been frustrated at every turn.

[Mr Peter Hain (Neath) (Lab)]

Does my hon. Friend recall also, on that theme, that in 1994 he and I and Jon Owen Jones, a former Member for Cardiff, Central, were censured by the Welsh Executive for speaking as Labour MPs at a conference in Llandrindod Wells for a Parliament for Wales?

[Paul Flynn]

I remember it vividly. It was a painful experience but one that resulted in promotion to Cabinet rank for my right hon. Friend. I saw the former hon. Member for Cardiff, Central today. At that time it meant challenging some of the views of the Labour party in Wales, which were not always progressive.

We got to the stage where Wales had the chance to make laws on its own soil, not for the first time in history, but for the first time in 1,000 years. Laws were made by Hywel Dda between 942 and 950, and they were very progressive. One stated that if a wife caught her husband in bed with another woman for the third time, she could divorce him and get compensation for the previous two occasions. Women had the right to own land, which was progressive in 942. There was also a law—it is rather better than the bedroom tax and other measures we have now—stating that if a person had passed through three villages asking for food but not been fed, he or she could not be punished for stealing food. That was progressive Welsh legislation, and it should have inspired the Government to realise that, as the great Welsh proverb states: Hawdd cynnau tân ar hen aelwyd—it is easy to kindle a fire on an old hearth. The old hearth was there, because we were law-makers in the past, and good law-makers at that.

Boldly the Welsh Assembly Government put forward their first law, which had the romantic title of the Local Government Byelaws (Wales) Bill. They took it through the Assembly and it became an Act. One would not have expected it to cause an enormous amount of excitement, because it just cleared up a few other laws to allow local government to pass their own byelaws, which they have been doing without trouble for a long time. There was no hesitation and no excitement, but for some reason—I am sure that the Solicitor-General will explain it when he replies—that modest Bill, the first for 1,000 years to bear the royal Welsh seal, which made it significant, even if its content was not, was opposed by the Attorney-General’s office.

[Huw Irranca-Davies (Ogmore) (Lab)]

My hon. Friend might want to recollect that before that we had the procedure for legislative competence orders, which he has referred to. The first one I dealt with, along with my right hon. Friend the Member for Neath (Mr Hain), was the LCO on red meat. Although it was delayed, subject to parliamentary scrutiny that was a little over-onerous, we did not delay the red meat LCO too long, because otherwise it would have gone off.

[Paul Flynn]

Yes, it was a difficult period when we had the LCOs, which were a new legislative monstrosity that we were stuck with and that puzzled us, but as a result of certain ingenuity they did mean that some sort of law was made in Wales, even if in a cack-handed manner. They are now a footnote in history.

The Local Government Byelaws (Wales) Bill went through because it was uncontroversial, and there was a little bit of ceremony because we were proud to be making laws in the land of our own country for the first time in more than 1,000 years. Why on earth was it opposed? The First Minister called it a

“ridiculous situation that has arisen on what is a totally uncontroversial piece of legislation…The primary policy objective of the Bill is to simplify and rationalise how local authorities make byelaws to deal with nuisances in their areas…So why the UK government has decided to take this to the Supreme Court, at the last minute, is inexplicable.”

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is making a strong case about the first law, which was very historic, as he mentioned. Did he share my surprise, along with other members of the Welsh Affairs Committee, that the Secretary of State, and apparently the Attorney-General’s office, did not even seem aware of the cost to the taxpayer of referring that very modest measure to the Supreme Court?

[Paul Flynn]

I am glad that my hon. Friend has intervened, because I can remind him of the costs that the Government seemed indifferent to. The legal cost of the Treasury Solicitor’s Department for representing the Attorney-General in relation to the Bill was £59,000.

[Mr Hain]

That would cover a lot of the bedroom tax.

[Paul Flynn]

Absolutely. We could have saved lots of the bedroom tax if this had not been done. The legal cost incurred by the Welsh Government was £30,000, and about £15,000 was spent on civil service time in the Wales Office. The total bill was £150,000. Why? Because some pernickety piffle artist in the Attorney-General’s office was trying to make some kind of stand against devolution. He went through the might of the High Court. Five judges were there, looking dignified and wise in their wigs. The total number of judges who agreed with the Government was zero. It was a unanimous vote that this was a frivolous intervention.

[The Solicitor-General (Oliver Heald)]

While following the very excited way in which the hon. Gentleman is putting his case, I cannot let him get him get away with that, because the Court made it clear that it was a perfectly justifiable application, and in fact it clarified the law in an important way.

[Paul Flynn]

I think that a number of them agreed and the judgment was won.

[Mr Hain]

I am not sure that it is entirely fair for my hon. Friend to put all the blame on officials in the Attorney-General’s office in the way that he graphically described, because it was the Secretary of State in the Wales Office who referred the matter to the Attorney-General. As the then Secretary of State, I was the author of the Government of Wales Act 2006, under which this process took place. I can tell my hon. Friend, and the House, that in no way was that Act drafted and designed to allow for this situation to occur. The drafting of the relevant clause dealt with cross-border issues where there were questions, for example, about rivers that flowed across the border or other environmental concerns about which there might be disputes after a Wales Act had been passed by the UK Government in Westminster. There needed to be a reserve power by which the Secretary of State for Wales could clarify or tidy up anything that resulted from such a cross-border issue. It was never intended to allow the Secretary of State to ride roughshod over the devolution settlement and veto what the Welsh Assembly had decided.

[Paul Flynn]

I am very grateful to my right hon. Friend for his expert view on this.

Another Bill was then presented by the Welsh Assembly.

[Huw Irranca-Davies]

Before my hon. Friend continues on to another Bill, may I suggest that there might be an interpretation of what justified the Westminster intervention and challenge on this? It is as simple as this: for local government, a devolved area in Wales, read England.

[Paul Flynn]

Absolutely. This is part of the long history of the neglect of Wales and the undervaluing of Welsh life by the British Government over the years that now has a chance of being corrected.

A Bill about the Welsh language was proposed that offered equal status to the two languages. While there were quibbles from the national Government about this, they did not take it to the High Court. We now have a farm workers wages Bill—a splendid Bill in many ways—that has had great support even from the farm unions in Wales. That is because there are farm wages boards in Scotland and in Northern Ireland, and the Bill tried to get the board continued in Wales. Farm workers along the borders in Wales are already exposed to market forces and do not have the protection that the 13,000 farm workers in Wales have. The Agricultural Wages Board set pay rates that gave a modest amount of protection to farm workers, whose wages have never been generous and were hardly generous under the Bill, but are certainly exposed to greater cuts now.

The UK Government warned that there were important questions for the Supreme Court to resolve as to whether the Assembly acted within its powers on that matter. Yet whatever powers the Welsh Assembly got, they certainly included agriculture. There is no question about that, because it was the decision of this House under the Acts that were passed here. However, for some twisted reason the Government decided that this was to do with employment, and by that chicanery challenged the Bill.

[Huw Irranca-Davies]

Does my hon. Friend share my shock at the fact that the Welsh Government Minister, Alun Davies, had repeatedly made it clear to the Secretary of State for Environment, Food and Rural Affairs that he wanted to carve a different path in Wales and was simply seeking a dispensation in order to do that, and yet he was told, “No, we will abolish the whole structure of the Agricultural Wages Board and then fight the battle over whether you can reinstate something that looks like it”? What sort of respect for devolution is that?

[Paul Flynn]

My hon. Friend gives a splendid example. This is the reverse of devolution, the very opposite of what the new Minister of State at the Cabinet Office said the other day about local opinion and good ideas. Wales has a stronger case for an Agricultural Wages Board, perhaps, than many parts of England, so we should be able to make a different decision, but the Government object.

[Paul Murphy (Torfaen) (Lab)]

I congratulate my hon. Friend on securing the debate. Should it not be the case—it certainly was when I was Welsh Secretary—that disputes between devolved Administrations and the United Kingdom Government should be resolved at a governmental and political level, and that they should never get to a stage where they are resolved by the courts?

[Paul Flynn]

That is absolutely right. Leaving decisions to the courts and depending on expensive silks is no way to run devolved Assemblies or national Governments.

A Bill on recovering NHS costs for asbestos treatment is also of great value. It went through the Assembly over the summer and is at an advanced stage. The first people to have their lives destroyed by negligent employers, or by defects in the health service with which they were provided, have suffered—it is a terrible, crippling disease—and they will be entitled to compensation from those who were responsible for causing the problem. What is wrong with that? The Bill has not been finally resolved, but if there is a problem with such Bills, surely the two authorities should discuss and resolve it.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that that Bill is important because it will recover money for the health service, which is a very worthwhile thing to do? One would have thought there would be support for that across the whole of the UK.

[Paul Flynn]

That is absolutely right. The main part of the Bill is to get money back for the health service from the negligent people who allowed diseases to take hold. Many of the unfortunate people affected by asbestosis in Wales worked in industry.

Tied to all this is the Government’s view of devolution. The Silk commission reported after a referendum that measured popular opinion in Wales. We know that the Tories have always had trouble with devolution. They were very much against it in 1994 when, as my right hon. Friend the Member for Neath (Mr Hain) has said, three of us were disciplined by the Labour party in Wales. Only one of their candidates in the first Assembly was elected by first past the post, while a few others came in through the assisted places scheme.

[Mrs Siân C. James (Swansea East) (Lab)]

I congratulate my hon. Friend on securing this debate. We are still awaiting the latest information on the findings of the Silk commission. Devolution delivers the things we need for the people of Wales—Welsh solutions to Welsh problems—and yet we cannot seem to prise that information out of the Government. It is a great shame that we cannot make progress at the pace that the communities and citizens of Wales want when we are putting all this time and effort into good governance.

[Paul Flynn]

My hon. Friend expresses very well the position we are in now. The Silk commission, after an exhaustive inquiry, made certain recommendations. We were promised that the Government would reply in the spring, then the summer, then the late summer and then the early autumn, but when will they actually respond? Carwyn Jones rightly said over the weekend that this is a major problem. An urgent bypass is required in Gwent and other constituencies that suffer continual traffic congestion, such as that of my right hon. Friend the Member for Torfaen (Paul Murphy), in order to find an alternative route for the M4. As Carwyn Jones said, the situation is frozen. The Welsh Government cannot move forward until there is a response to the Silk commission and action is taken on that.

In a few weeks’ time, on 4 November, Newport will recall the great day when thousands of Chartists made their protest against the Government of the time. They intended to establish a republic. The plan was to stop the mail going from Newport—that is the Royal Mail, not the Daily Mail, although there may well be riots about that now—so that the signal would go to the rest of the country that a revolution was going on and that a republic was to be set up. It was very good of Her Majesty to organise a party tonight to give me enough time to explain what happened. Those people wanted to run their own affairs and to have autonomy 174 years ago.

I will conclude, because I am sure that my hon. Friends will want to contribute to the debate, by reading a poem about that march in 1839 by Gillian Clarke, who concludes by saying that the “grudged gift” of devolution was given sparingly:

“Their bones ached from the shift, wind in the shaft,

the heat of the furnaces, yet on they marched,

their minds a blaze because their cause was right,

through darkness from Ebbw Vale, Blackwood, Pontypool,

faces frozen and stung by the lash of rain,

trudging the roads to Newport through the night.

At the Welsh Oak, Rogerstone, betrayed by daylight,

Frost’s men from the west, Williams’s from the east,

Jones’s men never arrived. The rest struck on

To stand united, of one heart in the square

before the Westgate. Had they stood silent then,

had they not surged forward, had they not been shaken

by rage against injustice, had they muzzled

the soldiers’ muskets with a multitude

of silence, had reason spoken,

those steely thousands might have won the day.

But they stormed the doors to set their comrades free,

and shots were fired, and freedom’s dream was broken.

A score dead. Fifty wounded. Their leaders tried,

condemned, transported. The movement, in disarray,

lost fifty years. Then came, at last, that shift

of power, one spoonful of thin gruel at a time,

from strong to weak, from rich to poor,

from men to women, like a grudged gift.”

17:57

[Nia Griffith (Llanelli) (Lab)]

I congratulate my hon. Friend the Member for Newport West (Paul Flynn) on his excellent speech in which he described our grave concerns about the way in which money has been used and continues to be used to deal with matters in a legal context rather than a political one. My right hon. Friend the Member for Torfaen (Paul Murphy) made the key point that we would like to see such discussions resolved politically, rather than being taken through the courts, with the huge costs that that involves.

The Secretary of State for Wales is responsible for initiating the action. The sad thing is that in each case, he has acted right at the last minute. Instead of discussing early on whether the Assembly was taking the appropriate measures or proceeding in the right way, on each occasion he has waited until the very last minute, when the Welsh Assembly Government have had everything ready and have been prepared to act, to raise the objection, in an almost obstructive manner. I hesitate to use that word because it might be considered unparliamentary to accuse him of such action, but it really does look as though he acts just when the Welsh Government have an excellent idea.

My hon. Friend the Member for Ogmore (Huw Irranca-Davies) spoke about the preparation that was done to allow the Agricultural Wages Board to remain in Wales. That was not a matter of starting from scratch, but of continuing what was already there. However, that has been laid waste because the legislation was put in question. That is such a wasteful way of proceeding.

I would like to ask the Minister a question, to which I hope he will respond when he replies, although I fear it might be difficult for him as Solicitor-General, because he cannot predict what his colleague the Secretary of State for Wales will do. My question is, when will this process end? How many more things will the Welsh Government prepare and be ready to run with, only to find that they are suddenly thwarted? We want that process, and the ridiculous waste of money, to stop now. If there are doubts about what is within the competence of the devolved Government, let us get that sorted out properly, around the table in a grown-up manner, not in the current ridiculous way. It is like children running up to mummy or daddy to ask whether something is right or wrong. It is an absurd situation, and I would like to know whether the Attorney-General has had talks with the Secretary of State for Wales about making this the last time it happens. It should not continue in future.

18:00

[Paul Murphy (Torfaen) (Lab)]

Unexpectedly, I rise to support my hon. Friend the Member for Newport West (Paul Flynn) on this issue. I do not actually think the Attorney-General’s Office is to blame for the situation. The system is to blame, because it means that issues are resolved through the courts when they should be resolved through the political process.

The whole purpose of the Wales Office and its counterparts in Northern Ireland and Scotland is to resolve disputes such as those that have been described in a proper political way, so that they never have to enter a court of law, let alone end up going to the Supreme Court and costing so much money. When I was first appointed Secretary of State for Wales, virtually all the responsibilities of my predecessors had gone to the National Assembly for Wales. Although my hon. Friend and I—we have been friends for far too many years to remember—were not always on the same path on the issue, we have ended up in the same place on it, not least because the people of Wales recently voted to extend the Assembly’s powers. For the first time, it will have the right to produce its own primary legislation.

The Solicitor-General will know that disputes in government are resolved either through correspondence or, if that cannot work, through Ministers meeting. In the case of matters involving devolved Administrations, Ministers of the Crown meet other Ministers of the Crown who happen to be in the devolved Administrations in Scotland, Wales and Northern Ireland. Beyond that, there is machinery, for which I was once responsible, for joint ministerial committees. If necessary, there is the British-Irish Council. All that means that matters can be resolved in a way that avoids the need to go to the courts. Of course, the situation is not the same when different parties are in government in London and Cardiff, but the principle is the same—to try to resolve the problem.

I rather fancy that the Solicitor-General will talk about whether the National Assembly has the powers to do certain things and whether it acts ultra vires or intra vires. Even those points can be resolved by diplomatic means, however, if they are talked through. By going to the Supreme Court, we press the nuclear button. Although that might satisfy the lawyers, civil servants and Ministers who think it should be done, they are unwittingly doing immense damage to the devolutionary settlement, whether in Wales, Scotland or Northern Ireland. The whole purpose of devolving legislation and administration to those three countries and regions of the United Kingdom is that they are allowed, by Act of Parliament and by referendum, to take their own decisions. If the Government do not like something, a crafty way to stop it is not through negotiation among Ministers but by going to the courts. That is the wrong way to do it.

A lot of the problem is the general inexperience in government of how devolution works. For many years, I was frustrated with Whitehall Departments because they did not understand what devolution meant. The purpose of the territorial Departments of State for Wales, Scotland and Northern Ireland is to undertake liaison between the Governments of Wales, Scotland and Northern Ireland and that of the United Kingdom.

[Stephen Doughty]

My right hon. Friend is making a strong case. Does he agree that at play here was something much more sinister because, in the case of the Agricultural Wages Board, the Welsh Government were going to show up the UK Government in what they were doing and what we were trying to protect? Let us not forget that the measure was to protect more than 13,000 low-paid agricultural workers in Wales. The use of this constitutional process shows not only disrespect for devolution, but a way of trying to get away from something the Government did not want to be shown up in public.

[Paul Murphy]

There are two ways of looking at it. There are party political differences because of the different parties in the different countries, but I also experienced that when Labour was in government and other state Departments were not necessarily sympathetic to what the Welsh Government were doing. It was my job to say, “You might not like it, but you’ve got to do it because that is what devolution is all about.” Otherwise, what is the point of having it in the first place?

[Huw Irranca-Davies]

When I served under my right hon. Friend as Under-Secretary of State for Wales, a signature of his tenure in office was that at all times such resolutions were dealt with early and within our mechanisms. It was a signal failure if something had to escalate to another constitutional mechanism, and it did not go at all to the Supreme Court.

[Paul Murphy]

I am grateful to my hon. Friend for his remarks, and there is machinery within the Government system for resolving disputes between the devolved Administrations and their Parliaments, and the United Kingdom Government. That has been set up for nearly 16 years and is precisely to deal with those areas of considerable difference. In my view, that includes whether there is a dispute, and whether something is intra vires or ultra vires. I repeat: to take the issue to the courts is to press the nuclear button and could cause immeasurable damage to the devolution settlement.

18:06

[Mrs Siân C. James (Swansea East) (Lab)]

I want to return to the Agricultural Wages Board—a good example —and ask the Solicitor-General why he is so adamantly trying to stop the agricultural wages sector in Wales, which is important to us in Wales as a rural economy. I represent the wonderful rural constituency of Swansea East and—I have to say this—I have a husband and son who are actively engaged in the rural community. I therefore get my ear bent about this matter on a regular basis by family, friends and neighbours, and I note the concern that people are expressing to me, and the worry. We have already seen the agricultural industry hit. Many people will have far greater fluency on the issue and be more qualified to speak about these matters than I am, but the idea that we in Wales cannot make a decision about helping farmers and rural workers within the boundaries of Wales without having it challenged is a retrograde step in the light of devolution, as many of my colleagues have said.

I am worried because the Farmers Union of Wales has stated clearly that this is about attracting young people of high calibre to the agricultural industry. If we want to attract the best young, forward-thinking people, including women, into rural industries and those related to them, how do we do that when we have to fight for every penny? How do we say, possibly when unscrupulous employers are taking advantage of the fact that there is now no Agricultural Wages Board to protect people, “It’s okay, we’ll look after you”?

This is not a race to the bottom; it is supposed to be a race to the top, but I am finding it difficult, and I would like the Solicitor-General to explain the situation to me and to all the people in Wales, including the 13,300 agricultural workers who would be protected by the introduction of the legislation in Wales. They are heaving a huge sigh of relief and are sympathetic to their fellow workers across the border in England. We already have wages boards in Scotland and Northern Ireland, and we cannot see why this legislation was introduced in Westminster.

I am going over old ground—the Minister will have heard this regularly and be well aware of it—but we want and need that protection in Wales. If we want a thriving rural sector in Wales, we must pay decent wages. We must ensure that we can protect people.

As I have said, I have friends in unglamorous jobs in farming—cow men, shepherds, general farm workers and farriers. They are cross, as hon. Members can imagine. They expect to be protected. They have been successfully protected for 65 years. During that period, many hundreds of thousands of people have been ensured a minimum wage and protection.

When the right hon. Member for South East Cambridgeshire (Sir James Paice) was a Minister in the Department for Environment, Food and Rural Affairs, he suggested that Labour Members assumed that farm workers were “forelock-tugging yokels”. All hon. Members accept that the world has moved on since 1948, but protection is not backward looking; it is about the future.

Somebody once likened history to using a rear-view mirror in a car: it is useful, but we do not necessarily need it. My hon. Friend the Member for Newport West (Paul Flynn) spoke of history, particularly of the Chartists. We should look over our shoulders and ask why the Agricultural Wages Board was established in the first place and what it has done over the years. I am sorry, but in Wales we would like to plough our own furrow—pardon my pun.

I return to the basic question. The board is supported by farming unions in Wales and other parts of the UK. I ask the Minister to accept that we in Wales want to be forward thinking. We want to protect people and give them decent wages. The Labour Welsh Assembly Government is to be congratulated on their action. They should not be stymied and thwarted at every corner. Let us move forward.

18:12

[Huw Irranca-Davies (Ogmore) (Lab)]

I congratulate my hon. Friend the Member for Newport West (Paul Flynn) not only on introducing the debate and on his excellent peroration on the stymieing of legislation and policy in Wales by the current Westminster Government, but on expounding on the narrative history of the Chartists and why it is relevant. I can only share his disappointment that we have so little time to debate this—we could go overnight, but, in compliance with the wishes of right hon. and hon. Members, we will try to avoid that situation.

The legislative competence order process was a previous mechanism for producing legislation in Wales. It was slightly cumbersome and convoluted, and required a great deal of detailed scrutiny in Parliament. However, it passed some cognisance of the growing authority of the Welsh Government. LCOs were much criticised at the time—rightly, in some ways, because they caused delay and were complex, even for the very good officials in the Wales Office in London and in Cardiff, and for Welsh Government officials, who worked through the minutiae. The intention—to afford proper scrutiny in Parliament and ensure that the Welsh Government could introduce their own measures under the process within their clearly devolved responsibilities and so on—was good. Yes, it caused delays, but there was a good spirit. We managed to pass LCOs into legislation, even after good scrutiny in Parliament by the Welsh Affairs Committee and others. There was never any intention to hold things up unduly.

The purpose was the growing relationship under the LCO system between the right scrutiny of this place at that time and the right role of the Welsh people, through their elected officials in the Welsh Assembly and the Welsh Government, to introduce appropriate measures from Wales. As my hon. Friend pointed out, that was not without its difficulties. It could sometimes be tortuous—even the now legendary red meat LCO took a little time to get on to the books, and that was one of the more straightforward orders—but we got there eventually. On all occasions, the intention of my right hon. Friends the Members for Neath (Mr Hain) and for Torfaen (Paul Murphy) was for their officials to work with officials in the Welsh Government and the Welsh Assembly to try to progress the measures through the LCO mechanism, which was imperfect but was what we had at the time.

What has followed, with the will of the Welsh people, is ostensibly an attempt to streamline the process to give clarity on where devolved responsibilities lie, and to allow the Welsh Government, the Welsh people and Welsh civic society to get on with passing their own laws—whether we, on both sides of the House, might agree or disagree with them ideologically—to define their own democratic path. As we have heard, it has not quite gone that way. For those on the Opposition Benches it feels like there has been by the current Secretary of State for Wales—I do not blame the Solicitor-General for looking quizzical—a maybe inadvertent but deliberate attempt to hold up, to challenge, to rebuke the Welsh people for being so impertinent as to actually bring forward their own legislation.

[The Solicitor-General]

I am surprised to hear the hon. Gentleman suggest that LCOs are better than the current system, whereby the National Assembly for Wales has primary powers in 20 areas. What is more, most of the Bills are going through without any difficulty. There have been difficulties with two, but the idea that we should go back to LCOs is wrong.

[Huw Irranca-Davies]

I could not agree with the hon. and learned Gentleman more. Perhaps I should clarify what I was saying: LCOs were clearly imperfect, but the new system is meant to be better. Even with the LCO paraphernalia—it was difficult and cumbersome—attempts were made within the constitutional arrangement, as my right hon. Friend the Member for Torfaen has made clear, to work through those difficulties. If necessary, and as a last resort, they would be escalated up the constitutional food chain for resolution at a higher level, but there was certainly not the seemingly macho political posturing of taking it outside of this place without recourse to internal mechanisms and straight to the Supreme Court. I can see only one possible justification for that: to prove some sort of point and say to the people of Wales and the democratically elected representatives in Wales, “Know your place.”

[Stephen Doughty]

Does my hon. Friend accept that there is also an opportunity cost here? What is the Secretary of State for Wales doing with his and his officials’ time, attempting to stymie and frustrate the will of the Welsh people and the National Assembly instead of focusing on standing up for Wales around the Cabinet table? He was evasive when we questioned him on this point in the Welsh Affairs Committee. He would not give us an estimate of the amount of time that he and his office had spent on this. I suspect it was far more than it should have been.

[Huw Irranca-Davies]

I agree entirely with my hon. Friend. There is a clear case for a cost-benefit analysis of the tasks the Secretary of State is spending his time on, and for asking why he is not finding more useful things to do. There is also the question of the cost of challenging this through the Supreme Court. In an era of what we are told is great austerity, cutbacks and stringent demands on Departments, I am amazed that the Wales Office thinks it fit to throw on to Government—albeit another Department—the cost associated with a Supreme Court challenge.

I turn to the Agricultural Wages Board, about which I know some small amount, given that I was the shadow Minister who stood here frequently in opposition to its abolition. Just as frequently, I put the case that the Westminster Government merely needed to allow Wales to continue as it was by putting a clause in the Bill, as requested by the Welsh Government, saying, “Ignore Wales for these purposes.” We only asked that they let us carry on and find a way to do it ourselves, rather than abolishing the whole mechanism and saying, “Now do what you want.”

I pay tribute to the work of Unite, in Wales and throughout the UK, which stood up for the lowest of the low-paid agricultural workers, for skills and training and for the development of earnings and capacity among agricultural workers. I also pay tribute to colleagues in the Welsh Assembly, including Mick Antoniw and others, who fought the good fight in Wales and to the Farmers Union of Wales—for goodness’ sake!—which said, “The reason we want to keep it in Wales is that we are slightly different from England. We have a higher proportion of small and medium-sized farms, which do not only employ individuals. That is why we want the clarity provided by the Agricultural Wages Board. We also rent ourselves out.” They would say to me, “I as a small farmer, rent out, and I know the terms of the contract.” I am talking of the young farmers of Wales too. These are not organisations that would automatically side with Labour on every issue in defence of something such as the Agricultural Wages Board, but my goodness they did on this occasion.

All that the Welsh Government and Alun Davies, the Welsh Minister, were asking was, “Give us time and space to define our own future”, but that did not happen. We debated it long and hard, we fought the good fight, speaking up for the Agricultural Wages Board not only in England, but in Wales, all the while conscious that the voice of representatives in the Welsh Government and the National Assembly was not being heard anywhere except in the media. We had to speak for them.

Wales lost without having had a direct say, and all that was required was for a Westminster Minister to say, “We concede that agriculture is a devolved responsibility. We won’t challenge you. We will put a clause in the Bill that will allow you to proceed.” That, I say to the Solicitor-General, would have shown respect for Wales and the devolution settlement. Rather than that, and symptomatic of the case put forward by my hon. Friend the Member for Newport West, we had a firm no. The door was shut in our faces. In effect, it wiped Wales off the democratic map. That is a regret.

The Solicitor-General is a reasonable and fair-minded fellow. The cacophony of pleas from the Opposition might remind him of the old poem about Welsh people worrying the carcase of a dead song and being a bit too melancholy, but we are not melancholy; we want to be joyous and we want to celebrate devolution and respect the fact that the people of Wales supported greater devolution. We just ask the UK Government, whatever political perspectives make it up, also to show that respect.

18:23

[The Solicitor-General (Oliver Heald)]

I start by thanking the hon. Member for Newport West (Paul Flynn) for initiating the debate. The issues raised are important and go to the heart of the UK’s devolution arrangements. It is clear that the issues have raised concerns among several hon. Members.

The hon. Gentleman, in his characteristic way, brought in history and his own political struggle over many years, and it was clear that he would like devolution to go further still. That is his viewpoint. I found the information about the three villages law of 945 particularly interesting, although I am not sure that it would be of current import and could cause some concerns if implemented by the current Government. It is not the Conservative’s stance on law and order, but it was an interesting piece of context.

The subject of the debate is the role of the Attorney-General in reviewing legislation passed by the National Assembly for Wales—a role that I share with him. Despite the comments of the right hon. Member for Neath (Mr Hain), this role was conferred by Parliament on the Attorney-General under the Government of Wales Act 2006. That was, of course, under a Labour Government, with their own approach to the issue of devolution. They had set forward a system of devolution that was a conferred powers model rather than the sort of model used elsewhere in the United Kingdom. As that happened, Parliament recognised that the devolution settlement for Wales must be made to work. The 2006 Act sets out the 20 “devolved” subjects in respect of which the National Assembly may legislate. It is the responsibility of this Parliament to legislate in any area that is not devolved.

The 2006 Act provides for the Attorney-General to consider each Bill of the National Assembly, so the Government look carefully at all legislation passed by it to ensure that it falls within the Assembly’s legislative competence. The Act provides that, where the Attorney-General or I consider a Bill to go beyond the Assembly’s competence, we can refer it to the Supreme Court to decide the question.

All of that recognises that it is in the nature of legislation that it may often appear to be about more than one thing. Where that happens with legislation passed by the National Assembly, a judgment has to be made about whether the legislation is about something that either is or is not devolved. The Government of Wales Act 2006 provides a means for the Attorney-General and, if necessary, the Supreme Court, to arrive at that judgment. If it did not, the devolution settlement could not work. The same power to refer a Bill to the Supreme Court is conferred on the Counsel General for Wales. In this way, there is an appropriate equality between the UK Government and the Welsh Government.

That illustrates an important point that I do not want to get lost in the debate. Something has been made of the idea that this Government are anti-devolution or are somehow determined to thwart the will of the Welsh Government and the democratically elected National Assembly for Wales. Where concerns arise, as the right hon. Member for Torfaen (Paul Murphy) said, most are resolved by a process of negotiation between the UK and the Welsh Governments. My officials have excellent working relations with their colleagues in the Wales Office and their opposite numbers in the Counsel General’s Office. The Attorney-General and I have excellent working relations, as one would expect, with the Secretary of State for Wales and with the Counsel General, Theodore Huckle QC. Together, we are working hard to try to reach agreement.

It was suggested by the hon. Member for Llanelli (Nia Griffith), the shadow Minister for Wales, that there was a problem with the UK Government making an effort to resolve issues before they escalated to the Supreme Court. It is, however, the last resort. The Wales Office, working with the Department for Environment, Food and Rural Affairs, has discussed with the Welsh Assembly Government concerns about the Agricultural Sector (Wales) Bill from the outset, and the Secretary of State wrote to the First Minister as soon as the draft Bill was available, expressing concerns about it—but the Welsh Government could not be persuaded to address them. The mechanisms provided under the Government of Wales Act 2006 will therefore need to be followed. Under its provisions, we are guardians of the Welsh devolution settlement and together we must put our efforts into making it work.

A reference to the Supreme Court is not a confrontational process. It does not amount to this Government or any Government picking a fight with the National Assembly. It is a simple recognition of the fact that a particular piece of Welsh legislation raises difficult devolution questions that are best answered by the independent Supreme Court. That process of resolution is to the benefit of the Welsh Government, the National Assembly and the UK Government. It is in all our interests that we fully and clearly understand the boundaries of the devolution settlement.

Full primary law-making powers are still relatively new for the National Assembly. It was the UK Government and the former Secretary of State, my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), who facilitated the successful referendum in 2011 on the devolution of those powers to the Assembly, allowing it to pass its own laws in 20 devolved areas for the first time. That was a major departure in comparison with a legislative competence order, as it lodged the power squarely with the Assembly.

We are still learning about the settlement. Decisions by the Supreme Court about what is within the legislative competence of the Assembly allow us to establish the boundary with greater certainty, and the Supreme Court itself has recognised that when there is uncertainty, it is appropriate for a reference to be made to allow it to be resolved at the earliest possible stage. That was true of the byelaws case.

Having said all that, 1 do not want the House to think that a reference to the Supreme Court is made lightly, or is somehow to be seen as the easy way out. Several Bills have now been passed by the Assembly, and the vast majority are uncontroversial in devolution terms. For the most part, there is consensus with the Welsh Government and the National Assembly that the legislation passed is within competence.

It is clear from this evening’s debate that the reference of the Agricultural Sector (Wales) Bill has given rise to strong emotions, which were set out by the hon. Member for Swansea East (Mrs James). Given that the reference has been made, I do not think that I should discuss the arguments about, in particular, the competence of that Bill in any detail here. We shall await the Court’s decision. What I will say is that the reference relates to all the themes that I have already identified, and that the United Kingdom Government take the view that employment law is a UK competence.

The Attorney-General considers that the Agricultural Sector (Wales) Bill raises important questions about the extent of the Assembly’s legislative competence and the boundary of the devolution settlement. Despite the good working relationships that I have described and the efforts of the UK Government, it was not possible to persuade the Welsh Government that there was a way forward that would meet their concerns. That is why the Supreme Court will have to make the decision. It is a sign of the Government’s respect for the current devolution arrangements, and our wish to provide certainty and stability for those who work in the agricultural sector, that we are continuing the existing agricultural wages regime in Wales until the court case is decided.

The Government of Wales Act 2006 was introduced by the previous Labour Government. It provided a conferred model for Welsh devolution whereby subjects that were devolved and within the legislative competence of the Assembly were specified in the legislation. The present Government believe that the conferred model is right for Wales. The settlement is not perfect, and the Silk commission—which has been mentioned—is currently considering how it could be improved. The Government will respond to Part 1 of the commission’s recommendations in due course, and, as the House will know, there was a further consultation about stamp duty during the summer. The Government are determined to see the process through, and to make it work.

There is some room in the settlement for different views in certain areas about the extent of the National Assembly’s legislative competence. That is why the last Labour Government provided a mechanism for the Supreme Court to scrutinise Assembly Bills. However, I agree with the right hon. Member for Torfaen that, if possible, it should be the last resort.

It was this Government who enabled the referendum on full Assembly powers to take place. That is an achievement of which we are proud, and because of it we are seeing a growing and maturing legislature in Wales. That is what devolution is about.

The hon. Member for Newport West mentioned the Asbestos (Recovery of Medical Costs) Bill. It is true that there have been constructive discussions about the Bill, but that demonstrates that the UK Government are seeking to resolve the devolution concerns at the earliest possible stage.

I do not think that the hon. Member for Ogmore (Huw Irranca-Davies) should be so pessimistic. I realise that to some extent he was making a political case, and it was very nice of him to say how reasonable and fair-minded I am; I have always found him to be the same. However, I think that progress is being made. It is early days, and I believe that this will be seen as a major achievement which is proceeding effectively.

Question put and agreed to.

18:34

House adjourned.

Ministerial Corrections

Tuesday 15th October 2013 Ministerial Corrections

Tuesday 15 October 2013

Home Department

Tuesday 15th October 2013 Ministerial Corrections

Entry Clearances

[Sir James Paice]

To ask the Secretary of State for the Home Department how many certificates of sponsorship for tier 5 visas have been issued by each sponsoring body in each of the last three years.

[Official Report, 25 June 2013, Vol. 565, c. 167-8W.]

Letter of correction from Mark Harper:

An error has been identified in the written answer given to the right hon. Member for South East Cambridgeshire (Sir James Paice) on 25 June 2013.

The full answer given was as follows:

[Mr Harper]

[holding answer 10 June 2013]: We are unable to provide the data regarding all tier 5 sponsors as the low volume of certificates issued by a third of them would make it possible to identify individuals or personal data.

The following table shows how many certificates of sponsorship (CoS) for tier 5 visas have been issued by the top 50 sponsors in each of the last three years. This information has also been placed in the House Library.

[Mr Harper]

[holding answer 10 June 2013]: We are unable to provide the data regarding all tier 5 sponsors as the low volume of certificates issued by a third of them would make it possible to identify individuals or personal data.

The following table shows how many certificates of sponsorship (CoS) for tier 5 visas have been issued by the top 50 sponsors in each of the last three years. This information has also been placed in the House Library.

Wales

Tuesday 15th October 2013 Ministerial Corrections

Carbon Emissions

[David T. C. Davies]

To ask the Secretary of State for Wales how much has been spent by his Department on offsetting costs for energy-related carbon dioxide in the last year for which figures are available.

[Official Report, 8 October 2013, Vol. 568, c. 22W.]

Letter of correction from Stephen Crabb:

An error has been identified in the written answer given to the hon. Member for Monmouth (David T. C. Davies) on 8 October 2013.

The full answer given was as follows:

[Stephen Crabb]

Nil. The Wales Office’s carbon credits are bought by the Ministry of Justice (MOJ). The Wales Office element of the MOJ’s carbon credits for 2011-12 was 0.02% which equates to £389.64.

The correct answer should have been:

[Stephen Crabb]

Nil. The Wales Office’s carbon credits are bought by the Ministry of Justice (MOJ). The Wales Office element of the MOJ’s carbon credits for 2011-12 was 0.02% of £389.64.

Westminster Hall

Tuesday 15th October 2013 Westminster Hall

Tuesday 15 October 2013

[Mrs Linda Riordan in the Chair]

Driver and Vehicle Agency (Northern Ireland)

Tuesday 15th October 2013 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Amber Rudd.)

09:30

[Mr Gregory Campbell (East Londonderry) (DUP)]

It is the normal protocol for those who speak in Westminster Hall to congratulate the Member who secured the debate and to say that it is about a topical, important issue. I can say, with the utmost assurance, that this is indeed an exceptionally topical, very important issue in Northern Ireland; more than 200 jobs are at stake in the Coleraine area, and more than 300 are at stake in Northern Ireland as a whole. The knock-on effect would be on a total number of jobs in excess of 500.

At the outset, I want to apologise for the absence of my hon. Friend the Member for North Antrim (Ian Paisley), who has worked closely with me on this campaign, as his constituency adjoins mine. Many of the employees involved come from one or other of our constituencies, as they do from throughout Northern Ireland. I want to give a few indications of the wider context before coming to the nub of the matter, in relation to the Driver and Vehicle Agency and the services offered there.

The Causeway coast area and Northern Ireland as a whole have been severely hit by unemployment in recent years. People will ask: has the whole UK not been hit like that? The answer, of course, is yes, but more significantly so in Northern Ireland. We have been cushioned a little by the dependency on the public sector in Northern Ireland. In that context, last week, no less a person than the Prime Minister was in Northern Ireland to try to encourage inward investment, because he, the Government, the Executive and my friend and colleague Arlene Foster, Northern Ireland’s Minister of Enterprise, Trade and Investment Enterprise, realise that because of the dependency on the public sector, we need to encourage inward investment from the private sector.

This is not a case of taking jobs from the public sector and trying to transfer them into the private sector; it is a case of supplementing our existing dependency on the public sector through private sector inward investment. Therefore, the Prime Minister came, last week, to try to bring jobs to Northern Ireland, so the last thing we want to see, as a result of the consultation that closed a few weeks ago, is his Government taking jobs from Northern Ireland. Hopefully, that will not be the case. The north coast has a lower-than-average wage structure, compared with Northern Ireland as a whole, which has a lower-than-average wage structure than the United Kingdom. We can see the absolute dependency not only on getting and creating more jobs, but on sustaining the employment that we have.

The context of the proposed relocation goes back some eight years. I first raised the issue in 2005, when the previous Government were looking at possibly amalgamating driver and vehicle licensing services to Swansea. Thankfully, that was overcome; good sense prevailed eight years ago, when people saw the efficiencies that could be achieved and the service that could be maintained to motorists and others in Northern Ireland.

In terms of the numbers, 230 people are involved in Coleraine and more than 100 are involved in the rest of Northern Ireland through the various sub-offices. The employment of 200 more people, on top of that, depends on the DVA in Northern Ireland. Should centralisation go ahead to Swansea, the total wage loss to the Northern Ireland economy would be in excess of £11 million annually. That would lead to a total economic loss of about £20 million to Northern Ireland, which we simply cannot afford.

I raised the issue with the Secretary of State for Northern Ireland, as did many of my colleagues. She made a straightforward commitment:

“It is important that he”—

the Minister—

“takes into account the views of Northern Ireland before he makes his decision.”—[Official Report, 6 March 2013; Vol. 559, c. 944.]

That was an obvious but radical statement. Just two weeks ago, the views of the people of Northern Ireland became absolutely clear, if there was any doubt. A debate was held in the Northern Ireland Assembly. As interested observers of the Assembly will know, there can, just occasionally, be matters of division there on political matters. From time to time, we do not see eye to eye—says he, with a bit of sarcasm in his voice. On this issue, however, there was not only cross-community support, but total and utter unanimity. Not a single voice of dissent came from the Chamber. The voice and views of the people of Northern Ireland were endorsed two weeks ago, on 30 September, when the Northern Ireland Assembly voted unanimously to support the retention of jobs and services at the DVA in Northern Ireland.

I turn to the jobs and services that are provided. In the agency, an assessment has been done on the work force’s composition. Some 73% of the work force are female, many of whom are carers and have other dependants. Any decision to centralise the services in Swansea would have massive implications, not only for the employees, which is obvious, but for all their dependants. Some of those females are part-time employees. The prospect of trying to get other employment in a Northern Ireland that is trying to attract inward investment, as I have just alluded to, is going to be remote. It will be difficult to attract other employment opportunities for the predominantly female staff.

I turn now to the services. An analysis has been done of the services offered by the DVA, and current satisfaction rates are very high. I want to draw a comparison between the satisfaction rates for the services offered in Northern Ireland and those for the Driver and Vehicle Licensing Agency in Swansea. I do so with a word of caution, because I fully understand that the sheer scale and complexity of the DVLA in Swansea provides a much more challenging environment in which to achieve targets. That is all the more reason, I would have thought, not to add even more to the burden that the people in Swansea already face.

The facts are as follows. For example, a survey in the past 12 months has shown that 95% of the transactions involving changes of registration are completed at the DVA in Northern Ireland within five working days, which is an excellent achievement. The same 95% completion rate at the DVLA in Swansea is achieved in 11 working days. Given the sheer complexity and scale in Swansea, completing changes of registration almost exclusively in 11 working days—95% of the time—is a reasonably good performance, but in Northern Ireland we achieve the same in less than half the time. People in Northern Ireland will be saying, “If centralisation goes ahead, are the change of registration processes going to worsen by more than double?”

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I congratulate the hon. Gentleman on securing the debate. He might be interested to know that I questioned my officials on the issue he raises, because I was aware of the potential problem. I was assured that the differences in refunds are due to the different ways in which the transaction is measured. The DVA’s target is to process and refund within five days, but that does not take into account any subsequent work that may arise in complex cases. The DVLA’s target is measured from time of receipt until a refund has been issued. The time taken to process the transactions is about the same in both agencies.

[Mr Campbell]

I thank the Minister for that explanation. I was going to come to refunds next.

[Stephen Pound (Ealing North) (Lab)]

I am sure that the hon. Gentleman is aware that the staff side response to the consultation refers to the perception in the DVA, which in many cases is backed up statistically, that the DVLA has vigorously, systematically and aggressively underfunded the IT development system in the DVA. Under those circumstances, does he agree that Northern Ireland has a remarkable work force that should be cherished rather than centralised?

[Mr Campbell]

I thank the hon. Gentleman for that contribution. I was coming on to IT—as he anticipated, in his usual prescient way.

[David Simpson (Upper Bann) (DUP)]

Will my hon. Friend give way?

[Mr Campbell]

Yes—I am in the mood for giving way, so I will give way to my hon. Friend.

[David Simpson]

I thank my hon. Friend and commend him for securing this important debate—when some 500 jobs are at stake, it is indeed a very important debate. If the figures he has given about Swansea are correct, surely moving everything from Northern Ireland to be centralised will compound the problem. A longer time scale for the completion of customers’ paperwork will be inevitable.

[Mr Campbell]

It appears to me, and I think to most people, that that would be the case.

The 95% target for applications for refunds is achieved in 30 working days in Swansea; again, allowing for the scale of the millions of people who tax their vehicles, achieving that figure is a challenge. The target in the same category in Northern Ireland is achieved in five working days—95% of refunds are cleared within five working days. Whichever way we cut this, it is absolutely clear that in terms of value for money for a service, a significant service is being offered.

The hon. Member for Ealing North (Stephen Pound) made the point, and the work force have repeatedly told me, that there has been under-investment, in the IT infrastructure in particular, for many years. In that context, the fact that the work force achieve such remarkable results is to be cherished and they should be secured for the future.

Recent analysis of the database of customers that the DVA serves shows that more than 60% of DVA customers are aged 44 and older. As we all know, that age group is less likely to be IT literate or to be online to take advantage of registration via a computer. The vast bulk of potential customers would be disadvantaged if the services were transferred to Swansea and the push for greater online registration continued, as a result of the loss of face-to-face and telephone services and local recognition and knowledge of that demographic in Northern Ireland. The Minister must take account of that.

I want to raise an issue about which there can be no dispute: Northern Ireland is the only region in the UK with a land border with another EU state—the Irish Republic. Traditionally, over many years, evasion rates have been significantly higher in Northern Ireland, but the rate has reduced considerably due to a comprehensive campaign there. Part of the reason is the local work force with local knowledge of vehicles and residences. Evasion rates that had continued to be high in the past have recently been reduced.

What are the chances of evasion in Fermanagh, south Armagh and Tyrone, which have borders with the Irish Republic, being detected by people operating from Swansea? The task will be much more difficult. I contend, with some justification given the previous figures, that evasion rates will rise, rather than fall. We do not want to encourage evasion or allow it to increase, rather than continue the drive to get it down.

An important reference point has emerged in the past four days. From media reports over the weekend, I understand that the DVLA’s independent complaints assessor has a draft report on the past two years, 2011-12 and 2012-13, with the various Departments for accuracy checking. When it is released in two weeks—I was assured yesterday that it will be released by the end of October, and I hope the Minister can confirm that—it will confirm a significant increase in the volume of complaints about the service people get at the DVLA in Swansea. Obviously, it is a draft report and we will wait to see the final outcome, but if complaints are increasing, part of the reason will be the sheer volume and complexity of cases being dealt with at one central agency. If anything can clinch the case for retaining a localised service, it will be in the context of the series of events I have outlined.

[Mr Goodwill]

Prior to the debate, I asked about the level of complaints. I was told that in the most recent year for which we have statistics, there were 12,500 complaints to the DVLA, which, measured against 170 million transactions, represents 0.01%. The increase in the level of referred complaints is due to a change in how complaints are handled. Previously, the chief executive had to refer complaints for consideration; they now automatically go through, which to some extent explains the increase in complaints that has been registered.

[Mr Campbell]

I am glad the Minister has confirmed that there has been an increase. I note that he said “in the most recent year”; my understanding is that the draft report refers to the past two years. Perhaps he has further information about the increase in the previous year, but I do not think he has. I accept the Minister’s comment on the increase and the reason for it. My colleagues and I have raised significant points and there are good reasons for retaining a local service that will take account of the issues.

In conclusion, I ask the Minister to do three things. I have invited the Secretary of State, and I invite him, to come to Coleraine in Northern Ireland to see at first hand the level of service and the work that is put in by employees, before coming to the final decision. In connection with that, I want the Minister to take account of the unique circumstances that prevail in Northern Ireland before coming to his decision. I also call on him to retain the excellent services that we have in Northern Ireland and those much needed jobs that go with them.

09:51

[Jim Shannon (Strangford) (DUP)]

I congratulate my hon. Friend the Member for East Londonderry (Mr Campbell) on securing this debate. It is nice to have a bevy of Northern Ireland MPs here—for once, we are the biggest party in Westminster Hall—to collectively support the need to retain the DVA in Coleraine and to ensure a good level of service provision for our constituents. That is why we are here: to see a continuation of the service that we have. As elected representatives we have an opportunity to respond and turn issues round in a few days or even after a phone call. The contribution from my hon. Friend and the evidence that we have individually show that such a response will not be possible if the service goes from County hall in Coleraine to Swansea in Wales. The 300 workers will certainly feel the pain.

I also congratulate in his absence my hon. Friend the Member for North Antrim (Ian Paisley) on his questions to the Transport Minister a few weeks ago. It is unfortunate that he cannot be here today owing to a family bereavement, but we thank him for his significant contribution. I know that he has worked long hard hours alongside my hon. Friend the Member for East Londonderry.

The detriment of the proposals will not simply be suffered by those who work in the DVA office; they will be suffered by those who use the service. I want to mention the service, the work that people do, and how that affects those outside, because there is a benefit to the whole of the local community. It has been estimated that some £22 million a year would be removed from the Northern Ireland economy if the move went ahead, which is something that could not be absorbed in such a short time. It would be detrimental to the economy of Northern Ireland, not only in East Londonderry but throughout the whole province. It seems that Northern Ireland would lose that personal service and the money that goes into local shops and businesses.

I am unsure about where the benefits will be and where the ripples of change will end up. I know that the local shop owners and businesses, who will no longer have that spending money in their shops, will certainly not feel any benefit from the relocation, and neither will those who work in those businesses, whose jobs or hours will be cut. I am not being melodramatic; I am explaining a sequence of events that has been seen in many areas and which cannot be allowed to take place. I am explaining the effect of relocating the DVA from Coleraine to Swansea.

My colleague is certainly right to highlight the irony of the Prime Minister removing jobs from Northern Ireland while at the same time celebrating the potential for business investment. If we look at those two statements from the Prime Minister and then the reality on the ground, we look with cynicism as we see the practicality of what is proposed. The notion of robbing Peter to pay Paul—robbing one area of jobs to provide in another area—is not an acceptable form of governing, and I trust that all MPs present here and elsewhere will send the message that such a movement of position and jobs is not simply an accounting form of moving numbers from one column to another; it is playing with people’s lives and the effect will reach out far beyond where we are.

Northern Ireland is an intricate part of the United Kingdom of Great Britain. As such, it is right and proper that we are used for central government purposes. The DVA centre is fit for purpose and is doing a great job. My hon. Friend outlined the service and efficiencies that are delivered at Coleraine, and he described the experienced personnel who deliver the service.

Will the relocation lead to efficiency? Indications show that it will not. I know the Minister has already responded to a couple of questions and he has given us his figures. However, the figures mentioned by my hon. Friend showed dissatisfaction with what has been delivered by Swansea. If that is the case, why move the DVA from Coleraine to Swansea? It seems illogical and will certainly not achieve efficiency, so it can only be for other—small p or big p—political decisions. If that is the reason, the Government are doing us an injustice, because we are very much a part of the United Kingdom of Great Britain and Northern Ireland, and we want to remain so.

I recently read that there has already been clear evidence in Scotland that the ordinary purchase of vehicles and changing of tax discs is being delayed by up to six weeks. In Coleraine, that can be done in five days. It is efficient. The Northern Ireland Public Service Alliance has figures that show a customer satisfaction rate of 98%. Where else in the United Kingdom is there a business with a satisfaction rate such as that? We have it in the DVA in Coleraine. Because of that delivery and efficiency, the decision should be looked at again.

Centralisation of work in places such as Scotland has led to numerous complaints and delays in what should be simple services, as well as huge disruptions to the cash flow for car dealerships. The efficiency that the centre in Coleraine displays should make it a flagship centre and not one that is flagged to close. We have something good that is delivering efficiently. Let us ensure that it continues to do so.

I fully support my colleague, and, more importantly, I support the high level of service that is provided at Coleraine. I fully support the inherent right that we have in Northern Ireland to be a cog in the wheel of central Government provision. We want to be part of that. We deliver it in every sense of the word through our contribution to the economy. Our contribution is a central part of the United Kingdom of Great Britain and Northern Ireland.

As my hon. Friend the Member for North Antrim has said, the Minister has the same jurisdiction in Coleraine as he has in Swansea. He also has the same duty of care to his workers there, and now is the time for him to set minds at ease and tell us that he is going to do his duty by the workers of Coleraine, recognise their work ethic and keep operations running smoothly in Coleraine. I am happy to support the proposal.

09:58

[Ms Margaret Ritchie (South Down) (SDLP)]

I congratulate the hon. Member for East Londonderry (Mr Campbell) on securing the debate this morning. It is an important subject for all the people in Northern Ireland. I welcome the Minister—the Under-Secretary of State for Transport, the hon. Member for Scarborough and Whitby (Mr Goodwill)—to his new position. I also welcome the shadow Minister, the hon. Member for Birmingham, Northfield (Richard Burden).

Northern Ireland is a public sector-led economy. Last week, we were pleased that the Prime Minister came and led on an international investment conference. Importantly, private sector jobs should supplement jobs in the public sector. We want to see a fair and equal distribution of the private sector jobs that we hope will flow from the Prime Minister’s visit and the visit of international investors last week. In this debate, we are all telling the Minister and his Department, “No decentralisation of services.” There is a dichotomy of policy, in that the Government and the Northern Ireland Executive believe in decentralisation because it can underpin the bedrock of the local economy, but by the same token, taking jobs away means centralisation to us. That issue needs to be explored, answered and corrected.

The current proposal to centralise vehicle registration and licensing services in Swansea will remove 324 full-time equivalent posts from Northern Ireland, which in real terms will have an impact on about 380 employees, and will also have an impact on the services provided.

As a result of an intervention by the then Northern Ireland Minister of the Environment, my party colleague Alex Attwood, with the Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond), a consultation was agreed and launched by the Department for Transport. The support of the Department of the Environment in Northern Ireland for retaining those jobs and services remains constant and has been backed by all political parties in Northern Ireland, as was mentioned by the hon. Member for East Londonderry. A strong case has been made for not only retaining the jobs in the DVA, but expanding services in Northern Ireland by transferring work for UK customers to Northern Ireland.

The impact will be felt in Coleraine, where the headquarters are based, and in areas such as Armagh, Ballymena, Belfast, Enniskillen, Derry, Omagh and Downpatrick. Under the proposal, my constituency of South Down will see the removal of services and jobs at the Downpatrick office, which has traditionally been the County Down facility for people to tax their car for many generations. Downpatrick is the main centre of public administration in South Down, and any reduction in staffing numbers will have an impact on its economy and on future services that might be attracted to the area. At the same time, we are trying to pool resources and administrative services to complement the role it has always had as a centre of public administration.

I appreciate that the constituency of the hon. Member for East Londonderry will be worst hit by the removal of services from Coleraine, but the injustice and disproportionate nature of the proposal will be felt by people whose jobs are affected and by people throughout Northern Ireland who rely on the services delivered by those offices, including those in my constituency.

The Minister will be aware of the representations made by me and my colleagues, including the former Minister of the Environment and the new Minister of the Environment, Mark H. Durkan. In the initial reply from the Under-Secretary of State for Transport, the hon. Member for Wimbledon, I was advised that the proposal to withdraw jobs from Northern Ireland was in response to the need to bring vehicle licensing and registration up to date and into line with developments in IT systems in Great Britain, and to provide a much-improved service. However, in his second reply, he outlined that the removal of 380 jobs from Northern Ireland would achieve significant savings for UK taxpayers.

Will the new Minister therefore clarify the reasoning behind the proposal? Is it simply a cost-saving exercise that will obviously have a disproportionate impact on staff in Northern Ireland, as well as on the wider community that relies on the services provided, or is it about developments in IT systems, through which local people will also lose jobs and services? If the Department for Transport is looking at the proposal as a means of cutting costs, it should consider the views of those employed in the service, who are some of the most dedicated people in the public service of Northern Ireland.

[Naomi Long (Belfast East) (Alliance)]

I thank the hon. Lady for giving way, and I pay tribute to the hon. Member for East Londonderry (Mr Campbell) for securing the debate. It is right that all parties are giving support on the issue. Does she agree that if the proposal is about modernising how the service is delivered, such a modernisation could be delivered in Northern Ireland without the need for closing the base there? We can already deliver a high-quality service, and modernisation would simply aid us in doing so, as well as allowing the further transfer of UK services to sites in Northern Ireland.

[Ms Ritchie]

I thank the hon. Lady for her useful and beneficial intervention. Obviously, if there is to be modernisation, an idea which none of us rejects or opposes, it could take place in Northern Ireland facilities—the headquarters in Coleraine and the other offices. In fact, we could take services that currently take place in Britain and, I have to say, perhaps do them much better, more efficiently and more diligently.

I want to move on to the views of the staff who responded to the consultation. They say that the existing closure programme has had a serious impact on services offered by the DVLA to the motorist in Great Britain. It is unclear whether those services can be properly managed, but no doubt they could be if they were brought to Northern Ireland.

Interestingly, a commissioned study by Oxford Economics has estimated that the DVLA proposal for the removal of services from Northern Ireland would have a direct negative impact of £14.5 million in gross value added terms, as well as an impact of £7 million on workplace wages in the Northern Ireland economy, which, given the size of Northern Ireland, is a remarkable statistic. The removal of £22.2 million from the Northern Ireland economy will have an impact on all its sectors, notably wholesale and retail trade, accommodation spaces, food services, entertainment and recreation, plus financial services, property, housing and the supply industries—and all that at a time of economic downturn, although there might be a slight lift that we would all welcome.

The figures I have cited for what would be removed from the Northern Ireland economy do not add up to what the Under-Secretary of State for Transport, the hon. Member for Wimbledon stated would be significant savings. Surely, a more acceptable form of improvement would be to upgrade the DVA’s IT systems. We must ask why the IT systems in Northern Ireland have been neglected, and not upgraded as a matter of necessity over the years. We ask that question because that has been replicated in other service areas. Some people say that, over recent years, some areas might have been prepared for privatisation and others for closure. For me, it is simply a case of downgrading a service and undermining the economic stability that exists in Northern Ireland.

I understand that staff working in the DVA feel that the service has been vigorously, systematically and aggressively underfunded for many years by the Department for Transport, despite which the staff have actively sought to provide the Northern Ireland motorist—whether the ordinary person with a car, someone working with agricultural machinery or people in the haulage industry— with an excellent level of service. That under-resourcing has left the staff open to the business criticism and the challenges in the current DVLA proposal for the future of vehicle registration and licensing services in Northern Ireland.

I am sure that, following the consultation that ended on this proposal on 11 September, the current Minister of the Environment in Northern Ireland will meet the Minister separately, as will a cross-party delegation of MPs from Northern Ireland. I hope that we can relay our serious concerns to him and demonstrate that the move will have a disproportionate impact on services, people and jobs in Northern Ireland.

Given the 100% opposition to the move and the strong case that has been made for the retention and the expansion of the services, I urge the Minister and his Department immediately to review the position, retain the jobs and, as the hon. Member for East Londonderry said, visit the office in Coleraine and pay a snapshot visit to the other offices. They should do that in conjunction with the local Minister of the Environment, Mr Durkan, who has a clear picture of what is going on and who has been steadfastly opposed to the closure.

[Stephen Pound]

Does the hon. Lady agree that as the efficiency case has been lost, cost is clearly the issue? Is she aware, as many of us are, that overtime payments in Swansea since this programme started have totalled £1.63 million? Does that not make a complete nonsense of the centralisation case?

[Ms Ritchie]

I thank my hon. Friend for his intervention. I was told that the figures for overtime payments in Swansea were nearer to £1.65 million. I am in no doubt that the work that precipitated those overtime payments could clearly be carried out in Northern Ireland where the service to the customer and the dedication of the staff are second to none. I urge the Minister to keep the DVA jobs and services throughout Northern Ireland. If he does that, he and his Department will not be found wanting.

10:12

[Sammy Wilson (East Antrim) (DUP)]

I am happy, Mrs Riordan, to take part in this debate. I recognise that this situation is not unique to Northern Ireland, because, of course, 1,200 jobs across the United Kingdom will be lost in 39 regional offices. However, the difference is that one quarter of those jobs are located in Northern Ireland, and one sixth of them are in one town. Our case is that there will be a disproportionate impact on one area, which has already suffered significantly from job losses.

I want to consider three areas this morning. First, will the new system be better than what we have at present? The Minister will argue that it will make available to people in Northern Ireland services that are currently not available. However, surveys show that not many people are looking for those services. Indeed, many have said that they do not wish to use such services. Some 60% of customers and 90% of dealers say that the services that are being withdrawn are the ones that they wish to use. The proposal, therefore, is not a response to what the public, who are paying for vehicle licensing, say that they want.

The people who will be affected include small dealers. Some 20,000 new registrations every year come through small dealers, who mostly use local DVA offices because they do not necessarily have the computer back-up for online services. Then there are the complex cases. Indeed, the Department’s own estimate is that 2,000 or 3,000 complex cases will have to be dealt with by post, so people will have to deal with Swansea, rather than having face-to-face encounters at local DVA offices. That will inevitably lead to difficulties. The fact that a case is complex suggests that a person needs to talk to someone.

By the Department’s own estimate, some 3,000 people will find that they are less well off. The Minister has cited the matter of refunds and given us some figures, but if wants to ask some questions of his officials, perhaps he should ask not just about refunds but about first registrations, changes to registrations and the average wait at offices. On all those matters, Swansea’s performance is poorer than that of the DVA offices in Northern Ireland. Service will be reduced to a wide range of customers and on a wide range of issues.

On fraud—I can see my colleagues laughing here—we have a rigorous system in place for those in Northern Ireland who do not pay their road tax. Indeed, I have been a victim of it. No allowances are ever accepted. I got caught taking my motorbike to the garage to get it prepared for an MOT. Even though I could prove that, officials said that it was on the road without tax, so I got fined and received a lot of publicity. Because of such rigorous enforcement, we have the lowest rate of evasion of anywhere in the United Kingdom. If that goes up—only seven prosecutors will be left and no arrangements have been made with local agencies—there will be a loss to the Exchequer.

On whether the service will be better, the answer has to be no, it will not. Will it save money? We already know that one reason behind the centralisation is the huge capital costs involved in the new IT system.

[Mr Campbell]

My hon. Friend alluded to whether the service will get better. As a number of Members have said, it appears that it will get worse. Does he agree that the service in Northern Ireland will not only suffer? Given the figures on the centralised process in Swansea, which a number of us have outlined, the service in the rest of the United Kingdom will also suffer because of the additional work load that Swansea will have to deal with if centralisation goes ahead.

[Sammy Wilson]

That is the point that I want to make in relation to cost. The hon. Member for Ealing North (Stephen Pound) said that as a result of centralisation and the additional work load, even some of the savings that had been anticipated have not been realised because overtime payments have gone up.

Of course, the additional work load that will result from the Northern Ireland move will put further pressure on the system. I suspect that the 400 new jobs that will be created in Swansea will not be sufficient to deal with the work load, so some of the savings anticipated in the proposal will not be realised. We must look at what the customers want and what is feasible for the Treasury. The additional costs must also be considered.

We do not get much cross-departmental thinking, but we are talking about an area with high unemployment. I supported the restructuring of the Northern Ireland economy, and I would love to think that all the people who will be displaced as a result of the DVA decision will easily move into jobs in the private sector, but when there have already been significant job losses in the private sector in towns such as Coleraine, the only place that they will move to is the dole queue. That in itself adds additional costs to the public purse, so I do not believe that there is an economic case for this change either.

I do not want simply to say to the Minister, “Look, we don’t like this, so don’t do it,” but a number of options have been proposed, and the “do nothing” option is one of them. The IT costs, which have already been sunk, will be lost. The Department wishes to give additional services to people in Northern Ireland, even though the majority of them do not want those services. Indeed, I point out to the Minister that even after 10 years in Great Britain 50% of people still do not use online services, so we are not unique in Northern Ireland in that respect. As I say, the “do nothing” option has been proposed. Choosing it would not cost anything, but of course the costs of the IT system have already been sunk.

I ask the Minister to give serious consideration to one suggestion that has been made. Yes, there will be a transition; there is resistance to the changes. There is quite clear evidence that people still want to use the DVA services. If the new system were put in place, those who wish to use the new services and the new methods of delivering them could do so, and those who did not wish to use them—that residual group of people—could still use the full DVA services. That would probably mean that 100 jobs would be lost immediately, but the rest of the jobs would be retained. Three offices would remain, but the rest would have to close. That is the estimate that has been made in Northern Ireland. Over time, that situation might change as people get used to the new services, but at least this option would avoid the big bang of sudden job losses—all the jobs going—and there would be no gap for people who need, or want, to use the face-to-face services.

Choosing that option would also produce considerable savings. The savings on the running costs would be £4.5 million—a 36% reduction in running costs in Northern Ireland and twice the savings that the Driver and Vehicle Licensing Agency anticipate will result from the change to the integrated system. So the Minister could make the case for choosing that option on the basis that savings would still be available.

Choosing that option would also mean that DVA staff in Northern Ireland would be trained on the new system. Bearing in mind what has already been said about the pressures that exist on the Swansea system at present, choosing that option would provide a contingency for DVLA to fall back on—a contingency of trained staff in Northern Ireland, in a place where, as has already been pointed out, productivity is far greater than elsewhere. So choosing that option has a number of benefits. It is one way to retain a significant number of jobs in Northern Ireland and avoid the proposal’s high economic impact on one part of the United Kingdom. The impact would be disproportionate, but I will not go through all the figures that other Members have already mentioned.

There are, of course, other options, including transferring blocks of services, but I do not think that the Minister can simply say, “Look, we have decided that all these services will be withdrawn, and there will be this huge gap left in the job market in Northern Ireland.” To me, saying that would not be good for customers, the Exchequer or the Northern Ireland economy, and it would not make sensible use of the skills that already exist in Northern Ireland and that will be abandoned if this change is made.

10:23

[Mark Durkan (Foyle) (SDLP)]

It is a pleasure to meet under your chairmanship this morning, Mrs Riordan.

I commend the hon. Member for East Londonderry (Mr Campbell) for securing this debate on an issue that obviously affects not only many people in his constituency, but people right across Northern Ireland, including people in the Driver and Vehicle Agency in my own constituency, which is in Foyle street in Derry.

We have heard that this is not only about protecting the significant number of jobs in the DVA in Northern Ireland, but about protecting the existing level and quality of services and, indeed, trying to improve them with future investment. Other hon. Members have quoted the high customer satisfaction indicators in Northern Ireland that are running at between 98% and 100%. Of course, we heard the hon. Member for East Antrim (Sammy Wilson) describe himself as a victim of the DVA system as it currently operates, but he actually presented himself here in Westminster Hall today as a satisfied victim. [Laughter.] That just shows the degree to which there is customer satisfaction. The fact that he can advertise his own victimhood as a justification for keeping the status quo, and building and improving on it, says an awful lot for the DVA and its staff in Northern Ireland. It also possibly says something for the hon. Gentleman, too, who I never thought would appear as a satisfied victim. There again, my expectations have been confounded.

It is important to recognise that it is not only the defence of the jobs and services that has galvanised people from all parties and, indeed, from beyond party lines in the north of Ireland, but the way in which it took an intervention by the previous Environment Minister in Northern Ireland, Alex Attwood, even to get a consultation exercise provided by the Department for Transport.

Then, of course, there was the whole offensive implication that came in the context of discussing this issue—namely, that removing the jobs from Northern Ireland would be a way to remove any threat or fear of religious or sectarian bias. That was rightly seen as a direct slur, not only on the DVA’s work force, but on the entire public sector work force in Northern Ireland. This idea was, “Well, we’ll protect you from anything that might involve a suggestion of religious bias by removing jobs.” If that is the case, why stop at DVA jobs? Remove more and more public sector jobs if doing so is meant to be a way to try to create a shared future; it will be a shared future of poverty and unemployment, but at least there will be no bias.

Rightly, the previous Minister with responsibility for roads—the Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond)—was forced to apologise, to a degree, for those remarks, but the fact is that they hurt and stung. They also exposed the folly and the contrived and scrambled thinking that has gone into this proposal from the London end.

We are not just concerned about defending the jobs and the service qualities that have been described. As other hon. Members have said, when we look at what has been happening with the Driver and Vehicle Licensing Agency in Britain, we are also concerned. We have seen that the presumption that providing online services will mean that everyone moves online is not borne out by the experience of the past 10 years. The chair of the Scottish Motor Trade Association described the situation in Scotland as “a shambles”, because of the closure of local offices and the move to centralisation. When we have all this evidence of the experience in other areas, of course we should listen to it.

However, not only the representatives of the people of Northern Ireland, but the Department for Transport and the Minister should be listening to that evidence. They should be saying, “Does it really make sense to put all the eggs into the single option of one single, centralised location for the entire UK?” As other hon. Members have said, allowing the DVA to be retained in Northern Ireland—in particular, the significant capacity and resource that exists in Coleraine—would give the DVLA the option and the flexibility of having a centre of excellence that it can rely on alongside Swansea.

[Mr Goodwill]

The hon. Gentleman mentioned some of the problems with the Scottish motor trade. The DVLA has acknowledged that it had temporary issues when some of the complex work was transferred from the GB local offices to Swansea. The DVLA has worked with the motor industry, and I understand that those issues have been rectified and performance is back up to target now.

[Mark Durkan]

I am not sure that I am fully persuaded by the Minister’s points, which, I accept, he has put on record. I think that I and others will test them with other soundings.

I want to make the point that we have had experience in Northern Ireland of other services being centralised. A number of years ago, when tax credits were introduced there was for a brief period a tax credit office in Northern Ireland, which tried to deal with complex cases; not all of them should have been complex, but by the nature of that system they became complex. We ended up with somebody having a bright idea, saying, “Let’s centralise tax credit.” The tax credit office was removed from Northern Ireland, although many cases in Northern Ireland are particularly complicated and people were unable to deal with or understand the needs and circumstances of people there, not least the cross-border cases that arise in the context of tax credits.

As other hon. Members have said, significant cross-border issues relate to vehicle licensing, including local traders’ dealings with the DVA, particularly in respect of used cars with a cross-border history. From time to time, there are changes in patterns of vehicle importation across the border from the south and the trade goes the other way, with people in the south buying their cars in the north. It is important that licensing and registration in both Shannon and the DVA in the north can work together, to track, connect and make sense of those things, and work with the Police Service of Northern Ireland and the Garda Siochana in relation to those matters. All that would be lost and we would end up with a repeat of the serious, chronic problems with border and cross-border issues on the centralisation of tax credits.

The fear is that the logic of centralisation will be not just be used in driver and vehicle licensing, but extended to other areas in future. Previously, we heard threatening suggestions from Whitehall Ministers that, if we did not make do with our lot on welfare reform, some of the servicing work—the back office work—done in relation to benefits in GB could be lost. Of course, the same argument could be applied in future to proposed changes in the regime for annually managed expenditure and further changes in relation to welfare reform and, for example, a new standardised computer system for universal credit.

We are not just defending the important jobs that we need to defend in DVA, but trying to hold the line against a relentless effort towards centralisation that goes completely against the grain of the commitments and promises made by the Prime Minister, in recognition of Northern Ireland’s talents and skills, its contribution and its offer.

Here we have talent, dedication and commitment from DVA staff, who, in spite of under-investment in technology by the DVLA, have delivered such a good performance. That commitment should be rewarded not with their jobs being removed to a remote location where the same quality of service will not be matched, but with their jobs being retained and new investment going in, so that they can provide an even better service to people in Northern Ireland and be able to provide that good service to people in Great Britain, as well, when it makes sense for the DVLA to call on their talents to do so.

[Mrs Linda Riordan (in the Chair)]

One hon. Member wishes to catch my eye. May I ask him to bring his remarks to a close at about 10.40 am, so that the Minister and shadow Minister have time to respond?

10:33

[Dr William McCrea (South Antrim) (DUP)]

I count it a privilege to serve under your chairmanship, Mrs Riordan. I welcome the Minister to his new post. I have personal respect for him and trust that he will not only enlighten us, but will give us some assistance in this matter, which my hon. Friend the Member for East Londonderry (Mr Campbell) has brought to this Chamber. I congratulate him on securing this debate. This matter goes to the heart of his constituency and constituents. Other constituencies in the Province are impacted and affected, as well. I also pay tribute to my hon. Friend the Member for North Antrim (Ian Paisley) for his efforts in this regard. I am sorry that he cannot be with us because of the death of his brother-in-law. I trust that that family may be comforted at this time.

It must be asked, in respect of changes in service impacting on the community, why are such changes being made? Are they desirable or needed? Of course, the natural answer from those who propose those changes is that this is better for the community. The contention is that there is no service that could not be bettered, and in many ways, yes, that is true. However, is the proposal for the betterment of, and is the demand coming from, the community? Is it better than what is offered?

I have great, grave doubts about the centralisation of services at the DVLA headquarters in Swansea. The consultation suggests that

“The proposals may result in the closure of a network of dedicated offices”

in Northern Ireland. We know that that is not so. Why did they not describe it as it is? It will—not “may”—result in the closure. Everyone knows that, so why was it not put in the document in the first place?

The people are offered

“Access to electronic vehicle licensing services, which will allow”

Northern Ireland

“motorists to license their vehicle or declare it off the road either online or via an automated telephone service, 24 hours a day”.

That means simply that they have the opportunity to go online or wait on the line—on the telephone—for this automated service.

We live in an impersonal age. People find that those making decisions for them are getting ever further away, when they try to contact them. That is not an improvement of service. For example, people are told to go online. That might help some, but the reality in the rest of the United Kingdom is that many who have that opportunity are not taking it. Why is that? Some cannot use online services or find doing so difficult. Instead of being of assistance to and helping them, that is more of a hindrance.

People who cannot go online are promised an automated telephone service. I must be honest and say, as a public representative, that I am sick, sore and tired of automated services. People are told to press this or that button and then move on to the next thing, after which they hope, at the end, to speak to someone. However, they just hear a voice. In this impersonal situation, people are nothing better than a number now. People are being promised exactly that with the services offered. They will be a number, rather than a person. There is no longer a human face to this service, as provided.

The people I represent want to talk to someone. I remember the decision being made to change things for representatives, regarding planning in Northern Ireland. People were told, “You’re not allowed to go out to sites any more. You’re to sit in an office.” Give me 10 minutes on a site any day, rather than sitting for half an hour in an office, because then I look at the reality, not at a piece of paper.

If we are looking for the betterment of a service, it should be judged by those who use the service. People in Northern Ireland, including my constituents, are saying, “We want the service retained in Northern Ireland, because we believe that it is a better service, not simply because we want to hold on to the jobs.”

As the hon. Member for Foyle (Mark Durkan) mentioned, the document states:

“Centralisation at the DVLA in Swansea will in fact remove any possibility that Northern Ireland services may be biased to any particular religious group, since these transactions will no longer be serviced by staff based in Northern Ireland, who could themselves hold particular beliefs.”

That is and was a slur. Who decided to put it in the document? Who thought up those words? When faced by my hon. Friend the Member for North Antrim, the Minister said:

“I apologise for any offence that was inadvertently caused and accept that the wording could have been clearer.”—[Official Report, 12 September 2013; Vol. 567, c. 1151.]

What did it mean, then, if it did not mean what it said? That needs to be put on the record. The person who put that in the document should be hauled over the coals, for that is an insult to those who have worked hard and served the people—

[Mr Goodwill]

Will the hon. Gentleman give way?

[Dr McCrea]

I only have a few seconds.

There is unanimity among elected representatives in Northern Ireland. We should retain these jobs in Northern Ireland, because that would provide the best possible service to our constituents, whom we represent.

10:39

[Richard Burden (Birmingham, Northfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Riordan. I add my congratulations to the hon. Member for East Londonderry (Mr Campbell) on securing this debate.

I welcome the Minister. We are both new to our respective roles and we both have a long-standing interest in road transport—in fact, we were both involved in a Ford eco-driving training session some years ago, which I will swiftly pass over because he did rather better than me. I also welcome my hon. Friend the Member for Ealing North (Stephen Pound), who takes a close interest in these issues as shadow Northern Ireland Minister.

The hon. Member for East Londonderry said that people always start Westminster Hall debates by saying that the issue is topical and important, and this one is that. The issue has rightly attracted huge concern from across the political spectrum in Northern Ireland. I will raise three major issues on how the process is being undertaken and its potential impact on Northern Ireland.

My first point is about how the reform is being done. I am sure we would all support in principle the modernisation of vehicle registration licensing. As has already been said, there has been significant neglect and under-investment in vehicle licensing services by the DVLA in Northern Ireland, and all drivers deserve the same high level of service. It may make sense to try to centralise databases between GB and Northern Ireland, to streamline the system and so on, but just because systems and databases can be streamlined does not necessarily mean that how the service is delivered to the public has to be centralised, too. That point has been made by a number of hon. Members today.

The experience of DVLA centralisation in other parts of the UK is not encouraging. The Minister said that the initial rise in complaints has not been maintained, but that does not answer the full point. My hon. Friend the Member for Ealing North said that, since the start of the closure programme, the DVLA has spent in excess of £1.63 million on overtime payments, and my hon. Friend the Member for South Down (Ms Ritchie) corrected him by saying that the figure is worse than that—£1.65 million.

If that amount has been spent so far on overtime payments for the centralisation process, something is going wrong. That is no criticism of the staff at Swansea, who do a professional job, as their colleagues do in other parts of the UK, but there is a real question about whether Swansea is equipped to cope with the increased demand of the centralisation programme. We would all question whether centralisation from Northern Ireland should be added to the demand already being created in Swansea without significant investment.

I have some practical examples. In Scotland, all applications to transfer a personal registration plate from one car to another moved to Swansea, which led to processed applications falling well behind the seven-day target. The Scottish Motor Trade Association, as my hon. Friend the Member for Foyle (Mark Durkan) said, reported delays of up to six weeks and described the situation as “a shambles.” That has caused frustration, and it is poor service.

It is not good enough for the Minister simply to say, “Well, we are getting on top of this,” because we need to learn from what has happened. We need to know how the Government have got on top of the situation and whether the centralisation in Northern Ireland will make matters worse; it seems to me that it is likely to. We should not repeat the situation.

My second point is on the centralisation’s social and economic impact. Hon. Members from across the political spectrum have rightly talked about that. Some 324 jobs are going in Northern Ireland, with 250 of those jobs in Coleraine. I know from personal experience in my own constituency that the closure of a major employment site not only causes direct job losses, serious enough though that is, but has an enormous impact on the local economy, too. Many hon. Members have made that point today. The actual job losses due to the overall effect of the centralisation programme in Northern Ireland is estimated to be closer to 500.

My hon. Friends the Members for South Down and for Foyle, and other hon. Members, have talked about the centralisation not only being an issue for Coleraine, although that is the biggest single concentration; there are impacts in Downpatrick, Derry and elsewhere. Bluntly, we are talking about the equivalent of many thousands of jobs going in GB if the same scale of job losses were to happen over here.

The Government have been rather coy about the likely impact of those job losses on the economy, but not everyone else has been. Oxford Economics has undertaken research estimating that £22 million of gross value added a year will be removed from the Northern Ireland economy, which will add to the rising unemployment bill. There will be an estimated increase of some £2.5 million in the annual jobseeker’s allowance bill because of the job losses alone, and there will be a further £3.6 million lost in tax revenue. If all that is added up, along with various other things, we are talking about substantial losses and a substantial hit to the Northern Ireland economy, as hon. Members have already said.

With such questions on what is taking place, people might think that the Government would at least have got their consultation procedure right, that they would have started the consultation in a timely fashion, that they would have done it sensitively and that they would have listened to advice from people on the ground who know what the real situation is. That just has not happened, has it? The Government failed to listen to local people’s concerns.

I pay tribute to the work of those, including the former Northern Ireland Environment Minister, Alex Attwood, who got the Government to consult in the first place. However, as many hon. Members have mentioned, the consultation document contains accusations that are, frankly, offensive—not to one section but to every section of the community in Northern Ireland. That requires a bit more than a public apology. I welcome the public apology from the Minister concerned, but the Government need to think about how they came to issue a consultation document containing that kind of thing in the first place.

I hope the Minister will reflect on what has been said today, and I hope he will reflect on what the Prime Minister said on his recent visit to Northern Ireland. He was over there promoting Northern Ireland, rightly, as a destination for inward investment. He said:

“Put your money in Northern Ireland and be part of this incredible success story because investing in Northern Ireland makes good business sense.”

Well, amen to that. But if that is the message to the private sector, perhaps the Government need to consider their own activities.

Unless and until the Minister can provide clear answers to the important issues raised today on the services that will be at risk, on the scale of job losses involved, on the impact on the benefits bill and on the hit to the UK taxpayer, and until he can quantify exactly what benefits will accrue from the change, perhaps—even though the consultation is formally coming to an end—he should pause, think again and come back with a considered response. The way things look at the moment, although the issue has been bouncing around for years, the consultation has been botched. There are very serious question marks about the centralisation, and the Government need to address them.

10:49

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I, too, congratulate the hon. Member for East Londonderry (Mr Campbell) on securing this debate on the future of vehicle registration and licensing services in Northern Ireland. I also welcome my opposite number, the hon. Member for Birmingham, Northfield (Richard Burden), to his place. I hope we can work together constructively—at least most of the time.

Let me acknowledge from the outset that I recognise that this is an important and emotive subject for the hon. Member for East Londonderry, his constituents and other hon. Members in Northern Ireland. In that respect, he will be pleased to know he has friends in high places, because the First Minister raised the issue with the Prime Minister on Friday, and the Secretary of State for Northern Ireland telephoned me on Sunday to discuss it personally; indeed, when I had my briefing session, I invited an official from the Northern Ireland Office, to ensure the voice of Northern Ireland was heard—talk about friends in high places.

Against that backdrop, I must explain that, as the hon. Gentleman will know, vehicle registration and licensing throughout the UK is an excepted matter and the responsibility of the UK Government. In GB, these services are delivered by the Driver and Vehicle Licensing Agency, in Swansea. In Northern Ireland, the DVLA has an agreement with the Driver and Vehicle Agency, which is part of the Northern Ireland Department of the Environment, to deliver vehicle registration and licensing services to motorists there. The DVA has traditionally delivered those services through its centre in Coleraine and eight other offices in Northern Ireland.

While I understand the hon. Gentleman’s concerns, the crux of the issue is that the vehicle registration and licensing services available to motorists in Northern Ireland have fallen behind those available in the rest of the UK. For example, motorists in Northern Ireland are unable to tax their cars online and have only limited services available at post offices. As the owner of more than a dozen vehicles, I must say I find the online tax system very simple. I can tax a tractor in 20 seconds; where I have to pay to tax a vehicle, it takes about two minutes. Otherwise, I would have to travel 4 miles to my nearest post office, which I cannot, of course, do on a Sunday night.

The consultation that has recently ended contains proposals to modernise services in Northern Ireland and to ensure that motorists there are treated the same as those in GB and can enjoy the same services. If the proposals outlined in the consultation were adopted—I must stress that I have not yet decided on the way forward—motorists in Northern Ireland would be able to tax their cars online and via an automated telephone service that would be available 24 hours a day all year round. Many more services would also be available at about 150 post offices throughout Northern Ireland.

Services to businesses in Northern Ireland would also be improved. Companies would have access to the same level of service as those in the rest of the UK, allowing them to streamline their processes so that they did not have to manage the registration and licensing of vehicles differently from companies in GB.

The changes proposed in the consultation would also ensure that motorists in Northern Ireland can never again fall behind those in GB when new services are introduced in the future. When the DVLA introduces more digital and online services in GB, those would become available to Northern Ireland motorists at the same time.

I acknowledge that introducing new services online and through post offices and centralising the delivery of the remaining services delivered by the DVA in Northern Ireland at the DVLA in Swansea would have an impact. Currently, the full-time equivalent of 324 staff work on vehicle registration and licensing services at the DVA in Coleraine. Introducing more online services and making more services available at post offices would mean that those staff were no longer needed for that work. The DVLA forecasts that 75% of the transactions currently undertaken by Northern Ireland motorists would be carried out online or at local post offices.

I stress that, despite many reports and statements to the contrary, there is no intention to remove those jobs from Coleraine to create the same number of new jobs in Swansea. The DVLA estimates that, if the new online and post office services are introduced in Northern Ireland, there would remain about 500,000 transactions where customers needed to deal directly with the DVLA. That sounds significant, but the DVLA in Swansea currently deals with 97 million vehicle transactions a year. The extra 500,000 could be absorbed by the DVLA with no increase in staff numbers and no effect on customer services.

To answer a point made by the hon. Member for East Antrim (Sammy Wilson) and the shadow Minister, the proportion of tax discs issued online is running at about 60%, and it is increasing. Of course, face-to-face services would also be available in post offices in Northern Ireland.

We must recognise that we are now in a fast-changing, digital world. Customers expect to be able to transact when and where they like—increasingly, from the comfort of their own homes. The way in which services have been delivered in the past, and the higher number of people required to deliver them, is becoming unsustainable. That is particularly true when more convenient and efficient alternatives are available and in use elsewhere in the UK.

Indeed, the DVLA is going through its own transformation process, which has resulted in many more services being made available at local post offices and in other services being centralised at the DVLA’s headquarters, in Swansea. That means that all the DVLA’s local offices in GB will close by the end of the year, with the loss of 1,200 jobs. The proposals for Northern Ireland vehicle registration and licensing services are no different from what is already happening in the rest of the country.

[Richard Burden]

The Minister is talking about the DVLA’s systems, but one important issue raised by Members from Northern Ireland, which I raised as well, was the impact on the Northern Ireland economy. We have heard the Oxford Economics estimate of direct and indirect job losses and of the impact on GVA. Will the Minister confirm those figures? If he is unable to do so today, will he write to hon. Members with the Government’s assessment of the impact on the Northern Ireland economy?

[Mr Goodwill]

I thank the hon. Gentleman for his question. Unemployment in Northern Ireland is lower than the UK average, and it has fallen by 1.2% in the past year. The analysis provided by Oxford Economics does not reflect the full impact the changes to the DVA’s operations will have, because it takes no account of the benefits from the expansion of digital services and the widening of services offered at post offices. Those changes will increase choice and ease of access for customers and reduce the cost of vehicle licensing and registration to businesses, ultimately increasing employment in Northern Ireland.

[Mr Campbell]

The Minister alluded to the 1,200 job losses in the rest of the UK. Does he accept that Northern Ireland, which has a much greater dependency on the public sector, has one thirtieth of the population of GB, so 1,200 lost jobs in GB should equate to 40 lost jobs in Northern Ireland? However, rather than losing 40, we will lose 500.

[Mr Goodwill]

I appreciate that a large number of people in Northern Ireland are employed in the public sector, which means these job changes, should they happen, would have all the more impact—particularly in places such as Coleraine, which is isolated from parts of the country where other public service jobs may be.

There are also economic facts that need to be considered. If introduced, these changes will save taxpayers throughout the UK £12 million a year, while introducing significant new services for motorists in Northern Ireland. I understand that hon. Members from Northern Ireland are concerned about the impact that the loss of more than 300 jobs would have on the economy of not only Coleraine, but Northern Ireland generally.

The Department of the Environment in Northern Ireland, which employs the DVA staff, has stated that it will seek to redeploy them and avoid the need for redundancies, where possible. However, I understand that there are some local issues. For example, 73% of the workers are female, so redeployment may not be possible, for family reasons. In the event that a decision is taken to press ahead with the proposals outlined in the consultation, I will make sure that the DVLA works openly with its counterparts in Northern Ireland to develop a transition plan for the affected staff so that the impact can be reduced.

There is some question about how many people in Northern Ireland will want to use online services or will be able to do so, given limits to broadband internet access. The 2013 Ofcom report shows that 80% of Northern Ireland households have internet access, and 93% of addresses are connected to high-speed fibre-optic broadband, owing to investment by the Northern Ireland Assembly. That compares well with the rest of the UK. However, some people will be unwilling or unable to use digital services at this time, and it is, of course, their right to make that choice. That is why many of the services currently available only at the DVA’s centre in Coleraine or at one of the eight other local offices in Northern Ireland will become available at about 150 post offices.

To summarise, while I understand the concerns that the hon. Member for East Londonderry and other hon. Members have expressed, I am keen to stress the positive benefits the changes would bring to Northern Ireland motorists, if adopted. I hope I have done that today. The wider availability of online and face-to-face services can only benefit customers.

The Minister previously responsible for this matter, the Under-Secretary of State for Transport, my hon. Friend the Member for Wimbledon (Stephen Hammond), had agreed to meet the hon. Gentleman and other hon. Members to discuss this matter. I am pleased to confirm that I am prepared to have that meeting, if not on 4 November, when it was scheduled to take place, then around that time. I stress that no decisions will be made until after that meeting. No firm timetable has been set, but we expect a decision by the end of this year or early next year.

Health Services (North-West London)

Tuesday 15th October 2013 Westminster Hall

11:00

[Ms Karen Buck (Westminster North) (Lab)]

I am grateful for the opportunity to raise some issues in this short debate, and I welcome the Minister to her role. It is good to have a London colleague here to respond to the debate, which deals with my serious concerns about the management of the delivery of health services in north-west London.

I asked for the debate with considerable sadness. I have been involved with health care delivery in north-west London for decades, on the community health council, when it existed, and as a member of the health authority for the same area; and for many years I enjoyed positive relationships with hospital management and primary care trusts, so it is of concern to me that I shall be describing a diversion away from such good relationships and communications, and the serious implications of that.

The debate is not about individuals, although I have concerns arising from the communication of some individuals’ views about health care delivery in recent months. The problem is structural, and it is not fixable just by improvements in the exchange of e-mails. It goes to the heart of trust and clarity in the way health care is provided. I am not alone in my concerns—I know other elected officials feel the same; but this is not just about politicians having our noses put out of joint when communications are not handled effectively. It is about some fundamental questions that have arisen, to do with how care is and will be provided to my constituents, and residents of the London borough of Westminster, where St Mary’s hospital is situated.

Because the challenges are so great in north-west London, as they are, indeed, in many parts of the health service, it is even more incumbent on those who deliver and manage health care to ensure that communications are clear, that there is a shared strategic approach to planning, and that there are common assumptions. As the Minister knows, the backdrop to the issue is important changes in the provision of hospital care and the “Shaping a healthier future” strategy for north-west London. That, of course, proposes the closure of several accident and emergency units in north-west London.

Fortunately, from my point of view—because it something about which we all care very much—A and E will not be closed at St Mary’s hospital in Westminster. It is good to see my hon. Friends the Members for Hammersmith (Mr Slaughter) and for Ealing North (Stephen Pound) here for the debate; I know that my colleagues have concerns about how emergency services will be provided in their areas when A and E units close.

[Mr Andy Slaughter (Hammersmith) (Lab)]

My hon. Friend shares my pain. Four out of nine accident and emergency units are designated for closure, and two of those are in my constituency; but the point that she is making is that every MP in north-west London shares the pain, because there is simply no capacity in the system to cope with such a decline in emergency services. The sooner the Government and the NHS realise that, the better.

[Ms Buck]

I agree with my hon. Friend. Of course, the proposed closures and the “Shaping a healthier future” strategy are themselves set against a financial context that puts extreme pressure on delivery. North-west London hospital services must accommodate a £125 million reduction in service between 2011 and 2015. At the same time—and this is pertinent to the core of my comments—local authorities have imposed dramatic cuts in their social care budgets. That is particularly germane to the issue, because the work of local authority care services relates to prevention and hospital discharge arrangements, and needs to be integrated with those areas, so that the highly pressured hospital service can work effectively.

Of course, another factor is the impact of the top-down NHS reorganisation that we were told would never happen, and the £3 billion that it cost, which has taken valuable resources and a great deal of energy away from the planned delivery of services. The slow death of the primary care trusts and the slow emergence of clinical commissioning groups during a time of massive changes has been part of the problem.

Colleagues such as my hon. Friend have legitimate concerns about the effect of the proposed A and E closures on their communities. St Mary’s hospital was not scheduled to lose its A and E unit, and we were pleased about that. I and others were briefed about ambitious plans for the development of a new, improved emergency care service, to be built at St Mary’s hospital. During the discussions and briefings there was no suggestion that there would be any specific consequential changes in the pattern of hospital services at St Mary’s. Therefore, when, at the invitation of my hon. Friend, I attended the independent review panel called to consider the A and E closures in other parts of west London, I was somewhat taken aback to be asked by the chairman how I felt about the closure of up to 200 beds at St Mary’s, and the movement away of most or all elective surgery, as part of the consequential changes resulting from “Shaping a healthier future”.

I immediately contacted the chief executive of the Imperial college health care trust, to ask whether that was accurate, what the implications were, and why I and others had not been told. That was not because I am automatically totally opposed to consequential changes in service delivery. We must be grown up about such things, and it is right that hospitals evolve and change. Things should not be, and never have been, set in stone. Good clinical reasons and financial necessity may drive change. However—and this is my theme today—to make that change work there must be clarity and partnership, and everyone must understand what is being proposed and how decisions are to be taken.

First, the Imperial trust referred me back to the “Shaping a healthier future” proposals, and to a slide pack that was shown to me and the hon. Member for Cities of London and Westminster (Mark Field) in the spring. That set out very broad headings for how services at the three hospitals in the Imperial group—Hammersmith, Charing Cross and St Mary’s—would develop. There was nothing in it that would have led me to conclude that St Mary’s would lose the bulk—or all—of its elective surgery.

I checked with Westminster council, to see whether I was missing the blindingly obvious. I am grateful to the excellent health strategy officer at the council, who has been a model of clarity in explaining how things worked. He told me, with, I believe, the full agreement of local authority members, that the authority—a statutory partner, which there is a requirement to consult about major changes in hospital services—

“did not receive any indication that there would be significant consequential changes to elective surgery at St Mary’s Hospital as a result of Shaping a Healthier Future. Furthermore, Westminster City Council has not been informed of any proposals to re-locate much or all elective surgery currently performed at St Mary’s Hospital to Charing Cross and any developments in this area would be submitted to both the Cabinet Member and Chairman of Health Scrutiny to investigate.”

He said the authority would consider the assumption by the chief executive of the Imperial hospital group

“that these proposals were in the Decision Making Business Case to be incorrect”,

and continued:

“At Imperial College Healthcare NHS Trust’s Board meetings on 24th July and 25th September, we were informed that Imperial were considering their options.”

Indeed, the chief executive of Imperial verbally, when I met him, and in writing indicated that no decisions had been taken and that the timetable for such decisions was for conclusion in the New Year. On 23 August, he wrote:

“I can assure you we are very much in the modelling and evaluation stages of any changes so are yet to consider whether we should propose moving any clinical services between our sites”—

note the use of “any”. That letter was widely circulated, so clarification could have come from other members of the local health service family, but no such clarification was received—to coin a phrase.

Meanwhile, a quick look at Hammersmith council’s website showed me that it was promising its community a reinvigorated Charing Cross hospital, but on a basis that did not appear to have been explained by Imperial to anyone in Westminster. Hammersmith announced in September:

“News that elective surgery is now on the list of possible future services would further boost the amount of expertise at the site, meaning patients in the local community benefit from the care it gives, and giving it greater status as a teaching hospital.”

[Mr Slaughter]

My hon. Friend is making a good case for the second of our concerns, which is not the closures themselves, but the chaotic, shambolic and amateur way in which they are being carried out. In the past six months, I have been told that Charing Cross hospital will close and be a clinic, a local hospital, a specialist social care hospital—whatever that is—or an elective surgery hospital. The person who told me most of those things, the chief executive of Imperial, has just left, suddenly, after only two years in the job. That is typical of the utter chaos in the hollowed-out NHS in north-west London and, no doubt, elsewhere.

[Ms Buck]

I totally endorse my hon. Friend’s words.

To return to my point about how Hammersmith council is presenting its achievements in winning services for Charing Cross that no one in Westminster or at St Mary’s hospital knows about, Hammersmith continued:

“Charing Cross will also become a specialist centre for community services which means that the many thousands of older and chronically ill patients, who need regular visits to hospital, will have less far to travel. It will mean local people will be better supported to live independently at home”.

It was good of Imperial to share that vision with Hammersmith and around Charing Cross, but it is a great shame that it chose not to share a single word with Westminster city council.

Reinforcing my hon. Friend’s point about chaos, however, I am not sure that even that is the true picture, because when I showed the press releases on Charing Cross from Hammersmith council to the chief executive of Imperial in September, I was told that it was spin on Hammersmith’s part and that what was proposed was only a 23-hour ambulatory care model, with no new beds at all. It is hard to square that with Hammersmith council’s vision and harder still to know what is true.

I do not begrudge Hammersmith residents their hospital—quite the reverse—but I am concerned about any sense of deals being done to secure their future, at the expense of local residents in Westminster and, critically, without so much as an opportunity for Westminster council even to consider the matter or to think about support services or the community care dimension, which Hammersmith so rightly talks about as important in a local hospital context and which can be applied to Westminster. If Hammersmith council can proudly claim that its new hospital means that

“the many thousands of older and chronically ill patients, who need regular visits to hospital, will have less far to travel”,

surely that cannot mean that older and chronically ill Westminster residents, who also need regular visits to hospital, should have further to travel—with no debate and no chance to put in place social care support or travel arrangements.

Things get worse. Four weeks after my meeting with the chief executive of Imperial, all my follow-up questions about what that means, whether decisions have been made or what services will be located where still remain unanswered. That is no doubt partly a consequence of the unexpected departure of the chief executive, who has been replaced in what is clearly a holding operation, in a manner that does not indicate a smooth and planned transition.

[Stephen Pound (Ealing North) (Lab)]

Is my hon. Friend aware that one of the justifications for the closure of the A and E department mooted for Ealing hospital is that it will be possible for ill Ealonians to glide effortlessly through the gentle traffic of west London and rock up at St Mary’s in Praed street for their essential treatment? Will she enlighten us as to whether she feels that the closure, or proposed closure, of some of the St Mary’s beds should have been put to the good people of Ealing?

[Ms Buck]

I absolutely agree with my hon. Friend. It is surely impossible to make decisions about one hospital after discussion with only one local authority—with its statutory responsibilities on consultation and delivery of services—and simply fail to talk about them to anyone else. I am afraid that that prompts so many questions about whether Imperial and, possibly, the north-west London clinical commissioning groups have buckled under the political pressure in Hammersmith— I understand that, political pressure is a reality—and have simply failed to recognise that they have responsibilities elsewhere in north-west London.

Things get even worse, I am afraid. I then had a letter from a north-west London CCG to say that the “Shaping a healthier future” programme did not include the St Mary’s site as one of those that would undertake routine planned elective surgery, but that that work was modelled to transfer to the Central Middlesex hospital, which was designated as one of the elective centres in north-west London—the first that any of us had heard about the Central Middlesex being part of the equation, and a fact not mentioned by Imperial. The letter went on to say:

“As the Trust are still undertaking this work and have not reached any conclusions they are yet to consider whether it should propose changing the location of any clinical services between their sites and therefore are not yet in the position to ask the relevant OSCs”—

overview and scrutiny committees—

“about consultation on this”.

Note again, the use of “any”.

Since then, however, further questions have emerged, including the suggestion that almost all elective specialties have already moved. So far from being the subject of future consultation and decision making, they have already moved, without any formal consultation on anything with Westminster council since 2011. That implies that no one actually knows where Westminster residents are being treated—an absence of grip that I find worrying.

Westminster council was therefore prompted to write to Imperial at the end of last week to say:

“We are at a loss to understand the presentation made to the Westminster Adults, Health and Community Protection Committee on September 25th”

when it was told that

“options as to what elective work could be located at Charing Cross Hospital were being investigated.

Westminster were informed by the North West London Commissioning Support Unit that Imperial were on course to develop a first view of the Outline Business Case…for the private meeting of Imperial’s September Trust Board. It was planned that this will take place alongside a discussion on the emerging clinical strategy. Following feedback from the Board, the complete OBC would be finalised to go back to the Board in the autumn for approval—Imperial are required to obtain NHS Trust Development Authority sign-off by Christmas and the OBC needs to be fully aligned as part of the FT application. Westminster are still of the view that the Outline Business Cases for the Alternative Proposals to Ealing and Charing Cross Hospitals (which did not include the transfer of Elective from St Mary’s) are yet to be agreed and are not confirmed.”

That is of substantive importance, and not only as an illustration of a monumental communications breakdown, precisely because health care is supposed to be moving in the direction of greater integration between primary, community and local authority-provided social care. How can such a model exist when a local authority, and, for that matter, some GPs, do not even seem to know where their patients are being operated upon?

Will the Minister ensure that Westminster council and the local CCGs, together with the Westminster MPs, get an accurate status report immediately, including what service changes have taken place over the past two years and without any going to formal consultation? What action can she take to ensure that the whole process of statutory consultation is not undermined by hospitals such as Imperial not even telling councils such as Westminster that substantial service changes have taken place, and that there is clarity on what decisions will be taken when, including in the context of the foundation trust application?

I have one last thing to say before the Minister’s reply, which I am looking forward to. This letter from Imperial, dated 15 February, made me smile:

“Clearly we need to reassess aspects of our attitude to our health care partners in NW London, including the bodies that are newly established as a result of NHS reform. Stakeholders clearly expect more engagement and visibility from me”—

the chief executive—

“and my team in order that we may win and cement your trust. Equally we are too often perceived as defensive and not good listeners in our approach and we are resolved to address that issue at all levels where we interact with the external world”.

That letter, I am afraid, turned out not to be worth the paper it was written on. In fact, we have had something of a car crash on communications over recent months. This matters not for us—not for our sense of probity or self-importance—but for the delivery of health care to patients. This is a serious and structural problem, and I hope that the Minister will not only respond today, but get a grip on the situation, so that we can learn from the mistakes and make urgent improvements.

11:09

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

This is the first time I have served under your chairmanship, Mrs Riordan—in fact, under anyone’s chairmanship, because it is my first Westminster Hall debate. It is good to start off with such a straightforward and easy subject.

I congratulate the hon. Member for Westminster North (Ms Buck) on securing the debate. I am a London MP and I know that this matter is important to her and her constituents, to the constituents of her hon. Friends the Members for Ealing North (Stephen Pound) and for Hammersmith (Mr Slaughter) as well as to those of other MPs who are not here today.

Before I turn to the issues raised, I put on record my thanks to the staff of the NHS for their commitment and dedication in providing a first-class service, particularly as they enter a period of change. We know that that is sometimes not easy, but they are maintaining a first-class commitment to patients throughout.

The debate around aspects of the north-west London reconfiguration has been going on for some time, but it is fair to say that the hon. Lady discussed a slightly new feature of it. Today is the first time I have heard in detail directly from her about these important issues. I will give her a response, but I will look at the detail of what she said, reflect on it and come back to her more fully after the debate. It is not possible to do that instantly, because until now I had not heard directly from her about some of the problems on communication and so on in the past year that she said illustrate some wider issues.

My understanding is that the joint committee of primary care trusts agreed in February this year that further work was needed to bring about improvements to services at both Charing Cross and Central Middlesex hospitals. I am aware that Imperial College Healthcare is developing its clinical and site strategy based on the principles set out in “Shaping a healthier future”. The trust has put forward a case for some elective surgery to be carried out at the Charing Cross site and has developed a vision for each of its three main sites becoming centres of excellence for the service they provide.

It is right that hon. Members and local authorities should expect openness and transparency when discussing local health issues and changes, and the hon. Lady has vividly put across that she does not feel that that has happened. It is regrettable that she feels she has encountered, in her dealings with Imperial, a lack of clarity around its clinical and site strategy and, in particular, around planned care and elective surgery.

The hon. Lady rightly stressed the need for partnership working through periods of difficult change such as these. Her comments on the overall exercise and the expressed clinical priorities were balanced, and I take seriously what she said about wishing to work in partnership and her point that we can clearly do a lot better. I have been assured by NHS England that a real effort will be made by the new leadership team at the trust and the local clinical commissioning group to engage more fully with her, other local MPs, local councillors and the local NHS as the site strategy is developed.

I am aware that the hon. Lady met the chief officer and the GP chair of the central London CCG to discuss her concerns about the changes to planned care and surgery in north-west London. As a result, she will know that under “Shaping a healthier future”, St Mary’s will continue to provide out-patient services, diagnostics, therapies and appropriate follow-up. I understand that work is under way to agree the best locations across north-west London for planned care surgery services.

[Mr Slaughter]

I hear what the Minister is saying—it is reasonable and I know that she is sincere—but we constantly meet these people and they are, frankly, hopeless. The issue is now becoming political. So far, we have had political unity across the board and we now know that the issue is on the Secretary of State’s desk. I implore the Minister to talk to him about these proposals—in the interests of her party, if none other.

So far, apart from Hammersmith and Fulham council, which is supporting the closures, everyone across west London is united on this: it does not matter what party they are or what position they hold. This issue is moving from the local to the national. Will the Minister please look—it is in her interest as well as ours—at what is going wrong in north-west London before we take steps in closing hospitals that we will not be able to correct?

[Jane Ellison]

I am not sure that describing NHS colleagues as “hopeless” is a particularly helpful contribution to future partnership working, but the hon. Gentleman has chosen his words in his own style, as he always does. He is right to say that the matter is on the Secretary of State’s desk. I will report back to the Secretary of State after this debate, specifically on the new concerns expressed by the hon. Lady on the dialogue and the relationship she has had. Beyond that, I cannot comment further on the reconfiguration, because of its status.

[Ms Buck]

The Minister is kindly referring to my sense of the communication problems. To reinforce the point, I should say that at the heart of this problem is a local authority that is meant to be a statutory partner. It has a duty to be consulted and that has clearly not happened. That is what matters, because it is through that consultation that decisions are made on how a local authority performs its role on supporting care. I want that message to go back to the Secretary of State. It is not a matter of opinion; it is a matter of absolute fact that the local authority has been ignored by Imperial for probably two years.

[Jane Ellison]

I hear that. I believe in the role that local authorities have to play in shaping health outcomes for their residents; as the public health Minister, one of my jobs is to champion their role. Like Members of Parliament, they care so deeply for the health of their local population and are so close to them that they are well placed to shape the future of health care in their area, and we take that seriously. I will take the hon. Lady’s concern back, reflect on it and talk to the Secretary of State about it.

There is a limit on what more I can say on the detail that the hon. Lady has given me. We have a lot to look at and talk to health partners about. I can only assure her that I take it seriously. The role of hon. Members in periods of enormous change such as this is critical, as it is for key local authority partners, too. That message is fully taken on board.

I will use my remaining time to give a little background on the reconfiguration. I know hon. Members will be familiar with it, but it is worth putting on the record. The reconfiguration of NHS services is a matter on which the local NHS is taking the lead, hence the importance of engaging local partners. The hon. Lady has already made reference to the fact that we do not believe that these things can be shaped only in Whitehall. They have to be influenced by enormous local input. I cannot agree with the description of the service as “hollowed out”, which is neither accurate nor fair.

Individual health overview and scrutiny committees, and the joint overview and scrutiny committees, made up of democratically elected members of all the councils concerned, have the power to refer the reconfiguration to the Secretary of State if they believe that the consultation has not been conducted appropriately, or that proposed changes are deemed to be not in the best interests of the local health service. We know that one council has exercised that power.

As the hon. Lady is aware, the proposals were referred to the Secretary of State by Ealing borough council in March this year; the hon. Member for Ealing North referred to that. The Secretary of State has sought and received advice on that referral from the Independent Reconfiguration Panel. I fully understand the importance of the Secretary of State’s decision to the hon. Members present and to others who have been prominent in this debate. The Secretary of State is actively considering the panel’s report and that decision will be made public shortly. Although I have not been pressed on when that might be, it is imminent. I cannot say anything further about the IRP’s report.

The one thing I want to stress is that all the changes are being driven by clinical need and a desire to get better outcomes for patients. They are not driven by a desire to save money. In that regard, I reject the comments made by the hon. Member for Hammersmith. The hon. Lady acknowledged that the driving force behind the reconfigurations is looking at whether we can get better outcomes for all our constituents through greater specialism.

[Ms Buck]

rose—

[Jane Ellison]

If the hon. Lady wants to intervene again, she is welcome.

[Ms Buck]

The Minister is being generous. She refers to decisions made by Ealing council and Hammersmith and Fulham council, but Westminster council was not even told about some of these changes, so it could not exercise its powers on overview and scrutiny in this case. While that is absolutely true, I do not think that anyone is setting out to change these things deliberately. They are, however, doing it without telling anybody.

[Jane Ellison]

As I said, I have heard the hon. Lady’s points. All relevant CCGs and trusts supported the overall shape of the reconfiguration. Local authorities have been key partners in that as well. She has rightly made specific points on some specific aspects that affect her constituents. We will reflect on those points and come back to her.

11:30

Sitting suspended.

Greener Road Transport Fuels

Tuesday 15th October 2013 Westminster Hall

[Mr Mike Weir in the Chair]

14:30

[John Pugh (Southport) (LD)]

It is a pleasure to serve under your chairmanship, Mr Weir, as always. It is also a delight to see the Minister after his recent preferment.

The debate might not be as well titled as possible, and if it fails to run its course, I urge all and sundry not to feel the obligation simply to fill up the time. Primarily, I want to talk about how we move around in a more environmentally sustainable way.

A passage from “The Hitchhiker’s Guide to the Galaxy” should be pinned up in the Department for Transport. It is the definition of a bypass or a new road, described as

“devices that allow some people to dash from point A to point B very fast while other people dash from point B to point A very fast. People living at…a point directly in between, are often given to wonder what’s so great about point A that so many people from point B are so keen to get there, and what’s so great about point B that so many people from point A are so keen to get there. They often wish that people would just once and for all work out where the hell they wanted to be.”

14:31

Sitting suspended for Divisions in the House.

14:53

On resuming—

[Mr Mike Weir (in the Chair)]

As all the main protagonists are here, we can resume.

[John Pugh]

I assume that my hon. Friend the Member for Redcar (Ian Swales)will be joining us shortly, but I think we can be less concerned about the timing of the debate, thanks to that interruption, Mr Weir.

I was trying to make the point that the most environmentally sustainable thing to do is probably not to move around at all, but for most of us in the 21st century, the daily commute, the school run, the journey to work and so on, are likely to be part of our lives for some time to come. Everyone in the room is surely familiar with that, as they surely are, too, with the constant need to refuel the vehicles that they use.

Everyone with a conscience in these times, when they are standing in the forecourt, probably thinks of two things: they consider price, primarily, but they also think of pollution. The Government, reflecting voters’ views, think not only of pollution and price, but of one other thing: revenue. It has long been a Government axiom that they are prepared to sacrifice revenue to achieve an environmental effect, because we all recognise that individuals by themselves are unlikely to bring about major environmental change. A community problem has to be solved on a community basis.

The fundamental problem presented by our travelling—that is, apart from noise, disruption and the permanent possibility of accidental death—relates to air quality and emissions from vehicles. We can address that locally through things such as the congestion charge, which, in London, has been a great success in improving air quality, and in a small-scale way through pedestrianisation, but that does not, by itself, do anything about the cumulative national, international and global impacts of transport.

The obvious remedy—not the only obvious remedy, but certainly one of them—is to make fuel less polluting or to make less polluting fuels, and to persuade, or alternatively, to coerce drivers to use them. A number of alternatives are clamouring for our attention. This list is not complete, but I put down hydrogen, bioethanol, biofuels, biogas—anything beginning with “bio”—electricity and electric cars, liquefied petroleum gas and compressed natural gas. There are exotic alternatives, too: I am aware that my hon. Friend the Member for Birmingham, Yardley (John Hemming) runs his rather large car on chip fat, which is one of the more exotic possibilities. None of them, particularly chip fat, is wholly unproblematic.

I want to put the case for LPG, particularly, as the least problematic alternative and the most worthy of Government support. By support, I mean fiscal support, rather than support in the form of further research and so on. I do not think LPG, as a mode of propelling cars, needs any further research. It can obviously been made more efficient over time, but the technology is well understood and well implemented.

I would like briefly to deal with some other candidates and my reasons for sidelining them in this debate. I am sure that other colleagues will wish to do otherwise and will perhaps want to highlight them. On hydrogen briefly, I think that we have to put that aside. People talk of conspiracy theories about the influence of the oil industry; there have been a good number of stories going back decades about how any promising research into hydrogen propulsion has been sat on, bought up or, in some way, scotched by the oil industry. I do not know whether that is true, but even advocates of hydrogen as a fuel would probably acknowledge that it is not yet a mature, scalable technology. More research is needed, and I hope that the Government will engage with those who research in this field, even if they do not actively support it.

Biofuels are further down the track, but consideration of biofuels and their mandatory mixing with conventional fuels, or their use as a substitute for conventional fuels, leads us to a series of what appear to be complex debates. The obvious debate, held at length in the Daily Mail, is about whether they will add to transport costs. Another debate, particularly on the continent, is about whether they are compatible with all forms of engine development—I understand that the German car industry has reservations and has blocked progress at EU level. There are debates about whether they will threaten food security or raise food costs, and about whether they will have a detrimental effect on land use as land use changes.

[Fiona O'Donnell (East Lothian) (Lab)]

The hon. Gentleman said that there is a debate about whether biofuels can affect food security. I quote the report from the Select Committee on International Development, which said that

“the FAO, the OECD and the World Bank”

all agree and that it is rare for so many organisations to agree on a fact such as that biofuels are a threat to food security.

[John Pugh]

This debate is swirling around the European community and effecting some progress, along the lines of putting a great amount of biofuel into ordinary fuel.

[David Mowat (Warrington South) (Con)]

Just to reinforce the point made by the hon. Member for East Lothian (Fiona O’Donnell), I think the United Nations has latterly described the use of wheat for petrol as a “crime against humanity”, which I think sums up where we are on that.

[John Pugh]

I think I might reserve the phrase “crime against humanity” for other things, but I recognise the impact. A number of third world charities believe that the net effect will further impoverish the third world and the areas that most need our help.

[Graham Stringer (Blackley and Broughton) (Lab)]

The hon. Gentleman rather skated over the issue of hydrogen-fuelled cars. I drove in such a car 10 years ago in Detroit. The technology is perfectly good. Does he agree that hydrogen suffers from exactly the same problem as biofuels, which is the source material, in that we must have land to grow source material from which to extract hydrogen?

[John Pugh]

I am sure that the hon. Gentleman understands hydrogen propulsion a lot better than I do; I hope he makes a contribution. I am betraying my ignorance here. I am just providing a preamble to what I hope will be a successful plea in favour of greater and more effective use of LPG. I do not in any way counter or dismiss the value of what the hon. Gentleman said.

[David Mowat]

I think hydrogen technology works extremely well, but the issue is that hydrogen infrastructure does not exist anywhere. Some countries have tried to develop hydrogen infrastructure; Iceland is an example. The difficulty is that infrastructure exists for petrol cars but not for hydrogen. That is what will stop the use of hydrogen.

[John Pugh]

I am certainly surrounded by people who are far more learned than myself in the field, but I shall have the temerity to continue.

Even if the biofuels issue has moved on to the discussion of what are called second generation biofuels, where people talk about not using virgin land or crops but municipal waste and algae, technical questions about the reliability of supply remain, particularly if whole-scale, mandatory use in other fuels is considered an option. I am simply pointing out that there are problems, and I think hon. Members’ interventions have helped me to illustrate precisely that point.

In some ways, electric cars seem a perfect solution, until one considers the production costs, which are currently high. There are issues with the battery, such as its weight, life and endurance, and with how the electricity itself is produced; the electricity might not have been produced in a carbon-neutral way. There is also the issue of flexibility of use, which I think is well understood by anyone who considers the topic for a second or two: what happens when battery life is exhausted?

I recognise that electric motors can be made to become more efficient; that battery technology can be increased; and that we can have charging points across the country—in fact, grants are, I believe, available at the moment and points are appearing—but there is still some way to go. One of my constituents, who died over the weekend, had been progressing with the Department for Business, Innovation and Skills some new development that would make electric motors a lot more efficient and batteries a lot more effective. Developments will be made in that field, but my best guess—this is borne out by conversations that I have had with the motor industry—is that despite Government investment and considerable Government enthusiasm, from some Ministers at any rate, electric cars will probably remain a niche market, extending only as the use of hybrids becomes more popular.

Even were electric cars to take off for the motorist, we will not see electric buses, unless we call them trams, and to be fair, the electric lorry is some way off. Lorries necessarily travel long distances, and the cost of that and the weight of carrying batteries to enable them to do that would probably be wholly prohibitive for quite some time to come.

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

Does my hon. Friend agree that one of the greatest challenges to the roll-out of electric vehicles is addressing what is called range anxiety, where drivers are worried that they will, like the Duracell rabbit, run out of power in an unfortunate place?

[John Pugh]

Yes. I think that, to some extent, the worry is misplaced. I think the range is greater than people imagine, but that underlying anxiety makes it difficult to sell purely electric cars, as opposed to hybrid cars; it is a lot harder ask of the consumer. In any case, when it comes to value for the consumer, electric cars are head to head with the new generation of the ever more efficient and quieter diesels. Looking at what is happening with car market sales, one can see the result. However, even with lower emissions, more diesels clocking more miles in bigger cars, which is what we seem to be seeing at the moment, will not significantly reduce the nation’s carbon footprint in the long term.

In the short term, there is also the added complication of more particulates being released into the air, which could have some negative short-term effects on people’s health. Some particulates are carcinogenic, and certainly none of them are particularly good for people’s respiratory system. Some people say that air pollution at the moment, particularly from diesels, is as dangerous as passive smoking. That brings me to LPG and CNG.

LPG creates fewer emissions—15% less than petrol and 40% less than diesel. It has no production problems; we make LPG vehicles in this country. Sadly, they are mostly left-hand-drive and exported, but they are made in large numbers in this country. It is a mature technology. It is being scaled up throughout the continent, and we have in place a distribution network—something like 14,000 points minimum, with most of the major supermarkets providing an obvious port of call for people.

An LPG vehicle can be easily converted—at the flick of a switch—to a petrol vehicle without detriment to its engine or its performance. However, when we look at what is happening with LPG in this country, we see stagnation, with very limited production. Granted, there are some post-production adaptations, but even when we think about that, it is a Catch-22 situation.

I have looked into the issue. I own two old cars, both of them about 16 or 17 years old. Both have fairly large engines, are quite expensive and could benefit from being converted. However, the cost of conversion probably now exceeds the cost of purchasing both cars, so someone in that sort of situation is unlikely to do so. The real issue with an older car is that, having done the expensive conversion, can anyone guarantee that the car will not fail in some other respect?

Equally, if someone is thinking about converting a new car, which makes an awful lot of sense over the lifetime of the car, they will run into issues regarding the guarantee on the car and its servicing. The garage from where the car was bought may not be happy to deal with it once it has been converted. The guarantee and service issues are enough to deflect all but the most determined purchaser.

Either way, there is a problem. The solution is for us to produce and use more LPG vehicles, but we are going backwards here. If anyone looks at the second-hand LPG market, as I have, they will find second-hand Vectras and Astras, but those cars are about seven or eight years old—vintage—simply because cars of that sort are not being produced for the UK market anymore. However, Opel, which is virtually the same company, is producing the Opel Adam, a new LPG car, as a brand leader. We therefore have the phenomenon where, in an allegedly not-so-developed country such as Turkey, there is a 20% uptake of LPG, while in England, the figure is 0.5%.

If the situation is poor with cars, it is probably worse with freight, where the whole-life cost of lorries—lorries are surprisingly expensive—have to be factored in by hauliers. In terms of cost per mile, it would benefit an enormous number of hauliers to convert, as long as they can predict the cost over a period, but to do so, they must have some sort of guarantee that the financial environment that they are in will remain somewhat similar.

We can see how a change in the financial environment has made a difference. At one time in the north-west, quite a few LPG buses were running around—they were very clean indeed—but changes in the bus grant and the subsidy bus companies got on their diesel simply destroyed the network, and firms such as Arriva rapidly withdrew from providing them. Initially, I thought it was an issue of reliability and so on, but that turned out not to be the case.

That is the problem. We have a solution, a partial solution or an off-the-shelf solution, which we can implement now, but we are not making any headway, while the rest of Europe is. Why is that the case? Given that we have a solution—it is not the sole solution, and it may not be the long-term solution, but we can do something appreciable to reduce emissions—why has it not been implemented? I think that it is because the Government are not creating a sufficiently certain economic environment.

It is often said that two things in life are certain: death and taxes. The problem is that taxes to provide fiscal environmental incentives are not that certain. There is a differential between LPG and petrol, but it is agreed annually. When the Government are pressed by Members to do more, they respond with a formula—it is in the debate pack—that goes something like this:

“The Chancellor keeps…under review and takes into account all relevant fiscal and economic impacts when taking decisions.”—[Official Report, 13 November 2012; Vol. 553, c. 176W.]

On the face of it, that sounds rational, until we recognise that long-term investment requires at least medium-term predictability. My worry is that, without predictability, many green technologies are destined to tread water. That is not speculation; we just need to compare the UK with other parts of Europe and to look at what happens there. The empirical evidence is clear: where there is a more far-sighted, more determined fiscal climate, LPG and, I dare say, other forms of green transport expand.

I can understand the Treasury view—it is anal, it is perhaps sound accountancy and it is prudent—but it is self-evidently a lousy business strategy, and it simply has to be challenged. When I raised the issue during the passage of the Finance Bill, the Treasury Minister—he is now the Financial Secretary to the Treasury, and I am assured that he is going places—replied:

“I hope he will understand that the Government need to balance the provision of certainty with the ability to respond to economic and fiscal developments. We can provide a degree of certainty…but I hope he”—

that is me—

“will take into account that there needs to be a certain degree of fiscal flexibility.”––[Official Report, Finance Public Bill Committee, 13 June 2013; c. 526-27.]

I appreciate that, but if there is such uncertainty, it prevents consumers, councils and businesses from thinking ahead and doing energy deals over many years. What is to prevent the Treasury from making a decision on the differential that contains caveats to protect against unpredictable, massive future volatility?

An agreement could be established that gives the Treasury some comfort and investors in LPG who would like to invest further some confidence that they will get some return on their investment. Is it not better to try to achieve that outcome than to have what we have at the moment, which is a fiscal incentive that, if the facts are to be believed, does not act as much of an incentive? If that incentive was working, I simply would not be here. There is no point in me or the Treasury acting in a wholly futile way. If the incentive does not do the job, we have to look at it again.

We need critical mass if LPG is to be the force it might be. Members can probably recall a time when diesels lacked critical mass. They were associated, particularly in the passenger car market, with clouds of black smoke, noisy, rattling engines and slow acceleration. The tipping point came when one neighbour could look at the shiny car in the other’s drive, discuss it with them and find that the car, which did not appear to be belching black smoke or rattling, was actually a diesel. As a result, diesels took off to a great extent in this country. The same can happen with LPG, but we still have some way to go.

In 2005, all the political parties talked about Mondeo man. I actually live next door to him, in so far as my neighbour has bought a P registration LPG Mondeo estate on eBay for a modest price. He swears by its reliability and economy, and he gets a huge mileage. He has found a rare pearl and an unusual buy, because there are not many cars like that.

For many people, it would be desirable to have a vehicle that is reliable, economical to run and environmentally less bad than a diesel, but that simply will not happen until two things come about. First, the Department for Transport needs to listen a bit harder to the industry, and I hope this new Minister has an open mind and will listen. However, he has a bigger task: to ensure the Treasury listens much harder to the Department for Transport.

15:16

[Fiona O'Donnell (East Lothian) (Lab)]

I congratulate the hon. Member for Southport (John Pugh) on securing the debate. I do not know whether he is aware of this, but it is particularly appropriate that we should be having this discussion today, given that the European Council will vote tomorrow on the extremely important issue of the cap on the use of food products in biofuels.

There are two main reasons why I wanted to attend the debate. The hon. Gentleman gave us an incredibly wide-ranging and well informed opening speech. He touched on air quality, and findings published today show that poor air quality can contribute to low birth weight. There is, therefore, still much to discover. However, that is not what I wanted to speak about.

My first main reason for wanting to speak is that I tabled a parliamentary question to the Department for Transport, which was due for answer yesterday. I thought I might be able to elicit an answer by turning up in person today. What representations have the Government made among other members of the EU in relation to the UK’s support for the 5% cap? I do not do this often, but I want to praise the Government for their support for that cap.

I also want to speak as a member of the International Development Committee, which recently published a report on food insecurity. We found that biofuels were a major contributor to food insecurity across the globe and especially in developing countries. In his opening remarks, the hon. Gentleman said their net effect would be to further impoverish the world, but we spoke in far stronger terms in our report, and we are not alone in doing so.

I am talking not just about the usual NGOs, which campaigned on biofuels during the recent IF campaign—I am sure the hon. Gentleman often wore the wristband and took part in photo opportunities, and he possibly responded to constituents in support of that campaign. A key part of it was to call on countries to act on biofuels and, in particular, to seize the opportunity to act in the EU.

When the Committee took evidence, however, it was disappointing that the Under-Secretary of State for International Development said that biofuels were not an issue the Government were engaging in at the G8 level. The issue needs to be pushed up the agenda, because the current situation is a shame. At one evidence session, however, we had encouraging evidence from the then Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker). He expressed his enthusiasm for algae-based biofuels. Some people might say, “Get a life”, but I thought it was very encouraging.

The hon. Member for Southport also talked about using waste cooking oil; we have until 2020 to meet our EU targets for biofuels use, and I urge the Government to invest more and to consider more alternative sources of biofuels that do not use food-based products. It is not only a question of using food; land and water are also used, and in developing countries those are scarce and vital resources.

I have come here with not just two reasons for speaking, but millions. There are millions of people in developing countries whose lives are put at risk by the rush for land on which to grow biofuels. Unfortunately, in developing countries where the law about registration and ownership of land is not too strict, it is all too easy for land to be grabbed and used for biofuels production.

The Select Committee report found that there was an increased risk of hunger, and that between 25 million and 135 million more people might suffer hunger, in Africa alone, as a result of the world’s efforts to produce more biofuels. There is also a worrying link between food prices and energy prices. We know all too well in this country how volatile energy prices are, and anything that links food and energy prices is a reason for concern.

I should welcome reassurance from the Minister about what the Government are doing at EU level to campaign on the issue. We need to think about the price rises I mentioned. There are competing claims, but we found in our evidence that prices for oil seed could rise by 20%, those for vegetable oil by 36% and those for maize by 22%. As the hon. Member for Warrington South (David Mowat) mentioned in an intervention, wheat prices could rise by 13% by 2020. We know what food insecurity means in this country, but at least here we have enough food—it is just that people do not have the money to buy it. In the developing world, there is a huge threat to food production.

I hope that my speech has been short and to the point, and that in addition to dealing with the many issues that the hon. Member for Southport raised, the Minister will take the time to talk about food insecurity in developing countries. There can be no issue more important.

15:22

[Ian Swales (Redcar) (LD)]

It is a pleasure to speak in the debate. I congratulate my hon. Friend the Member for Southport (John Pugh) on securing it and giving it an imaginative title, which allows us to range over the subject with abandon.

There is an important distinction between greener transport fuels and making transport greener, and I think that my hon. Friend made several points about the latter issue. There is no doubt that vehicle manufacturers and many others, such as fuel manufacturers, have contributed to an enormous reduction in the amount of fuel used for road transport. The car that I drive gets more than 60 miles to the gallon, which would have been unthinkable when I was tinkering with cars in my early 20s. We have heard about the possibility of switching fuels, but although liquefied petroleum gas may reduce fuel use, it is, as its name suggests, a fossil fuel.

I want to talk about fuels that I think of as greener than fossil fuels. There are three basic sources: liquids, gases and electricity. The important thing is to think about where they come from, and many contributions today have been about that. As my hon. Friend said, there are many sources of electricity, and some could well be more polluting than putting petrol in the car. For example, electricity may be generated in a coal-fired power station, then go down a line with the associated line losses, and into a car that is plugged in, but that is an incredibly inefficient way to fuel a vehicle.

An important point about electric cars is where the electricity comes from. Just last week a car went all the way across Australia entirely on solar power. Unfortunately, we do not have the weather here to see that as a long-term solution, but at least it proved that it is technically possible. The journey was 2,000 miles in six days, so that was pretty good mileage. Electricity is clearly an option for greener fuel.

There are gas possibilities, of which hydrogen is the most obvious. The subject is bedevilled by different views of science, statements from NGOs and so on. In an intervention, hydrogen was linked to crops, but the biggest source of hydrogen in my constituency is the ethylene cracker. Plastics are made by extracting hydrogen from gases, essentially, and there is a hydrogen surplus in Teesside, which comes entirely from the petrochemical industry—not from crops at all.

There are many sources of hydrogen, and the most likely one in future is surplus electricity from renewable electricity generation. It is technically fairly simple to use surplus electricity from wind turbines, for example, to generate hydrogen, which could become fuel for vehicles. There are many technical possibilities for hydrogen generation, without necessarily using crops. Hydrogen is an incredibly powerful fuel.

It is an amazing fact that splitting a water molecule into hydrogen and oxygen gives the fuel that sent rockets to the moon. It is necessary only to recombine them, and that can send rockets into space; it is the perfect fuel because it produces water again as a by-product. Hydrogen must be on the long list of future fuels for that reason, if no other.

There are many liquid biofuels, some more controversial than others. One is used cooking oil, which my hon. Friend the Member for Birmingham, Yardley (John Hemming) is keen on. That is clearly a good environmental use for oil that would otherwise be thrown away. However, the amount of what is called used cooking oil throughout Europe is many times the amount actually used for cooking.

Imports of palm and other oils, which the hon. Member for East Lothian (Fiona O'Donnell) mentioned, are driven partly by the market for so-called used cooking oil. A great deal of policing of the source of the material is needed, because there are loopholes and many traders who run rings round the industry. Equally, however, many small-scale collection facilities produce fuel, and they have a role in the future.

I want to talk now about crop-based biofuels. I must declare an interest, because Europe’s largest bioethanol plant is in my constituency. I challenge the idea that we can have either food or fuel. We are still paying farmers in this country not to grow things—including 6 million tonnes of sugar beet, which is potentially a fuel for a bioethanol plant. The idea that the issue is all about land does not always stand up to examination. There are many political, economic and agricultural reasons why there are food shortages in the world, and, when overall world land use is considered, land is quite far down the list. Perhaps that is controversial.

[Mr Goodwill]

The hon. Gentleman should be aware that the current EU set-aside requirement is zero. When land is set aside it is usually, currently, because of some environmental arrangement that the farmer has entered into. The amount of set-aside in the UK is dramatically less than it was 10 years ago.

[Ian Swales]

I thank the Minister for that response. I recognise his special expertise in this area.

I want to talk about the sustainability of the bioethanol made in my constituency. It is made from animal-feed wheat, not human-grade wheat, and at the other end we get three products: bioethanol; carbon dioxide, which is captured for use in the food and drink industry in a separate plant; and crucially, high-grade animal feed. All the protein in the wheat ends up in high-grade animal feed, which is highly prized in the agricultural industry, to the point that there are times when those at the plant tell me that it is an animal feed plant with a bioethanol by-product, rather than a bioethanol plant with an animal feed by-product.

The high-protein animal feed replaces imports mostly from South America, mostly based on soya and mostly grown on former rainforest land. Far from being unsustainable, that high-grade animal feed, a by-product of the bioethanol business, is in effect replacing the use of rainforests in South America. A cradle-to-grave view of the sustainability of all greener fuels needs to be taken, because there are an awful lot of misconceptions about how some of the businesses work.

[Mr Goodwill]

My hon. Friend will be aware that the by-product from those plants is suitable only as ruminant feed. Much of the grain in South America is produced to fuel the chicken and pork industries, which seems to be the big demand in the developing world.

[Ian Swales]

I recognise that the Minister has a special expertise, but I know that there is demand in the marketplace for the feeds, which form only part of the overall mix. Having enjoyed the product of a ruminant in my cup of tea earlier this afternoon, I know that they have a place in the final food chain.

[David Mowat]

I am not totally certain that I understood the thrust of what was said about rainforests. Was the point being made that it is good to convert rainforest into soya for use in transport?

[Ian Swales]

No, absolutely not. My point was that the high-grade, high-protein animal feed, which the by-product feed replaces, is typically grown in South America, so the by-product feed reduces the demand for soya-based proteins, mostly from South America. There is a green chain. The situation is not as simple as people say.

The Government have had a policy for putting biofuels into both diesel and petrol for years. Starting with diesel, they set the targets and people invested large amounts in chemical plant, but all the early investors went bust because the Government kept moving the goal posts—surprise, surprise, the same has happened with bioethanol. The £300 million that people invested in the plant in my constituency has largely gone and the plant recently changed hands for a lower price. Why? Because the Government have not delivered on the renewable transport fuel obligations they said they would when the investment case was originally made.

The hon. Member for Southport mentioned an important point: we need certainty for green technologies. If we are asking people to invest large amounts of capital, we cannot keep changing our minds. Changing one’s mind leads to an industry heavily dependent on imports of green products. Unless we give investors certainty about the goal posts and the environment into which they invest, they will not invest anymore. Most of the early investors in such technologies have done badly and that is mostly due to Government policy.

For the same reasons, we need to ensure at EU level that targets for the proportions of biofuel in diesel and petrol are separate. If we allow an overall target and let oil companies play games over how much biofuel they put into each one on any given day, the people who have invested heavily in capital plant will have years of feast and years of famine, as the oil companies play their games, and will eventually exit the market. Again, traders will be left to pick up the pieces.

[Graham Stringer]

The hon. Gentleman is making an interesting speech and I have learnt a lot from it. Is not the fundamental point of what he is saying that in asking the Government to pick one technology over another, we are asking them to pick winners? History shows us that the Government are much better at picking losers than winners.

Rather than the Government’s picking winners and choosing where to put subsidies, would it not be better for them to switch some of the subsidies currently going into the energy industry—there is a huge debate about that at the moment—into research, so that we can move on to the next generation of renewable technologies, which the market will support?

[Ian Swales]

The hon. Gentleman makes a good point. I have told many potential investors in the industry that we cannot expect the Government to make winners. As at a roulette table, they will put their chips on lots of different numbers, but having made policy on, for example, the proportion of petrol that should come from bio-sources, they cannot change it when people are putting in hundreds of millions of pounds. By the way, those biofuels do not get a subsidy; all they need is a market that is understood and left to prosper. I agree with his point, but at some stage we must not so much pick winners, as set the environment for particular sectors of the market to thrive.

[John Pugh]

One place the Government cannot avoid interacting with the market in one way or another is the taxation regime, and they do so to an enormous extent. A lot of the price of petrol is tax. They cannot opt out.

[Ian Swales]

That is a good point. The Government have a key role, because they are never out of the market, due to the environment they set and the rules they put in place. They are players, whether they like it or not.

We need to look constantly at the science behind the issues and not simply listen to the last non-governmental organisation we spoke to. Sustainability needs to be looked at from cradle to grave, and there is a lot of devil in that detail, such as the materials used to make a car battery for an electric car. We need to police systems, because once we put rules in place, there are usually lots of people working on the best way to get round them and maximise their take. We need to ensure that we are not naive about the systems we put in place. We need big thinking.

One of my concerns is that we need five Ministers to respond to the debate: one from the Department for Business, Innovation and Skills; one from the Department of Energy and Climate Change; one from the Treasury; one from the Department for Environment, Food and Rural Affairs; and one from the Department for Transport, who I am sure—no pressure—will speak for all the others. The issues typically cross those five Departments, a fact that I know the Government recognise. They have put a high-level team in place, but we need not just high-level thinking, but high-level action to ensure we get a consistent view, over, for example, the value of waste and where it is best used.

Finally, I congratulate the Minister on his new role. I am sure that, having listened to the debate, he is wondering whether he did the right thing in accepting the job. I hope he will give us the clarity we all seek.

15:29

[Richard Burden (Birmingham, Northfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Weir. When do you want to call the Minister?

[Mr Mike Weir (in the Chair)]

We finish at 4.22, so you can split the time among yourselves.

[Richard Burden]

I will not go on for the sake of it. This is the second debate of the day for the new Minister and me in Westminster Hall, so we are starting as we mean to go on. I congratulate the hon. Member for Southport (John Pugh) on securing the debate. We have heard important contributions from my hon. Friend the Member for East Lothian (Fiona O’Donnell) and the hon. Member for Redcar (Ian Swales) and we have had important interventions from the hon. Member for Warrington South (David Mowat) and my hon. Friend the Member for Blackley and Broughton (Graham Stringer).

When he introduced the debate, the hon. Member for Southport quoted from “The Hitchhiker’s Guide to the Galaxy” on getting from A to B. Given the importance of what we are talking about and the seriousness of the consequences if we do not effectively tackle climate change, I was put in mind of a different quote from that book:

“For instance, on the planet Earth, man had always assumed that he was more intelligent than dolphins because he had achieved so much—the wheel, New York, wars and so on—whilst all the dolphins had ever done was muck about in the water having a good time. But conversely, the dolphins had always believed that they were far more intelligent than man—for precisely the same reasons.”

On the challenge of climate change, that makes a very good point.

Cutting emissions and tackling greenhouse gases is not simply a question of tackling the transport end of the equation, but transport is obviously central to the issue. We are talking about transport still accounting for more than a fifth of the UK’s CO₂ emissions, with 97% of that coming from cars alone. That is why the European Council of Ministers debate on achieving the EU target of 40% was important. I understand that the time scale has now slipped. Originally, the proposal was for 2020, and, as a result of the latest decision, it is now 2024. I understand the UK voted for that longer time scale. Can the Minister confirm whether that is the case when he sums up the debate?

In the UK, we have ambitious targets to reach 1.7 million electric vehicles by 2020 and to ensure that all vehicles are ultra-low emission by 2050. Today we are not debating whether the transport sector needs to change, but what reforms are needed. I have had the privilege of chairing the all-party motor group for several years. It is a position I will have to give up now that I am in my current role. However, I know that great work has been pioneered in this country by the Automotive Council, in conjunction with organisations such as the Office for Low Emission Vehicles.

The hon. Member for Redcar might be right that we need five Ministers in a debate such as this, although the thought scares me a little, but one of the great things about OLEV is that it has started to bring together cross-departmental working. We could learn from that in other sectors. The Automotive Council and OLEV have both been important in ensuring that the UK is doing all that it can to promote innovation, development and the take-up of low-carbon transport. I am particularly proud of the Automotive Council, which was an initiative of the Labour Government. I am pleased that the success achieved by the council has meant that it has been continued by the current Government.

[David Mowat]

On the point about electric cars, does the hon. Gentleman accept the point that was made earlier? Given that 70% of our electricity is produced from fossil fuels—most of that from coal—electric cars are actually less carbon-friendly than petroleum cars at the moment, and will be for some considerable time.

[Richard Burden]

The point that we cannot simply measure emissions and the impact on the environment by looking at what comes out of the tailpipe is absolutely right. We do need to look at the whole-life question, and that includes questions of energy generation and where it comes from and so on. I would not go as far as the hon. Gentleman and conclude that electric cars are less environmentally friendly than petrol cars. It depends what we are talking about and what the circumstances are.

[David Mowat]

That is true, but in terms of carbon production, it is arithmetically inevitable that if we produce electricity from coal and then use that electricity to make a car go, with the losses that take place in each of those stages, we will use more carbon. I am not saying there are not other benefits, but the carbon is worse.

[Richard Burden]

There are all sorts of issues. The hon. Gentleman makes an assumption that the electricity is generated from coal. It is clearly the case that coal is an important part of the energy mix, but it is not the only one. The debate is about how we achieve the right kind of balance to ensure that, as far as our road transport is concerned, it contributes as best it can to combating carbon emissions; and not only carbon emissions, but some of the other emissions that the hon. Member for Southport talked about.

[David Mowat]

Will the hon. Gentleman give way?

[Richard Burden]

I will let the hon. Gentleman intervene one more time. I do not want this to become a dialogue.

[David Mowat]

I will make one final point. Of course it depends on where the electricity comes from, and sometime soon we might have more carbon-free nuclear at a scale that will enable electric cars to be carbon-friendly. However, at the moment, 75% of our electricity—this is broadly true of the rest of Europe as well—comes from fossil fuels. Until that changes, electric cars are a net worsener of the use of carbon. I will leave it at that.

[Richard Burden]

This is perhaps to be continued another time. I will simply repeat that, in fairness, the equation is not as simple as that. However, it is the case that we need to green our road transport in this country. As we do that and talk about the options, it is important that we all live in the real world, ensuring that the policies we adopt, whatever they might be, do not worsen the cost of living crisis that is hitting so many people at the moment. My constituents know that the Government might be patting themselves on the back in relation to fuel duty. The fact that VAT went up to 20% in 2011 has also been part of the mix as far as their cost of living is concerned, because that created a long-lasting impact on them as well. However, I do not want to dwell on that.

I want to ask the Minister to cover a few points in relation to alternative fuels and the action that is needed to promote lower emissions in different parts; issues to do with the recharging network; and other ways that the Government could promote behaviour change to cut transport emissions and protect the planet.

First, I want to address biofuels. The hon. Member for Southport raised important concerns. Indeed, my hon. Friend the Member for East Lothian talked about the important work of the International Development Committee on this subject. I know it is important work. Not only was I chairing the all-party motor group until recently, but I was also a member of the International Development Committee as well. Important evidence was given to the Committee on the impact of agriculturally produced biofuels and the impact that they have on food prices and food security. That is why I am pleased that, as far as the European Union is concerned, there has been a recent vote to cut the number of food crops used to produce biofuels. However—perhaps the Minister can confirm whether I am right—we are now not talking about a 5% limit, but a 6% limit. The target was watered down. Sadly, the Conservative members of the European Parliament contributed to that watering down.

Will the Minister confirm whether I am right about the 5% or 6% target and the change there? What is the Government’s view? Would they have preferred a 5% target? Without wanting him to jump across too many departmental areas, what does the Minister think of the recommendation mentioned by my hon. Friend who sits on the International Development Committee, that the UK revise its domestic renewable transport fuel obligation to exclude agriculturally produced biofuels completely?

If the Government still want to be the greenest one ever, as I understand they are still saying, it is important that they set out their position on biofuels as regards not only how they affect food crops, which we have already discussed, but how in practice we can distinguish between different kinds of biofuels in relation to both their sourcing and how they are produced. I would not go as far as the hon. Member for Redcar on some of the points he made, but different biofuels have different impacts, and it is important for Government policy that such distinctions are made.

The hon. Member for Southport rightly stated that we need to look at the issues of liquefied petroleum gas and compressed natural gas. I will not repeat what he said, other than to make two points. First, I recognise that LPG and CNG still need to be part of the mix, and will stay part of the mix for some considerable time, so the questions he asked deserve answers from the Minister. Secondly, to repeat what my hon. Friend the Member for Blackley and Broughton said, although decisions have to be made on fiscal incentives or disincentives for particular fuels, we must be careful to respond to the important point made by the Automotive Council and everybody else, which is not to try to pick winners, but to try to be technology-neutral in principle and to see what works. I hope that the Minister will answer the important questions asked by the hon. Member for Southport.

The promotion of low-carbon transport goes much further than such questions; it is also about the development of low-carbon technologies to provide a context for the use of different fuels, and how the progress already being made on petrol and diesel engines—they will remain part of our car and commercial vehicle fleet for a long time yet—can be sustained. That is why I welcome the work of the Office for Low Emission Vehicles, and its document, “Driving the Future Today: A strategy for ultra low emission vehicles in the UK”. I want the Minister to set out the Government’s thinking on some of the issues raised by that report.

On the demand side—assuming that electric vehicles will be an important part of the mix for the future—a recent Institute for Public Policy Research report showed that demand for those vehicles in the UK has recently fallen behind most other European countries and the United States, despite the innovation and leadership shown by the UK automotive industry. When Labour was in power, we took the important step of providing grant incentives for purchasers of low-emission vehicles, and I am pleased that this Government remain committed to that. However, the first bullet point in OLEV’s vision in its document is the need to develop a

“buoyant domestic fleet and private markets for ULEVs”—

ultra-low emission vehicles—which means demonstrating their economic benefits by tackling high up-front costs and dispelling misconceptions about their performance.

Are the Government committed to the continuation of plug-in car grants, and does the Minister accept that the Government could do more by leading by example? They could use their procurement processes more imaginatively to ensure that the switch to ULEVs spreads across the public sector, and they could consider how to maintain and provide aftercare for those vehicles to help promote local jobs and local industries, as well as the development of local skills. In a way, the Government car fleet could both buy British and support the ULEV agenda.

On infrastructure, the Government have now departed from what they originally said about having a national recharging network for electric vehicles, and instead favour what they describe as home and workplace recharging. However, OLEV has stated that that means supporting a network of charge points in homes, residential streets, railway stations and public sector car parks, which sounds a bit like a recharging network to me. OLEV has said that £37 million is available to help to roll out the infrastructure until 2015, which I welcome, but what does the Minister expect the £37 million to achieve, and how far short will it fall of what OLEV thinks is needed?

OLEV has emphasised the importance of the energy companies in delivering a step change towards having ULEVs, from providing a smarter electricity grid supported by new tariff structures through to using plug-in vehicles themselves as distributed energy stores that might even feed electricity back to the grid at peak times. Do the Government have any plans to achieve such innovative ideas in practice? Does not such a point suggest the need for a much more proactive regulatory framework for the energy companies?

I certainly welcome the UK H₂ Mobility project to stimulate the take-up of hydrogen-powered vehicles, which are a bit closer to reality than the hon. Member for Southport said. We still need to know the level of infrastructure that the Government think will be required for the scale shift of cars to hydrogen fuel cells, the time scales that are envisaged and the mechanism that will be put in place to achieve what the Government want.

In relation to automotive capability, the OLEV strategy rightly underlines the importance of the Automotive Council’s work, which I have already mentioned. Such developments as the recent announcement of an advanced propulsion centre are certainly welcome, as is the competition launched with a £10 million prize for the development of long-life battery production.

There are still questions, however, about whether UK companies, particularly small and medium-sized enterprises, will benefit from the shift to ULEVs through the promotion of jobs and employment in the UK. Research for the Society of Motor Manufacturers and Traders by KPMG recently underlined the barriers faced by companies that have the flair, but too seldom the opportunity, to development their ideas and bring them to market. All too often, there are still difficulties in accessing affordable finance. The report estimated that UK companies are not securing about £3 billion-worth of opportunities for the automotive supply chain in the UK.

The Minister knows that the industry, in the form of the Automotive Council, is demanding more assertive Government action, so what will he do to press his Treasury colleagues to respond more effectively? As the skills agenda is also important to achieving our objectives, what discussions does he intend to have with the Secretary of State for Education to bring an end to the rather toffee-nosed valuing of traditional academic achievement over vocational achievement in this country?

The shift towards ULEVs is not only an environmental necessity for the future of our planet. In “Driving the Future Today”, OLEV has stated that the transition to such vehicles

“represents a once in a lifetime industrial opportunity for the UK automotive sector if it successfully positions itself in the vanguard of this new technology—delivering jobs and growth for decades to come.”

That is why the industry and consumers look to the Government to match their words with actions on such issues.

Finally, in considering greener fuels, it is important to remember that while H₂ powers hydrogen vehicles, O₂ powers human vehicles. I therefore hope that the Minister will set out some of the practical actions that he and the Government intend to achieve to ensure that another part of the ultra-low carbon mix of transport in this country involves measures to encourage cycling and walking as part of that agenda.

15:59

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I am pleased, Mr Weir, to be here today. I congratulate the hon. Member for Southport (John Pugh) on securing this debate. He touches on a key issue for my new Department, which is how we can build a low-carbon transport system for the 21st century. Let me briefly mention my own interest in this, which was alluded to by the hon. Member for Redcar (Ian Swales). As a farmer, I produce wheat. Indeed two loads of it went to the Hull plant last year to produce bioethanol. I must admit to feeling guilty when I saw perfectly good wheat, which could be used for animal feed or biscuits, going to produce ethanol, so I was reassured to hear from the hon. Gentleman that the residue is not wasted but used as a ruminant feed.

Although I am new to this role, I am not new to the issue or the subjects raised in today’s debate. Way back in 2008, I was fortunate to be called by Mr Speaker to ask a question of the then Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who I understand is still a Member of this House, about the impact of biofuels on food production. My interest in the issue remains to this day. The question I asked went something like this: is it better to put ethanol in a Range Rover’s tank or food in an African child’s stomach? I must say I did get quite a good answer from the then Prime Minister. Before that, I was a Member of the European Parliament and served on the environment committee as a deputy co-ordinator for the European People’s Party group and was involved in much of the European legislation that we are using now to clean up our vehicle fleet and the atmosphere.

Many hon. Members will have seen the recent UN report on the latest science of climate change, which clearly reveals the costs of failing to address the dangers of climate change. The Government are committed to building a low-carbon energy system that avoids such risks, and transport must play its part in the challenge.

Transport accounts for around a quarter of UK carbon emissions, and the share is rising. It is essential that we act now to reduce the impact of transport on our environment. Last month, the Government published their strategy for electric vehicles, which is a key element of our plan for a low-carbon transport system. The Government’s vision is that by 2050 almost every car in the UK will be an ultra-low emission vehicle. As well as cutting carbon, electric cars have the potential to reduce our reliance on foreign energy imports and to clean up the air in our towns and cities.

The Government are determined to seize this opportunity, and to place the UK at the forefront of the design, development and manufacture of ultra-low emission vehicles, and I am sure that we will work with the Automotive Council to do just that.

[Ian Swales]

Does the Minister feel that his colleagues in the Department of Energy and Climate Change, who are worried about the lights going out this winter, are factoring into their work on future power generation the electrical demand that he is talking about?

[Mr Goodwill]

Yes, I am sure they are. I am concerned that one means of addressing the range anxiety problem is to have fast-charge cars. Electric cars work well when they are charged overnight with renewable energy or nuclear energy, but once we start fast-charging cars at filling stations, we will have a major problem not only with generation capacity but with the grid’s ability to carry that amount of electricity.

However, not all modes of transport can be easily electrified. Aviation and heavy goods vehicles are likely to continue to require liquid fuels for decades to come. It is therefore essential that we develop the technologies to produce low-carbon liquid fuels.

Biofuels are renewable transport fuels created from organic matter and offer one way of creating low-carbon fuels. However, biofuels—and bioenergy more generally— also present complex challenges. Last year, the Government published a strategy for bioenergy, which recognised its important role in allowing the UK to meet its climate change objectives. It concluded that by using bioenergy, we could cut the costs of decarbonising the UK by £44 billion.

[Fiona O’Donnell]

I thank the Minister for giving way and take the opportunity to welcome him to his new role. Does he agree with his predecessor, the Minister of State, Home Department, the hon. Member for Lewes (Norman Baker), who has perhaps gone to a better place now, that some forms of biofuels are worse for the environment than fossil fuels?

[Mr Goodwill]

I have seen analysis of some of the bioethanol produced in the United States which indicates that that is the case. I will comment on the particular impact of fuels as I make progress in my speech.

The Government published a strategy on bioenergy, which concluded that by using bioenergy we could cut the cost of decarbonising the UK by £44 billion. Other reports have estimated that the biomass industry could provide 50,000 jobs. There are clear opportunities for the UK in the global race for growth driven by science and innovation, and it is an industry that we need to develop. However, the strategy also made it clear that bioenergy had its risks. If it is not managed properly, bioenergy can actually increase greenhouse gas emissions and put at risk key objectives such as food security. It is therefore essential that we proceed with care and develop systems that use bioenergy only where it is genuinely sustainable.

We have already taken important steps on the path to genuinely sustainable biofuels. In 2008, the Renewable Transport Fuels Obligation was established. For the first time, biofuel was required to be blended into road transport fuel. In 2011, the UK introduced mandatory sustainability criteria to the RTFO. Those changes meant that biofuels could no longer be sourced from areas of high biodiversity, such as rainforests or wetlands. In 2011, we also saw the introduction of double rewards for advanced biofuels, also referred to in this debate as second generation biofuels, and biofuels made from waste. Such changes have led to encouraging trends in the fuels supplied under the RTFO. The average carbon savings of biofuel supplied under the RTFO when compared with fossil fuel have increased from 46% in 2008 to around 68% in the latest statistics.

One example of the feedstocks behind this trend is used cooking oil. The hon. Member for Southport may be aware of the Olleco biodiesel plant in Bootle, which is the country’s largest purpose-built plant dedicated to producing biodiesel from used cooking oil, and is not too far from his Merseyside constituency.

[David Mowat]

The Minister makes the point about how these things are alternatives to fossil fuels, but does he accept that not all fossil fuels have the same amount of carbon? If we were to replace petrol with gas or liquefied natural gas cars, as opposed to liquefied petroleum gas cars—there are 15 million LNG cars in the world and 3 million in Pakistan—we would halve the amount of carbon being produced from the transport sector. That technology exists already. I repeat the point that I made to the shadow Minister that electric cars are not a panacea for as long as we continue to produce the electricity from fossil fuels, particularly coal.

[Mr Goodwill]

My hon. Friend is absolutely right. Methane, or biogas, is CH₄, so for every molecule of carbon dioxide produced there are four molecules of water, so it is a big improvement over fossil fuels such as LPG.

[John Pugh]

I was not aware of the cooking oil development plant in Bootle, but I was once the leader of Sefton council, which covered Bootle. The major environmental issue that we had was the strange smell that used to permeate households in the area, and that was regarded in those days as an environmental hazard. This environment is a complicated thing to deal with.

[Mr Goodwill]

Indeed. We have a big chip factory in my constituency, which occasionally has the same effect. Used cooking oil offers carbon savings of around 80% compared with those produced by fossil fuel, and the latest data suggest that last year around a third of biofuels supplied in the UK came from used cooking oil. We are very much on the case of ensuring that used cooking oil is indeed used cooking oil, and the Department is currently monitoring the situation closely because of the allegations that have been flying around. Certainly, the UK should not be criticised in that regard.

There is still more to do to ensure the sustainability of biofuels. In particular, we are concerned about the impact of indirect land use change. Studies have demonstrated that, due to ILUC, some otherwise sustainably produced biofuels can end up causing greater carbon emissions than fossil fuels.

[Fiona O’Donnell]

The Minister is being very generous in giving way again. Does he not agree that that perhaps is what the hon. Member for Redcar (Ian Swales) missed in his contribution—while the products that may be used in his constituency are not fit for human consumption, they still use up valuable resources of land and water?

[Mr Goodwill]

The issue of displacement—the ILUC situation—is one that we are well aware of. It tends to be more of a problem with biodiesel than with bioethanol, but it is an issue that we need to address through negotiations and agreements at the European level.

The European targets that the UK has agreed to are legally binding. Therefore, the UK needs to work within the European framework to produce a biofuel policy that reduces the environmental and social impacts of biofuels. As part of this process, it is imperative that ILUC is properly addressed at European level. Negotiations are ongoing in Europe, and we are pressing for an ambitious outcome to the ILUC situation. The 5% figure is certainly the figure that we are negotiating towards.

As we have heard in the debate, there are also concerns about the impact of biofuels on food prices. Food versus fuel is an issue that I take very seriously. The primary goal of agriculture should remain food production, and the production of biomass must not undermine food security or increase food prices. It is accepted that increased demand for biofuel has played a role, but Government analysis has shown that although increased global crop prices have resulted from biofuel production there has only been a modest rise in food prices.

I must point out at this stage that there is only 10p worth of wheat in a loaf of bread anyway, so there are many other factors that come—oh dear, I have mentioned that I am a farmer again. However, I recognise the seriousness of even a small impact on food prices, as well as the potential for biofuel support policies to increase crop price volatility. Nevertheless, I am confident that our position on the ILUC negotiations, if it is successful in limiting crop-based biofuels and incentivising those produced from wastes and residues, should reduce the direct competition for food feedstocks.

I will turn now to advanced fuels. Resolving the issue of ILUC remains the main barrier to setting out the clear pathway to achieving our 2020 targets, which I know industry and investors need. However, in the meantime we can set out some markers for the longer-term path to more sustainable biofuels. That is likely to be achieved through the use of non-land-using feedstocks, such as agricultural residues and municipal waste. However, use of these feedstocks requires advanced conversion processes that have not yet been commercialised. These processes are an exciting technology, which can turn unwanted waste products into valuable transport fuel. A number of countries have already established production facilities for these advanced biofuels, although there are none as yet in the UK. However, with the UK’s world-class research capabilities we have the potential to become a global player in this sector.

That is why earlier this year the Government announced a £25 million competition for an advanced biofuel demonstration contest, which aims to deliver up to three demonstration-scale advanced biofuel plants in the UK. Later this year, we will also be announcing a call for evidence on advanced fuels. We will invite industry’s views on what more the Government should be doing to develop these essential technologies, which will be needed long into the future to allow us to reduce the carbon footprint of road travel and, increasingly, other transport sectors.

However, not all non-land-using biofuels rely on advanced technologies. For example, biomethane made from waste demonstrates some of the highest carbon savings of any biofuel, and the technology for its production is well understood. Indeed, I visited a BMW car plant in the United States, which was powered by biofuel from a nearby waste dump.

[Ian Swales]

May I ask the Minister a question about a detail in his speech? He mentioned “other transport sectors”. It is already technically possible for biokerosene to fuel aircraft. Some aircraft have flown—including, I believe, a Virgin aircraft—powered purely by biokerosene. Will the Government do anything about aircraft fuels?

[Mr Goodwill]

I will not digress too far into the area of aircraft but we certainly need to ensure that the quality of aircraft fuels is consistent, and currently we do not put biofuel into aviation kerosene for safety reasons. However, more research could lead to some progress in that area.

Biomethane represents a particularly compelling opportunity for heavy goods vehicles, which have few other options for decarbonisation. Biomethane currently represents less than 1% of renewable transport fuel, so there is clear potential to expand its contribution to reducing emissions in the UK. However, biomethane cannot be used in transport without the vehicles that are able to use it, and there are currently fewer than 1,000 natural gas vehicles in the UK. The Government are supporting the early uptake of gas-fuelled vehicles through the low-carbon truck demonstration trial. This £11 million project to trial low-carbon trucks and supporting infrastructure will support almost 350 natural gas trucks.

I am aware of industry concerns about the adequacy of incentives for the use of biomethane in transport, particularly when compared with other Government support schemes for the use of biomethane in electricity and heat. These issues will be considered as part of our forthcoming call for evidence, and we will then be in a position to propose the changes that we think will be needed to the RTFO in order to strike the best balance of incentives. With luck, we will then be able to introduce those incentives alongside agreed European proposals to address ILUC.

I turn now to some of the points made in the debate. I again welcome the shadow Minister, the hon. Member for Birmingham, Northfield (Richard Burden), to his role. In many ways, we are on the same page. The renewable energy directive targets are still in place for 2020; under those targets, 10% of transport energy will be renewable. I am sure that he will be pleased to know that those targets have not changed as a result of our recent negotiations.

The hon. Member for Southport raised the issue of liquefied natural gas, which is the same as methane or biogas. As a transport fuel, natural gas has lower carbon emissions than diesel; it produces about 15% lower emissions. Natural gas also diversifies our fuel supply, increasing energy security, and it can improve local air quality. In addition, natural gas benefits from a lower duty rate than diesel. I should point out that matters regarding duty rates should be addressed to the Chancellor of the Exchequer.

Liquefied petroleum gas vehicles have some environmental benefits. On a lifecycle basis, LPG vehicles produce about 14% less carbon dioxide than petrol vehicles do. However, LPG is not as good as diesel. LPG cars deliver similar air quality emissions to petrol cars, and better air quality emissions than diesel, although the gap has narrowed with the introduction of Euro 5 and Euro 6 cars.

The hon. Member for East Lothian (Fiona O’Donnell) asked about the 5% food crop cap. I hope that I have reassured her that we are sticking with that, and we have certainly made it clear to the European Commission, the European Parliament and all other member states in the Council of the European Union that the UK supports the 5% cap.

[Fiona O’Donnell]

Can I press the Minister further and ask what discussions he has had with the German Government, who would be key to gaining support for the 5% cap?

[Mr Goodwill]

I met my German opposite number in Luxembourg last Thursday. Although the discussion did not veer into that area, I am sure that we will have a good working relationship with the Germans. Of course, the Germans are currently in the process of forming a new Government, so I look forward to hopefully meeting my new colleague, or perhaps his replacement if there are changes to the Government. The hon. Lady is absolutely right—Germany is key to almost everything in Europe, and we certainly have a very good working relationship with our colleagues from the German Federal Republic.

Regarding electric vehicles, the point was made that the market for them is very much a niche one. We are happy with the take-up of ultra-low emission vehicles. We are working across Government with the industry and we have introduced a range of ambitious measures to make the UK a premier global market for these vehicles.

My hon. Friend the Member for Warrington South (David Mowat) made a point about the energy mix in terms of electricity generation. It is the case that electric cars—ultra-low emission vehicles—already produce lower emissions than conventional vehicles, and as the grid decarbonises their environmental performance will improve further. I am keen to see more renewable energy being produced, not least off the coast of my constituency. Also, as a keen fan of nuclear power, I know that we can use the electricity that nuclear power produces at night-time to trickle charge electric vehicles.

I was asked whether the Government are committed to plug-in car grants. We have announced £500 million of support for the period from 2015 to 2021, and shortly we will launch a call for evidence to inform how we will achieve the best value for that investment.

The issue of hydrogen was raised. The Government launched the UK H₂ Mobility project in 2012, which was a joint undertaking with industry. The project will evaluate the potential for hydrogen as a fuel, developing an action plan for a roll-out to consumers from next year if the evaluation is successful.

I think that I have responded to most of the points that were made in the debate. If I have missed some points, I apologise and I will certainly write to respond to them, as time is pressing now.

To conclude, I thank everyone who has contributed to this debate for taking the time to consider this important issue. The use of biofuels and non-conventional fuels is, and will remain, complex and controversial. However, that must not stop us from finding the right balance between producing the fuels we need for a low-carbon future and protecting the livelihoods of the most vulnerable, both here and in the developing world.

Sentencing Tariffs (Offences Against Animals)

Tuesday 15th October 2013 Westminster Hall

16:19

[Mr Adrian Sanders (Torbay) (LD)]

It is a pleasure to speak under your chairmanship for the first time, Mr Weir. I am delighted to see the new Minister here. It is wonderful that a fellow west country Member of Parliament —the real west country: Devon and Cornwall—is in a ministerial position.

Animal baiting and fighting legislation was first introduced in the United Kingdom in 1835. Yet more than 175 years later, these most barbaric and cruel activities remain alarmingly prevalent. Despite dozens of individuals being prosecuted every year, acts of animal cruelty continue to a horrific extent. Additionally, the practice is associated with other criminality, such as drug dealing and firearms sales.

We in England and the United Kingdom cherish our pets. The fact that dogfighting still occurs today would astonish most people. A lot of people describe dog and cockfighting as sports, but there is nothing sporting in watching two dogs being made to tear each other apart. Sadly, examples of such barbaric animal cruelty are still too numerous in our society. It is astonishing that people still cause untold suffering to animals in this way. There have been all too many examples of the practice over the past few years.

Last year, in Derbyshire, a mutilated puppy was found by rescuers from the Royal Society for the Prevention of Cruelty to Animals. The dog, a west highland terrier cross, was found in a filthy, mangled state, abandoned in a box dumped in a country lane. Half of both his ears had been cut off and he was riddled with fleas. Cutting ears off is apparently a standard procedure for dogfighting, as they can be bitten by other dogs during a fight. To make dogs last longer in the pit, the ears are cut off by the gangs beforehand. It can also be done to make the dog look more aggressive. It would have been excruciating for this terrier, done by an unprofessional person with no anaesthetic. The dog was still terrified when found by its rescuers; he flinched whenever vets went near his ears, so he obviously associates them with pain.

The RSPCA said that the terrier was probably an abandoned or unwanted pet and added that many such pets end up in dogfighting pits. Often, families struggling to make ends meet can no longer cope with paying for pets, which oftentimes are left on the streets. There has been an increase in strays. The RSPCA warned that these pets can be picked up by dogfighting gangs.

One such gang was broken up in Oxfordshire in 2011, when a father and son admitted to training dogs for organised fights. They were jailed and banned from keeping dogs, following a major RSPCA investigation. The father admitted using equipment such as treadmills, weighted collars and rudimentary veterinary equipment to train the dogs. RSPCA inspectors discovered an emaciated bull terrier, as well as shocking footage of dogfighting, when they searched his home.

In March last year, another gang was broken up, following another covert operation by the RSPCA. It was found goading animals into fighting, as well as training dogs. Those convicted received 20-week custodial sentences.

It is welcome that these people are being brought to justice. The sentences they receive send a clear message to others involved in dogfighting or thinking of taking part. Sadly, these individuals are not the first people to be sent away for the brutal practice and they will not be the last. Furthermore, dogfighting is the tip of the iceberg when it comes to ongoing animal cruelty.

In a cockfight, two roosters fight each other to the death, watched by people placing bets on the victor. If the birds survive, the organisers let them suffer untreated injuries or throw them away. They lie dead or dying in heaps. Left to themselves, roosters almost never hurt each other badly. However, in cockfights the birds often wear razor-sharp blades on their legs and get injuries such as punctured lungs, broken bones and pierced eyes, even when they survive.

Last October, a father and son were convicted of taking part in such a sick competition. RSPCA inspectors raided their homes and found evidence that they were at the heart of a global network of cockfighting. Together, they owned 484 birds bred for fighting, including 97 mature fighting cocks, and a cock-fighting pit. There were magazines and photographs, too, as well as evidence that the pair had travelled as far as South America to watch cockfights.

The RSPCA called the scene a “cockfighting factory”. It found more than 60 pairs of spurs, which are attached to birds’ feet to increase the damage inflicted, together with leg muffs, leg bands, beak muzzles and other blood-splattered veterinary items. Indeed, the pair were internationally renowned for their brutal practice. The father had featured on the front cover of an Asian cockfighting magazine. They exported the birds for fighting to Brazil, the Philippines and France, among other countries. Their birds had been fed with steroids to increase strength and stamina. Both men were given suspended sentences, large fines and community service, thanks to the RSPCA’s efforts. The question is, is that enough?

I highlight those cases to bring home the fact that animal cruelty in its most brutal form continues to plague our society and occurs even in this country. The most recent legislation on animal welfare is the Animal Welfare Act 2006. It was a welcome updating of the law on animals’ well-being, much of which was almost 100 years old. It simplified the legislation for enforcers and animal keepers by consolidating more than 20 pieces of legislation into one and eliminated many loopholes in the system.

The 2006 Act also ensured that people who organise animal fights, train animals for fights or publicise or record a fight, face the full force of the law. It sought to strengthen deterrence for persistent offenders by increasing penalties. For example, those causing unnecessary suffering to an animal could face up to 51 weeks in prison, a fine of up to £20,000, or both.

Despite that welcome legislation, the reports I mentioned show that more must be done to deter gangs who are organising these brutal blood sports. An already stretched RSPCA can only do so much to find the gangs carrying out these acts. It only has so many resources to pursue them through the courts. This is why we need to send a strong signal to individuals who may be, in any way, involved in the organisation of any sort of animal fighting, wrestling or baiting.

I suggest that penalties be doubled, allowing for custodial sentences of up to two years for particularly egregious cases of animal cruelty. That would send out a powerful signal to those engaged, or considering becoming engaged, in this brutal competition. It would give judges the necessary leeway to impose sentences they felt were appropriate to the crimes involved and ensure that people such as those I have mentioned faced the full force of the law and paid for their criminal brutality.

We are at something of a disadvantage in that the provisions for tougher sentences in the 2006 Act were never enacted. Will the Minister explain why? The most someone is likely to get, even for serious cases of animal cruelty, is a six-month sentence; in reality, they will probably only serve eight weeks.

Finally, I pay tribute to the tireless efforts of the RSPCA. Every year, it rescues and collects almost 120,000 animals. It finds new homes for about 60,000 of them. Another 60,000 animals are microchipped, helping them to stay safe. Ever since it was founded in 1824, the RSPCA has been a voice for animals throughout Britain. Despite facing countless difficulties in this time, it has always stayed true to its central charitable mission—namely,

“by all lawful means, prevent cruelty, promote kindness to and alleviate suffering of all animals”.

It is a charity that cares for all our animals, whether pets or companions, on farms or in laboratories.

Last year, the RSPCA secured more than 3,000 convictions by private prosecution. Its internal investigations unit looked into more than 160,000 complaints of alleged cruelty. It is especially worthwhile to highlight the work of the RSPCA at a time when donations are falling. The proportion of people giving to charity fell from 58% to 55% in 2011, according to the Charities Aid Foundation, and it is expected to have fallen again in 2012. As we all struggle with austerity, so do charities.

It is vital that we continue to support the work of charities such as the RSPCA, and any other animal welfare organisation, at this time. All the while, their workers and volunteers continue their efforts to ensure that vulnerable pets and animals receive the care they deserve. The examples of dog and cockfighting that I have raised today are proof that their work is much needed.

Animal cruelty in its worst form continues to take place in Britain. If we really cherish our pets in Britain, we should have an appropriate legislative framework to protect their well-being. We must give judges the power to punish the most egregious acts of animal brutality, and the measures I propose would do just that. The Government need to conduct a thorough review of sentences for issues beyond—

16:30

Sitting suspended for a Division in the House.

16:39

On resuming—

[Mr Sanders]

As I was saying before the rug was pulled out from under my peroration, we must give judges the power to punish the most egregious acts of animal brutality. The measures that I have mentioned will, I hope, do just that. The Government need to conduct a thorough review of sentences for issues beyond just dog control. We should have the data, so that we can see how effective the 2006 Act is and whether more needs to be done.

I would be interested to know what objection the Government might have for not undertaking such a review. The Minister’s time to respond is limited, but I hope he can meet me and the RSPCA to discuss the issues in more detail. An increase in the maximum penalties, fines and jail sentences faced by those who are caught will signal that this country is no place for such barbarity. We might finally banish their cruelty from our society, once and for all. I think that we can all look forward to that.

16:41

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

It is a pleasure to serve under your chairmanship, Mr Weir. I congratulate my hon. Friend the Member for Torbay (Mr Sanders)—he is a fellow west country MP—on securing the debate and raising an issue that attracts a great deal of interest. He has always championed it, and I join him in praising the RSPCA for how it pursues some of the horrific cases that he outlined in his introduction.

I was personally interested in this area before I joined the Government. I served on the Environment, Food and Rural Affairs Committee, and earlier this summer, as part of my research, I read an interesting report called “Unleashed”, which was written by an academic called Simon Harding. It looked at the phenomena of status and weapon dogs and tried to understand why we are seeing an increase in some types of dog fights.

There are three key types of dog fight. First, there are those awful dog fights where bets are placed. They often take place in private venues, and that is the type of thing that my hon. Friend mentioned. Secondly, there is what they call “back of van” fights or trunking, which are awful. The idea came from the US, where they lock dogs in the boot of a car to fight it out. The third type, which some of the evidence suggests has had the greatest increase, is chain rolling, where dogs are used as an alternative to a knife and there are impromptu fights in parks. There has been a significant increase in reports to the RSPCA of illegal fights of that sort.

A further problem has been the growth of the internet, which has made some of these crimes easier to commit. That point has been highlighted by a great many of the animal welfare charities. We have the awful problem of the different terms and code words used in internet advertising for dogs designed to be sold for fighting, such as red-nosed, game-proven, game-bred and blocky. I welcome what the Pet Advertising Advisory Group has done to try to tighten that up by creating a new code of conduct for those companies that advertise pets.

The Government deplore acts of animal cruelty and believe that offenders deserve the full force of the courts. Our responsibility is to ensure that the legislation is fit for purpose. My hon. Friend asked whether we would review the legislation. We reviewed the main legislation that protects the welfare of kept animals—the Animal Welfare Act 2006—in 2010.

The report prepared by my Department and sent to the Environment, Food and Rural Affairs Committee for its consideration concluded that there was broad agreement that the 2006 Act has genuinely had a positive impact on animal welfare. It successfully brought together a number of different pieces of legislation into a comprehensive whole and placed a duty of care on those who are responsible for animals. The 2006 Act also introduced a preventive measure that has allowed action to be taken without animals suffering unnecessarily. Although the consultation highlighted some concerns that more could be done to speed up court cases involving seized animals, it did not cast doubt on the adequacy of maximum sentences.

Of course, legislation must set maximum penalties. It is then for the courts—usually the magistrates court for animal welfare cases—to take a view on what sentence should be given. Judges and magistrates have a great deal of discretion in sentencing. In coming to a view, they are helped by specific sentencing guidelines produced by the Sentencing Council, which has been responsible since 2010 for providing detailed guidance to courts on the appropriate sentence for individual cases.

Sentencing guidelines help to achieve consistency in deciding the type and length of sentence and set out the factors that should be considered in those decisions. The guidelines set out how a judge or magistrate can decide on the seriousness of a particular offence, and then determine the appropriate sentence. Of course, the circumstances of different cases can vary quite widely and that can explain the different sentences handed out. The guidance to magistrates covers cases of animal cruelty for offences committed under the 2006 Act and helps magistrates to impose an appropriate penalty. Those guidelines were last updated in 2008 and reflect the current penalties available.

The Government’s responsibility is to ensure that the courts have the flexibility to impose the appropriate sentence within acceptable ranges. To that end, the 2006 Act makes it an offence to cause any unnecessary suffering to an animal. That offence carries a maximum penalty of six months’ imprisonment or a fine of £20,000 or, crucially, both. Someone found guilty of organising or participating in a dog fight, along the lines that my hon. Friend described, could receive both a fine of £20,000 and a prison sentence of six months. Six months is the highest sentence available to a magistrates court and the fine is much greater than the usual £5,000 limit.

In addition, the 2006 Act makes it an offence to fail to provide an animal with its welfare needs. That offence can attract a maximum penalty of six months’ imprisonment or a fine of £5,000, or both. The offender can also be disqualified from owning an animal in future.

[Chris Evans (Islwyn) (Lab/Co-op)]

As I was coming to work yesterday morning, there was a Staffordshire bull terrier-type dog dead in the Thames. I hear what the Minister says, and I commend the Government’s action on increasing fines and sentences, but what action has specifically been taken to stop the people involved from owning those dogs again, legally or illegally, and what action has been taken to stop these dog fights taking place?

[George Eustice]

There are a number of measures under which we can do that. Under the 2006 Act, which was introduced by the previous Government, people can be disqualified from owning dogs. Through that Act, Parliament tightened up the earlier legislation. The courts now have to state why they would not impose such a disqualification, rather than it being left entirely up to them.

[Chris Evans]

My concern is on the safeguards to ensure that someone who is banned cannot own a dog again by legal means. What evidence do we have that someone owns a dog, even if they are banned? How do we impose that ban? That is the issue that I was raising.

[George Eustice]

Clearly, it is for the courts and the police to enforce the bans. Other bits of legislation related to dog welfare and, in particular, breeding, contain anti-avoidance clauses, so that if someone has five litters of dogs being bred on a premises—regardless of who owns or claims to own those dogs—they are caught by the law and require a licence. There are elements of legislation that do that, and I am here to set out what the law states. I commend what the previous Government did in introducing the 2006 Act. As I said, it requires the courts to state why they would not impose such a disqualification.

I realise that some people would like to see the maximum limits raised, but we need to be clear why such a move is deemed desirable by those calling for such an increase. Is it because the maximum limits are considered to be low compared with other similar offences? If we make that point, however, we should compare them with the maximum penalties for other crimes, such as assaulting a police officer, which can attract six months of imprisonment, a fine of £5,000 or both. The maximum penalty available for acts of antisocial behaviour, under the new Anti-social Behaviour, Crime and Policing Bill, will be three months, a fine or both.

My hon. Friend mentioned the Animal Welfare Act provision to increase sentences to 51 weeks. I think that he was referring to a scheme called “custody plus”, but it is not quite true that that would relate to a custodial sentence of 51 weeks; in fact, the sentence was always intended to be a combination of community service and imprisonment. It was not simply an increase—a mixture was always intended.

Alternatively, is an increase intended to act as a deterrent? The Government, however, have received no indication from magistrates that the penalties for animal cruelty cases should be increased because they are having to impose more and more penalties towards the upper end of the range. Crucially, for no convictions has a judge handed out the maximum sentence of six months. We therefore have to ask, why increase the maximum, if the existing one is not being used by the courts?

To give an example of the penalties handed down by magistrates over the past three years, convictions under the Animal Welfare Act have been roughly 1,000 a year; typically, about 10% of those have been sentenced to imprisonment, with the remainder getting a fine. That does not indicate to me that magistrates consider that the maximum penalties for animal cruelty should be increased. I understand the points made by hon. Members about increasing maximum sentences, but there does not seem to be evidence to suggest that a review is necessary, especially given that the issue was reviewed most recently in 2008.

My hon. Friend has, however, brought up an important subject for debate, which we all recognise as a growing problem, and the Government have introduced additional bits of legislation to deal with dangerous dogs, such as community protection notices or criminal behaviour orders, which allow the courts to ban people from owning or breeding dogs, or to require dogs to be neutered—a whole suite of other policies applies there.

My hon. Friend asks whether I am willing to meet him and the RSPCA, and of course I am, although the area is the responsibility of my noble friend Lord de Mauley, so he might well take that meeting on my behalf or with me. Nevertheless, I thank my hon. Friend for an important debate.

Protecting Older People from Fraud (Wales)

Tuesday 15th October 2013 Westminster Hall

16:52

[Paul Murphy (Torfaen) (Lab)]

I am glad to be serving under your Celtic chairmanship, Mr Weir. I am sure that you understand that some of the issues in today’s debate are very much relevant to the whole of the United Kingdom. I am also grateful to the Minister, whom we look forward to hearing from later.

A few statistics will show the extent of scams just in Wales, and how they affect all of us who represent Welsh constituencies. Between February 2012 and February 2013, 2,500 scams were reported, but it is reckoned that only 5% of scams that occur are reported to the authorities, so the total number could be as high as 50,000. There were 958 doorstep complaints, with 19 prosecutions, and 1,658 post, e-mail and telephone scams, with only two prosecutions. Those figures are revealing, not least because the majority of the victims of those scams were probably people, such as myself, over the age of 60. Those who are affected by such crooks and gangsters, who prey on our old people, are, I fear, vulnerable, physically and mentally. On average, older people lose £1,200 per person when swindled, although they can lose an awful lot more—their dignity, their self-esteem and, tragically and occasionally, their very will to live.

Recent examples of scams in Wales include one that involved the distinguished correspondent for BBC Wales, David Cornock. His elderly mother was swindled out of £270,000 by fraudsters, eventually leading to her premature death. In addition, a man in my constituency sent money to a non-existent lottery, the so-called European Lottery Guild, while a woman in Wales sent nearly all her money to a clairvoyant in Switzerland. Those examples are only the tip of the iceberg, which is why Age Cymru—a fine organisation—is now campaigning on the issue, led by Gerry Keighley, who used to be the editor of my local evening paper, the South Wales Argus. They are all doing a great job.

[Chris Evans (Islwyn) (Lab/Co-op)]

The Bryn estate in Pontllanfraith in my constituency has been plagued by doorstep scammers, rogue traders and their ilk for a number of years. Thanks to the Bryn residents’ association, a “no cold calling” zone has been introduced, which has had a huge and beneficial effect. Does my right hon. Friend agree that such schemes require further sight by the Government and endorsement throughout the country?

[Paul Murphy]

Indeed I do, and I shall come on to that matter in one of my recommendations to the Minister. My hon. Friend makes an interesting point, however, about the role of neighbours. When someone is aware that an older person or couple, vulnerable as they are, lives nearby, neighbours, as well as friends and family, have a huge role to play in deterring such terrible things, as do citizens advice bureaux and our local authorities’ trading standards departments, all of which are aware of the issues.

I want to bring to the attention of Members a new sharp practice—that is what I shall call it at this stage—resulting from the so-called green companies exploiting the Government’s affordable warmth scheme and the green deal. Those schemes are, in themselves, good; they seek to give vulnerable people, such as those on benefits or who are older, help towards reducing their energy bills, whether through insulation or whatever. I am in no way criticising such excellent schemes, which are funded by the United Kingdom Government, not the Welsh Government, although of course they operate in Wales as well as throughout the rest of the United Kingdom.

Such phone-in companies call older people and try to persuade them to register for advice and assistance, for which they are charged. In reality, those who wish to take advantage of the Government schemes can simply go to the authorities, official help lines, citizens advice bureaux or trading standards departments and ask for advice on what they should do. As everyone in the Chamber knows, however, people are often caught by a person calling on the telephone, and they are susceptible and more vulnerable to such activity.

[Jessica Morden (Newport East) (Lab)]

I congratulate my right hon. Friend on securing the debate and on his work with Age Cymru, which I hope will help people in future. I, too, have seen a huge increase in my constituency of companies using the green deal to scam older people—cowboy practices. Recent cases have now been referred to trading standards, but they are clearly the tip of the iceberg. Does he agree that this seems to be a particular problem in south Wales, as reported by Which? recently? We should investigate that issue more fully.

[Paul Murphy]

Indeed. I did not come across that until constituents came to me with their problems. I shall give three examples—there are many—of this sort of practice. Eco Green Deal Solutions has now shut down, I am delighted to say, after the consumer watchdog programme, “X-Ray” on BBC Wales found that several customers who were not eligible were charged up to £249 for arrangement and assessment fees. Another is Cornerstone Green Solutions, which took £99 from an elderly and vulnerable lady in my constituency. I understand that another company, Diversity Network Ltd, which is totally independent of the other two, has tried to arrange a refund.

The company that has caused most concern throughout south Wales, including in my hon. Friend’s constituency, is Becoming Green. It has caused great distress to some constituents who came to see me, and among other things, it caused me to raise the matter in Parliament. It is charging older people £299 for what it calls its advice service, and when it is challenged, my constituents are unable to get their money back. One of its customers—interestingly, bearing in mind the earlier debate, he lives in Torquay—recently wrote to a national newspaper, whose reporter contacted the company 17 times before getting beyond an electronic switchboard, which cut him off. I also had great trouble getting through to the company, as did my constituents.

The problem is that admirable schemes have been undermined by the activities of companies that are jumping on the bandwagon simply to make a big profit. I have contacted trading standards offices. Torfaen has an excellent trading standards office, which in recent weeks has received 62 complaints about such companies, 44 of which trade in becoming green, almost wholly from people over 60. The companies that I mentioned operated in Cardiff, where trading standards have received many complaints. Both authorities, and probably Newport and Caerphilly, are looking closely into the activities of those companies and others, and investigating them.

[Nia Griffith (Llanelli) (Lab)]

Does my right hon. Friend agree that in many instances such companies come up with ideas that are totally inappropriate for the householders they meet. I know of people living in terraced houses who use coal to heat their homes but are being told all sorts of nonsense about new gas boilers when they are not on mains gas? Much of the scammers’ advice is hot air, and we must ensure that we get rid of them.

[Paul Murphy]

My hon. Friend makes a valid point. The companies often confuse older people by offering opportunities that may never occur. They may refer to loans as grants, and confuse the people they are talking to.

This is not the Minister’s direct responsibility, but will he liaise on this matter particularly—I will come to other recommendations—with his counterpart in the Welsh Assembly Government and Welsh local authorities to publicise as much as possible the activities that we have all condemned today, so that our constituents are aware of them and can report them to the proper authorities? The Torfaen newspaper, which goes through every letter box in the valley, has highlighted the issue, so that people are made aware of it. That is the sort of thing that we must do.

I turn to more general points, which are important and on which the Government could help. First, will the Minister liaise with Royal Mail so that protocols are changed to allow staff to offer advice and to report suspicious mail? Postal companies should be empowered to refuse to deliver misleading, dishonest or scam mail in which promises and guarantees of large sums of money to the recipients are visible on the envelope. That might require the law to be amended, but it is worth considering. Age Cymru has heard of older people receiving up to 70 letters a day from companies encouraging them to take part in various scams. Secondly, will he work with the telephone companies to offer more protection against phone calls, especially from abroad, and to close down offenders’ lines? Thirdly, will he work with internet providers to increase protection by blocking access to known offenders?

My hon. Friend the Member for Islwyn (Chris Evans) referred to increasing the number of “no cold calling” zones throughout Wales. There are 14 in my constituency, and they are located specifically in areas where people are more elderly and vulnerable. They have been particularly successful in Torfaen, but they exist in other constituencies, and they should be encouraged. I hope that the Minister will liaise with Welsh local government to ensure that the matter is taken up.

It is the collective job of the United Kingdom Government, the Welsh Assembly Government and councils in Wales to protect the most vulnerable people in society from the activities of the unscrupulous rogues who plague us and prey on older people.

17:06

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

It is a pleasure to serve under your chairmanship, Mr Weir. I pay tribute to and congratulate the right hon. Member for Torfaen (Paul Murphy), a distinguished former Secretary of State for Wales, on securing this debate on the importance of protecting older people in Wales from fraud and scams. I am aware of the specific companies and cases he raised, and I hope to provide some reassurance on how they are being investigated and what the UK Government are doing, working with the Welsh Assembly Government and Welsh local authorities, to make progress.

I confirm that officials in the Department for Business, Innovation and Skills are in contact with trading standards colleagues in Cardiff and at the National Trading Standards Board about the three companies he mentioned. They are under active investigation. I understand that the Cardiff trading standards team and the Welsh scambusters team are investigating the issues raised by the right hon. Gentleman and they have been outlined in the BBC television programme he mentioned.

More broadly, I pay tribute to Age Cymru and its research on the matter. I met its representatives back in April to talk about the issue, and I know that many other Welsh Members of Parliament from all parties have also met people from the organisation. I pay tribute to it for its excellent work to help to protect and support vulnerable elderly people, to enable them to live their lives in comfort.

I hope that hon. Members will be interested to know that my noble friend Baroness Randerson, the other Under-Secretary at the Wales Office, will be holding a round table meeting at the Wales Office next month to support Age Cymru’s work. As part of that, we are bringing together organisations from across Wales, including enforcement and consumer protection agencies, Royal Mail, BT and Ofcom, to discuss how we can work together to reduce older people’s exposure to such scams.

I am sure that the right hon. Gentleman is aware that the cross-party group on older people and ageing at the National Assembly for Wales met only last week to discuss the issue and took evidence from a variety of stakeholders. We have invited the chair of the group to participate in our round table next month, which I hope will join up the discussions that are happening in Cardiff with the issues that we are focusing on at UK level.

[Roger Williams (Brecon and Radnorshire) (LD)]

The right hon. Gentleman has raised a particular type of scam affecting Wales. A constituent, Mr Davies—I call him that because it is his name—responded to persistent attempts to get money out of him for carbon credit and eventually sent £3,000, which he has not seen again. Local police say that they cannot investigate because it is too complicated, and the Serious Fraud Office says it is below its threshold. Will the Minister take that on board, and perhaps talk to me afterwards to look for a way forward to ensure that people receive justice?

[Stephen Crabb]

I thank my hon. Friend for raising that case. Without more detail, I cannot comment further, but I would be very disappointed if Dyfed-Powys police or the Serious Fraud Office were not able to investigate. Let us see the detail, and hopefully we can raise that issue and get some progress on it.

We know that more than 3.2 million people—nearly 7% of the entire UK population—fall victim to scams each year, and that fraud and scams generate more than £9 billion of individual losses each year. That figure is truly staggering. We can all say that we are in complete agreement in this room this afternoon about the need to protect all sections of society, and especially the elderly, against the harm caused by scams.

I take on board the point made by the right hon. Gentleman about the level of prosecutions concerning reported scams. It is important to recognise and put on record that it is notoriously difficult to investigate phone and e-mail scams and to pursue the culprits behind them, because so often the scams originate overseas. The solution, therefore, cannot just be one of enforcement, and that is where prevention comes in, as the right hon. Gentleman mentioned.

In Cardiff, for example, the trading standards team recognise that prevention is key to reducing such crimes. Last year, they set up monthly victim support meetings with South Wales police and other partners, such as Age UK, Age Cymru, Victim Support, and Care & Repair. They work to identify victims of scams and doorstep crime and provide further support, advice and education. As a result, they report that they are seeing the number of cases raised at meetings decline. Through making people aware of how to spot and avoid scams and by utilising telephone and mailing preference services, we can reduce exposure to scams and the likelihood that someone will be taken in.

The Government provide for advice on scams through various agencies—particularly through the citizens advice service, which provides clear and practical guidance to consumers over the phone and on websites. As a Government, we are also taking steps to ensure that people are aware of scams and know what to do if they suspect a scam.

[Nia Griffith]

The Minister will be aware that the hon. Member for Romsey and Southampton North (Caroline Nokes) proposed a ten-minute rule Bill. Will he comment on whether the Government have any plans to implement the meat of that Bill, which was to allow, with safeguards, postal workers to intervene when they saw a huge number of envelopes with those fancy prizes on the front going to one address?

[Stephen Crabb]

I thank the hon. Lady for raising that point. I shall come to Royal Mail a bit later and hopefully the information that I shall provide will suffice. If not, I can follow that up in writing.

The “Think Jessica” campaign and representative bodies such as Age UK and citizens advice bureaux work to raise awareness of the devastating impact that scams and fraud can have on those who fall victim—especially the elderly—and on victims’ families. The National Trading Standards Board has also provided funding to trading standards in Wales for a national doorstep crime project. That project has a number of actions to undertake and that includes working alongside the Older People’s Commissioner for Wales, the Welsh Assembly and other Government Departments.

The Consumer Protection Partnership, which is made up of partners from the enforcement community, as well as Citizens Advice and other Government bodies, has teamed up with fraud and scam experts, such as the Serious Organised Crime Agency and Action Fraud, to implement a more holistic and joined-up approach to tackling scammers. As part of that, the citizens advice service and the Trading Standards Institute launched a scam awareness campaign in May this year, which was endorsed by the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for East Dunbartonshire (Jo Swinson)—the consumer Minister—to raise awareness and to help empower consumers to take firm action against scams. Through a renewed focus on prevention, there is an opportunity to try to protect some of the most vulnerable members of society from falling victim to unscrupulous people.

I will now mention some ways in which consumers can report scams and fraud. The Government have established Action Fraud to allow for the reporting of scams. Scams can be reported to Action Fraud by phone or by completing an online fraud report. It is a simple and quick process, and most importantly, it alerts the most appropriate authority to a potential scam. If someone believes that they have been the victim of a scam, or if they need help about how to advise someone whom they believe is the victim, they can also contact the Citizens Advice consumer helpline, which provides clear, practical help for consumers on what they should do.

Where Citizens Advice identifies a breach of consumer protection law, it can alert local authority trading standards enforcement. I encourage anyone who wishes to do so to make use of schemes such as the telephone preference service and the mailing preference service, which will stop addressed mail, and the “Your Choice” preference service, which will stop unaddressed mailings.

Over the past two years, the Government have better equipped trading standards to hit scammers hard by transferring responsibility for cross-cutting leadership and co-ordination of enforcement activity from the Office of Fair Trading to the National Trading Standards Board. The NTSB funds and directs specialist scambuster teams in England and Wales to enable trading standards to take a cross-regional approach to tackling scams and rogue-trading practices. Scambusters currently have five ongoing serious investigations into scams targeting older people in Wales, and I will highlight a couple of their successes shortly.

On the green deal, I strongly share the concerns of the right hon. Gentleman about rogue traders claiming to be associated with the green deal. We have seen that previously with double-glazing salesmen, with households being targeted for inappropriate investments in conservatories, and a few years ago, with the boom in solar panels.

As constituency MPs, we have all had experience of people coming to our surgeries reporting bad practice. The green deal is just another opportunity for some of these hardcore scammers and fraudsters to target vulnerable households. In April this year, I visited the British Gas training academy in Tredegar, where proper qualified green deal assessors received their training and qualifications. Those are the people whom households should trust for green deal assessments, and not the rogue companies that the right hon. Gentleman mentioned.

The Consumer Protection Partnership is collating emerging consumer issues around the green deal and has held discussions with the Department of Energy and Climate Change. The CPP aims to ensure that initiatives from all Government Departments—but especially on the green deal—take account of potential real harm to consumers through fraud and misrepresentation.

Both trading standards and the Green Deal Oversight and Registration Body naturally take a very serious view of rogue traders and will pursue them with the full force of the law. While instances of abuse under the green deal are only just starting to emerge, it is worth putting on record that scambusters have notched up a couple of impressive wins against other vultures who prey on the vulnerable in Wales. That serves as an example of what fraudsters operating under the green deal banner can expect to receive.

For example, one criminal was a cold-calling rogue trader builder, operating in the local authorities of south-west and mid-Wales. A scambuster investigation identified 21 victims of the man; they had paid more than £150,000 to him. The scambusters team was able to contact and offer support to a number of victims through dedicated specialists. The investigation resulted in the man being sentenced to 12 months’ imprisonment, suspended for two years, for using aggressive commercial practices against vulnerable people. I could point to other examples as well, but time is against us. In order to build further on successes such as that, and to continue to limit the real damage caused by rogue traders in Wales, the NTSB has allocated a budget of £325,000 for its Welsh scambuster team this year.

In summary, the fraudsters’ goal is a simple one: to cheat as many people as possible out of their money by making false promises. Fraud and scams hit the elderly particularly hard; on becoming victims of a scam, they often lose a disproportionate amount of money in relation to other victims. I hope that I have been able to demonstrate this afternoon how, as a UK Government, we are taking action to combat the issues—particularly in Wales, where we are working alongside local authorities and the Welsh Government. We will keep that in sight, and if the right hon. Gentleman wants to follow up in the weeks and months ahead, I will be very happy to continue the discussion.

I come back to a couple of specific questions that have been raised by hon. Members. We were asked about cold doorstep-calling and whether we would welcome a ban, or an increased number of cold-calling “notspots”, where people are prevented from doing so. As a Government, we are certainly not against such initiatives when they are genuinely community-led. When specific communities are being targeted by fraudsters and there is a demand in the community for such an arrangement, we certainly do not wish to do anything against that. However, it is worth putting on the record that neither do we want to harm genuine entrepreneurs, who make a living legitimately, providing a legitimate service and business to households on their doorsteps. There is a balance to be struck, but where there are vulnerable communities who have suffered repeated targeting, perhaps that is one of the solutions that can be community led.

The hon. Member for Llanelli asked about Royal Mail, which currently takes steps to raise awareness of the problem of scam mail among its staff. It has put in place an internal reporting facility that allows customers, including relatives or friends of suspected victims, to report concerns to postal workers or directly to a Royal Mail helpline, which allows advice to be issued and information to be passed on to an appropriate body—the police, trading standards or a support body—for action. The company has been working with the police on identifying possible victims and postage accounts suspected of being used to send scam mail. Again, I am happy to follow up with the hon. Lady if she wants further information about what Royal Mail is doing to prevent scam mail.

The right hon. Gentleman described the people who perpetrate such crimes as crooks and gangsters. That is probably some of the more polite language that we could use to describe such people. We absolutely want to prevent them from operating. They are at times notoriously difficult to investigate and track down, but we as a Government take the issue extremely seriously. We want to provide resources to local trading standards departments and to the cross-cutting partnerships to ensure that there is enforcement and action at the local and Welsh national levels, right across the UK and internationally where possible.

Question put and agreed to.

17:21

Sitting adjourned.

Written Statements

Tuesday 15th October 2013 Written Statements

Tuesday 15 October 2013

Foreign Affairs Council

Tuesday 15th October 2013 Written Statements

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The EU Foreign Affairs Council (Trade) will take place in Luxembourg on 18 October 2013. My noble Friend Lord Green will represent the UK on all the issues on the agenda.

The substantive items on 18 October will be:

One Legislative item:

State of play on the proposal for a regulation of the European Parliament and of the Council establishing a framework for managing financial responsibility linked to investor-state dispute settlement tribunals established by international agreements to which the European Union is party.

Non-legislative items:

State of play on the preparations for the Eastern Partnership summit (Vilnius, 28-29 November 2013)—Trade aspects:

EU-Ukraine, DCFTA¹ part of the association agreement.

EU-Republic of Moldova, DCFTA part of the association agreement.

EU-Georgia, DCFTA part of the association agreement.

EU-Republic of Armenia, DCFTA part of the association agreement.

Items on which a vote may be requested are: adoption of the EU-China negotiations on investment, and adoption of the EU-ASEAN negotiations on investment. A vote might be requested on the declassification of the Transatlantic Trade and Investment Partnership (TTIP) mandate.

Other items not subject to a vote are: the state of play on preparations for the IX World Trade Organization Ministerial Conference (Bali, 3-6 December 2013) and the state of play on China—anti-dumping/anti-subsidy measures on wine.

¹Deep and Comprehensive Free Trade Area Agreements

Business-led Taskforce on EU Regulation (Report)

Tuesday 15th October 2013 Written Statements

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Well designed and proportionate EU legislation benefits the economy, for example by eliminating outstanding barriers to the single market. But imposing unnecessary regulatory burdens on business stifles innovation, job creation and growth, particularly for small companies. This must be addressed, especially in the current economic climate. Reducing the burden of EU regulation on business is a priority for this Government.

In June, the Prime Minister therefore appointed a taskforce of six business leaders to look at reforms to EU rules, regulations and practices (both existing and proposed) to put the voice of business at the heart of the debate on cutting EU red tape. The members of the taskforce were Marc Bolland, chief executive M&S; Ian Cheshire, CEO Kingfisher; Glenn Cooper, managing director ATG Access; Louise Makin, CEO BTG; Dale Murray CBE, entrepreneur and Angel Investor; and Paul Walsh, Diageo.

The Government are today publishing the taskforce’s report: “Cut EU red tape”. The taskforce has drawn on over 100 business voices from across Europe, who have generated more than 250 proposals. Their report suggests practical ways to solve the day-to-day frustration, confusion and costs caused by poorly designed EU rules.

The taskforce sets out 30 clear recommendations to improve the most burdensome EU rules, covering the full range of business operations, including addressing barriers to overall competitiveness, starting a business and trading across borders.

Furthermore, the report proposes new principles—the “compete” principles—as a common sense filter through which any new EU regulations must pass to ensure they are pro-innovation and pro-growth.

The Government warmly welcome the taskforce’s report and its concrete proposals for reducing unnecessary costs and burdens for business. We will be considering all these recommendations in detail as a priority; they will be a key part of our work to cut unnecessary EU regulation, including at the forthcoming October European Council.

We shall also be looking at how to take forward all of the suggestions from stakeholders that did not make it into the final report.

Copies of the taskforce’s report have been placed in the Libraries of both Houses.

The report is also available online at:

https://www.gov.uk/government/publications/cut-eu-red-tape-report-from-the-business-taskforce.

ECOFIN (13-14 September)

Tuesday 15th October 2013 Written Statements

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

An informal meeting of the Economic and Financial Affairs Council was held in Vilnius on 13-14 September 2013. Ministers discussed the following items:

Working lunch for ECOFIN members

There was a debrief to Ministers from the earlier Eurogroup discussion. The Commission also presented on its recently published proposal on the single resolution mechanism.

Economic outlook and financial stability of the EU

ECOFIN discussed recent developments in the global economy, including the gradually improving macro-economic and financial situation on the euro area and the EU.

Improving access to finance for SMEs—European policy options

ECOFIN discussed a number of Commission-EIB designs for financing instruments aimed at leveraging finance for SMEs. The UK highlighted that participation in this scheme should be voluntary for member states.

Follow-up to the G20 leader’ summit and preparation of the IMF/World Bank annual meetings and the G20 ministerial meeting

The presidency and Commission gave a short update on the outcome of the G20 leaders’ summit on 5-6 September and Ministers gave a mandate to the Economic and Financial Affairs Committee to prepare and endorse the IMFC statement and the EU G20 terms of reference in preparation for the October meetings.

The UK endorsed the progress made at the G20 leaders’ summit on the automatic exchange of tax information and urged the Commission and the presidency to swiftly incorporate the new emerging global standard into EU law through the revision of the administrative co-operation directive.

Future shape of the financial system—from the Banking Union architecture to efficient structure of financial markets

The think-tank Bruegel presented on the structure of the EU financial system going forward, based on a paper they published for this discussion. An exchange of views followed.

Fight against tax fraud and tax evasion—towards a global standard on automatic exchange of information

This discussion was opened by guest speaker, Angel Gurria, the Secretary-General of the OECD, who outlined developments made at the EU and global levels towards reaching a global standard on automatic exchange of information. ECOFIN then held an exchange of views on continuing this progress with the aim of tackling tax fraud and evasion.

ECOFIN (15 October)

Tuesday 15th October 2013 Written Statements

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

A meeting of the Economic and Financial Affairs Council will be held in Luxembourg on 15 October 2013. The following items are on the agenda to be discussed.

Current legislative proposals

The presidency intends to give a state of play update on the following financial services dossiers: common securities depositories regulation (CSDR); Omnibus II; markets in financial instruments directive (MiFID); single resolution mechanism (SRM); bank recovery and resolution directive (BRRD); and deposit guarantee scheme directive (DGSD).

Preparation of the European Council on 24-25 October 2013

a) Indicators and policy areas for strengthened economic policy co-ordination:

ECOFIN will hold an exchange of views on indicators and policy areas for strengthened economic policy co-ordination. The Government recognise the desire for euro area countries to strengthen the co-ordination of their economic policies. However the Government consider that, consistent with the June European Council conclusions, participation in any new measures for economic and monetary union should be voluntary for those outside the single currency and be fully compatible with the single market.

b) Commission-EIB SME initiative:

ECOFIN will consider Commission-EIB designs for financing instruments aimed at leveraging finance for small and medium-sized enterprises (SMEs). The Government recognise the importance of ensuring small business has access to finance, but considers that national Governments are best placed to decide the most effective policies to achieve this. Accordingly, participation in this scheme should be voluntary for member states.

European Semester: Lessons from 2013 and way forward

ECOFIN will hold an exchange of views on lessons to be learned from the 2013 European semester—the Commission’s yearly cycle of economic policy co-ordination —and the possible ways for further improvement for next year’s exercise. The Government welcome the opportunity to discuss this with the Commission and other member states.

Follow-up to G20 Finance Ministers and Governors’ meeting on 10-11 October 2013 and Annual Meetings of the IMF and World Bank Group on 11-13 October in Washington

The Commission and presidency will provide a short update on the outcomes of these meetings. G20 Finance Ministers and Governors’ will discuss: recent developments in the global economy and financial sector vulnerabilities; international financial architecture reform; financing for investment; strengthening the G20 process; and a forward-look to priorities for the Australian presidency in 2014. The annual meetings of the IMF and World Bank Group will discuss the economic outlook and situation; and IMF policy issues, including governance, surveillance, resources and the IMF’s support to low-income countries.

Preparation of the 19th Conference of Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in Warsaw from 11 to 22 November 2013

ECOFIN will adopt conclusions on climate finance ahead of the UNFCCC conference in Warsaw in November.

Tax Information Exchange (Oriental Republic of Uruguay)

Tuesday 15th October 2013 Written Statements

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

A tax information exchange agreement (TIEA) with the Oriental Republic of Uruguay was signed on 14 October 2013. The text of the TIEA has been deposited in the Libraries of both Houses and will be made available on the HM Revenue and Customs website. The text will be scheduled to a draft Order in Council and laid before the House of Commons in due course.

HMS Illustrious

Tuesday 15th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

On 10 September 2012, Official Report, column 1WS, I announced plans to preserve the legacy of the Royal Navy’s Invincible class aircraft carriers.

HMS Illustrious, the last of these three iconic ships, is due to retire from service with the Royal Navy in 2014. The Ministry of Defence’s Disposal Services Authority (DSA) has today launched a competition which will seek innovative reuse bids to retain the ship in the UK, with part or all of it developed for heritage purposes.

As a first step, an industry day will be held early in 2014 and applications to attend are now invited from organisations able to put forward mature and viable proposals, in keeping with the role and history of the Invincible class of ships.

Following the industry day, a full and open competitive process will continue throughout the remainder of 2014. In the event that no suitable reuse bids with a heritage element are submitted, the DSA will open up the competition by seeking proposals for other uses or recycling.

Foreign Affairs Council/General Affairs Council

Tuesday 15th October 2013 Written Statements

[The Minister for Europe (Mr David Lidington)]

The 30 September General Affairs Council (GAC) focused on cohesion policy and the preparation for the 24-25 October European Council. I also provided the Ministers of the GAC with an update on the work we are doing on our balance of competences exercise.

Cohesion Policy

The GAC discussed a key issues paper that was prepared by the presidency. This paper focused on outstanding areas of disagreement with the European Parliament on the cohesion policy legislative package for 2014-20. This paper raised four main issues: macro-economic conditionality; the performance reserve; co-financing; and pre-financing.

On macro-economic conditionality I restated that the UK’s opt-out from sanctions for macro-economic conditionality agreed in the February European Council must be preserved. I also highlighted that the European Parliament should not have a role in decisions linked to economic governance beyond the economic dialogue that has already been established, even where as with macro-economic conditionality these decisions do not apply to the UK.

The performance reserve is intended to reward good performance when using cohesion funding and ensure that these funds are spent as effectively as possible. The focus of discussion was over the percentage of the funds allocated to the performance reserve. I maintained that any agreement must respect the ceilings agreed at the February European Council and emphasised the importance of agreeing rules that improved the efficiency and transparency of EU spending.

Likewise, co-financing rates underpin the effective use of structural funds. I argued that this purpose should not be diluted unnecessarily and that any changes to the co-financing rates should not alter the ceilings of expenditure agreed in February.

Initial pre-financing addresses cash-flow issues by providing a proportion of spending at the start of programmes. Here I raised our concern that the proposals could increase the levels of reste á liquider (build up of unspent commitments), which create uncertainty in the future levels of spending.

Preparation of the October European Council

The GAC discussed the draft annotated European Council agenda in preparation for the 24 and 25 October Heads of State and Government meeting. The agenda covers the digital single market; better regulation, including an update from the European Commission on regulatory fitness (REFIT); services liberalisation; innovation; an update on latest developments on economic and monetary union; and an open item for discussion on the current foreign policy at the time of the European Council.

I strongly supported the pro-growth agenda set for the October European Council. I highlighted that e-commerce, copyright, e-payment and big data, building on the G8 open data charter, are areas where particular priority should be given to achieve the greatest impact.

I also highlighted the need to continue the work to reduce the regulatory burdens on businesses. A number of UK businesses were conducting a review on the top 10 most burdensome EU regulations. I underlined that it would be important to listen to what business had to say.

Balance of Competences

I briefed the GAC on the six first semester reports of the balance of competences review. The intention of this review is to provide a mechanism for objective analysis based on evidence from a wide range of sources, rather than to recommend policy outcomes. The first six reports show there were clearly areas where the EU plays a positive role, but that there are also areas where changes could be made to make the EU work better.

Private Security Providers Association Launch

Tuesday 15th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)]

The UK is, along with the USA, a global leader in the private security company (PSC) market. Legitimate PSCs, working to high standards, are vital to the protection of diplomatic missions and the work of companies and non-governmental organisations (NGOs) in complex and dangerous environments around the world.

The Government want to see the highest standards, including on human rights, across all PSCs that work in complex environments abroad. At the same time, the Government want to level the global playing field for those PSCs that work to high, measurable standards, so that they cannot be undercut by PSCs which do not meet those standards.

We have undertaken to establish a system of national certification to professional standards for PSCs, which would measure PSCs’ implementation of the commitments and principles set out in the international code of conduct for private security service providers (ICoC).

A large section of the PSC industry has signed up to the ICoC, which envisages professional standards to implement the ICoC principles and the creation of a global oversight mechanism, named the ICoC Association (ICoCA). The ICoCA forms the second track of the Government’s approach to raising standards and levelling the playing field for PSCs. The Government strongly encourage all PSCs working in complex environments abroad to both pursue certification to these standards by accredited certifying bodies and to become members of the ICoCA.

The ICoCA was launched at a conference in Geneva on 19 and 20 September. The UK, along with Australia, Sweden, Switzerland and the United States, is one of the founding member Governments of the ICoCA. Thirteen civil society organisations and 135 PSCs have also joined the ICoCA as founding members. Over 50 of the 135 PSCs that have joined the ICoCA are UK-based. The United Kingdom has provided £300,000 of funding to support the establishment of the ICoCA. Other founding states are also providing support.

The governance structure of the ICoCA will consist of a general assembly, a secretariat based in Geneva, and a 12-person board of directors, with equal representation for each of the membership pillars of Governments, civil society and industry. Former UK Permanent Representative to the United Nations and other international organisations in Geneva, Dr Peter Gooderham CMG, has been elected to the board of directors. The board of directors will establish the procedures by which the ICoCA will fulfil its core functions.

Future membership of the ICoCA for PSCs will depend on them being independently certified to approved professional standards. The ICoCA will be able to monitor member PSCs are fulfilling their obligations under the ICoC, including through independent monitoring in the field, and can receive complaints that a PSC has breached the principles of the ICoC.

We believe the twin-track approach of certification to agreed standards and ICoCA oversight can help us fulfil the UK’s commitments under the UN guiding principles on business and human rights. These commitments were set out in the UK’s action plan on business and human rights, which the Foreign Secretary and Business Secretary launched in September.

Justice and Home Affairs Council

Tuesday 15th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

The Justice and Home Affairs (JHA) Council and the Eastern Partnership ministerial meeting was held on 7 and 8 October in Luxembourg. My right hon. Friend the Lord Chancellor and Secretary of State for Justice and I attended on behalf of the United Kingdom. The following items were discussed.

The justice day began with a discussion of the “one-stop shop” in relation to the data protection regulation. The proposal is intended to bring consistency and efficiency to the oversight and enforcement of data protection rules by supervisory authorities, where the data controller concerned has a presence in more than one member state.

Almost all member states supported the idea of a one-stop shop in principle. However, that support was conditional on the way those objectives were achieved, and it was clear that more work was needed.

The presidency concluded that work should now focus on its first proposed model for decisions to be taken by the “main establishment” supervisory authority albeit with restricted powers but an intervention was made and the presidency agreed that the co-decision model should also form part of further work by experts.

The Council then agreed a general approach on the criminal law directive on counterfeiting the euro and other currencies. The UK has not opted in to this proposal.

Vice-President Reding presented her recent proposals for the creation of a European Public Prosecutor’s Office (EPPO) to prosecute offences of fraud against the Union’s budget and for reform of Eurojust, the EU’s judicial co-operation agency. There was support, in principle, from a large proportion of member states—not including the UK—for the EPPO but less agreement on issues of substance, including: scope; structure; competence; powers; jurisdiction and governance. The coalition agreement confirms that the UK will not take part in the establishment of the EPPO. On Eurojust, the UK regretted that the Commission had not awaited the outcome of the ongoing peer evaluation of the current framework and the UK sought an explanation as to why no impact assessment had accompanied this proposal. The presidency committed to press ahead with both negotiations in parallel.

Over lunch there was a read-out of the EU/US discussions on data protection which had been taking place in light of the Snowden leaks.

Under any other business, the presidency asked member states to help in lobbying the European Parliament to overcome the current stalemate on delegated and implementing acts on the justice funding instruments.

At the start of the interior day of the Council the presidency announced that Ministers had agreed, over lunch, to award the EU Police College (CEPOL) to Hungary on a temporary basis, as one of seven bids that followed the UK’s decision to sell CEPOL’s current site at Bramshill. The presidency noted that the 2005 Council decision specifically naming Bramshill as the seat of CEPOL would still have to be amended and a member state initiative is expected. The Government will deposit this in Parliament in the usual way and expects it to trigger an opt-in decision under protocol 21 to the treaties.

Following a discussion at the June JHA Council, and pending a more comprehensive report to be given at the December JHA Council, the Commission (Reding) gave a presentation on free movement rights and the abuse of these rights. Noting that 19 member states had responded to its call for evidence, the Commission stated that free movement of EU citizens was one of the fundamental achievements of the EU. However, the Commission noted that free movement rights were weakened by abuse and the Commission would support member states in using existing EU tools to fight such abuse. These tools included sanctions, such as expulsion and re-entry bans in certain circumstances and with the appropriate safeguards. National authorities could also check whether an EU citizen had become an unreasonable burden, and if so could refuse residence and withhold benefits. The Commission noted evidence of a minority of EU mobile citizens with low employment prospects who placed a strain on disadvantaged areas and on local services.

The Commission proposed five measures to ensure that free movement rules struck the right balance between rights and obligations: working with member states to produce a handbook on sham marriages; clarifying the notion of “habitual residence” through a practical guide; increasing the share of European social funds (ESF) available to tackle social inclusion from around 15% to 20%; organising workshops with the ESF managing authorities in the member states to exchange best practice; and inviting the mayors and local leaders of the regions under the most pressure to a conference on free movement issues in spring 2014.

The UK welcomed the Commission’s acknowledgement that fraud and abuse was a real issue, but said that there was still some way to go in ensuring that the legitimate concerns expressed by a number of member states were taken seriously. A sterile debate about statistics would undermine public confidence in the EU and its institutions. The sham marriage handbook needed further work and there was a need for consistent interpretation of the free movement directive, for example on expulsion and re-entry bans. Many member states supported the UK’s position, recognising that while free movement was a fundamental principle, fraud and abuse had to be counteracted. The Commission took note of the points raised and said they would be reflected in its final report.

Next the presidency and the Commission updated Ministers on the current EU response to the Syrian situation, described as the

“worst displacement crisis in the world.”

With more than 2 million refugees in total, Syria’s neighbourhood continued to bear the brunt of the crisis and the UN Refugee Agency (UNHCR) called for greater resettlement efforts by the international community. To date, nine EU member states have pledged resettlement places, and the Commission encouraged others to follow suit.

The Commission said that the regional development and protection programme (RDPP) was making progress. A total of £6.8 million had also been mobilised from the European refugee fund (ERF), but it was critical to note that only £3.3 million remained in the pot for emergency actions. Future measures which might need to be considered were: greater co-operation between European Asylum Support Office (EASO) and the member states under pressure; activating the civil protection mechanism under the right conditions; and triggering the temporary protection directive (TPD) should the situation continue to deteriorate to the point where the threshold was met.

The EU’s High Representative, Cathy Ashton, described the situation on the ground. She welcomed the UN Security Council resolution and noted that the neighbouring countries were becoming increasingly unstable. A total of 25% of Lebanon’s population was now made up of Syrian refugees. The Geneva II process continued, but had a long way to go, as the projection for the next year was that the total refugee population would increase to 3.9 million. EASO noted that for half the EU member states, Syrians were now within the top three asylum intake. The UK highlighted that it had provided over £500 million to the relief effort in the region, as well as participating in the RDPP with a contribution of £425,000. For the UK, more protection and support in the region, rather than resettlement activity, was necessary for a sustainable longer term solution. The presidency called for close monitoring of the situation, and asked the Commission to pursue further solutions.

Next Italy outlined the tragedy which took place on 3 October in Lampedusa, proposing rapid establishment of a taskforce to oversee a range of measures in response. The Commission supported the measures proposed by Italy, and announced its proposal for a Mediterranean- wide search and rescue mission to intercept migrant boats from Cyprus to Spain, working in collaboration with Frontex. This should be accompanied by quick implementation of EUROSUR, the planned external border surveillance system for the Schengen area. In addition, Commissioner Malmström urged member states to consider both resettlement and relocation activities to demonstrate real solidarity for those member states at the external border. Commissioner Malmström announced that she would be visiting Lampedusa with President Barroso the following day. Baroness Ashton underlined the importance of working with Libya and joined others in noting the difficulty of further progress on joint migration work with the Libyan authorities. Frontex was more cautious regarding the ability to conduct enhanced search and rescue efforts, highlighting that no provision for such activity was available in the budget reserve for 2013.

Most Ministers took the floor to express their condolences. Support was given to the idea of a joint taskforce, as well as increased co-operation with third countries to dissuade migrants from making these dangerous journeys or to detect them earlier. It was agreed that the focus should be on effective engagement with the Libyan authorities. The UK agreed that the collective response must improve. There was a need to target the organised criminal groups which exploited the migrants, and to have a better and more coherent dialogue on migration, mobility and security with an increased emphasis on border management. Migration issues needed to be fully incorporated into the EU’s wider external engagement with countries of origin and transit. The Commission agreed to take forward the setting up of the taskforce, and would provide more information on the search and rescue operation shortly.

Ministers were briefed by Baroness Ashton on the importance of civilian contributions to common security and defence policy (CSDP) missions, particularly in the field of justice and home affairs (JHA). The success of the missions was underlined, as were the challenges of maintaining them. Particular attention was drawn to the sizeable contribution made by secondees from justice and home affairs ministries. Ministers were thanked for these contributions and were encouraged to do even more.

The Commission briefly updated on the outcome of the first relocation forum on 25 September. The objective of the forum was to offer discussion on the mechanics for relocation in order to assist those member states which would in the future consider relocating. The Commission underlined its voluntary nature, a point which EASO echoed, and noted it should not be confused with resettlement.

The Finnish delegation briefly noted the ministerial conference on Schengen states with external land borders, which took place on 13 September, involving the Interior Ministers of Finland, Estonia, Latvia, Lithuania, Poland and the Slovak Republic. The conference had led to a number of joint commitments on co-operation between various authorities in order to secure the internal area.

Greece noted progress made in recent months against its national action plan. The new asylum and appeals service had opened its doors on 7 June, and already registered a total of 2,547 applications. The first mobile screening units had been deployed to some of the islands, and the authorities were still on track to open the first reception centre in Lesbos at the end of 2013.

In the margins of the JHA Council, the presidency facilitated a plenary discussion with the Eastern Partnership countries on judicial reform, judicial co-operation, the rule of law, corruption, organised crime, cybercrime, and migration and mobility. Ministers adopted a joint declaration and the presidency hoped it would be the first of many such meetings.

Office of the Public Guardian

Tuesday 15th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

My right hon. and noble Friend the Minister of State, Ministry of Justice, Lord McNally, made the following written ministerial statement:

The Government are today publishing a consultation paper seeking views on the next phase of our proposals to transform the services provided by the Office of the Public Guardian (OPG). This reinforces our commitment to implementing the “digital by default” approach in public services.

The OPG is currently undertaking a programme of reform that is designed to meet two key challenges. First, to reform its systems and processes in order to deal effectively and consistently with ever increasing demand to register lasting powers of attorney—a trend that is set to continue with the country’s ageing demographic. Secondly, to transform the way its services are delivered to the public in order to reduce bureaucracy, making its services to customers simpler, more efficient and more accessible. This will be achieved by making the majority of its services accessible online.

Our consultation paper, therefore, seeks views on the following issues:

The forms and application process for lasting powers of attorney;

Supervision of deputies;

Access to the registers;

Proposals for a fully digital lasting power of attorney.

The consultation will run until 26 November. Following this, it is our intention to make the necessary changes to enable some of the provisions to come into force during 2014, although the proposals for a fully digital lasting power of attorney post 2014 will require primary legislation.

Today, I have deposited copies of the consultation paper in the Libraries of both Houses. Copies are also available in the Vote Office and Printed Paper Office. Copies are available on the internet at: www.justice.gov.uk.

Office for Nuclear Regulation

Tuesday 15th October 2013 Written Statements

[The Minister of State, Department for Work and Pensions (Mike Penning)]

The Department for Work and Pensions has obtained approval for an advance from the Contingencies Fund of £550,000 to implement shared services (HR, finance and procurement) for the Office for Nuclear Regulation. This advance is necessitated by the lead in time for delivery prior to Royal Assent of the Energy Bill.

Parliamentary approval for additional resource of £550,000 for this new service will be sought in a supplementary estimate for the Department for Work and Pensions. Pending that approval, urgent expenditure estimated at £550,000 will be met by repayable cash advances from the Contingencies Fund. The repayment is expected to be made in the financial year 2013-14.

This advance will allow the Office for Nuclear Regulation to continue to work to its current development timetable and implement shared services in time for the Office for Nuclear Regulation to be established as a public corporation in April 2014.

Grand Committee

Tuesday 15th October 2013 Grand Committee

Tuesday, 15 October 2013.

15:30

[The Deputy Chairman of Committees (Viscount Simon) (Lab)]

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

Legal Aid (Information about Financial Resources) (Amendment) Regulations 2013

Tuesday 15th October 2013 Grand Committee

Considered in Grand Committee

15:31

Moved by

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Legal Aid (Information about Financial Resources) (Amendment) Regulations 2013.

Relevant documents: 2nd Report from the Joint Committee on Statutory Instruments.

[The Minister of State, Ministry of Justice (Lord McNally) (LD)]

My Lords, the draft Legal Aid (Information about Financial Resources) (Amendment) Regulations 2013 amend the Legal Aid (Information about Financial Resources) Regulations 2013 that came into force on 1 April this year. The draft regulations make provision in relation to requests for information by the Director of Legal Aid Casework to the Secretary of State for Transport to facilitate a determination for the purpose of legal aid that a relevant individual’s financial resources include an interest in a motor vehicle. This amendment is intended to support the Criminal Legal Aid (Motor Vehicle Orders) Regulations 2013 that came into force on 30 July this year. These provide for mechanisms of enforcement in relation to unpaid contributions towards the cost of criminal legal aid in the Crown Court imposed under the Criminal Legal Aid (Contribution Orders) Regulations 2013.

The motor vehicle orders regulations authorise the magistrates’ court to order the clamping and sale, through motor vehicle orders, of an individual’s vehicle when the contribution required to be paid by the individual towards their Crown Court legal aid costs is overdue. Before granting a motor vehicle order, the court must be satisfied that the defendant owns the vehicle, and it is for this purpose that the amendment before the Committee is significant. Requests for information by the Director of Legal Aid Casework to the Secretary of State for Transport, in practice the DVLA, in accordance with the amendments made by these draft regulations will enable the director to confirm whether an individual is the registered keeper of a particular vehicle. If the individual is the registered keeper of that vehicle, the director will also be able to request any particulars contained in the register in relation to that vehicle. An applicant for legal aid is required to indicate in their application whether they, alone or with anyone else, own a motor vehicle, and if so, the registered vehicle number of that vehicle. The individual’s statement that they own a vehicle, taken together with the DVLA’s confirmation that the individual is the registered keeper of the vehicle, will be a way of evidencing that the individual owns the vehicle for the purposes of the motor vehicle orders regulations.

These draft regulations also add the Armed Forces Independence Payment to the list of prescribed benefits in the schedule to the 2013 regulations. If an individual is in receipt of a prescribed benefit, the director may request information about the benefit from various other government departments, including the amount the individual is receiving. Due to the timing of the secondary legislation that created the AFIP, it could not be included in the schedule when the 2013 regulations were first made; it was always intended to add the AFIP to the schedule at the earliest opportunity.

Having accurate information about the financial resources of an individual who is applying for or in receipt of legal aid is an important part of ensuring that only those eligible for legal aid receive it and that those who can afford to contribute to the cost of their legal representation are made to do so. I should stress that the proposed data sharing arrangements with the DVLA will in no way impact on defendants, solicitors or courts in terms of forms or process. There is therefore no risk of any delay to existing court proceedings or any additional burden on court users. As was the case with the original 2013 regulations, nothing in these regulations dilutes the Government’s obligation to protect an individual’s personal information and to maintain confidentiality.

These draft regulations support the Government’s proposals to make the legal aid system operate more efficiently, and to improve confidence in the system as a whole by ensuring that those who are entitled to help receive that help while those who can afford to pay, do so. I beg to move.

[Lord Beecham (Lab)]

My Lords, I begin by welcoming the noble Lord, Lord Bates, to the Front Bench. I am not sure that he has a relevant interest—to quote the appropriate phrase, perhaps—in these regulations, but it is good to see another Peer from the north-east occupying a position of some influence, I hope, with this Government.

The regulations refer to an “interest” in a motor vehicle. That can take more than one form and need not necessarily be ownership. Presumably, somebody might be the keeper of a vehicle which is rented or hired, or indeed owned by somebody else, and I am not quite clear how the regulations would apply in those circumstances. It is also interesting that the explanatory notes refer to the fact that details of the scheme were to be published in an addendum to the consultation response alongside an updated impact assessment. I do not know whether that has been published and I confess that I have not been able to find an impact assessment. Will the noble Lord indicate what the potential impact is, for example, in terms of the number of vehicles that might be expected to be reported and, for that matter, the number of vehicles about which action might be taken, presumably in taking possession of those vehicles?

Will the noble Lord also indicate the approach that will be taken in relation to possible removal or disposal of such a vehicle and what criteria would be likely to be applied? For example, if someone, whatever his involvement in an offence might be, was dependent on having transport, for example, to work, would that be a material factor or would the process be directed simply at taking into account a financial recovery? Presumably, if a contribution was sought from somebody, he would be expected to dispose of any financial interest in the vehicle, which could conceivably cause difficulty. Is a process to be directed to that question? What other impact is anticipated in relation to the application of the order?

In relation to the other part of the regulations, given the concern about members of the Armed Forces, I find it a little surprising that a benefit specifically directed to, presumably, members of the Armed Forces who have suffered a disability, possibly in the course of their service, should be taken into account. Will the noble Lord inform your Lordships about the rationale for that? I appreciate that it might be regarded as analogous to the disability living allowance but one might have thought that, if a disability is incurred in the armed services, a rather different view might be taken. Will the noble Lord indicate the potential impact of this, in terms of the number of cases which it is envisaged might arise on an annual basis? Obviously, we are not going to take a point about these regulations, except to note that they seem to have been in force for some seven months before coming to this House for consideration. It does seem an inordinately long time after regulations have come into force to proceed with the process of parliamentary approval. None the less, we as an Opposition are not going to take any point against them as such.

[Lord McNally]

My Lords, I thank the noble Lord for that helpful intervention. On the point about publication, the impact assessment was published on 5 July 2013. On discretion, the primary legislation already puts in a number of safeguards. The court may make a clamping order only if it is satisfied that a defendant’s failure to pay the amount sought was due to wilful refusal or culpable neglect. The clamping order must not be made unless a defendant has an interest in the vehicle, and a clamp may not be fitted to a vehicle that displays a current disabled person’s badge. So safeguards are there. The court may grant an order only if the individual has an interest in the vehicle. If the individual shares a vehicle with their spouse or partner, this would be sufficient. However, we would not go after a vehicle which was the subject of a hire-purchase agreement, for example.

I appreciate the noble Lord’s probing. I was one of the initiators of this tightening of the regulations, because I had in my mind the idea of the drug-pusher who was kingpin of his estate and who seemed to be able almost to defy the law by driving around in a swanky car. It might at least send a message to those who saw him as a role model if his swanky car was taken off him. However, I understand that that needs to be carefully balanced against other matters in law—and I think that it is balanced.

On the Armed Forces matter, AFIP is a benefit for Armed Forces veterans to protect them from any possible financial detriment as a consequence of the replacement under the Welfare Reform Act 2012 of disability living allowance with personal independence payments from 8 April 2013. Like the DLA and PIP, AFIP is a benefit which is deducted from the gross income of an individual when their eligibility or liability to make a contribution towards the costs of legal aid made available under Part 1 of the Act is being calculated. It is therefore four-square with other benefits in that respect. With those assurances, I commend the regulations.

Motion agreed.

Court of Appeal (Recording and Broadcasting) Order 2013

Tuesday 15th October 2013 Grand Committee

Considered in Grand Committee

15:44

Moved by

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Court of Appeal (Recording and Broadcasting) Order.

Relevant documents: 8th Report from the Joint Committee on Statutory Instruments

[The Minister of State, Ministry of Justice (Lord McNally) (LD)]

My Lords, when I first looked round the Committee, I thought we were at a casting session for a future television programme.

The order before us today sets out the conditions under which the recording and broadcasting of footage in the Court of Appeal Civil and Criminal Divisions will be permitted. Before setting out further details about this order, I will briefly explain some of the background to this policy.

There is evidence to suggest that the more informed people are about the justice system, the more confidence they will have in it. Few people have direct experience of court proceedings, and public understanding of how the justice system works is limited. In principle, the majority of our courts are open to all members of the public who wish to attend, but in practice very few people have the time or opportunity to see what happens in our courts in person. The justice system is viewed by many as opaque and complex. We believe that we should make our courts more accessible and make it easier for the public to understand court proceedings.

Increasingly, people rely on television and the internet for access to news and current affairs. It is right to respond to changes in technology and society and to allow cameras into our courts, but it is important to do so in a balanced way which will protect the individuals involved and preserve the dignity of the courts.

Currently the recording and broadcasting of footage in courts below the UK Supreme Court is prohibited by Section 41 of the Criminal Justice Act 1925 and Section 9 of the Contempt of Court Act 1981. Section 32 of the Crime and Courts Act 2013, which received Royal Assent in April, enables the Lord Chancellor, with the agreement of the Lord Chief Justice, to create an order specifying the circumstances in which the prohibitions contained within the Criminal Justice Act and Contempt of Court Act may be disapplied. The Court of Appeal (Recording and Broadcasting) Order 2013 is the first order to be made under that power, and sets the conditions under which the statutory prohibitions on recording and broadcasting will be disapplied to allow for recording and broadcasting of footage from the Court of Appeal. Any breach of the terms of the order may amount to contempt of court.

Recording and broadcasting of footage will be only of specified proceedings, as laid out in Article 5 of the order, where these proceedings are in open court and in front of a full court. Media parties may film only advocates’ submissions, exchanges between advocates and the court, and the court giving judgment. Filming of any other individuals—including appellants, members of the public, victims and witnesses—is not permitted. In cases where any party is not legally represented, only the court giving judgment may be recorded.

So long as any applicable reporting restrictions would not be breached by broadcasting, in many cases footage may be broadcast “almost live”, subject to a 70-second time delay, as agreed between media parties and Her Majesty’s Courts and Tribunals Service. We believe, however, that in some cases it is necessary to impose restrictions on broadcast in order to prevent prejudicing any potential future retrials, and to protect the interests of justice.

For this reason, any footage of proceedings where a retrial has been ordered may not be broadcast unless the court gives permission to do so. This means that in those cases where a retrial might be ordered, such as appeals against conviction, the court must give its permission before any part of those proceedings may be broadcast. Where a retrial is not ordered by the court, media parties may show footage immediately after the conclusion of proceedings. In certain limited circumstances, the court may give permission to broadcast even these cases from the outset. But until the conclusion of the case, the decision is solely for the judges in that appeal.

It is important for justice to be seen to be done but this cannot be at the expense of the proper administration of justice or the reputation of the courts. The courts deal with very serious matters that can affect the liberty, livelihood and reputation of all the parties involved. Therefore, we have taken steps in order to ensure that any report or presentation using footage recorded in the Court of Appeal should be presented in a fair and accurate way. It will have to have regard to the overall content of the presentation, and to the context in which the broadcast footage is presented. Furthermore, footage may not be used in party political broadcasts or for the purposes of advertisement or promotion. It cannot be used for the purpose of light entertainment or satire.

The technical and operational details governing the recording and broadcasting of footage from the Court of Appeal will be set out in writing and agreed between the judiciary and the media parties. This will be annexed to the written authorisation of the relevant media parties by the Lord Chancellor.

When the broadcasting provisions were debated in this House during the passage of what became the Crime and Courts Act 2013, concerns were expressed that the introduction of cameras into the Court of Appeal, while broadly supported, might be the thin end of the wedge and lead to the undesirable broadcasting of trials and proceedings in the lower courts. I reiterate the assurance given at that time that any extension to the circumstances set out in this order will require a new order that will require the agreement of the Lord Chancellor and the Lord Chief Justice, and the approval of both Houses of Parliament under the affirmative procedure.

We are conscious of the concerns that were raised regarding victims and witnesses, and of the perceived potential detrimental effects that court broadcasting might have on their experiences in court. In particular, the comments made by the noble Baroness, Lady Kennedy, during the passage of the primary legislation through Parliament, as well as a report by the Joint Committee on Human Rights, led directly to the publication of a full impact assessment alongside this order, and to our continued engagement with interested parties.

It is rare that a victim or witness will appear in person at the Court of Appeal, as the majority of cases will be appealing a point of law rather than the facts of the case. However, in the event that they are present, a number of safeguards will be in place to minimise any potential impact that broadcasting may have. As I said, the order does not permit filming of any victim or witness. Nor does it permit the broadcasting of any footage of them. In addition, existing reporting restrictions will continue to apply, and Section 32(3) of the Crime and Courts Act 2013 provides that the court may stop or suspend filming, or prohibit broadcast, in the interests of justice or to prevent prejudice to any person.

The Government are committed to increasing transparency and to providing the public with the information they need on the operation of public services. The justice system is no exception. To many people, the law remains mysterious. Public understanding of how the courts work is critical to confidence in the system and to its effectiveness in ensuring that justice is done. This order will allow for greater visibility of the courts, without undermining the seriousness and diligence that are central to the quality of our justice system.

I hope that, in making the presentation, I made it clear that we know that we are going into new territory. Certainly the observations of this Committee will be greatly valued. In the mean time, I commend the order to the Committee.

[Lord Hope of Craighead (CB)]

My Lords, I very much welcome the order. I rise to speak because I have some experience of the operation of a very similar system, which I introduced 20 years ago in Scotland. The position there is that there is no statutory restriction on the filming or audio recording anything that happens in any court. The matter is controlled entirely by the judiciary. When I became Lord President, it seemed to me—very much for the reasons given by the Minister in his opening remarks—that the public would benefit from seeing a little of what happened in the courts, and would thereby understand a bit more about how the process of justice was being administered. The opening remarks of the Minister were precisely to the point, and I very much agree with the reasons he gave for making this order.

On the other hand, I set as my criterion in deciding what to do about the other point that the Minister made, which was that the administration of justice and the respect that is due to the court itself were absolutely fundamental to any relaxation that might be made on any blanket restriction on the use of cameras or audio recording. The system which I set up was rather a modest one, but is almost exactly that which the Minister has put before this Committee. It depended entirely upon the consent of the court to the use of this equipment. Since we were allowing trials to be considered for audio and television purposes, it would require the consent of a lot of other people as well.

This is a very modest step, because it looks only to the Court of Appeal process. That is a good deal easier than the system at which I was looking. Nevertheless, I have one or two remarks. It is of course very different from the system from which I have just come in the UK Supreme Court, where there is a live feed of the hearings on Sky, and our judgments, when we give them, are reported instantly on YouTube. I understand from comments that have been made to me that both these systems are widely used by the universities, which like to keep track of what arguments have been presented to the court and what judgments have been given.

I do not think that, in not going that far, the Minister is making a mistake. When one looks to the Court of Appeal, as I was doing in Edinburgh, one has to be extremely cautious and move step by step. This step is carefully judged and very appropriate. However, I would like to suggest one or two points. First, the Minister might care to look for the future at the practice direction which I gave in 1992, which set out one or two other points to which people were expected to adhere. I do not have a copy with me today, but it is available in the usual way and provides some guidance to the way the system is operated in Scotland.

Secondly, to give noble Lords a little idea of how the system is actually used, one of the points which came over clearly to us was that the broadcasting corporations want quick feed for news broadcasts but do not have available space for a good deal of dispute and discussion in court unless, as Sky does, they provide it live on a feed which is simply available all the time. I cannot see the live system working here because, quite rightly, there is a check on what is being put out, so that the court must give its permission. The Minister said it could be almost live but cannot be actually live; I fully understand that. That being so, the use that could be made of argument would be rather limited.

However, I see real value in the broadcasting of, at least excerpts from, what judges are saying when dealing with an appeal against sentence. I confess that once or twice in the past two or three years I have wished that the noble and learned Lord, Lord Judge, who was sitting as Lord Chief Justice, had been seen on television. I knew that his remarks were extremely well judged, but I would have thought that they would have carried much more weight if people had seen him actually saying them. That will be the great value of this in the future, almost certainly the most valuable from the court’s perspective and also from the point of view of the broadcasters.

Two things may be missing here. First, in Scotland, we find that the television companies now mostly use the system for ceremonies that take place in court. When a new judge is introduced, which happens fairly frequently these days, there is a fairly colourful ceremony which takes place in court. When the First Minister for Scotland is sworn in, that takes place in court as well. These things do not happen, of course, in the Court of Appeal. On the other hand, things do happen in the Lord Chief Justice’s court which might be of interest to the public, and they are not on the list of things which can be broadcast. It may be that experience will allow for a little bit of relaxation to allow that kind of thing to take place; for instance, when a new Lord Chief Justice is sworn in.

The other thing is documentaries. I think—but I would be grateful if the Minister could confirm—that the recordings referred to here would be available for broadcasters for use in documentaries. That was what happened in our experience in Scotland. Six programmes were made to show trials as they happened and, in one or two cases, the appeals that followed after trial. There has been another one very recently in Scotland, the case of Nat Fraser, where the same technique is being used. It has been broadcast, using recorded material from the proceedings in court. I can see some interest in the way this is done, although of course it will lack the draw for the broadcaster of having the evidence, but at least some of the argument could be helpful. It would be interesting to know whether documentaries would be covered.

Those are the three points for further reference: first, checking how it is done in Scotland for some guidance as to how the system actually works in practice; secondly, ceremonies; and thirdly, documentaries. Otherwise, I very much welcome this measure and I am sure that in due course we will find it beneficial.

16:00

[Lord McNally]

I really appreciate what the noble and learned Lord has said. Perhaps it is a factor of age but it is fair to say that I was the least enthusiastic of Ministers about this. I have used in ministerial discussions the term “slippery slope”. The noble and learned Lord’s endorsement is very clearly on the record. I am interested to know whether there has been any downside in Scotland. Has any abuse by the television authorities been later used to call into question a court judgment or anything like that?

[Lord Hope of Craighead]

No. I think I had the upper hand, to be perfectly frank. When I introduced it in 1992, the broadcasters understood that if they abused the rules, that would be the end of the system. My experience was that they stuck precisely to what we asked them to do. I was not aware of any abuse of the system. My noble and learned friend Lord Mackay of Drumadoon, who is more familiar with Scotland than I am, may have other experience, but that was my experience. Of course, as far as the Supreme Court is concerned, we have to keep a careful watch on what is being used and what is done with what is being used, but in my experience we have not been let down by that either.

I think the broadcasters will appreciate that this is very much up to them. If they abuse the system, that will be the end of it and judges will not give their consent. That is why that particular part of this order is so important. It is a crucial point of the whole system.

[Lord Beecham (Lab)]

My Lords, the Opposition certainly support the Government’s intention in helping to make the legal system more transparent and to educate people in its workings. I am much encouraged by the remarks of the noble and learned Lord, Lord Hope, about the experience in Scotland. It would be interesting to know what the viewing figures are for these proceedings but at least we are clearly not in the realm of “Strictly Come Appealing” or possible interpretations of that kind.

Perhaps the Minister could indicate whether and at what stage there might be a review of the situation. Obviously, as the noble and learned Lord has said, if there were some transgression on the part of the media, judges could stop facilitating the process of broadcasting. But is there an intention—as in the normal course of events presumably there would be—to review the operation, and would that be in conjunction with the senior judiciary? We are limiting the arrangements, in the first instance at any rate, to the Court of Appeal. There would be concern if it were proposed to extend it to other, lower courts, particularly if witnesses and parties were to appear in broadcasts, but fortunately we do not seem to be following the American model of turning this into a source of entertainment rather than education. To the extent that this proposal will contribute to a better understanding of the legal system, it is certainly to be welcomed.

I had not understood the position in Scotland to have been as it has been described to us today. I pay tribute to the noble and learned Lord for having blazed a trail for what ought to be a distinctly progressive move towards enlightening the public and the users of the legal system about how it operates, at least on this important level, in addition to the broadcasts that currently take place of the Supreme Court itself, as the noble and learned Lord reminded us. We warmly endorse matters as they are laid before us and look forward to seeing how they progress in practice.

[Lord Mackay of Drumadoon (CB)]

I am conscious that not every Lord Mackay has any right to say anything about the judicial system in England, and he should confine himself to the system to which he belongs, in Scotland. However, it might help Members of the Committee if I endorse what the noble and learned Lord, Lord Hope, has said here today.

My impression of the proceedings recorded in Scotland is that the lawyers and judges who took part were confident that the trust placed in the broadcasters was merited. I have heard no criticism of the recording or, ultimately, transmission, of the broadcasts. On the other hand, among one’s lay friends—including legal friends—who watch some of these programmes, there is a range of opinions on the success of the venture. Sometimes it is clear from questioning the viewer that he or she has not followed everything that was broadcast. One reason may be that a documentary can only last an hour or so but must represent filming of a trial lasting 10 days or 20 days, or whatever. To some extent the fact that programmes are sometimes misunderstood or not fully appreciated may—in a funny way—be a further justification for taking a small but very well thought-out step towards deciding whether broadcasting has a role to play in the judicial system in England.

[Lord McNally]

My Lords, I am extremely grateful to both noble and learned Lords for giving us the opportunity to hear about the Scottish experience. I notice that the two juniors of the noble and learned Lord, Lord Hope, have remained silent during this debate, but I know that their presence is nevertheless welcome.

I think the Scottish experience has been trailblazing, and none of the fears I had about broadcasting the courts have applied to the Supreme Court. It has greatly enhanced public appreciation and awareness of the Supreme Court to have the live feed and the ability for the public to watch it at work. I am sure my officials have already taken note of practice direction 1992. The noble Lord is quite right that the question of ceremonies and swearing-in is not covered by this order, and I will reflect on that, because it would be useful. It would be nice, when a Lord Chief Justice hands over, if there was some kind of accompanying televisual ceremony. I agree with that. Furthermore, the broadcasters will be able to create documentaries. I understand there have been some good ones. There is one in my pile about a Scottish trial, made by Channel 4. I have not watched it yet but am told it is very good.

To be fair, the evidence is that this can be helpful. I am sure that all our views are coloured by the images of the OJ Simpson trial and the trial in South Africa, which seemed to move from court of law to three-ring circus very quickly. I remain cautious in this area, but the Committee can be doubly reassured because the Lord Chief Justice has gone through this at every step and, equally, any changes will have to be agreed by the Lord Chief Justice of the day. As I said, both Houses of Parliament will also have to be convinced. We have put in the safety catches—that is, if you can put safety catches on a slippery slope.

I am very grateful to the noble and learned Lords, Lord Hope and Lord Mackay, for what they said. We will review the arrangements in due course, including with the senior judiciary to make sure that it is comfortable with how they are working.

Motion agreed.

Police and Criminal Evidence Act 1984 (Amendment: Qualifying Offences) Order 2013

Tuesday 15th October 2013 Grand Committee

Considered in Grand Committee

16:11

Moved by

[Lord Taylor of Holbeach]

That the Grand Committee do report to the House that it has considered the Police and Criminal Evidence Act 1984 (Amendment: Qualifying Offences) Order 2013.

Relevant document: 8th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, the Government are committed to taking and retaining the DNA of people convicted of crime. This is particularly important for offences of a violent or sexual nature, where the transfer of DNA between victim and assailant makes the transfer of DNA more likely. Taking DNA helps solve historic cases and may deter future offending. The Government have supported wider powers to take DNA and fingerprints from those with past convictions. Armed with those powers, the police have carried out Operation Nutmeg, which involves taking DNA from those convicted of historic sexual and violent offences who were not sampled at the time.

As a result, DNA from more than 6,700 convicted offenders has been added to the DNA database. These include 1,494 people convicted of indecently assaulting a child, 304 convicted of gross indecency with a child, and 105 child rapists. However, the operation has brought to light an anomaly in the treatment of those convicted of sexual offences under past legislation compared with those convicted of equivalent offences under current legislation. This order addresses the anomaly and deals with a small number of other serious offences.

The need for the order arises from the way in which the Crime and Security Act 2010 gave the police powers to take DNA and fingerprints from those with past convictions if this had not been done at the time of the original arrest and conviction. This Act received Royal Assent in April 2010 and was brought into effect in March 2011. It created a list of qualifying offences. These are more serious offences, mainly sexual and violent.

The list of qualifying offences contains offences under current legislation, but not legislation which has been repealed. This particularly affects sexual offences, as the Sexual Offences Act 1956 was largely repealed and replaced by the Sexual Offences Act 2003, which came into effect in May 2004. So, for example, someone convicted of rape before 2003 has a conviction under the 1956 Act, but this is not a qualifying offence. However, someone convicted of rape in 2005 has a conviction under the 2003 Act, which is such an offence—hence the anomaly which this order seeks to address.

16:15

If people have past convictions for qualifying offences, the Act allows the police to take their DNA and fingerprints at any time if this was not done at the time of the original arrest and conviction. However, for those with convictions for other offences, this power lapsed two years after the Act was brought into effect—that is, in March 2013. The effect of this is that, since March, though there is a power to take DNA and fingerprints from a person with a 2005 conviction who was not sampled at the time, there is no such a power in relation to a person with a pre-2003 conviction. The order remedies this anomaly by adding sexual offences under repealed legislation to the list of qualifying offences. The order also puts those arrested or charged in the present day with sexual offences committed before May 2004, when the 2003 Act came into force, on the same footing as those arrested or charged with offences committed since then.

As noble Lords will know, under the new regime to be introduced by the Protection of Freedoms Act 2012 on 31 October, people arrested for or charged with, but not convicted for, qualifying offences may have their DNA and fingerprints retained for a limited period. In the case of those arrested but not charged, they may be retained for three years if the Biometrics Commissioner consents. In the case of those charged, they will be retained automatically for three years.

It can be seen that, as the law currently stands, these provisions will apply to a person arrested for or charged with a sexual offence committed after May 2004, which will fall under the 2003 Act. Noble Lords will realise that a person currently arrested for or charged with a sexual offence committed before May 2004 must be dealt with under the 1956 Act, because this is the Act that was in force at the time of the offence. So such a person cannot have their DNA and fingerprints retained for the additional three years if they are not convicted. By putting offences under the 1956 Act on the qualifying offences list, people currently arrested and charged with sexual offences will be subject to the same retention rules whenever the offence was committed.

The order also adds certain offences involving homicide, such as war crimes, infanticide and child destruction, to the list, for consistency with murder and manslaughter which are already qualifying offences. It also adds rioting and female genital mutilation because of the seriousness of those offences. This is a practical measure, as I hope that I have demonstrated, to remove some anomalies in the existing legislation which I hope will command the Committee’s general support. I beg to move.

[Lord Rosser (Lab)]

I thank the Minister for his explanation of the terms and purpose this order. As he said, the rules relating to the retention of DNA samples by the police were changed under the Protection of Freedoms Act 2012 in the light of a European Court of Human Rights judgment. On this side, we felt that the changes pushed through by the Government went further than necessary. Currently, if a person is convicted, their DNA can be held indefinitely, except in a few specific types of case. Under the provisions of the 2012 Act that come into force at the end of this month, people arrested for, or charged with, qualifying offences but not convicted may have their DNA and fingerprints retained for a specified period. Those of people arrested but not charged may be retained for three years if the Biometrics Commissioner agrees. In the case of those charged, they will be retained automatically for three years. As the Minister said, qualifying offences are the more serious ones, which are mainly sexual and violent. As I understand it, the order ensures that offences under previous legislation that has now been repealed are included, so that biometric information can be taken where appropriate. The order provides also for those additional offences to be designated as qualifying offences, which addresses the issue of how long the biometric information can be retained. As the Minister said, the order adds further offences to the list of qualifying offences.

The issue that I will raise regards the actions that the Government may have been taking or not taking prior to the coming into force of the 2012 Act. It appears that police forces were told last year to start deleting DNA samples in order to comply with the provisions of the Protection of Freedoms Act 2012 that relate to the circumstances under which, and the length of time for which, such samples can be retained after this month when the provisions of the Act come into effect. However, the Government do not appear to have put into effect any interim arrangements to cover the fact that the appeals arrangements to the Biometrics Commissioner that the police can use when they do not think that it is appropriate to delete a sample in accordance with the provisions of the Protection of Freedoms Act 2012 were not in place, and do not come into effect until the end of this month.

Likewise, the arrangements for when the police feel that national security will be an issue if a DNA sample is deleted and so make their own determination not to delete such a sample do not come into effect until the end of this month. It appears that no interim arrangements were made to cover this situation, bearing in mind that the police were told last year to start deleting samples in accordance with the pending legislative requirements of the Protection of Freedoms Act. Under the 2012 Act, the police can make such a determination, which must then be reviewed by the Biometrics Commissioner. However, the powers of the commissioner do not come into effect until 31 October this year.

Apparently, the police have already deleted hundreds of thousands of DNA profiles and samples. A figure of 600,000 was mentioned. Why were they told to do so when the DNA retention arrangements were not in place? Or did Ministers have informal arrangements in place under which they would make a decision on whether the police could retain a DNA sample for longer than the time provided for in the 2012 Act, pending the coming into being of the Biometrics Commissioner and his or her statutory powers? Did Ministers make informal arrangements to address national security considerations by allowing the police to retain samples for longer than the time provided for under the 2012 Act, under which they would have to be deleted to comply with the terms of the Act and its provisions, which would take effect from 31 October 2013? As I understand it, the powers of the police to make their own determination in such cases, subject to review by the Biometrics Commissioner, do not come into effect until 31 October of this year.

When the order was discussed in the House of Commons last week, the Home Office Minister responding was asked if there were any examples of the police not being able to keep DNA samples when they wanted to. He replied that,

“the process for the implementation of the Protection of Freedoms Act 2012 … has been worked through closely with the police and other partners”,

and that he was,

“unaware of cases in which the police have expressed a desire to apply in this way. Indeed, the police clearly have the right from 31 October to make such an application to the Biometrics Commissioner”.—[Official Report, Commons, First Delegated Legislation Committee, 9/10/13; col. 8.]

I am not sure whether the answer to the question of whether there were any examples of the police not being able to keep DNA samples when they wanted to is yes or no, but it is to be hoped that the Minister will be able to throw some light on it since I am asking the same question of him.

The other interesting part of the reply from the Commons Minister was the statement that from 31 October the police clearly have the right to make such an application to the Biometrics Commissioner. That rather accepts that they do not have such a right until 31 October, which is precisely the point I am raising; namely, how have the police, faced with being told last year to start deleting DNA samples that cannot be retained when the terms of the Act come into force at the end of this month, been able to apply since last year for the retention or extended retention of samples which they deem it necessary to keep but which cannot be retained under the terms of the 2012 Act when it comes into force at the end of the month and when the procedure for enabling such applications to be pursued through the Biometrics Commissioner under the provisions of the Act do not come into effect until the end of the month? The effect of the Government’s actions appears to be that, for example, the police have been unable to retain or even apply to retain the DNA of someone arrested but not charged with serious offences such as rape, the sexual assault of a child or manslaughter since at least December 2012, and this government-created loophole lasts until the end of this month.

The Government had pledged that the police would be able to apply to the Biometrics Commissioner to retain DNA if, for instance, the victim is under the age of 18 or,

“the retention of the material is necessary to assist in the prevention or detection of crime”.

However, the mechanism for such appeals has not yet been brought into being by the Home Office, and rather than allowing the police to hold these data until the legislation has been implemented, the DNA records are apparently being deleted. Will the Minister indicate at what level within the Home Office the decision to proceed with the deletion of DNA records for those arrested but not charged with a qualifying offence was discussed and then made? Will he say how many police forces have ignored the demands to delete DNA samples in the interim period prior to the coming into force of the relevant provisions of the 2012 Act? Further, how many DNA records have been deleted, and what impact has this had on policing capability? Alternatively, will the Minister indicate that there is no truth at all in the matters I have raised? As regards the Home Office e-mail published by the Times as stating: “This record”—of someone arrested but not charged with rape—“will have been deleted as a part of the legacy deletions for stage 1a. As the individual was NFA’d and for legacy data, forces cannot apply to the Biometrics Commissioner for an extension, this will only happen from 31 October 2013”, will he indicate whether that was incorrect or was addressing a completely different and unrelated issue?

These are potentially quite significant issues around what has been happening during the interim period between the end of last year and the coming into force of the provisions of the Act. I accept that what I am saying may not be correct, but it is an issue that we on this side have raised before in the other place, and we do not seem to have had very specific answers to address our concerns. I hope that the Minister may be able to do so when he comes to reply.

[Lord Taylor of Holbeach]

My Lords, the noble Lord will know that the policy to delete the DNA records of innocent people is something that has been widely welcomed around the House and, indeed, by the Opposition. That work has been going on. It has created a gap which the noble Lord has pointed to; I have to acknowledge that. However, the Government and the police, in considering the management of the issue, have come jointly to the conclusion that there would be no retrospective applications to the Biometrics Commissioner. That is because to have done so would have required police scrutiny of the case file of every innocent person arrested for a qualified offence in the past three years. That is reckoned to be 180,000 case files. This was considered disproportionate to the circumstances which the new legislation is designed to address because, according to our knowledge of those files, it would have identified only a very small number of cases suitable for application to the Biometrics Commissioner. It would have significantly delayed the entire programme to delete innocent people from the databases. I do not think that the Government are seeking to make an apology for that decision, because we consider that Parliament’s wish was that the DNA of innocent people should indeed be deleted from the database.

[Lord Rosser]

Was it not also Parliament’s wish that there should be an appeal mechanism in existence before that happens? It does not come in until the end of this month.

[Lord Taylor of Holbeach]

That is exactly what is being put in place.

[Lord Rosser]

Why did the Government not abide by Parliament’s wishes and not bring it in until the appeal mechanism was there, since Parliament wished that there should be one?

[Lord Taylor of Holbeach]

Because the deletion of DNA had been agreed by Parliament. The Government have been under considerable timetable pressure on that. As a Minister, I have been very much involved with the deletion of DNA records and that programme was under considerable pressure to be effected. We have had debates in the House on this matter, widely supported by the Opposition.

[Lord Rosser]

But was it not agreed by Parliament on the basis that there would be an appeal mechanism in place to which the police could refer cases if they had doubts about deleting them? I understand what the Minister is saying about the Government wanting to implement government policy in the form of legislation, but did that legislation not also provide for an appeal mechanism? That was a fundamental part of it.

[Lord Taylor of Holbeach]

I hope that I have reassured the noble Lord that the decision was taken, in conjunction with and with the agreement of the police, that this was the most effective way of implementing the policy, and of making sure that we implemented a policy on DNA deletion while ensuring that we provided proper and adequate facilities for the Biometrics Commissioner’s role to commence at the end of this month.

Motion agreed.

Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013

Tuesday 15th October 2013 Grand Committee

Considered in Grand Committee

16:34

Moved by

[Lord Astor of Hever]

That the Grand Committee do report to the House that it has considered the Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013.

Relevant document: 7th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, I greatly welcome the opportunity to open this important debate. I am introducing this legislation specifically for those seriously injured service and ex-service personnel resident in Northern Ireland who are entitled to an Armed Forces independence payment, or AFIP for short. This legislation provides access to additional benefits, schemes and services, known as passported benefits.

Noble Lords will recall that I led a debate on 25 March this year introducing similar legislation for service and ex-service personnel residing in other parts of the United Kingdom. Today’s debate will ensure that AFIP recipients resident in Northern Ireland have similar access to passported benefits.

The changes to be debated are closely linked to the Government’s commitment to uphold the Armed Forces covenant, the key principles of which are to ensure that members of the Armed Forces community are not disadvantaged compared to other citizens in the provision of public and commercial services, and that special consideration should be given, as appropriate, in some cases, especially to those who have given the most—for example, the injured and the bereaved.

The covenant applies to the whole Armed Forces community, comprising service and ex-service personnel and their families wherever they are located, and the Ministry of Defence is keen to see it implemented widely. We recognise that the circumstances for the Armed Forces community in Northern Ireland are different, for reasons that are well understood.

For example, wounded, injured and sick personnel in Northern Ireland benefit from an extra level of support from the Personnel Recovery Unit based in Northern Ireland, and are currently part of a trial under which the Ulster Defence Regiment and the Royal Irish (Home Service) Regiment Aftercare Service provide welfare for them after they are discharged.

We are putting in place support and help for those who have suffered serious injury in the line of duty, and these provisions will further enhance that support. To explain the need for these regulations, it may be helpful if I provide noble Lords with some background.

In July 2012, the Prime Minister announced that the Government would simplify and enhance financial support for members of the Armed Forces who have been seriously injured, as part of the measures to uphold the Armed Forces covenant. My department worked closely with the Department for Work and Pensions to implement AFIP on 8 April 2013 across the UK, at the same time as the personal independence payment was brought in to replace disability living allowance as part of the welfare reform programme. The MoD also introduced a number of consequential amendments to put in place access to additional benefits and services for AFIP recipients in England and Wales. On 11 June 2013, similar legislative provisions were put in place for AFIP recipients resident in Scotland.

While the AFIP payment has been available to seriously injured service and ex-service personnel resident in Northern Ireland, the legislative changes to provide access to passported benefits have not been implemented. This debate will begin this process, with a second legislative amendment to follow in due course.

In order to establish access to two important “passports”, we are required to amend two other parts of primary legislation. That is what we will debate today. These minor but important legislative changes are in respect of, first, carer’s allowance and, secondly, the Christmas bonus.

The legislative change in respect of carer’s allowance will ensure that those who provide invaluable support to seriously injured members of the Armed Forces in receipt of AFIP have access to carer’s allowance in Northern Ireland from the Department for Social Development. Carer’s allowance is currently £59.75 per week. This change will make provision specifically for those who devote their lives to support our seriously injured people, providing some financial support for doing so. It is only right that a person caring for an AFIP recipient should have access to the carer’s allowance.

The provisions relating to the Christmas bonus will ensure that all recipients of AFIP automatically qualify for the tax-free, lump-sum Christmas bonus of £10, which is paid annually in Northern Ireland by the Department for Social Development.

By putting in place the provisions to enable AFIP recipients resident in Northern Ireland to access the additional benefits, schemes and services offered by other government departments, devolved Administrations and local authorities, the Government are giving them equal treatment to that offered to service personnel and veterans resident elsewhere in the UK. This is another example of the Government’s commitment to uphold the Armed Forces covenant.

It is important that we address these issues in order to meet the principles at the heart of the covenant across all Administrations for members of the Armed Forces and veterans who are seriously injured. I commend the order to the Committee and I beg to move.

[Viscount Brookeborough (CB)]

My Lords, I welcome the order. It is a very worthy measure. Everyone in Northern Ireland is delighted that it is extending to Northern Ireland. I was not present when this was debated for the remainder of the United Kingdom. When the Armed Forces covenant first appeared, it was very welcome, but there was perhaps a little doubt about how it would benefit people and how it might be implemented, especially in Northern Ireland. The covenant was a stepping stone—or a foundation stone—for extending other things and showing better care support for all our soldiers, especially those who have been injured.

One could go into how difficult it was in Northern Ireland, but it is better to look at it the other way: thank goodness it has become slightly easier to introduce this in Northern Ireland. We know that there were issues with talking to the Northern Ireland Assembly, and it is most welcome that the talks went well and that we are now getting to the stage where we are able to give our soldiers, and especially our veterans, support that is equal to what they have here.

I was interested to hear the Minister refer to the aftercare service as being a “trial”. That was the first time that I had heard it talked about like that. I hope that he thinks that it is being tried because certain aspects might be very beneficial in the remainder of the United Kingdom.

Overall, this is a most welcome measure. We should not highlight the problems and how difficult the process was, but should welcome it as a great step forward.

[Lord Rosser (Lab)]

I thank the Minister for the explanation of the need for, and purpose of, the order. As he said, it seeks to give seriously injured service and ex-service personnel in Northern Ireland who qualify for the recently introduced Armed Forces independence payment similar access to passported benefits to that of those who qualify for disability living allowance or the personal independence payment. As the Minister said, the Armed Forces independence payment was introduced in April this year. The statutory instrument providing for the payment covered all those eligible throughout the United Kingdom, including in Northern Ireland. The payment is to cover the extra costs that seriously injured personnel who meet the eligibility criteria may have as a result of their injury.

Two further statutory instruments enabled recipients of the Armed Forces independence payment to receive additional passported benefits to which they were entitled. However, as I understand it, these further statutory instruments did not include amendments to the related Northern Ireland passported legislation, which I believe related to allowances for carers and the entitlement of pensioners to a Christmas bonus. The Minister made reference to this. This point was the subject of a discussion that established that, in this instance, the relevant Northern Ireland legislation could be amended using powers under the Armed Forces (Pensions and Compensation) Act 2004, subject to the consent of the relevant Northern Ireland Ministers.

I have one or two questions to put to the Minister. I told him about them literally two minutes ago, which was somewhat remiss of me, so I fully accept that the answers may not be forthcoming this afternoon. I would be interested to know exactly how numerous or few are the relevant Northern Ireland Ministers whose consent has had to be sought and given. It would also be helpful to know how many seriously injured service and ex-service personnel will be covered by this order relating to Northern Ireland when it comes into force on 28 October.

I assume that the additional expenditure will be small, but perhaps the Minister could confirm that the cost will be borne by UK taxpayers as a whole and also say from which department’s budget the additional costs will be met. I notice that the title of this order refers to the Armed Forces and Reserve Forces. It would be helpful if the Minister could confirm that there is parity of treatment under the terms of this order between the two forces mentioned.

We want to see the spirit and intention of the Armed Forces covenant, and its commitment that members of the Armed Forces will not be disadvantaged by the nature of the responsibilities and role they undertake, applying in Northern Ireland, and we support the order.

16:45

[Lord Astor of Hever]

My Lords, first, I thank the noble Viscount, Lord Brookeborough, for his support. I was heartened by what he said about the very positive changes in Northern Ireland. Secondly, I thank the noble Lord, Lord Rosser, for mentioning the Opposition’s support for this order.

The noble Lord asked some questions and I hope that I am able to answer them. First, he asked how numerous or few are the relevant Northern Ireland Ministers whose consent has to be sought and given. The answer is five, plus the Minister of State for Northern Ireland. The noble Lord asked whether the costs will be borne by UK taxpayers as a whole. The answer is yes, it will. He asked how many seriously injured service or ex-service personnel will be covered by this order relating to Northern Ireland. The answer is fewer than 20.

The title of the order refers to the Armed Forces and Reserve Forces. The noble Lord said that it would be helpful if I could confirm—I wrote this down—that there is parity of treatment under the terms of the order between the two forces. The answer is yes.

In summary, I will restate a point I made when I opened this debate. The changes debated today are closely linked to the Government’s commitment to uphold the Armed Forces covenant. It is only right that we provide access to additional benefits, schemes and services for the most seriously injured, wherever they are resident in the United Kingdom. I believe that these changes will go some way to achieve this.

Motion agreed.

European Parliamentary Elections (Amendment) Regulations 2013

Tuesday 15th October 2013 Grand Committee

Considered in Grand Committee

16:49

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do report to the House that it has considered the European Parliamentary Elections (Amendment) Regulations 2013.

Relevant documents: 8th Report from the Joint Committee on Statutory Instruments

[Lord Wallace of Saltaire (LD)]

My Lords, these regulations make updates to the rules for the administration and conduct of European elections. They flow from changes made for UK parliamentary elections in the Electoral Registration and Administration Act 2013 and associated secondary legislation, with which a number of us have been much concerned over the past two years. They also provide for the implementation of an EU directive concerning non-national EU citizens standing as candidates at European parliamentary elections, and make other changes to the administration and conduct of these elections.

These amendments are needed to support the effective administration of the European parliamentary elections that will be held on 22 May 2014. The measures are designed to improve the accessibility and security of the voting process and to implement a number of recommendations which have been made by, among others, the Electoral Commission and the Association of Electoral Administrators since the previous European parliamentary elections in 2009.

The Cabinet Office has consulted on these regulations with the Electoral Commission and with others such as the Association of Electoral Administrators, SOLACE and the territorial offices, and with colleagues in the Government of Gibraltar. We were fully involved in the discussions about the new directive with the European Commission, and have worked to ensure that its implementation is proportionate and workable in the UK context.

While the Electoral Registration and Administration Act made a number of changes to the rules for UK elections, which were set out in primary legislation, noble Lords will be aware that the rules for European elections are set out in secondary legislation. These regulations, therefore, make the corresponding updates for the European parliamentary elections.

I now turn to the key measures in the regulations. They enable postal votes to be despatched further in advance of polling day, which will be of particular help to those at remote locations, particularly overseas, including service voters, as it will give them more time to receive, complete and return their postal vote in time for it to be counted. Providing for postal votes to be issued as soon as practicable at an election will facilitate the early despatch of postal votes soon after the close of nominations, and earlier than the 11th day before the poll, which is the earliest postal votes may be issued to many postal voters at present. As a consequence of the earlier despatch of postal votes, the regulations also ensure that electors can continue to cancel their postal vote and arrange instead to vote in person or by proxy, provided that they do this before the postal vote application deadline—that is, at least 11 working days before the poll—and that the postal ballot papers have not already been completed and returned to the returning officer. This ensures that the current flexibility afforded to electors to change their voting arrangements is maintained.

The regulations also introduce a set of up to date voter-facing forms and notices, including poll cards, postal voting statements and the ballot paper, which are intended to make the voting process more accessible. This reflects moves in recent years to modernise the appearance of voter-facing forms at newly created polls such as the police and crime commissioner elections and the 2011 referendum on the parliamentary voting system. The revised material has been produced following a programme of public user testing and consultation with the Electoral Commission, the Association of Electoral Administrators, territorial offices, electoral services suppliers and with Scope.

Noble Lords will recall that, during the passage of the ERA Act, the Government listened to considerable parliamentary concern about the need to ensure that there is a mechanism in place to deal with any queues which might form at polling stations at close of poll, given the isolated but highly publicised instances of queues at polling stations at the 2010 election. These regulations therefore reflect for European parliamentary elections the Act’s provision for UK parliamentary elections, whereby voters waiting in a queue at the close of poll—that is, at 10 pm on polling day—for the purpose of voting, may be issued with a ballot paper and cast their vote. Let me be clear, however, that this provision is not intended as a substitute for proper planning by regional and local returning officers at elections. It is for these returning officers to make sufficient provision in the number of polling stations and staffing levels to manage the volumes of electors likely to vote at polling stations.

On a related note, these regulations contain a key measure to ensure that returning officers are accountable, reflecting as they do for European parliamentary elections the ERA Act’s provision for UK parliamentary elections whereby returning officers’ fees may be reduced or withheld by the Secretary of State following a recommendation by the Electoral Commission.

The regulations put into legislation that all postal votes are to be subject to a key security check, whereby the signature and date of birth on the postal voting statement are checked against records. This improves upon the current requirement to check at least 20% of postal votes. While 100% checking has been funded at previous elections and has been achieved by a large proportion of returning officers, we want to ensure that all postal votes are subject to the same high level of scrutiny.

The regulations also include a related measure which requires EROs to inform electors after a poll where their postal vote has been rejected because the signature or date of birth, which are used as postal vote identifiers, that they have supplied on the postal voting statement failed to match those held on record, or where they had simply been left blank. This is to help ensure that those electors can participate effectively in future elections and not have their ballot papers rejected at successive polls because of a signature degradation or because they are making inadvertent errors. This will help legitimate voters who submit their postal ballot packs in good faith to avoid their vote being rejected at subsequent elections.

It will also provide EROs with the flexibility to challenge postal votes where there is any cause for concern about their validity. Given that EROs will not be obliged to inform individuals where fraud is suspected, there is an opportunity for any such suspicions to be collated and reported to the police, where that is warranted. This measure ensures that particular attention is paid to the way in which mismatches appear and provides an opportunity to identify patterns or anomalies which may indicate that malpractice has been attempted. The regulations also permit those who had planned to vote in person but are called away at very short notice before polling day on business or military service to appoint an “emergency” proxy to vote on their behalf, which builds on the current facility for those taken ill.

The regulations also provide for police community support officers to enter polling stations and counting venues under the same conditions as police constables, in line with the corresponding provisions in the ERA Act. This will allow police forces additional flexibility in deploying their resources on polling day and allow them to provide a greater visible reassurance to the public.

Finally, the regulations implement a European Council directive that amends the existing Council directive, which provides that EU citizens living in a member state of which they are not nationals may vote and stand as a candidate in European parliamentary elections in their state of residence. The position at previous European parliamentary elections was that a candidate who wished to stand for election in the UK and who was an EU citizen, but not a UK, Irish or Commonwealth citizen, had to provide certification from their own member state of citizenship that they were not disqualified from standing in European parliamentary elections in that state when submitting their nomination for candidacy. Under the new directive, from the 2014 polls onwards, that will change and candidates or nominating officers will be able to ask the UK Government to request information from their home member state. This requirement is to be applied across all member states and is intended to remove a perceived barrier to non-nationals standing for election in the member states in which they reside. Furthermore, the existing provision allowing candidates to obtain the declaration themselves will remain in place as an alternative, should candidates and parties choose it. The Government will liaise closely with colleagues and regional returning officers in the process of implementing the directive.

Overall, these provisions make sensible and relevant changes for the conduct and administration of European elections in line with those being made for UK parliamentary elections. They are designed to increase voter participation, further improve the integrity of our electoral system and ensure that the processes underpinning our elections are both more robust and more relevant to the needs of voters. I commend these regulations to the Committee.

[Lord Teverson (LD)]

My Lords, I welcome these regulations and particularly like the Minister’s optimism about planning for queues at European elections. Let us hope that that problem arises and we can show that this new robust system actually works. Somehow I suspect that it might not be the case but let us hope so. I should perhaps declare an interest in that I am a director of a company that, as a minor part of its business, prints ballot papers, including, probably, for the European elections.

I welcome all the regulations but just wanted to check something around equal treatment. I am particularly pleased that it is now easier for non-nationals of the UK and Ireland to put forward their candidacy, and that there are fewer barriers to that happening. However, I would like to understand whether and how Irish and Gibraltarian—and even UK—citizens are checked for potential disqualification. I can see that we are moving towards national authority where European states other than the UK and Republic of Ireland are concerned, but do we check disqualification for people from Gibraltar, the United Kingdom and Ireland?

The other matter on which I wanted to catch up is the date for the European elections, where a range of dates is set. Have the Government considered moving to a Sunday, like most of the rest of the European Union? That could be an experiment to see whether we could increase voting by holding the election at the weekend. Can the Minister also tell me whether next year’s local elections will go back to June, or the date for the European elections?

Finally, a much more strategic question: when do the Government intend to introduce open lists—as opposed to closed lists—for these elections, so that citizens can make real choices, rather than ones thrust upon them by a clique of political parties—of which, of course, we are all members and should therefore declare an interest.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, on this side of the House, we welcome the regulations, including the provision for telling those whose postal votes are rejected the reasons for such a rejection so that they can correct the mistake next time. We welcome the checks on postal votes. Along with the noble Lord, Lord Teverson, we also welcome making it easier for people to stand for election in countries other than those where they are citizens.

Before going on to questions about the actual regulations, I draw the Committee’s attention to the fact—which has already been alluded to by the noble Lord, Lord Teverson, and by the Minister—that this election also covers the people of Gibraltar. With this in mind, we were concerned by the quite false suggestion made by the Minister’s colleague in the House on 10 October—whether on behalf of the Government or the Conservative candidates in the European elections we do not know. The noble Baroness, Lady Warsi said that,

“we are incredibly clear about the sovereignty and the sovereign position of the Gibraltarian people. It is nice to hear that the Opposition now share this view”.

My noble friend Lady Royall of Blaisdon remonstrated with this quite outrageous implication, saying,

“the Minister said that the Opposition now support the people of Gibraltar. I would like to make it clear, and have it on the record, that my party has always supported the citizens of Gibraltar and their self-determination”.

One might have thought that sufficient for the former chair of the Conservative Party, but she added insult to injury by saying:

“It is incredibly heartening to hear that. It therefore puts my mind at rest, certainly in relation to the potential sovereignty crisis”.—[Official Report, 10/10/13; cols. 177-78.]

I therefore ask the Minister, as he oversees all the rules and regulations, including these ones governing the European elections in Gibraltar, to ensure that the administration of the vote is carefully overseen by the Electoral Commission, so that it is fair to all candidates in the South West England constituency.

I turn to the question of the close of poll. Contrary to what the Minister’s then colleague, Miss Chloe Smith, said in introducing the regulations in the other House—words repeated today by the Minister—the Government did not listen to what Parliament said about the queue at 10 pm and being able to vote, and had to be forced to do so by a vote in this House. Sadly, the Government continue to fail to listen, including to the Electoral Commission, which has a certain professional expertise in these matters. They did not listen over that issue and they are not listening now over the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill, where they failed to consult the Electoral Commission before dreaming up Part 2. They are still resisting a large number of concerns that the Electoral Commission has about it, in particular the demands on the commission to make new sorts of judgments and to register a swathe of new organisations and, in particular, its worry that it will not have the resources to do so satisfactorily.

However, this concerns the current regulations which, again, will require the Electoral Commission to produce guidance, particularly on the matter of the time when postal votes can be handed in. As the Minister knows, the commission continues to raise some important questions over that wording. Can he give us a reassurance that the commission will be able to manage all the new expectations being laid on it by the lobbying Bill, together with its work on these European elections, which are to run concurrently with the local elections?

I have two further minor points to raise. In the debate in the Commons, Mr Graham Stringer MP asked:

“Are the European regulations on personation the same as those that apply in our general elections? Is a record kept of ballot papers, as it is in general elections, if personation occurs?”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 12/9/13; col 6.]

The Minister in another place promised him a written response. Unfortunately, I have not managed to locate it, but perhaps the noble Lord will be able to read the answer into the record today.

Finally, in earlier exchanges on other statutory instruments, I thought that every opportunity was going to be used to forewarn people about the forthcoming move to individual electoral registration. I was therefore very disappointed that in my own area, Camden, absolutely no mention of the move to IER is made on the latest registration form, which has been done in time for the European elections; nor, I am assured, do the forms for Harrow or Lambeth. Does the Minister know what action is being taken more generally to prepare for this somewhat hurried change? As he knows, the commencement order to bring IER into force is due to be made on 8 November. Can he confirm that that is still the date, especially as we have yet to see the details of the outcome of the live data-matching trials using DWP records, which took place over the summer? In some instances, they matched fewer than half of the records. We have not seen a list of the particular areas, but it may be that he has that information to hand. Perhaps he could also clarify how much work is due to be undertaken by electoral registration officers on IER at the same time as they are running the combined European and local elections. Most importantly, is he satisfied that they have the resources for both of these challenging tasks?

[Lord Wallace of Saltaire]

My Lords, I thank the noble Baroness, Lady Hayter, for that fighting speech which has enlivened our afternoon. I shall try to answer her questions as well as I can. The noble Lord, Lord Teverson, asked me about open lists versus closed lists. It is probably fair to say that there is no common view within the coalition on this, nor is there between the Government and the Opposition, so it is a matter on which we hope there will continue to be some form of debate. It is certainly the case that next year the local elections will be held on the same day as the European elections, on 22 May, but will then return to their otherwise normal date the following year.

He also asked about moving polling to a Sunday. All sorts of suggestions have been made for encouraging people to vote and making it easier for them to do so, including possibly having two days of voting over a Saturday and a Sunday. The problem with many of them is that the additional costs in staffing terms would be quite considerable, and thus these suggestions have not yet gained the degree of traction that I suspect the noble Lord might like.

On the question of how far we are checking the qualifications of voters in Ireland and Gibraltar, I had better write to the noble Lord to make sure that I get the answer entirely right. The noble Baroness, Lady Hayter, proclaimed the depth of the Labour Party’s commitment to the sovereignty of Gibraltar. Perhaps I might be allowed to repeat something that I said some years ago when this question came up. Under the 30-year rule, papers were released on discussions within the then Conservative Government in 1971-72, when a spat with the Spanish over Gibraltar was in full spate. The Foreign Secretary scribbled on one paper that perhaps one ought to consider possible alternatives. One alternative came up from a relatively junior member of the Foreign Office, who suggested that one might perhaps think of assigning the governance of Gibraltar to the Knights of St John on Malta. A senior official scribbled: “Have you ever met the Knights of Malta? You might as well give the sovereignty of Gibraltar to the Young Liberals”. The reason I use this example is that I once intervened on a Question under the Labour Government and the Minister responsible for negotiating with the Spanish Government had been the national president of the Young Liberals in 1971-72. I pass that on as an anecdote for a pub quiz, if the noble Baroness wishes to take part in one. I was very disappointed that the noble Baroness did not ask me how many postal voters there were on Gibraltar for the most recent European elections. I could have assured her that it was probably fewer than 100. The entire electoral roll is about 20,000.

I take her point about the demands on the Electoral Commission. We will come back to that in the transparency of lobbying Bill, which I am sure we will all enjoy discussing from Second Reading on 22 or 23 October.

On the question of personation, I am assured that the rules for personation in European elections are the same as those that apply to UK parliamentary and other elections. The intention of the regulations is precisely to reconcile as far as possible the regulations for national parliamentary, local and European elections.

I take the noble Baroness’s point that there is no mention on the papers going out at the moment of the move towards individual electoral registration. Perhaps I may take that back and be in touch with her again, because I entirely agree that we need to make people think about the change as soon as possible, and must consider how best to alert people about our move to it. I admit that, as usual, the effective head of my household filled in our Wandsworth and Saltaire election forms again this year, and that I did not check what she did. Therefore, I cannot tell the noble Baroness whether either the Bradford or the Wandsworth electoral forms alerted us to individual electoral registration.

I hope that I have answered all the questions that were raised in the debate, and I commend the regulations to the Committee.

Motion agreed.

Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2013

Tuesday 15th October 2013 Grand Committee

Considered in Grand Committee

17:15

Moved by

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2013.

Relevant document: 8th Report from the Joint Committee on Statutory Instruments.

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

My Lords, the regulations are regarded as being compatible with rights under the European Convention on Human Rights.

We updated the regulations last year with the introduction of the jobseeker’s allowance domestic violence easement, which recognised the challenge that the victims of domestic violence face when making the decision to flee a perpetrator. The easement made provision for jobseeker’s allowance claimants who are victims of actual or threatened domestic violence by a partner, former partner or family member to be exempt from jobseeking conditions for an initial four-week period, which may be extended to a total of 13 weeks where evidence is provided. The period allows those affected by domestic violence the time to focus on important priorities, such as organising new accommodation or arranging alternative schooling for dependent children, without also having to focus on meeting their jobseeking conditions.

Since 31 March 2013, the Government have implemented the revised definition of domestic violence. The Home Office carried out an extensive consultation with stakeholders to establish a definition that captured the full spectrum of what form domestic violence can take. Reflecting the advice of former victims and those professionals who work to support them, the definition goes well beyond physical abuse to incorporate sexual, emotional, psychological and financial abuse. The new definition specifically introduces controlling and coercive behaviour, as well as recognising that those aged 16 and 17 may be victims.

We are seeking to update the definition of domestic violence in the jobseeker’s allowance regulations so that it corresponds with the new cross-government definition. Through our existing regulations, we already give as much weight to a single incident of domestic violence as we do to multiple incidents, and we already include 16 and 17 year-olds under Regulation 14A. However, domestic violence was previously limited to specific types of abuse. We need to ensure that we incorporate the new definition in full.

I hope that the Grand Committee will accept that the change of definition is a positive and important step. For the first time, the definition recognises that victims may be subject to different types of domestic violence and abuse. It makes it clear that domestic violence can be many things, and is certainly broader than physical violence alone. By working to a single cross-government definition, we will enable victims and those who support them to be absolutely clear about what constitutes abuse and what support is available.

We know that the first incident reported to the police or other agencies is rarely the first incident to occur; often, people have been subject to abuse on multiple occasions before they seek help. Promotion of this definition should assist victims in coming forward and seeking help.

We know from the Office for National Statistics that 31% of women and 18% of men interviewed in 2011-12 had experienced domestic abuse by a partner or family member since they were aged 16. These figures are equivalent to 5 million female victims and 2.9 million male victims. This is a substantial issue for our society.

The Crime Survey for England and Wales has estimated that around 1.1 million adults experienced coercive control in 2010-11. That is why it is important to extend the definition of domestic violence to include such behaviour. It has been widely understood for some time that it is a core part of domestic violence. As such, this move does not represent a fundamental change in the definition but a recognition that coercive control is a complex pattern of overlapping and repeated abuse perpetrated within a context of power and control that it is important to highlight.

The introduction of the jobseeker’s allowance domestic violence easement and the destitute domestic violence concession last year was welcomed by external stakeholders and front-line staff. It is the first time that the Department for Work and Pensions has specifically supported the needs of domestic violence victims and their families within the welfare regime. The policies have been designed to give victims the additional support they need to get their lives back together and to put them on a secure footing after leaving a partner.

Having introduced the policy, the department took the decision to research how its implementation had worked in practice, in order to understand how well the policies have been operating and to ensure that we continually improve our service. Work is under way to implement the recommendations from the research that was published in June this year. It includes improving the understanding of the easement and concession among front-line staff through refreshed guidance. Messages will be directed towards these staff, including benefit centre staff, and will focus not only on policies but on supporting vulnerable customers sensitively.

The work also includes the use of management information, and its distribution to different levels of the organisation to give an insight into the use of the policies by location, and work with local partnership managers to promote the benefits of dialogue with local domestic violence stakeholders. We will continue to maintain strong relationships with stakeholders at national level to ensure that those issues are dealt with, that best practice is identified and shared, and that the latest evidence and analysis is used by the policy team to determine future activity.

It is of paramount importance to me that advisers are given the learning and support that they need to help them identify and help vulnerable claimants, not just through the financial support that Jobcentre Plus can offer but by signposting to the many local organisations that support victims at such a critical point in their life.

I hope that noble Lords will agree that these changes are worth while and that applying a common cross-government definition of domestic violence and abuse will make it easier for all to understand. I believe that it is a significant improvement to the help that we offer to victims of domestic violence. On that basis, I hope that the Grand Committee will support these changes.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for that very comprehensive explanation of these regulations. We on these Benches welcome the Government’s changes, not least because it is another stage in a process which began with a government amendment to the Welfare Reform Bill in this House in 2008-09.

I agree with the Minister that it is of the highest importance that victims of domestic violence are given the space and support necessary to rebuild their lives at the time that they move away from a situation of abuse. I think that the regulations have the potential to form an important part of that support. However, perhaps the Minister can reassure the Committee on a few points. First, simply in terms of the definition—which seems to be helpfully broader than the one that it succeeds—can the Minister confirm for the record that no one who is covered by the current regulations would be excluded by the extended definition?

The Minister referred to the cross-government definition of domestic violence that is now being used. It clearly makes sense to have a definition in these regulations which is coherent with that but, looking at the cross-government definition, unless I am mistaken, there seems to be a difference between the two. The new cross-government definition of domestic violence and abuse refers to:

“Any incident or pattern of incidents of controlling, coercive or threatening behaviour, violence or abuse”.

I do not think that threatening behaviour is covered in these regulations but I may have made a mistake and perhaps the Minister can point out to me where it is. If there is a difference between what is in the regulations and what is in the cross-government definition, can the Minister explain to the Committee why that is the case?

Next, can the Minister tell us whether the Government are about to bring forward changes to the universal credit regulations? Otherwise, of course, we would be in the deeply unhappy position of having a difference between the regulations affecting those claiming jobseeker’s allowance and the very many people who I am sure will be claiming universal credit any month now. Perhaps he could reassure us as to what is happening with that. Do the Government propose to bring forward amending regulations and, if so, when? How many people will be claiming universal credit at the point at which they will be changed?

I looked at the research that has been done on both the easement and the DDV, which the Minister referred to, and very helpful it was too. The Minister referred to some action that has been taken to follow up the recommendations of that DWP research from June this year. The Committee may wish to note that I counted 15 recommendations specific to the DWP; I have chosen to pass over for the moment the recommendations for further research that are also contained in the report. Can the Minister tell the Committee which of those 15 recommendations to the department have already been implemented in full? If he does not have that information to hand, will he write to me to confirm that? It would seem important that those recommendations are implemented very soon, and the department has had since June to do that.

This matters because the research showed that, despite the fact that we have high levels of domestic violence reporting in this country, the take-up of both the easement and the other policy are actually quite low. The government report said:

“We know from official statistics that DV rates overall are high, affecting one in three women, and that it is particularly prevalent among unemployed women. Yet the Jobcentre Plus offices visited with the highest numbers of JSA DV Easement cases were reporting fewer than 20 cases overall during the course of a year”.

If I read this correctly, only 338 cases of the four-week easement and 115 cases of the full 38-week easement were taken up as part of the JSA domestic violence easement. That seems incredibly low given the levels of reported domestic violence, and the report points out that those domestic violence reported rates are higher among unemployed women. Is the Minister comfortable that the policy has been properly understood and implemented by his officials? If not, how soon does he expect to feel confidence in that situation?

I have one further question. When these regulations were debated in the other place, the question was raised as to whether the position of 16 and 17 year-olds was the same as that of those aged 18 and over. Can the Minister clarify that for the record?

Subject to the answers to those few questions, we on these Benches are pleased to welcome this definition and look forward to hearing what the Minister has to say.

[Lord Freud]

I thank the noble Baroness for that. I know she has a concern in this area. Clearly, domestic violence is a dreadful form of abuse. We as a Government are committed to providing better support for victims. This is the first time that the definition recognises that the victims may be subject to a wide range of domestic violence and abuse.

On her specific question about whether the move from the old to the new has left any form of abuse stranded and not covered, I am happy to confirm that there is no situation covered in the old form which is not covered in the new form. The attraction of having a single definition is that it makes it much clearer to everyone—supporters and victims alike—what constitutes the abuse and that they can go to all government agencies for help with particular types of abuse.

Running through the questions in no particular order, on the 16 and 17 year-old question, our regulations are set out in such a way that they refer to all claimants. Clearly there are 16 and 17 year-olds who are claimants and therefore we do not have to specifically talk about 16 and 17 year-olds because they are automatically covered.

The other point raised about the structure of the regulations concerned why the definition is not replicated exactly. This is just about wording; the practical effect is the same. It needed to be worded in a way which, in drafting terms, was consistent with the powers in paragraph 8B of Schedule 1 to the Jobseekers Act 1995, which talked about domestic violence which is inflicted or threatened. The conduct we are defining must therefore be capable of being inflicted or threatened. In that light, the reference to “threats” and the “threat” of coercive behaviour, and “threatening behaviour”, are in practice surplus to requirements: one does not threaten to threaten. That is the trouble when one has other legislation into which one needs to fit things. That is all it is.

17:30

On the question about reflecting the definition within universal credit regulations, I am pleased to say that we have already made the equivalent amendments to the definition of domestic violence under universal credit—as we have for ESA and JSA—in 2013, so we are covered there. On the June report, we are going through those specific recommendations. We have established a steering group to go through and apply them. I will probably need to write on which of them are in. I suspect, because it is a working group, that probably none of them are formally in right now. However, I will come back to the noble Baroness with a little bit more detail on that in a letter if she will allow me.

We had some precise figures on uptake in the Answer to a Written Question from the noble Baroness’s colleague in the Commons, where we gave out the monthly figures. They are not particularly high. We need to acknowledge that many victims face a challenge in disclosing this kind of information. We need to raise and promote awareness of the easement. That will be tied to the actions we take after the research. This will help staff understand the issues; we are going to work on that. Clearly, however, I share some of her concern that the volumes are low and we need to go somewhat further.

I think that I have covered all the issues apart from the one I need to write on. I hope that I have set out all the issues to the Grand Committee, and ask it to accept these regulations.

Motion agreed.

Committee adjourned at 5.33 pm.

House of Lords

Tuesday 15th October 2013 Lords Chamber

Tuesday, 15 October 2013.

14:30

Prayers—read by the Lord Bishop of Leicester.

Introduction: Baroness Lawrence of Clarendon

Tuesday 15th October 2013 Lords Chamber

14:40

Doreen Delceita Lawrence, OBE, having been created Baroness Lawrence of Clarendon, of Clarendon in the Commonwealth Realm of Jamaica, was introduced and took the oath, supported by Baroness Benjamin and Lord Boateng, and signed an undertaking to abide by the Code of Conduct.

Introduction: Baroness Bakewell of Hardington Mandeville

Tuesday 15th October 2013 Lords Chamber

14:45

Catherine Mary Bakewell, MBE, having been created Baroness Bakewell of Hardington Mandeville, of Hardington Mandeville in the County of Somerset, was introduced and took the oath, supported by Lord Ashdown of Norton-sub-Hamdon and Baroness Brinton, and signed an undertaking to abide by the Code of Conduct.

Syria: Peace Initiative

Tuesday 15th October 2013 Lords Chamber

Question

14:50

Asked by

[Lord Truscott]

To ask Her Majesty’s Government whether they consider that the recent Russian-led Syrian peace initiative provides a model for defusing other international crises, for example relating to Iran.

[Lord Wallace of Saltaire (LD)]

My Lords, we welcome UN Security Council Resolution 2118, which determines how Syria’s chemical weapons must be eliminated. However, the conflict continues—this is not a broader peace initiative. Syria’s use of chemical weapons presents different security challenges to Iran’s nuclear programme but there has been a similar international response. The UN Security Council has agreed six UN resolutions on Iran’s nuclear programme, all of which Iran remains in breach of. We hope that Iran will engage substantively with the UNSC mandated E3+3 to resolve the nuclear issue.

[Lord Truscott (Non-Afl)]

I thank the Minister for that reply and I declare an interest as Vladimir Putin’s biographer. Many people would argue that the Russian-led Syrian peace plan is the most significant peace initiative this year. To recognise this and to encourage Russia in its peace-making endeavours, a few hours ago I nominated President Putin for the Nobel Peace Prize. Will Her Majesty’s Government do the same?

[Lord Wallace of Saltaire]

My Lords, this has been a joint US-Russian peace initiative, it is not purely a Russian-led one. We welcome the constructive response that the Russian Government are now making on Syria and we hope and expect that the Russians will ensure that President Assad and his regime are represented at the Geneva II peace conference when it meets at the end of November. We hope and expect, but we do not yet know.

[Lord Hannay of Chiswick (CB)]

Will the Minister correct the noble Lord who spoke before and remind him that the idea of getting Syria to surrender its chemical weapons was raised in this House rather before President Putin raised it? More seriously, will he state that in the event of Syria transgressing the Security Council resolution, the Government would not necessarily be bound by the vote that took place in the other place at the end of August?

[Lord Wallace of Saltaire]

My Lords, we have to recognise—and I say this as a Liberal who believes in international order and is very reluctant to condone the use of force—that without the threat of force we might not have reached the position we have so far reached in Syria. Just as with the opening to Iran, without the very extensive sanctions against it we might not be having the discussions that we are now having with the Iranian Government. One has to use diplomacy as far as one can, but the big stick behind it sometimes helps.

[Baroness Falkner of Margravine (LD)]

Does my noble friend agree that in conflict resolution it is not so much a model that brings about change but the facts on the ground? In Iran there has been limited but nevertheless very welcome regime change, in Syria there has not. Can my noble friend tell the House whether Her Majesty’s Government are now receptive to Iranians participating in the Geneva II conference?

[Lord Wallace of Saltaire]

My Lords, we would welcome Iranian participation in the Geneva II peace conference. However, as UN Resolution 2118 spells out, the Geneva II peace conference is based on acceptance of the Geneva I communiqué, and Iran has not yet signalled that it accepts the basis of that communiqué.

[Lord Campbell-Savours (Lab)]

My Lords, during the Recess, at the beginning of September, there were UPI international press reports from a reputable source that the Russians were accusing the Syrian opposition of using chemical weapons. There seemed to be almost a conspiracy of silence in the western press about these accusations. What actually happened in the Foreign Office? Was that information followed up, and if it was, what was the conclusion of any inquiry?

[Lord Wallace of Saltaire]

My Lords, Russian allegations were made. There have been investigations, in so far as it is possible to pursue investigations on the ground within Syria at present, and all the evidence to which I have had access suggests that the opposition did not have access to chemical weapons and certainly did not have the capacity to use chemical weapons on the scale on which they were used on 21 September.

[The Lord Bishop of Leicester]

My Lords, does the Minister agree that this shift in fortunes in Syria is very largely due to the relationship of trust that the United States Secretary of State and the Russian Foreign Minister have developed in recent months, and that similar levels of trust will be vital to resolving other pressing international crises, not least with Iran?

[Lord Wallace of Saltaire]

My Lords, I agree. I should also say that the British Foreign Secretary has worked extremely hard over the past nine months and more to come to terms with the Russians and to develop a relationship with the Russian Foreign Minister. The European Union high representative, the noble Baroness, Lady Ashton, has also done a great deal of work with the Russians on Syria and as part of the E3+3 on Iran.

[Lord Hylton (CB)]

My Lords, I welcome very much the first steps in restoring diplomatic relations with Iran and the Foreign Secretary’s meeting with his Iranian counterpart. Does the Minister agree that Iran can be enormously helpful in Syria, Lebanon and Afghanistan, as well as in the other country mentioned by the right reverend Prelate? If there is progress on these fronts, would that not justify further steps in normalising our relations?

[Lord Wallace of Saltaire]

Of course it would. However, we are proceeding slowly and cautiously. There was an Iranian invasion of the British embassy compound only two years ago and we are conscious, as the Foreign Secretary said in his Statement to the Commons the other day, that the Iranian political system is a complex structure and that to be President of Iran is not necessarily to command all power in Iran. When President Rouhani returned most recently he was cheered in the streets of Tehran, but he was booed and his car was apparently pelted by members of the Basij militia.

[Lord Triesman (Lab)]

My Lords, I probably should start by making it clear that it is no part of the Official Opposition’s policy to nominate President Putin for the Nobel Peace Prize. The initiatives on Syria, particularly in relation to chemical weapons, are plainly welcome, although there is much more to do on Geneva II. I understand that the Foreign Secretary has done some months’ work on deepening the relationship with Russia, but it does not seem to have deepened enough for it to be a reliable way of achieving the objective in the effort to defuse crises. What positive steps will the Government take, perhaps with the United States and France, to deepen that relationship so that it is more reliable?

[Lord Wallace of Saltaire]

As noble Lords will know, the Russians are not easy companions. Foreign Minister Lavrov is giving a big speech in Brussels today, I understand, on the relationship between Russia and Europe as a whole. Although we welcome the more constructive relationship that we are having at present on a number of Middle Eastern problems, we are also moving towards the EU summit at the end of November on the Eastern Partnership, and Russian behaviour towards Ukraine, Armenia, Moldova and Georgia regarding the possibility of those states signing association agreements with the European Union is, to say the least, not particularly constructive, nor is the effort that it is making to interrupt Lithuanian exports to Russia.

Financial Conduct Authority

Tuesday 15th October 2013 Lords Chamber

Question

14:59

Asked by

[Lord Naseby]

To ask Her Majesty’s Government whether the Financial Conduct Authority has the authority to assess and monitor consumer finance products and anticipate their compliance with the law and the likelihood of their mis-selling.

[Lord Newby (LD)]

My Lords, the Government have granted the Financial Conduct Authority a product intervention power to protect consumers. This power allows the regulator to mandate, restrict or ban certain features of a financial product, restrict a product’s sale to certain groups of consumers or ban a product outright. This power will extend to consumer finance products when the Financial Conduct Authority takes on responsibility for regulating consumer credit next April.

[Lord Naseby (Con)]

My Lords, that announcement is very welcome, although the delay to next April is one that I do not particularly welcome. Does the Minister recall that the FSA under its watch allowed PPI to happen, costing the banks that mis-sold it well over £1 billion and allowed CPP to sell credit card identity insurance, costing millions of pounds? Although this new body is set up, is it not worrying that the Consumer Panel has yet to meet? Can we have an assurance that practitioners of retail financial services will be on that panel, not least because the retail distribution review is now in force and there will be increasing numbers—millions of our citizens—investing in financial products without taking third party advice?

[Lord Newby]

My Lords, I am sure that the FCA is well aware of the need to have a Consumer Panel that is as broadly based as possible. It is important to recognise that the FCA now has significant new powers: the product intervention power, the ability to ban products and powers to disclose details of warning notices, for example, as well as a power to take formal action against misleading financial promotions and disclose the fact that it has done so. It has more teeth, and all the evidence so far shows that it intends to use them.

[Lord Touhig (Lab)]

My Lords, the case of a man who defaulted on a payday loan of £120 and ended up owing £1,800 was raised by Chris Evans MP, my successor in the other place. The payday loan company in question made 330 attempts to take money from his bank account and charged him £5 on each occasion. They further demanded £178 in interest charges. Some of the tactics employed by the payday loan companies would shame the mafia. Is it not time that we treated them like the mafia, as criminals?

[Lord Newby]

My Lords, last week the Financial Conduct Authority published its first attempt to deal with the problem that the noble Lord raises. It is proposing that it should be possible only to roll over a loan twice and that if a consumer has a CPA with a loan shark—sorry, if it is a loan shark, it probably does not have any CPA—or an entirely reputable company, the number of payments that will be able to be taken under such an authority will be reduced to two. This will therefore deal pretty comprehensively with the specific type of issue raised by the noble Lord.

[Lord Sugar (Lab)]

My Lords, I have seen the suggestions put forward by the FCA on payday loans in an attempt to protect consumers. May I respectfully say that whoever drafted them is a little naïve? Needless to say, those devious people alluded to here will work around them in a few moments. Does the Minister recognise that the only way to solve the issue is to cap the exorbitant interest rates charged and, more importantly, impose strict advertising guidelines where the advertisers are forced to devote as much prominence to warnings as they do to the sales pitch? By that, I do not mean some micro-printing in jargon that is not understood by the average consumer.

[Lord Newby]

My Lords, the FCA has made proposals on advertising, which the noble Lord may have seen. As for a cap on interest chargeable, the view at the moment is that the FCA does not believe that that is the most effective way of capping the total charge made. I am sure the noble Lord will have seen the Which? report in recent days, showing that borrowers from high street banks are sometimes paying as high, if not higher, effective rates of interest on their loans because of other charges. The key thing is to have a cap on the total cost of credit, rather than simply go for a cap on the rate, which payday loan operators certainly can get around by imposing a whole raft of other charges surrounding the conditions of the loans.

[Lord Elystan-Morgan (CB)]

Perhaps I may raise a point that I have raised on previous occasions. That is to say that the debtor is not entirely without protection in our law. As the Minister will know, a judge of the High Court, or indeed a circuit judge, always has the power in dealing with these matters to ask himself the question whether the creditor has acted unfairly or whether there are conditions in the contract that are unfair. If he finds that to be the case, he can do one of two things: he can either rewrite the contract completely or he can refuse all redress to the creditor.

[Lord Newby]

I am sure that that is the case, but we want to try to ensure that contracts do not have those unsatisfactory features in the first place and that, if they are unsatisfactory, either they are banned, which the FCA will be able to do, or the rules will be set in such a way that they do not become widespread in the first place.

[Lord Davies of Oldham (Lab)]

My Lords, the Opposition are of course pleased to endorse changes to the law that are being effected by the Government at present, although we still doubt whether they are going far enough. However, is there any evidence that changes in the law are effecting the necessary change in culture in the City and elsewhere to ensure that higher standards prevail and that the grievous abuses of the past will not continue?

[Lord Newby]

My Lords, two things have to happen. First, we have to make sure that the regulatory and legal framework is fit for purpose so that people do not adopt unacceptable methods of behaviour in the first place, and if they do, they can be caught and dealt with properly. Secondly, there is a big issue around the culture in the City, which the Parliamentary Commission on Banking Standards discussed at great length and which your Lordships’ House has discussed. The two have to go hand in hand. The pressure that this House and Parliament can put on the banking sector regarding culture should not be underestimated. Debates here are taken seriously by the banks. We need to keep pressure on them whenever we have dealings with them. This must be underpinned by law and by better regulation, but we need both.

Education: Foreign Languages

Tuesday 15th October 2013 Lords Chamber

Question

15:07

Asked by

[Baroness Bakewell]

To ask Her Majesty’s Government what steps are being taken to arrest the decline in the number of foreign languages students in schools and universities.

[Lord Ahmad of Wimbledon (Con)]

My Lords, learning a language brings intellectual, cultural and economic benefits to individuals, employers, communities and, indeed, nations. The Government are committed to the teaching and learning of languages in schools. Indeed, from September 2014, primary schools will have to teach a foreign language at key stage 2. Thanks to the English baccalaureate, modern language GCSE entries have also reached their highest level this year, increasing by about 16%. We have also prioritised higher education funding for modern languages courses to ensure the continued availability of language study in higher education institutions.

[Baroness Bakewell (Lab)]

I thank the Minister for that Answer. Before I press him further, perhaps I may offer my personal congratulations to the noble Baroness, Lady Bakewell of Hardington Mandeville. I look forward to receiving her post, and I hope she enjoys mine.

I very much welcome the move to have young children taught languages—I am sure that a great many of us do—but I wonder what will happen in the light of the present situation. The number of universities offering language degrees has fallen by 40% since 1998. With such a fall, what will happen to those young students when they grow up and find that there are not enough available language courses for them to study?

[Lord Ahmad of Wimbledon]

Of course, the noble Baroness comes to this with a great deal of expertise from her position as president of Birkbeck. The Government have continued through the Higher Education Funding Council for England to treat modern foreign languages as strategically important and vulnerable, and have provided additional funding to ensure that adequate levels of provision remain. To give an example, £3.1 million of further funding for a new three-year student demand-raising programme has already been allocated. We are also encouraged by the recent figures on the Erasmus programme, which show that more than 14,000 students from the UK are now participating in programmes at other institutions across Europe.

[Baroness Coussins (CB)]

My Lords, I declare an interest as Chair of the All-Party Parliamentary Group on Modern Languages. Is the Minister aware that there is now very robust evidence to show that languages at GSCE and A-level are subject to unfair, harsh and erratic marking? This deters schools from encouraging students to choose languages, in case their position in the league tables is damaged. It also deters students from choosing languages, because they know that their chances of getting top grades and university offers might be reduced. Will the Minister undertake to meet urgently with Ofqual and the examination boards, in order to ensure that an equitable marking system can be guaranteed before the 2014 exams?

[Lord Ahmad of Wimbledon]

I can certainly say to the noble Baroness that I will take back her suggestion to the department. It is important for all of us across the House to underline the importance of languages. The new national curriculum, which has now been published, includes a statutory foreign language at key stage 2. We believe that this will encourage students to take up modern languages, and indeed encourage schools to offer them. As I said earlier, the English baccalaureate is already encouraging more young people to take a language at GCSE level. Let us not forget that it was in 2004 that a statutory undertaking to provide languages at schools was removed. We are trying to restore that, and ensure that this medium to long-term process is long lasting.

[Baroness Perry of Southwark (Con)]

Does my noble friend not agree with me that one very welcome development is that many universities now offer joint degrees? They teach modern languages alongside engineering or business studies, for example. This is exactly what employers tell us they want.

[Lord Ahmad of Wimbledon]

My noble friend makes a very important point. We need to understand the issue of languages at universities. Many universities offer languages as an addition to other disciplines, and people benefit from that. I come from the business community, and when I was on the board of a company we recognised that such degree courses provide a particular technical training alongside a language. Language training has changed—languages such as Chinese are much in demand by employers, and are being encouraged across the board.

[Baroness McIntosh of Hudnall (Lab)]

I return to the noble Lord’s point about the requirement for primary school students to now be taught modern languages. Where will the teachers who will deliver languages in primary schools come from, and what qualifications will they be expected to have?

[Lord Ahmad of Wimbledon]

Again, the issue of teachers arises—you need teachers to teach languages in the first place. I am pleased to say that the Government are encouraging teacher supply on this level. We are making available an increasing level of bursaries for those students wishing to undertake teacher training in languages. Bursaries have been increased for up to 20,000 available candidates with first-class honours degrees who wish to pursue language training.

[Lord Grenfell (Lab)]

My Lords, does the noble Lord not agree that it would be a pity for efforts to teach foreign languages to be motivated by purely commercial interests? Trying to get people to be better business representatives abroad is surely not the only reason. Many of the people who are learning foreign languages find that in other countries they speak English anyway, and put us to shame. Would it not be a great shame if future generations did not at least have the ability to read some of the world’s great literature in its original language?

[Lord Ahmad of Wimbledon]

I agree with the noble Lord’s final point. As someone whose origins lie in the Indian subcontinent, I assure noble Lords that at home mother knew best, and we were taught languages appropriately to understand literature from across the world. While English remains the language of the modern business world, I referred in my opening Answer to the importance of education to understanding cultures across the world. Indeed, looking at the example of the Chancellor and the Mayor of London, we see that both their daughters are currently undertaking courses in Chinese. Anyone who has done business in China will know that without understanding Chinese in China you will not be able to expand your business.

Tobacco Products Directive

Tuesday 15th October 2013 Lords Chamber

Question

15:14

Asked by

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government, in the light of the recent vote in the European Parliament, what are their current intentions with regard to the proposed revision of the tobacco products directive.

[Lord Hunt of Kings Heath (Lab)]

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

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

My Lords, we are very pleased to see the move towards tougher action on tobacco, with Europe-wide controls banning flavoured cigarettes and the introduction of stricter rules on front-of-pack health warnings. However, we are disappointed that the Commission’s proposal to regulate nicotine-containing products, including e-cigarettes, as medicines was not supported by the European Parliament. We believe that these products need to be regulated as medicines and we will continue to argue for this during further negotiations.

[Lord Hunt of Kings Heath]

My Lords, I am grateful to the noble Earl, but is he particularly disappointed that it was Conservative MEPs who voted to weaken tobacco packaging warnings and blocked a ban on slim cigarettes, which are targeted at young women? Will the Government make amends by agreeing to amendments to the Children and Families Bill which would mandate the introduction of standardised packaging in this country?

[Earl Howe]

My Lords, the tobacco products directive, as the noble Lord will know, does not seek to introduce standardised packaging. As he will also know, the Government have decided to wait before making a final decision on that issue but we want member states to have the flexibility to make further progress on domestic tobacco control measures in certain key areas that go beyond the new directive. We have been helping to shape the final text of article 24 to achieve that objective.

[Baroness Gardner of Parkes (Con)]

Is my noble friend aware that in this country people who have suffered even major amputations are still so addicted to tobacco that they will ask the doctor to hold up the cigarette to their mouth? I have had this report from doctors. Does he not think that what we really have to aim at is stopping smoking among the young? Is he aware that in Australia it is no longer cool to smoke if you are young? Apparently, that is more effective than any of the health warnings.

[Earl Howe]

My noble friend, as ever, makes some very wise comments. The good news is that the most recent figures on smoking prevalence are going in the right direction. It is undoubtedly true that we can never do enough to raise our game on smoking cessation measures, one of them being nicotine-containing products. That is of course a major focus for Public Health England.

[Lord Storey (LD)]

Does my noble friend agree that if children are being driven in a car where adults, perhaps their parents, are smoking it is extremely dangerous for those children? Does he not think that the Children and Families Bill is an opportunity to put this right?

[Earl Howe]

I certainly look forward to the debate on that issue during proceedings on the Children and Families Bill and I agree with my noble friend that we have to do all we can to discourage smokers from lighting up when children are in a vehicle. We believe that that can be done without resorting to legislation at present.

[Lord Faulkner of Worcester (Lab)]

Is the Minister able to confirm that there is nothing in the tobacco products directive to prevent the Government introducing standard packaging for cigarettes and implementing a ban on smoking in cars when children are present?

[Earl Howe]

Yes, my Lords. So far there is nothing in the directive to prevent that, which is why article 24 is the most important issue for the Government. We want member states, as I have said, to have the flexibility to make further progress on domestic tobacco control measures in key areas.

[Lord Patel (CB)]

Despite the EU’s lack of interest in regulating for e-cigarettes, is it the Government’s intention to regulate against them in the United Kingdom?

[Earl Howe]

My Lords, our position is clear: e-cigarettes should be regulated as medicines. These products need to be regulated for safety and quality, one of the reasons being that, as medicines, we can more effectively control their sale to children and the way that they are advertised and promoted. We need to take an approach that is future proof, being applicable to new technology nicotine products in whatever form might be brought forward in the future.

[Baroness Finlay of Llandaff (CB)]

Can the Minister tell us what action the Government intend to take over slim cigarettes, which were not affected in the recent EU directive but which are particularly appealing to young girls and are often a route to introducing them to becoming addicted to tobacco?

[Earl Howe]

The noble Baroness makes a very good point. While some in the public health community are concerned about slim cigarettes, and understandably so, both the European Parliament and the Council decided that slims should not be banned under this directive. However, she is right that slims are known to be more attractive to women than men. It may be something that remains on the agenda for future consideration at a European level.

[Viscount Ridley (Con)]

My Lords, is the Minister aware of evidence from New Zealand that e-cigarettes are extremely effective in getting people off tobacco cigarettes and that they are more effective than tobacco patches? Is it not important that in regulating e-cigarettes we do not discourage them from taking a considerable market share from tobacco products, given that vaping is clearly much safer than smoking?

[Earl Howe]

My noble friend is right. E-cigarettes certainly have the potential for being a force for good in helping smokers to quit. At the same time, we do not want them to become a gateway into smoking. The aim is to have licensed products that have demonstrated safety, quality and efficacy, and for such products to be available as widely as possible.

[Lord Brooke of Alverthorpe (Lab)]

Will the Minister take note of the fact that people have moved from heroin to methadone, which is less dangerous to them than heroin? In fact, we now have hundreds of thousands of people parked on methadone and there is no way in which we can get them off it. That is extraordinarily expensive for the country and bad for their health.

[Earl Howe]

I recognise the issue that the noble Lord raises, but perhaps that is a debate for another time.

Financial Services (Banking Reform) Bill

Tuesday 15th October 2013 Lords Chamber

Committee (2nd Day)

15:21

Relevant documents: 8th and 10th Reports from the Delegated Powers Committee.

Amendment 43

Moved by

[Lord Sharkey]

43: After Clause 8, insert the following new Clause—
“Competition and diversity
The Secretary of State must bring before Parliament within 6 months of the passing of this Act proposals to increase competition and diversity in banking by imposing upon any bank in which Her Majesty’s Government is a majority shareholder a duty to apply the following principles—(a) the principle of regionality whereby each branch of the bank is permitted to take on new deposits, open new accounts and make loans to companies or individuals only when the registered addresses of these companies or individuals is within the defined geographical area of operation of that branch;(b) the network principle whereby regional groups of local branches are autonomous in terms of governance, publish separate reports and accounts, collaborate with other branches to share central services such as the provision of systems, marketing, specialist financial products, liquidity management and wholesale funding while also maintaining appropriate mutual guarantees and self-regulation within the group to ensure that failing local management and branches are dealt with within the group with no recourse to the taxpayer;(c) the stakeholder principle whereby the governance of regional groupings of local branches explicitly includes stakeholder representation, comprising local businesses, customers, suppliers and employer and elected employee representatives;(d) the social purpose principle whereby a broader social purpose is embodied either in the banking licence of the bank or other statute so that the directors do not have a duty to maximise profit, but to ensure the profitability and financially sustainability of their local operations in supporting the economy of their regions of operations and financial inclusion in those regions, and nothing in this social purpose principle requires making loans that could not reasonably be expected to be repaid.”

[Lord Sharkey (LD)]

My Lords, this is a probing amendment. It is designed to allow us to consider what progress we are making in generating competition and diversity in our financial system, and what steps we might take to accelerate this process.

From the start, the Government have recognised that there is a problem with the levels of diversity and competition in the financial system. The coalition agreement of May 2010 commits the Government to,

“bring forward detailed proposals to foster diversity, promote mutuals and create a more competitive banking industry”.

A year later, the Commons Treasury Committee published a report entitled Competition and Choice in Retail Banking. This report showed competition to have declined. Part of the evidence for this decline was in the simple increase in concentration of financial services; part of the evidence was in the decline in customer satisfaction. The report notes:

“Competition policy should maximise the benefit to the consumer. Our evidence suggests that this is not happening. The large banks perform poorly on many consumer satisfaction surveys relative to other providers. Survey evidence consistently shows customers are dissatisfied by service quality and the lack of real choice on offer in the marketplace. In a genuinely competitive market we would expect firms which provide superior service, choice or prices to gain significant market share from rival firms, but we see little evidence that this is happening”.

The committee is there describing in restrained and measured language a cartel-like situation. In other words, there are too few banks, and those are too big and too similar. The banks themselves did not agree with that view. The committee noted:

“The large banks have told us that ultimately consumers will benefit from lower prices resulting from the economies of scale and synergies provided by larger more diversified banks. We agree that there are economies of scale/minimum efficient scale in retail banking which will ultimately limit the total number of firms in the market. However, we question whether the need for economies of scale justifies banks having a 30% share of the market or whether such benefits, if they exist, will be passed onto consumers in a market where competition is deficient. Indeed, such economies of scale benefits are likely to be outweighed by the negative impact on competition by those providers who are perceived to be ‘too big to fail’”.

In addition, there are two other factors. First, as Andy Haldane has noted, there is a case for concluding that over $100 billion in assets, banks actually become less efficient. They are too big. Secondly, the evidently corrupt culture we have seen in some of our banks is a clear symptom of a lack of real competitiveness and is probably chiefly caused by this lack. It is competitiveness—real competitiveness—that keeps companies honest, or at least very much more honest than some of our banks have been. I rehearsed all their recent and shocking failings at Second Reading, and I will not do so again now, but I will again point out that the PPI scandal is the clearest possible indication of non-competitive, cartel-like disregard for the interest of consumers. Banks sold policies which they knew did not serve the ends they were supposed to serve, and they did it on a gigantic scale. This would not happen in a truly competitive market.

This is the situation today: there is a lack of real competition and of real diversity. A study by the University of Oxford published in April this year by the Building Societies Association shows that across both the savings and mortgage markets diversity has dropped by about 20% since 2004. The report acknowledges some hopeful signs and says that in recent years the decline appears to have levelled off, but it concludes:

“If the Government is to fulfil its commitment to foster diversity it will need to do more to ensure that a variety of organisations are able to operate in financial services markets in the future, with the aim of reversing the decline in diversity... since 2004”.

It also says, bluntly:

“Consumers are likely to benefit less from competition than a decade ago and if another crisis were to hit, the system is more vulnerable than it was”.

The Government are clearly alive to the problems of competition and diversity and to their importance. Many initiatives, legislative or otherwise, have been aimed at bringing about improvements in both, but there is nothing in place which will produce any significant improvements in any near future, and there may be nothing in place at all that will really transform the competitive landscape. Divestment of branches and regulation of P2P and crowdfunding are welcome, and easing of the difficulties in acquiring a banking licence is very welcome indeed, but the plain fact is that we start from a position where the large banks have 80% or so of the market in the UK and have behaved in a cartel-like manner. The measures in place or in progress will surely not reduce this figure by much in the next 10 years. In fact, I would be very interested to hear if the Treasury has a medium-term forecast of market share of the big banks. Perhaps the Minister could help with that in his reply.

This 80% dominance of our big banks is the cause of the lack of diversity in our financial system, which is now very much less diverse than it was 50 years ago. The German savings bank association pointed out in May this year that 70% of German banks are mutually owned or not for profit. It also noted that in the UK just 3% of banks are local, compared to 34% in the USA, 33% in Germany and 44% in Japan.

The question is, of course: what can be done to speed up the progress of competitiveness and diversity? I do not think the answer to this question should be “Nothing”, or “We do not need to”, or “We can wait for some technological change to eventually produce the results we look for”.

I have spent almost my entire commercial life working with very large multidivisional and multinational corporations. They are fiercely competitive because they are committed to securing even the smallest possible profitable increase in market share. They are committed to doing this by being dedicated to serving the interests of their customers because they feel, no matter how big they are, the relentless threat posed by very much smaller, more agile and more innovative competitors. We need all these things, especially the last, to be true of our banking system.

I think any really substantive answer to the question of the lack of competition and diversity will have to address directly the lack of the true regional or local banking and the absolute dominance of one type of banking. This amendment sets out a proposal to do just that. We can do more and do it more easily with banks we own than with the other banks. We have an opportunity to use our ownership to begin to bring about the transformative changes we need.

The amendment proposes that the Secretary of State must bring before Parliament a plan to increase competition and diversity by imposing on banks we own a duty to apply the principles of regionality, networking, stakeholder involvement and social purpose. The principle of regionality is to restore real localism to banking, so that banks really know their areas and their customers in a way which is emphatically not the case right now. The network principle is to give regional groupings of branches a degree of real autonomy and some real identity. The stakeholder principle is to give representation in the banks’ activities to local businesses, customers, suppliers, and employees as well as employers. The social purpose principle is to explicitly give banks a local social purpose and responsibility. It is these principles that we need to see in operation if we are to introduce any real competitiveness, any real innovation, and any real diversity into our banking system.

15:30

As the noble Lord, Lord Eatwell, said at Second Reading, the Bill before us introduces no fundamental change in the competition regime. That is a pity. I look forward to hearing Lord Eatwell speak in a moment to the next amendment in this group. I say again that this is a probing amendment. It would be disappointing if the Government were to respond only by saying that it would be undesirable or impossibly difficult to regionalise banks. That would be to miss at least some of the point. I hope the Government will respond to this probing amendment with, at the very least, an account of how they intend to accelerate progress towards real competition and diversity and a reasonably detailed description of how they would like to see the banking landscape in the medium-term future. I beg to move.

[Lord Eatwell (Lab)]

It would probably be helpful if I spoke now, and also introduced the amendment which is grouped with this one. I am grateful to the noble Lord, Lord Sharkey, for mentioning the comments that I made at Second Reading, but I feel that his amendment, while it raises a series of valuable issues, conflates some of them in a way which is not entirely helpful.

The first point is the one that he also made, which is that there has been no fundamental thinking at all about the structure of banking in this country. The whole discussion about ring-fencing which occupied us last week is a modification of the existing structures of ownership, rather than encouragement to develop an entirely different and more competitive banking structure. That is a key issue which underlies the amendment in the name of the noble Lord, Lord Sharkey, and the one that is in my name and that of my noble friend Lord Tunnicliffe. Where the issue has been conflated is that regional banking, to which he referred, should be separated from the issue of competition. Either or both can be promoted, but they have to be seen as separate entities. For example, the chief executive of Santander has recently written in the Financial Times that she would like to see a significant increase in regionalisation in its activities. That, of course, is not necessarily an increase in competition, but is a more regional focus of the single entity.

It is, however, encouraging, with respect to the regional issue, that the Governor of the Bank of England argued in Leeds a couple of weeks ago that he was very much in favour of an increase in regionalism in British banking, and I wonder whether the Government agree with him in this respect. The key issue underlying this is not regionalism so much. After all, if we look across Europe, it was the small regional banks which failed in their dozens, particularly of course in Germany. The issue is of relationship banking, and the return to a close relationship between the lending entity—which used to be the manager of the bank—and the community in which he or she is located. For example, that was an important force in the development of the science park in Cambridge. At that time, Barclays Bank played an important role in the funding of the science park. The manager, who took something of a punt in this respect, was of course then promptly moved on, because it was felt that he had overstretched his remit. I am very sympathetic to the idea of regionalism, but we have to see it in the context of a secure structure, without creating the rather weak structures which collapsed in other countries. We have to focus especially on the issue of relationship banking.

I now turn to the amendment in my name and the name of my noble friend Lord Tunnicliffe. This amendment seeks to look in particular at competition, with which the noble Lord, Lord Sharkey, began his discussion. As he pointed out, while at the beginning of the financial crisis it was argued that banks were too big to fail, they are now much bigger than they were then as a proportion of the overall UK market. The “too big to fail” issue is even more important today than it has been in the past.

There is no doubt whatever that the regulatory system itself—as well as various other aspects of banks’ activity, including the payments system, to which we will return later—has been a very effective barrier to entry. Only one significant deposit-taking bank—Metro Bank—has been introduced into the UK system over the last five or six years. We need to tackle this issue of competition. It was striking that the banking commission argued in the second volume of its report that,

“a market study of the retail and SME banking sector, with a full public consultation on the extent of competition and its impact on consumers”,

should be commenced immediately. It continued:

“We make this recommendation to ensure that the market study is completed on a timetable consistent with making a market investigation reference”,

to the competition authority,

“should it so decide, before the end of 2015”.

The Government’s response to the parliamentary commission on this point does not state that they reject this recommendation. Instead, they imply that they will fulfil it. However, what has happened? Nothing; absolutely nothing. They are bringing forward the OFT market review of small business banking, but this was not talking about small business banking. They are not putting in place a market review of the retail banking sector as a whole. Why on earth not? That is what is necessary, and what this amendment calls for.

The Government say that they are in discussions and that they are engaging with the problem. We would like to see some evidence of that. It is just not enough; it is too piecemeal, and not transparent. A proper review of competition in the banking sector is required. This amendment would secure that review in the manner which the commission recommended.

[Lord Flight (Con)]

My Lords, I declare an interest as a director of Metro Bank. I support Amendment 102, in the name of the noble Lord, Lord Eatwell. The Government are now well aware of the competition issue, but no particular policy has been formulated for how to deal with it. This legislation offers the opportunity to require that that should be prescribed. I will say more about competition in a minute.

While I support the principle behind the amendment in the name of the noble Lord, Lord Sharkey, I have strong reservations about regional banks. I remind noble Lords that, going back to the second half of the 19th century, when an industry got into trouble the regional bank failed and the whole region became depressed, often for a decade or more. The principle at that time, led by individuals such as Walter Bagehot, was to create national banks to spread the risk. Therefore, I am not sure that regional banks are particularly the answer.

Government policy has been anti-competition going back to at least Barings. I remember more than 10 years ago having an extensive debate with the late Sir Eddy George when he was Governor of the Bank of England, because it was stated policy that lender of last resort facilities would apply only to banks that were too big to fail. It seemed to me completely the wrong way round in that it gave smaller banks a disadvantage in terms of what they had to pay for deposits. Lots of them, such as Hambros, closed down. It created the great risk, for which we subsequently paid the price with the banking crisis. Elements of uncompetitive measures have been the big—very much higher—capital ratios that smaller banks have been obliged to have in relation to mortgage lending; the costs of the payment system; and the difficulty of getting a banking licence. If I may boast, I think that Metro Bank is the first new high street bank to have been set up in 120 years.

However, I therefore have some sympathy with the second part of the amendment of the noble Lord, Lord Sharkey. What he is saying, in my language, is that we want high street banks that will get dug into their communities and will naturally get involved with sponsoring activities in those communities. That is exactly what Metro Bank is doing. It is very good business to do it and very popular. When we open branches, there are queues of people waiting to come in and open accounts because they are so fed up with the appalling service that they have had from the banking oligopoly for the past few years. It was, indeed, very much an oligopoly. I think it was Lloyds that first decided that you could cut all service and just leave people with telephone numbers to dial. The other banks all followed, with a very substantial boost to profits as a result. For customers, however, it has been one of the biggest factors in making the large banks so unpopular.

I think the outlook is encouraging. Metro Bank plans to have something like 6% of the nation’s deposit base by 2020, which is not that far away. There are other new banks coming up. I believe that the face of the banking scene, even if the Government do not do much about it, will look very different in some 10 years’ time. One of the issues is that the big banks are simply too big to manage. The have archaic silo systems, which are an enormous problem to them. Their activities are simply too large. The requirement for increases in capital will lead to them shrinking their balance sheets and, rather like the old-fashioned huge department stores in the US, it is inevitable that business pressures will lead to their decline.

I attended an interesting meeting that was addressed by Andrew Bailey, the head of the PRA, this morning. He made the point that perhaps the regulator had been wrong to require small new banks to have much higher capital ratios against certain forms of lending. The logic for that was that new banks were more risky—fair dice—but its net effect simply increased the oligopoly strength of the existing large banks. The PRA is looking constructively at making capital ratios, as far as possible, the same across the board, whether banks are large or small. So the PRA is very much on to the need for more banking competition and for it to be supportive and helpful to new banks, as opposed to having rules that hinder them.

The Government, too, have seen the point and are keen on more banking competition. It seems to me, however, that they have not thought about it adequately and have not made up their mind about what more should be done, other than expressing a wish for more competition. That is why a requirement to look into the subject would be no bad thing. However, as I said, while I fully support the principle of more high street banks doing the things that high street banks always did, I am less comfortable with the amendment of the noble Lord, Lord Sharkey, which I think is overprescriptive.

15:45

[Lord Glasman (Lab)]

My Lords, I should like to speak in favour of the amendment moved by the noble Lord, Lord Sharkey. It is very important that we recognise the severity of the situation relating to the banks and precisely what happened in 2008. I commend the localism agenda of the Government in terms of politics, but I wait to see how the localism agenda applies to banking institutions and their restructuring. It is very important to see the four root causes of the crash.

The first is that it is not only the state that centralises power; it is also capital that centralises. There is a consistent tendency to oligopoly and then to monopoly, unless there are constraints on that. What we have seen, and what we continue to see, is that 80% of our banking still goes through the same failed institutions, and what we have is more of the same, rather than something distinctly different. What we have is a collapse of regional business investment, which is extremely harmful and manifests itself in two ways: in constraints on productivity on one side and, on the other, the extraordinary growth of payday lenders, as the banks cannot deal with local needs. So centralisation is one aspect of the crash, and a lack of accountability in the structures of the bank is the other. This is where I am very much in favour of what my noble friend Lord Eatwell says, with one proviso.

Relationality is crucial and, when there is representation of interests in the corporate governance of banks, you have a greater degree of honesty. If you look at the story with the Spanish banks and the German local banks, you find that the constraints on them were eased and they were, in fact, acting like normal profit-maximising banks. They had lost their regional commitment and got themselves involved in series of overextended loans, very similar to ours. I say to the noble Lord, Lord Flight, that that is not a condemnation of regional banks; it is a condemnation of the fact that they ceased to be regional.

One anecdote that crystallises the problem is the example of Northern Counties Permanent Building Society, which was established in 1850 and flourished through 150 years. It went through four depressions, grew and merged as a mutual in 1965—noble Lords will see where this story is going—with the Rock Building Society. It then became the Northern Rock Building Society, which did well until 1997, when it was demutualised. It became the fourth largest mortgage lender in the country and sponsored Newcastle United but it also, by the maximisation of returns, completely lost its asset. We do not need any symbolism here; Newcastle United Football Club used to be sponsored by Northern Rock and now it is sponsored by Wonga. That is the reality of the circumstance that you confront, and there is no virtue in that; it is of no benefit to anybody. There is centralisation, lack of accountability, recklessness and deceit. They are all part of the same story of being unable to hold anybody to account. Without incentives to virtue, unfortunately, you get incentives to vice. That was the system, and it is the system that we still have.

I want to speak for the logic and the virtue of the amendments proposed here. The first element is regionality. As I say, all the cases that my noble friend Lord Eatwell and the noble Lord, Lord Flight, referred to, concerning Germany and Spain and their regional banks, were due to those banks no longer being regional. When there is a constraint on the bank to lend within a prescribed geographic area, banks will flourish. We can see how effective that has been from the Sparkassen in Germany. I remember the noble Lord, Lord Flight, a while ago referring to the stability of the German system being based on its currency, but it is also based on the fact that there is a regional banking system that sustains business through ups and downs, and where there is a genuine local knowledge of what is going on in those businesses as well as a vocational work scheme.

The third part of this is the most important—that is, the representation of the skills and knowledge of the workforce and stakeholders in the corporate governance of the firm. This leads to a balance of interests that holds people accountable. I completely agree with my noble friend Lord Eatwell about the stress on regionality and relationships in the second part of the amendment; relational banking is absolutely essential. However, that implies local knowledge and the restoration of what we have lost, which is trust. So this is not a quick fix. I commend the work of the most reverend Primate the Archbishop of Canterbury in talking about a 10 to 15-year structure of reconstituting credit and trust in the nation. There will have to be a coalition between different stakeholders in doing so. But it is a terrible missed opportunity when we have an asset that has not been regionalised and has not been subject to proper balance of power in corporate governance, with no regional accountability in it to look at bad practice and correct it before it reaches the taxpayer. Above all, as the story of Northern Rock teaches time and again, if you maximise immediate returns on investment, you will lose the asset. There have to be constraints on that which allow capital to maintain its presence in areas and be a partner to business and families. In terms of regionality, relationships, stakeholder accountability and non-maximisation, this amendment holds the key to the establishment of the banking system that must come now.

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I apologise to the Committee that I was not able to speak in the Second Reading debate, but I have followed the debate on this legislation very closely. I support my noble friend Lord Eatwell’s amendment but also wish to speak in support of some of the things discussed by the noble Lord, Lord Sharkey.

Airdrie Savings Bank is unique in Britain as it is the last mutual trustee savings bank in the country. I declare an interest as I have had an account there since I was six and my father also had an account there from the age of six. The difference between Airdrie Savings Bank and other banks is that it cannot offer the gizmos offered by the big high street banks. However, it offers a localised service that is completely trustworthy. There are no two ways about it: it has had its difficulties throughout the crisis, as has every part of the financial services industry. However, because it is unique, sometimes there is a risk that its needs are forgotten about. I ask the Minister to ask officials to look specifically at how an institution such as Airdrie Savings Bank can be protected. It is, indeed, a very venerable bank; my noble friend Lord McFall addressed an event at its 150th anniversary some eight or nine years ago. The bank is completely rooted in its community. The only perk its directors get is a fish supper once a month. There is no question of any extreme expenditure or remuneration being given to the bank’s directors.

I say to the noble Lord, Lord Flight, whose passion for financial literacy is well known in this House, that having a bank that is so extremely local means that financial literacy is not something we necessarily have to worry about. Indeed, it is located in a community that is largely financially excluded. Without Airdrie Savings Bank, many people would not have a bank account.

I have known the bank for many years. When I was Economic Secretary to the Treasury and Airdrie Savings Bank staff came down for a fiduciary interview with staff at the Bank of England, which was then in charge of regulation, there was a threat of a bribe being offered as Airdrie staff brought with them tins of shortbread. I can be extremely proud of Airdrie Savings Bank. As someone who, in various guises, has had to promote financial services in this country, there are not many other banks that I can be proud of. It would be a pity if, through this legislation and, for example, capital adequacy requirements, difficulties were put in the way of this superb institution. It is an old-fashioned institution but, frankly, would it not be a good idea if banking became boring and old-fashioned again?

[Lord Higgins (Con)]

My Lords, both these amendments have much to commend them. The point that I would like to pick up regarding Amendment 43 is the position of the banks in which the taxpayer has a large holding. Having bailed out a number of banks, it is extraordinary that the Government have stood back completely from any involvement at all in what those banks are doing. In the context of competition, which we are now discussing, there is a strong case for them to set an example. This would enable at least a degree of competition to be introduced at this stage without much delay.

Amendment 102 also has much to commend it. It suggests that the inquiry should look into a series of aspects with regard to banks such as the level of competition, the obstacles to it, other actions and so on. One should add to that a careful study of what the economies of scale in banking actually are, because I suspect the reality is that they do not exist to anywhere near the extent that the size of the banks at present would suggest. On the other hand, we would find that there were major diseconomies of scale, not least the enormous risks to which we have been exposed as a result of banks being the size that they are. We frequently say that they are not only too big to fail but too big to manage. It is clear that they are too big to manage, and that is a major diseconomy of scale.

If we are going to set up the kind of inquiry that the Opposition are advocating, which I would support, it needs to look at economies of scale in this context and consider whether—given that the banks seem to have been motivated as much by megalomania as by anything else—they are of an appropriate size or whether some consideration ought to be given to whether competition would be increased if they were broken up. It is curious that competition in this area has been, as far as I can see, in no way affected by this or any previous Government’s overall competition policy, which has simply not been applied here. If, as the noble Lord said just now, the major banks have probably 80% of the market—given that normally anything over 30% would be appropriate for an investigation—we need to look at that carefully.

The lack of competition is affecting two things: the supply of loans to consumers and small businesses in particular, and the price. It is clear that there is a serious lack of supply for businesses that are trying to get finance for expansion. Despite all the Government’s efforts, of which there have been a number, to increase the supply of loans to small businesses and others, the loans do not seem to be getting through to the people whom the Government would like to help.

As for the price, one has only to look at the cost of capital to banks and then at the amount that they are charging consumers to realise that the situation is lunatic. I wish my noble friend Lord Flight well because there must surely be scope for something to be done on that issue. The difference between the cost and the amount being charged is totally disproportionate. This came up earlier in Question Time, when my noble friend on the Front Bench replied that there is concern about the amount being charged by banks when compared with what is charged on payday loans and so on. A helpful and illuminating article in the press in the past few days brought out this point. I hope that one can get something done about that.

We have some way to go and noble Lords will no doubt wish to return to this matter on Report. I hope that we will then take a definite decision or, even more, that the Government will respond to the proposal for a study. However, this is only a study, and a number of other measures to which I have referred go wider than this. These measures could be taken now and have some effect on the appalling oligopolistic situation in the market at the moment.

[Lord Phillips of Sudbury (LD)]

My Lords, I, too, broadly support these two amendments. It is encouraging that every speaker so far has taken that broad point of view. As my noble friend Lord Sharkey said in opening this debate, the amendment in his name and that of the noble Lord, Lord Glasman, is a probing amendment. I hope that the noble Lord, Lord Eatwell, was advancing Amendment 102 in the same spirit. I very much hope that the Minister will say that he will take away the contributions made, so that we can come back together on Report with an amendment that answers some of these concerns.

Perhaps the most striking statistic that we have had was that given by the noble Lord, Lord Eatwell, who said that in Germany 80% of banking is provided by local regional banks whereas here the figure is only 3%. I think that was said by the noble Lord, Lord Eatwell, or perhaps it was the noble Lord, Lord Glasman.

[Lord Sharkey]

It was me.

[Lord Phillips of Sudbury]

I am sorry, it was my noble friend. That is a stunning statistic. The fact that some of the small German banks failed in the great crisis seems to reflect a strength and virtue as compared with the situation in this country where, but for the injection of in excess of £80 billion of taxpayers’ funds, as far as I can see the whole banking system would have failed. The big clearers would have gone to the wall—that is the truth. We do not even have a market banking system that complies with the supposed basic virtues of a capitalist system: when they were tested, they could be held up only by immense government input.

16:00

I suggest that Amendment 102 might well have called upon the reviewer to look at more extensive issues. I would hope that we could also have a long, cool and deep look at the problems of entry into the banking system. I do not think that “competitive” is the right word to describe the current difficulties. Also, we should look hard at how we could bring in regional banks, along the lines of Amendment 43. I have difficulty with some of the proposals there—for example, that there should be statutory constraints on how a regional bank can accept deposits, being unable to accept deposits from individuals or companies outside its region. I cannot see that that is a workable proposition. There are several detailed issues such as that which need careful review.

I also suggest to the Minister and to the Committee that we should look at the prospect of some of the smaller building societies being able to convert into retail banks much more easily than is currently the case. In my small town of Sudbury in Suffolk we have the Ipswich Building Society. It is excellent and is rather like the old clearing banks used to be when I was a young man: they were close to their patch, knew their customers and had stable staff and a manager who was known and knew his customers—in fact, they were pillars of the community. Today, all that has gone from the clearing system with a vengeance and, I believe, at great cost to our society and to the effectiveness and, indeed, security of the banking system.

A return to relationship banking is not something that one can conjure out of thin air, least of all through legislation. Indeed, the restoration of trust in the banking system is a bedrock of and essential for a revival of banking that we can be proud of. As I said, I hope that the Minister, in consultation with those who have tabled these amendments, will be able to come back on Report with something that we can all get our teeth into.

[Lord Turnbull (CB)]

My Lords, I, too, am grateful to the noble Lord, Lord Sharkey, for giving us the opportunity to debate this issue, although, as I will make clear shortly, I have come to a slightly different conclusion. When we get to Amendment 103 next week, we will be talking about the RBS good bank/bad bank issue. The Parliamentary Commission on Banking Standards, which more or less in the same paragraph talked about that issue, also recommended that the Government should examine the scope for the disposal of any RBS good bank as a multiple entity. I think that these studies were called for by the end of September. We have now gone beyond that point and I hope that the Minister will be able to tell us when we can expect those reports. To some extent, the amendment in the name of the noble Lord, Lord Sharkey, seeks to pre-empt the conclusion. I should like to wait to see what the Government have to say on this and then take the matter on from there.

There are also other concerns. As well as trying to increase competition faster than would be achieved under RBS’s current plans, we should always be seeking to return RBS to its position as a fully effective lender, particularly to SMEs. We are asking it to reconstruct itself so that it gets back into the private sector and becomes a ring-fenced bank and a non-ring-fenced bank. My concern is that if we also ask it to start work on a regional agenda now, that will simply overload the system and not get it to the point of becoming an effective lender, which is the main priority in the short term.

It is not clear to me that the regional agenda will necessarily be an effective model, particularly when it is created by taking clones of existing bank networks—by simply breaking up the existing banks into smaller bits and trying to run them on the same lines, with much of the same culture and same technology. I wonder whether that will work and whether the future doe not lie in a more disruptive technology that will grow up from below. I wonder why, for example, we are keen on switching. Why will people want to switch from one kind of a bank to another kind of bank if it is just a smaller version of the same kind of bank? I am beginning to think that the real future lies not so much in the break-up of the existing model but in a disruptive technology, with someone doing to banking what Amazon has done to retailing.

It is inevitable that there will be a full market investigation reference to the Competition Commission. Again, I would not start that now, while so much else is going on, but begin somet ime after 2015. My preference would be to fold this regional debate into that, rather than pursue it now.

[Lord McFall of Alcluith (Lab)]

My Lords, the noble Lords, Lord Eatwell and Lord Sharkey, have done the Committee a service by raising this issue. Four years on from 2010, when the Government came into office, we have much less competition: banks are bigger; the cost of capital, as the noble Lord, Lord Higgins, said, is more expensive; and SMEs’ credit is still drying up. The problem is that British banking lacks a “spare tyre”, as Adam Posen of the Monetary Policy Committee said. I remember a conversation that I had with Stephen Hester when he was chief executive of the Royal Bank of Scotland. He said, “If you have new entrants into the banks, all they will do is replicate the business model that already exists. You need a Google, a Yahoo or a Facebook to have that disruptive technology”, as the noble Lord, Lord Turnbull, described.

I was of the opinion that, as a commission, we should have a referral to the Competition and Markets Authority straight away because this is an area in which, when talking about change, we are talking about years and possibly decades. If we do not get on to this straight away then we will see very little improvement at all in five or 10 years’ time. As the noble Lord, Lord Eatwell, said, if we are talking about establishing regional banks—an aspiration which the most reverend Primate the Archbishop of Canterbury articulated—we need a secure structure. We have to understand how small banks failed. People say, “Well, small banks are just the same as large banks”. I have a quote here from February 2006 in which an individual said,

“we are now in the midst of another wave of innovation in finance. The changes now underway are most dramatic in the rapid growth in instruments for risk transfer and risk management ... These developments provide substantial benefits to the financial system. Financial institutions are able to measure and manage risk much more effectively. Risks are spread more widely, across a more diverse group of financial intermediaries, within and across countries”.

So, the system is safer. The individual who said that was a certain Tim Geithner, whom the President of the United States then appointed as the United States Treasury Secretary. Mr Geithner had a great knowledge of individual institutions but Mr Geithner, like the IMF and others, was clueless about the interconnectedness of the banks, which is why the banks went down. Whether we are talking about large investment banks or small regional banks we must turn our attention to that area of risk if we want a better system.

My noble friend Lady Liddell mentioned the Airdrie Savings Bank. I was privileged to give the 150th anniversary address there. To re-emphasise what she said, the non-executive directors there were local and unpaid. The Airdrie Savings Bank was a fly on the back of the elephant that was the Royal Bank of Scotland. However, the Airdrie Savings Bank prospered and the Royal Bank of Scotland went under. The Chancellor at that time, Alistair Darling, said that he got a call in the morning from Tom McKillop, the chairman of the Royal Bank of Scotland, saying that it would be out of business in the afternoon if the Government did not step in. Surely there are lessons to be learnt there from the small banks.

I do not accept the proposition that small and regional banks are not on. A chief executive of a very large bank said to me in private that we should look at retail banking in the United Kingdom as utilities—as predictable and boring activities. That is the way we should be looking at our banks. I think a referral to the Competition and Markets Authority would be wise at the moment because we will be talking about this issue for 10 or 15 years to come. If we do not look at the structure of retail banking in the United Kingdom, we are simply going to replicate what we have at present. There is an opportunity for innovative thinking. These amendments offer the Government that opportunity and I hope that the Minister in replying will indicate that this is a fertile area and we can get on to looking at a new structure for our banking.

[Lord Desai (Lab)]

My Lords, I support the amendment in the name of my noble friend Lord Eatwell and want to comment a little on the amendment from the noble Lord, Lord Sharkey, and my noble friend Lord Glasman. The key is what the noble Lord, Lord Higgins, said. Where are the economies of scale in banking from? Why are large banks more successful in surviving and, as it were, swallowing up smaller banks here than they are elsewhere? We had smaller regional banks for a number of years in the 19th century and later. Then we had the concentration of only five large clearing banks left and then even fewer. One question that the competition authority ought to ask is, “Are the economies of scale technological, or is it just that larger banks can borrow money on the money market at a more favourable rate than small banks can? Or are we as authorities putting serious restrictions in the path of small banks to stop them starting and prospering? Are we imposing extra costs on the small banks so that the large banks get away with lower costs than small banks?”. Those are the questions that we ought to examine.

I do not particularly mind whether these are regional banks—what we need is more diversity in banking. Regional and local banks may have failed not because there is something wrong with being local or regional but because there was a storm of cheap credit available and people decided that even if you were a local bank you could still get into the American subprime mortgage market to make money. That is what ruined people; it was not being regional. In a globalised market you have access to buying and selling assets all over the world. German local banks got into subprime mortgage markets in America and lost out.

We really ought to nail down where the economies of scale are and encourage and increase diversity by removing the non-competitive restrictions that currently help large banks to dominate, rather than creating small banks that would have special competitive advantage—as it were, some kind of subsidy—which may be desirable in some larger sense but is not economically efficient. We have to ask whether large banks are surviving because of a competitive advantage and whether they will fail again, costing us a lot of money. Should we look for diversity and a level playing field among large and small banks?

16:14

[Lord Newby (LD)]

My Lords, it is a great pleasure to respond to this fascinating debate. I should say at the outset that the Government are committed to greater competition and diversity in the UK banking sector, both locally and nationally. Effective competition is essential for ensuring that customers get suitable and affordable products.

It is not true to say that there has been no fundamental thinking by the Government on the structure of banking and the need for greater competition. That is why we asked the Independent Commission on Banking to investigate competition issues in the UK as a key part of its work. Half of its report covered competition issues. It identified a number of issues and areas which needed action and we are taking forward its recommendations for dealing with these. For example, we are removing the competitive advantage big banks get from being seen by the market as too big to fail through the ring-fence. We have secured a new seven-day switching service, delivered by industry to tackle inertia in the personal current account and SME business account market. This service was launched on 16 September. We have introduced a strong competition regulator by giving the FCA an objective to promote effective competition.

The new regulators have already brought forward big changes on the regulatory side through their barriers to entry work. I commend the report that they produced earlier in the year to the noble Lord, Lord Phillips, in particular. This will make it easier for new banks to enter the market, to grow and to compete with the large incumbent banks. These changes have been greatly welcomed by the industry and will make a big difference going forward for those who want to start a new bank, be it to serve the local community or to compete nationally.

I should highlight here the PRA’s consultation on an initial capital exemption for some small specialist banks. The proposed exemption would allow some banks to gain authorisation with minimum capital of as little as £1 million, and to do so much more quickly than has ever been the case in the past. These are not small changes. Within the narrow world of bank authorisation, these are revolutionary changes which will make it much easier for new entrants to come forward. There have been some extremely successful new entrants. Metro Bank is one of the most successful and I suspect that its competitors consider that it is being disruptive by making a number of changes in the way it does banking which will affect the whole system, in many cases for the better.

The actions that we have already taken will be supplemented by what we are doing in the Bill. We are creating a new payments regulator to ensure fair and transparent access for new and smaller banks to the payment systems. We shall discuss that later today. The Government have announced that they will ask the new payments systems regulator to look at the case for and against introducing full account portability as an early priority, as well as the case for requiring the big banks to give up, in whole or part, ownership of the payments systems.

We are giving the PRA a secondary competition objective to strengthen its role in ensuring that we have competitive banking markets. We will provide the FCA with further competition powers so that it has even more appropriate tools in that area.

As to the OFT, it has brought forward its investigation into SME banking and the competition issues affecting these markets. This is arguably the most contentious area in terms of the lack of appropriate products and volume for that market. The study is part of its ongoing programme of work to investigate concerns over competition in banking and to inform the decision on whether key banking markets should be referred to the Competition Commission for a formal market investigation. In January it reported on its review of the personal current account market, so it is not true to say that no work is being done on looking at competition on current accounts.

The review raised significant concerns over concentration levels. However, it concluded that the important changes being implemented, such as the ring-fence and the new account switching service, meant that market referral was not appropriate at this time.

The OFT aims to conclude its programme of work by 2015 and will make a decision then as to whether a market referral to the Competition Commission is needed. In consideration of the significant measures currently being implemented to improve competition, along with the importance of allowing the OFT to complete its current investigations, I hope that the noble Lord, Lord Eatwell, will feel that his Amendment 102 is not necessary and will not seek to press it.

Turning now to Amendment 43, I have already detailed the extensive action the Government are taking to improve competition.

[Lord Eatwell]

I wonder whether the Minister will allow me to comment on the series of measures he just outlined. All are worthy in their little way, but will he acknowledge that the Government have actually rejected the commission’s recommendation that there be,

“a full public consultation on the extent of competition and its impact on consumers”.?

This is what the Government are not giving.

[Lord Newby]

The Government are saying that the OFT is in the process of undertaking a series of pieces of work. We believe that the appropriate way forward is for it to complete that work and to decide whether it wishes to make a referral. We think that that is a sensible approach; it is already in train and we think it should reach its logical conclusion.

To help increase diversity in business lending, the Government have introduced several important schemes, which include the business finance partnership and the introduction of the business bank. The Government are promoting alternative finance to boost overall lending through investments and various innovative non-bank channels, including two peer-to-peer firms, Funding Circle and Zopa, as part of a small business programme. Peer-to-peer platforms enable people to lend money directly to businesses and consumers; they can therefore offer a more effective way for businesses to access finance. They are certainly disrupted in terms of the way in which finance is going directly into many small businesses.

The business bank is drawing together existing government initiatives under one roof and deploying £1 billion of capital to address gaps in the supply of finance to SMEs. So far, £75 million is being invested in venture capital and £300 million in new sources of lending. The Government are also taking action to support local banking—for example, through a credit union expansion project which includes a £38 million funding package from the Department for Work and Pensions.

Community development finance institutions are also providing loans in support of those struggling to access finance from the commercial banks. The regional growth fund is supporting their work through £60 million of wholesale funding and the Government also provide tax relief worth up to 25% on investments. Both credit unions and CDFIs typically operate in quite a tightly defined geographic area and have that special focus.

At national level, both RBS and Lloyds are already in the process of divesting part of their UK banking businesses as a requirement of EU state aid rules, creating new challenger banks. The divestments are part of a package designed to improve competition in the banking sector. The Government have taken the first step to return Lloyds to the private sector and are actively considering options for further share sales. The reintroduction of the TSB brand on the high street is a major step forward for retail competition. This action is further evidence of the Government’s stated aim not to be a permanent investor in the UK banking sector. This is an important step in further normalising the sector and continuing the process of removing government from the extraordinary measures taken during the crisis.

For RBS, the Government are already investigating the case for creating a so-called “good bank/bad bank” split. We will report the findings of this review shortly, later in the autumn. We do not believe that the case for breaking the core operations of any bank in which the Government have a stake into regional entities meets the objectives of maximising the bank’s ability to support the British economy, getting the best value for the taxpayer while facilitating a return to private ownership. The cost of any reorganisation would be attributable to the banks, and, as a result, to the taxpayer. In addition, the time required to execute such a reorganisation would be lengthy, further delaying the Government’s ability to return the banks to private ownership. As a result, the amendment would run directly contrary to the Government’s stated objectives.

This does not, however, mean that we do not see a role for regionally or subregionally focused banks. I have been impressed, for example, by the work of the Cambridge & Counties Bank, which is based in Leicester and is using its local expertise to support SMEs in Leicester and the broader East Midlands region. Its capital comes from a combination of a Cambridge college and a local authority pension fund, which seems to me a model that could with benefit be replicated elsewhere.

I was extremely interested to hear from the noble Baroness, Lady Liddell, about the success of the Airdrie Savings Bank. I am happy to work with officials to see how that bank is faring and whether anything that the Government are doing is making its life unnecessarily difficult.

The challenge, however—looking at that model on the one hand, and on the other saying that in Germany there are a lot of regionally successful banks—is that that is not where we are starting from now. It is very difficult for government to change a culture single-handedly. If banks such as Cambridge & Counties are successful and other people see that they are, we will see more regional banks, but I do not think that government either can or should try to impose a new overall structure on the banking sector against competitive forces and what people in the banking sector want to do.

I do, however, welcome the news that Santander wants to regionalise decision-making. RBS has for some time been trying to re-educate its SME bank managers about the virtues of relationship banking. It is amazing that that was lost, but the penny has dropped, and I very much hope that the statement by Santander is part of a broader process to push down decision-making to regional and local levels.

I hope that I have been able to persuade my noble friend that the Government have considerable sympathy with his amendment, but that much is already happening to bring greater diversity into the banking sector. Frankly, the pace of change—the number of new entrants, the change in the way that the system is operating and the way that people are doing banking—is quicker than at any previous point in our lifetime. I hope that, on that basis, he will feel able to withdraw his amendment.

[Lord Higgins]

My Lords, my noble friend seems to be implying that the study by the OFT is in some sense a substitute for the amendment. In that context, one is bound to ask what the OFT has been doing on this for the past 25 years. Is that what he is saying and, if so, when are we likely to have a decision on whether there should be a referral? Is there any possibility that the OFT report would give us the kind of information asked for in the amendment?

[Lord Newby]

My Lords, as I said, the OFT is undertaking its work and expects to have formed a view by 2015 about whether to have a broader referral. I think that at one level everybody finds it easy to criticise the failures of virtually every regulatory body in the past. It is unfair to suggest that the OFT has learnt no lessons from the past 25 years in the way that it undertakes its work. The Government have considerable confidence in the work that it is now doing.

[Lord McFall of Alcluith]

My Lords, the noble Lord, Lord Higgins, has a real point here. If we look at the timeline with PPI, consumer groups were complaining about it in the late 1990s. There was a supercomplaint in 2005. The Treasury Committee highlighted it in 2003. The OFT and the Competition Commission looked into it. It was 2012-13 before something was sorted out. That is a generation. We are making these points against the background of a sclerotic system and we really need a commitment from the Government that they are considering the matter. Otherwise, we will be back here in 10 or 15 years’ time and nothing whatever will have moved.

[Lord Newby]

My Lords, everybody would have a great deal of sympathy with the general point that the system has worked very slowly in the past. The FSA was extremely slow in many ways, but one of the features of the way the new system works is that a greater degree of urgency is injected. I give as an example the document on consumer credit published by the FCA last week. The FCA does not take responsibility for consumer credit until next April, but well in advance of that date it has produced a comprehensive plan of how it wants to proceed. This is much more rigorous than anything we have seen in that area in the past. To a considerable extent, the regulators have learnt lessons about the need to move with all due deliberation, yet also with due speed.

00:00

[Lord Flight]

My Lords, I ask the noble Lord to look at the other side of the balance sheet. I could not find the extract, but it is from a key government website and says that most organisations within the public sector are obliged to bank with either RBS or Citibank. This means that new banks cannot solicit their business. I am not clear how that came about or whether it is even in accordance with EU requirements, but a large part of the economy in the public sector is simply being dictated to on who it can bank with.

[Lord Higgins]

My Lords, my noble friend says that people have been very slow in the past, but he is now telling us that the OFT will decide whether to make a referral—not actually do anything, just make a referral—by 2015. Does it really take from now to 2015 to decide whether the banks need to be referred?

[Lord Phillips of Sudbury]

My Lords, if I may, I would add that my noble friend talked of being too slow, but in this debate several noble Lords have made the point that it is not slowness which has afflicted the large clearing banks but immorality. Whether you are talking about trying to manipulate the LIBOR rate or PPI or identity insurance—you can go on and on—there is the sheer scale, impersonality and lack of relationship or any sort of customer allegiance. I fear that these have rotted the foundations of so many of these colossal banks. Does he not therefore understand that the gist of these amendments is to try to replace that state of affairs?

[Lord Newby]

My Lords, as far as immorality is concerned, later we will deal with amendments on the reversal of the burden of proof and on the new criminal offence which will be available should banks behave in a grossly immoral way. That is the way to deal with the narrow point my noble friend makes. The whole question of the culture of the banks is addressed only partially in the legislation because it is by definition a cultural issue. We are taking very significant steps to regulate individual senior managers and hold them to account for what they do in a way that has never been the case in the past. Again, that is quite a revolutionary change. Regarding the specific point raised by the noble Lord, Lord Flight, I believe that local authorities at least can bank wherever they choose, but I will look into the point and write to him. I simply do not know what the position is.

[Lord Sharkey]

My Lords, I will be brief because I see that I am holding back an avalanche of 158 government amendments. There have been a lot of strong, very well argued and diverse views, but there have also been some general themes. For example, there was a feeling that getting close to the customer is absolutely critical. I entirely agree with that. In fact, I fear that without this there is little chance of reforming the banking culture at all. There also seems to have been a general desire in the Chamber to discuss again the issues raised and to see whether on Report there could be a way of advancing some of the arguments put forward today. In the mean time, I beg leave to withdraw the amendment.

Amendment 43 withdrawn.

Clauses 9 to 12 agreed.

Amendment 44

Moved by

[Lord Newby]

44: After Clause 12, insert the following new Clause—
“Part 3Bail-in stabilisation optionBail-in stabilisation option
(1) Schedule (Bail-in stabilisation option) (which contains amendments relating to a new stabilisation option in Part 1 of the Banking Act 2009) has effect.
(2) The Treasury may by order make any provision they consider appropriate in consequence of the application to building societies of the amendments made by this Part.
(3) An order may, in particular, amend section 84 of the Banking Act 2009, or amend or modify the effect of any other enactment to which this subsection applies.
(4) Subsection (3) applies to any enactment (including a fiscal enactment) passed or made—
(a) before the passing of this Act, or(b) on or before the last day of the Session in which this Act is passed.(5) In this section “building society” has the same meaning as in section 84 of the Banking Act 2009.”

[Lord Newby]

My Lords, this clause and the new schedule to the Bill in Amendment 105 have the effect of amending the Banking Act 2009 to provide the Bank of England with a new stabilisation option—the bail-in option. Bail-in involves shareholders of a failing bank being divested of their shares or having their holdings severely diluted and creditors of the bank having their claims cancelled, reduced or deferred to the extent necessary to restore the bank to financial viability. During the financial crisis it was not possible simply to allow banks which failed to enter insolvency, as other companies do when they fail. This is because of how interconnected the banking system is and because of the need to protect the banks’ customers by ensuring that they could continue to access essential banking services. This protection came at a very high cost to the taxpayer. These new powers will provide one solution to that problem by offering an alternative to insolvency which exposes shareholders and creditors to the losses of the bank, while enabling the bank to continue to operate as a going concern. This will help to ensure that taxpayers are never again required to bear all the costs of resolving failing banks.

It has long been the Government’s policy to develop such bail-in powers. This was an important strand of the Government’s response to the recommendations of the Independent Commission on Banking. The UK has also been at the forefront of the international development of bail-in. Along with other G20 countries, we endorsed the Financial Stability Board’s recommendation on bail-in in November 2011. We have also worked hard at ensuring that the EU would agree a feasible and credible bail-in tool, and have made substantial progress recently in this area. We believe that EU agreement on a common resolution recovery directive is near and, for this reason, the Government are now confident enough about the content of the directive to be able to bring forward bail-in powers through this Bill.

On the details of the amendments, paragraph 1 of the schedule introduces the bail-in option as an additional stabilisation option in the Banking Act 2009. When the bail-in option is deployed, the Bank of England can cancel, reduce or defer liabilities of the bank for the purposes of recapitalising it and restoring it to viability. It may also transfer some or all of the bank’s securities to a bail-in administrator to hold securities of the bank, or to perform other tasks as specified by the Bank of England, on a temporary basis. In any event, shares held by the original shareholders would be expected to be transferred or severely diluted in the course of resolution.

Paragraph 3 of the schedule sets out the conditions for use of the bail-in option. These are that the bank is failing or is likely to fail to satisfy the conditions for authorisation, that no action is likely to be taken to restore the bank to compliance and that the exercise of the power is necessary having regard to the public interest in: the stability of financial systems in the UK; the maintenance of public confidence in the stability of those systems; the protection of depositors; or the protection of any client assets that may be affected.

Paragraph 4 defines the power to make a special bail-in provision cancelling, modifying or changing the form of a liability of the bank in resolution. This power can be exercised only for the purpose of or in connection with cancelling, reducing or deferring a liability of the bank in question. Proposed new Section 48B also specifies a set of liabilities that are excluded from the power to make special bail-in provision. These liabilities are excluded for one of two main reasons: either because they would not have been exposed to losses in insolvency or because exercising the bail-in powers on them would be likely to impede the resolution of the firm or create wider market instability. This includes deposits protected by the Financial Services Compensation Scheme or similar overseas deposit guarantee schemes, liabilities to the extent that they are secured, client assets, short-term liabilities owed to certain financial institutions outside the affected firm’s group, certain liabilities arising in respect of central counterparties and settlement systems, and certain debts owed to employees and trade creditors. The Treasury has the power to amend this list by order.

When the Bank of England exercises its special powers to bail in liabilities of a failing bank, it must make a report to the Chancellor explaining why it has done so. A bail-in should in general be done in a way that respects the treatment that creditors would have received if the bank had been allowed to fail and enter insolvency. In terms of economic effects, this means that the failing bank’s shareholders would be divested of their shares, or otherwise have their claims severely diluted, and subordinated debt holders would be exposed to losses. Senior debt holders would generally be exposed to losses only after subordinated debt holders. It would also generally be the case that creditors in the same class would bear losses on an equal footing.

In common with the existing stabilisation options in the Banking Act, the Bank of England may depart from these general principles where appropriate. If the Bank of England does so in exercising the special bail-in powers, this report could explain the reasons for doing so. The Chancellor will lay a copy of any such report before Parliament.

New Section 48H gives the Bank of England the power to require a bail-in administrator or one or more of the directors of the bank to draw up a business plan that includes an assessment of the factors that led to the failure of the firm and outlines a plan for addressing these problems. The plan must be approved by the Bank of England after consulting the PRA and the FCA and may require changes to be made before approving it.

New Section 48L specifies further powers available to the Bank of England, including powers to modify and convert securities that fall within the scope of the bail-in powers. New Section 48N enables the Bank of England to remove a director from a bank in resolution, or to terminate or vary a director’s contract. It also allows the bank to appoint new directors. New Section 48O enables the Bank of England to issue directions to directors of the bank.

New Section 48P gives the Treasury the power to make an order relating to the treatment of protected financial arrangements in a bail-in. Protected arrangements are defined as security interests, title-transfer collateral arrangements, and set-off and netting arrangements. These arrangements are entered into by the counterparties in order to minimise the risks associated with the financial instruments. Therefore it is right that these arrangements are respected to the extent possible while pursuing the special resolution objectives. This is analogous to the existing power for the Treasury under the Banking Act 2009 to specify protections in the case of transfers of some but not all of the business of the bank under resolution.

The Treasury will be required to put in place compensation arrangements for affected shareholders and creditors following an application of the bail-in powers. These will include a no-creditor-worse-off safeguard that broadly provides that no shareholder or creditor should be left worse off as a result of the exercise of the bail-in powers than they would have if the bank had simply failed and entered insolvency. In addition, the Bank of England may exercise the bail-in option in respect of a banking group company if certain conditions are met.

First, the authorities must be satisfied that a bank in the same group meets the conditions for resolution. Secondly, the authorities must be satisfied that acting only in respect of the bank itself is not sufficient to achieve the special resolution objectives. The actions should seek to minimise the effects of the exercise of the power in relation to group companies on other undertakings in the group. It should only be to the extent necessary in order to achieve the resolution objectives.

I apologise for setting out the details of these provisions in some detail, but they are relatively new to your Lordships’ House and one of the essential components of the menu of provisions contained in the Bill to give a safer and more secure banking system. I commend the amendments to the House.

16:45

[Lord Eatwell]

My Lords, we can forgive the noble Lord, Lord Newby, for taking some time to introduce the amendment and schedule; I believe that they are by themselves longer than the original Bill. It has been one of the significant matters that those of us who wish to comment on this legislation have had to digest.

An issue that the noble Lord did not address, which has been a major concern in the academic literature that has been looking at the issue of bail-ins and resolution regimes, is that the bail-in regime may in itself create contagion and systemic risk. One has to consider that well over 50% of the liabilities of a typical large bank consist of some form of interbank loans and investments. Therefore, by bailing in one particular bank you are spreading the contagion to the banks that will consequently be bailed in. Could the Minister brief us on the Government’s thinking on that issue?

I have a number of questions on particular points about the bail-in schedule, and I will try to address them in a reasonably logical direction. The first point is that there seems to be no satisfactory transition arrangements for those who might be bailed in. In other words, people who have purchased financial instruments or made investments in advance of this legislation will, as I understand it, subsequently be at risk from the legislation even though, at the time then they made the investment, that risk did not exist. That seems unreasonable. Would it not be appropriate for them to have some grandfathering that would allow them to escape this risk if they had acquired the instrument in advance?

On the other hand, so to speak—of course, economists always like to be two-handed in these respects; I believe it was President Truman who asked to have one-armed economists—the principle of no less favourable treatment is equally unreasonable. If an individual purchases a financial instrument knowing the nature of the risk to which he or she is exposed, why should they then be protected by the principle of no less favourable treatment from bail-in or insolvency? They are aware of the risk and should surely take responsibility for it.

On the theme of the conditions for bail-in, the Minister noted that liabilities representing protected deposits were excluded liabilities. That means that ordinary people with bank accounts with sums in them that are below the Financial Services Compensation Scheme limit are appropriately protected. However, now and again ordinary people will typically go way over that limit, even people who usually have quite modest accounts. For example, in the process of property purchase and sale one sometimes has peculiar large deposits in one’s bank account for a short period, or when receiving a lump sum in connection with a pension scheme you typically have a peculiarly large deposit for a short period. Will these people be at risk? The schedule suggests that they would be. What measures are available to ensure that they would not?

The next point I wish to turn to was raised by the Minister with respect to banking groups. The bail-in option refers to a stabilisation power in respect of a “banking group company”. That suggests that they might be companies outside the ring-fence. Why is this necessary outwith the ring-fence if the ring-fence is deemed to work? If the ring-fence is protecting depositors and the maintenance of financial services in the way that the Government have argued, why are these measures necessary outside the ring-fence? Perhaps the Minister will enlighten us.

To move on to a couple of issues that are less serious but might become important, the schedule reads:

“A deposit is ‘protected’ so far as it is covered by a scheme which … operates outside the United Kingdom, and … is comparable to the Financial Services Compensation Scheme”.

What does “comparable” mean? Does it mean that it is of the same ilk or that it is of the same scale? There is a variety of such schemes operating around the European Union and in other jurisdictions closely associated with this country that, for example, are quite different in scale even though they may be of the same ilk. So what does “comparable” actually mean?

As the noble Lord pointed out, the Treasury has the ability to amend by order the crucial terms in Sections 48C and 48D. I asked the noble Lord, Lord Deighton, when we considered the earlier part of the ring-fence legislation, what position the Government were going to take on the recommendation from the Delegated Powers and Regulatory Reform Committee for the enhanced scrutiny of certain affirmative procedure orders. The Delegated Powers and Regulatory Reform Committee proposed an amendment; I asked Lord Deighton what the Government’s attitude was to it, and I was promised an answer. I hope that the noble Lord can give us an answer today.

[Lord Turnbull]

My Lords, these clauses exemplify the maxim, “be careful what you wish for”. The commission recommended that the UK Government should prepare a UK version of the bail-in scheme being negotiated in the EU as a precaution against the possibility that the EU scheme could be delayed. One only has to look at the Solvency II directive to know how long these things can take. We have a slightly different explanation today, which is that we are sufficiently close to finalising the EU scheme that it is safe to proceed to legislate for it. In other words, that implies that this is a substantive scheme, not an interim scheme that might in due course be replaced by an EU scheme. I wonder if the Minister could clarify this.

My only other remark is to say that I very much support the remarks that the noble Lord, Lord Eatwell, has made about people who, once or twice in a lifetime, have a very large sum in their accounts. The other example that could have been quoted is people who sell a business before they retire.

[Lord Flight]

My Lords, I can see something like a bail-in scheme working satisfactorily with regard to a bank the size of the Co-op Bank, for example, and indeed the proposals to bondholders are effectively a do-it-yourself bail-in scheme. However, in the unlikely event that it was necessary, if a bank as large as Lloyds Bank were in trouble, I find it difficult to believe that the situation could be resolved by a bail-in scheme. This is in part for the reasons that others have given, that the knock-on effects to the rest of the banking system are too large. So while the bail-in system makes great sense, I do not think it can be a sort of universal solvent to the possible need for taxpayer money to be used when huge banks are in trouble, or for so long as we have huge banks.

[Lord Blackwell (Con)]

My Lords, in asking Parliament to approve these powers, I wonder if my noble friend could set out what protection he believes is built into this legislation for the inappropriate use of these powers. I understand why having a regime in place that allows a speedy resolution to be enacted is desirable. If that is to come about, it needs to happen very quickly and efficiently when the circumstances call for it. The draft legislation sets out the conditions under which those powers might be exercised. The new Section 8A of Schedule 2 talks about appropriate conditions protecting,

“the stability of the financial systems … the maintenance of public confidence … the protection of depositors … the protection of client assets”,

but those conditions are obviously subject to judgment and interpretation, and it would be helpful to understand those parties who might be affected by the exercise of those powers, not least of course shareholders and bondholders, and whether there is any protection for them against the inappropriate use of those powers without getting into some lengthy and time-delaying process of judicial review.

[Lord Higgins]

My Lords, these clauses give the Bank of England very considerable powers and responsibilities, which we will need to consider very carefully; we are going somewhat into uncharted waters. At a purely quantitative level, will my noble friend, if not today then on some other occasion, indicate how the system would have worked if it had been applicable in the recent financial crisis? That is to say, in the case of the bailed-out banks, would it have been sufficient to mean that there would have been no charge on the taxpayer, or is it likely that there would still have been a charge?

We will consider in particular the question of the hierarchy of debts. The briefs that we have had from the Treasury have been very helpful, but it might be helpful if my noble friend could in some way or another give us some idea of how the new hierarchy is now likely to work or, to avoid any doubt, perhaps to write the hierarchy into the legislation.

Other points give me some cause for concern, some of which have been made by the noble Lord on the opposition Front Bench. It seems that there is still a considerable risk of contagion if one suddenly bails in a particular bank, but the people who are its creditors will have repercussions elsewhere in the banking system. I am not entirely clear to what extent the Government have taken that particular risk of contagion into consideration. These are quite complicated matters, and we look forward with interest to the Minister’s reply.

[Lord Newby]

My Lords, I thank the noble Lords who have spoken on these extremely technical points. A number of the questions were themselves extremely technical, so if I do not answer them fully now I will of course write to noble Lords.

The first question the noble Lord, Lord Eatwell, raised, was the question of contagion. My first point here is a general one. The markets now expect the bail-in powers to be one of the options available if banks get into difficulty. They seem generally to accept this as an option, and they are adjusting their own activities to the extent that they feel that is necessary in recognition that this will now be part of the environment in which they work. However, in an individual case, if the Bank felt that there was a risk to financial stability by exercising the full bail-in option, which covers all the assets or liabilities of the bank, it could decide not to bail in all of them but to be selective in a manner that would reduce the possibility of contagion.

In addition, in circumstances where a bank is going under, if you do not go down this other route, virtually whatever else you do with it, there is a risk of contagion. That is one of the considerations that will be in the mind of the Bank of England. Of course, if the Bank felt that there was a risk to the whole system if a particular bank went down, it has the powers under the Banking Act to nationalise it, which is another way of protecting the system and the stability of the system. This is another possible approach, but under the Banking Act it is now one of only four possible ways of dealing with the problem of a failing bank.

I am sorry if my answers are slightly out of order, but the noble Lord asked what the word “comparable” meant when we talked about other countries’ depositor protection. As he knows, all EU member states have depositor guarantee schemes with a common limit, and all those schemes will be considered comparable. Therefore it covers any schemes that will ensure small depositors in the event that the bank becomes insolvent and unable to pay its debts, in the same way as our FCA.

16:59

[Lord Eatwell]

I was thinking of the Crown Dependencies.

[Lord Newby]

I had not realised that the noble Lord, Lord Eatwell, was thinking of the Crown Dependencies. I will write to him about that.

The noble Lord asked whether the concept of no less favourable treatment was appropriate. This concept relates only to the insolvency counterfactual. It is reasonable that an investor should be no worse off due to an action of the authorities than in an insolvency. That is the option that might be facing investors if the bail-in was not taking place.

The noble Lord asked about temporarily high balances. This is an issue that we have debated over the years. As far as bail-in is concerned, the bank will have discretion not to bail in certain liabilities. In terms of the general issue about temporarily high balances, this is being pursued within the context of the EU. There is a very widespread recognition that it would be desirable to get protection for people who have such temporary high balances.

The noble Lord asked about transitional arrangements. The issue of bail-in has been debated at international level for some time. Markets know that bail-in is now an acceptable, and indeed a leading, tool for dealing with large banks in the European fora. We have agreed that there should be no transitional agreements, especially as the counterfactual would be insolvency.

The noble Lord asked about our response to the Select Committee. My noble friend Lord Deighton, as the noble Lord knows, is in China this week, so he will be replying formally when he returns. But the approach that the Treasury has taken so far in terms of working with parliamentarians who have a close interest in these matters has been to circulate draft secondary legislation at the point at which it has gone out for wider consultation. The current consultation exercise on the big draft statutory instruments under this Bill has, I think, now closed. We are drawing up a response to all the stakeholders who have made comments and the intention is that at that point the Treasury will directly contact noble Lords who have expressed an interest so that we can discuss where we have got to and consider any suggestions that noble Lords might have on the secondary legislation.

My view, having looked at it, is that this is highly technical legislation and the best way of getting an input is to have a conversation around it. The Treasury is very open at this point to any suggestions from your Lordships, or indeed Members of another place, in terms of the details of the secondary legislation. They are not set in stone. We are trying to get the best outcome. We think that that more discursive approach in the context of these highly technical instruments is the best way of getting the maximum positive involvement with parliamentarians in the process. As I said, my noble friend Lord Deighton will be writing to the noble Baroness, Lady Thomas of Winchester, about that.

The noble Lord, Lord Higgins, asked whether bail-in would mean that taxpayers would not have had to make any contribution. It is difficult, if not impossible, to say definitively since we do not know how much could have been bailed in. What is clear is that we would have substantially reduced any government contribution. Loss-absorbing capacity provisions in the Bill will further strengthen that concept. The ICB said that the 17% PLAC proposals would have been sufficient to deal with the problem last time in all but the most extreme cases.

The noble Lord, Lord Higgins, asked about the creditor hierarchy and whether it will be stated in the Bill. We have not stated it in the Bill, but we will be working on the statutory code of practice under the Act when it is enacted. The aim is that it will be set out more fully there.

The noble Lord, Lord Blackwell, asked what protection there was against inappropriate use of the powers by the Bank of England. The conditions before which the Bank can intervene are pretty stringent; they are that the bank is failing or likely to fail and that it is in the public interest to do so. If the Bank operated vexatiously or against the public interest, that would be an inappropriate use of its powers—but so it would if it acted in that manner under any other of its powers. Our view is that the conditions are clear enough and give the Bank sufficiently clear steer that we are reasonably confident that the problem that the noble Lord anticipated would not arise in practice.

The noble Lord, Lord Flight, asked whether the bail-in could work for big international banks. We believe that it could; the UK authorities are working with international counterparts to put in place resolution plans for large banks to ensure that the tool can be applied effectively. We see bail-in as being the leading tool for such banks.

The noble Lord, Lord Eatwell, asked whether bail-in was necessary for all banks, including those outside the ring-fence. The truth is, obviously, that all banks can encounter difficulties, not just retail banks. We believe it appropriate that the Bank of England has the tool available for dealing with non-retail banks as well as retail banks, which this provision would do.

I am not sure that I have answered every last question that I have been asked. To the extent that I have not, I will write to noble Lords.

[Lord Eatwell]

I just take up the Minister on that last point. Surely one of the key arguments about the ring-fence is that there is an implicit guarantee from the public authorities not to allow institutions within the ring-fence to fail. That implicit guarantee is worth a lot of money to those banks that have been too big to fail. Surely the whole point about the ring-fence is that those outwith it would not benefit from that form of public continuity guarantee. But is the noble Lord saying that the Government wish to retain such measures, which would allow them to implement such continuity guarantees?

[Lord Higgins]

I come in on the same point, if I may, because my reaction was the same as the noble Lord who has just spoken. Am I right in thinking that all these bail-in provisions apply only to ring-fenced banks? Is that the case, or not, or are they extended to banks that are not within the ring-fence? Perhaps the Minister could make absolutely clear what the position is, because it was not clear earlier.

[Lord Lawson of Blaby (Con)]

The noble Lord, Lord Eatwell, said something which I think is profoundly wrong, but I can understand why he said it. Will my noble friend the Minister make it absolutely clear that it is not the position of Her Majesty’s Government, and it is not the purpose of this Bill, to ensure that no ring-fenced bank will ever be allowed to fail? That is not the position; it must not be the position and I do not believe that it is the Government’s intention.

[Lord Newby]

My Lords, I can confirm what the noble Lord, Lord Lawson says. It is not the intention to have a situation where it is impossible for a ring-fenced bank to fail. What we are doing, particularly through the guarantee scheme, is ensuring that ordinary depositors are protected in those circumstances. Through these potential provisions we hope to ensure that there will be continuity of activity, which might not be the case without them.

In terms of the scope of these provisions, they are the fourth of what are now four options in the Banking Act for dealing with a bank that is in danger of failing. One is sale to another bank; one is the bridge bank and the other is nationalisation. Those measures apply to all banks covered by that legislation. I believe that that extends the measures beyond the ring-fenced banks.

[Lord Higgins]

I am sorry but I am still not clear. Could bail-in provisions be applied by the Bank of England to banks which are not within the ring-fence?

[Lord Newby]

That is what I was attempting unsuccessfully to say.

Amendment 44 agreed.

Amendment 45

Moved by

[Lord Newby]

45: After Clause 12, insert the following new Clause—
“Part 4Conduct of persons working in financial services sectorFunctions for which approval is required
(1) Section 59 of FSMA 2000 (approval for particular arrangements) is amended as follows.
(2) Omit subsection (5).
(3) For subsection (6) substitute—
“(6) The PRA may specify a description of function under subsection (3)(a) only if, in relation to the carrying on of a regulated activity by a PRA-authorised person, it is satisfied that the function is a senior management function as defined in section 59ZA.”
(4) After subsection (6A) (inserted by section 5 above) insert—
“(6B) If—
(a) a function of a description specified in rules made by the FCA under subsection (3)(a) or (b) is a controlled function in relation to the carrying on of a regulated activity by a bank, and (b) the FCA is satisfied that, in relation to the carrying on of a regulated activity by a bank, the function is a senior management function as defined in section 59ZA,the FCA must designate the function in the rules as a senior management function.(6C) If a function of a description specified in rules made by the PRA under subsection (3)(a) is a controlled function in relation to the carrying on of a regulated activity by a bank, the PRA must designate the function in the rules as a senior management function.”
(5) Omit subsections (7) to (7B) and (11).”

[Lord Newby]

My Lords, we now turn to the government amendments which implement another important part of the recommendations of the Parliamentary Commission on Banking Standards on senior persons and banking standards rules. This group also contains a number of amendments to the amendments the Government have tabled. I begin by explaining how the government amendments will deliver the goal of improving standards of conduct in banking.

The Parliamentary Commission on Banking Standards concluded that the current system for approving those in senior positions in banks—the approved persons regime—had failed. It saw it as overly complex and unable to ensure that individual responsibilities were adequately defined or that clear expectations were set for those holding key roles. The commission’s central recommendation in this area is for the creation of a senior persons regime applying to senior bankers. The regime for senior managers in banks will have the following features. It will reverse the burden of proof so that senior bankers will have to show that they did what was reasonable when a bank fails to comply with regulatory requirements in their area of responsibility, or face regulatory action for misconduct. It will have mandatory statements of responsibility, so that whenever someone is a candidate to be a senior manager in a bank, the bank will have to set out clearly what aspects of the bank’s business they will be responsible for. There will be powers for the regulators to make conduct rules for senior managers in banks instead of the old system of statements of principles supported by codes of practice. There will be a requirement that the register kept by the FCA must state who is a senior manager in a bank and give details of regulatory action taken against them.

The new regime for senior managers will also retain the tools which the regulators have under the existing approved persons regime. The regulators will also retain their tough powers under FSMA to impose unlimited fines on, or publish notices of censure about, senior managers in banks. It may sometimes still be appropriate for the regulators to approve people to perform functions that are not senior management functions but which still involve important responsibilities. The Government have therefore chosen to retain the power for the regulator to pre-approve individuals to perform functions outside the senior managers regime. It is for the regulators to determine what functions, if any, should be subject to pre-approval outside the senior managers regime. I am confident that noble Lords will agree that retaining this power is a sensible safeguard at a time when concerns about individual standards in financial services remain acute.

In addition to the regime for bank senior managers, the commission also recommended the introduction of a standards regime that would apply to a wider class of individuals who work in banks. The Government have therefore provided the regulators with a new power to make conduct rules for anyone who is employed by a bank, even if they are not a senior manager or other approved person. This is an extension of regulatory power in relation to individuals, and gives the regulators the power to impose a single set of banking standards rules for all who work in banks. Employees of banks could face disciplinary action if they breach these standards rules or if they are knowingly concerned in regulatory breaches by the bank. The regulators will not be compelled to make conduct rules. They will be able, quite properly, to exercise their supervisory judgment to determine who in a bank should be subject to rules, and what standards to impose.

Finally, the commission also recommended including provision for time-limited and conditional approvals of senior bankers, and longer time limits for the regulators to take disciplinary action against individuals. The Government also accepted these recommendations. Accordingly, the Bill will allow the regulator to grant approval to perform senior management functions in banks subject to conditions, as well as to take steps to vary an approval it has already given, for example by imposing new conditions.

Perhaps I may respond to the amendments tabled by the noble Lords, Lord Brennan, Lord McFall and Lord Watson. Amendments 46A, 46B and 47A seek to ensure that responsibility for preventing money laundering and other financial crime is also a senior management function. The Government agree with concerns that underpin these amendments. UK banks should uphold the highest standards in preventing criminal activity, and not facilitate it. Where there is evidence that banks have not lived up to those standards, the people at the top should be held to account. I reassure noble Lords that the new regime for senior managers will deliver precisely that accountability in relation to financial crime. Therefore, while we can all support the result that the noble Lords want to achieve, I can assure them that these amendments are unnecessary and there are no loopholes when it comes to such matters.

I shall try to explain why. The definition of “senior” is quite comprehensive. It encompasses all aspects of the bank’s operations and would therefore include responsibility for aspects of a bank’s operations that are concerned with the prevention of financial crime, where those aspects could involve serious consequences for the bank, for business or other interests in the United Kingdom. The amendments could in fact have the unintended effect of requiring junior staff with specific duties in relation to financial crime to be treated as senior managers. That would run in the opposite direction to what the parliamentary commission intended, which was to focus on senior persons in charge of all aspects of the bank’s activities.

Amendment 53A has two limbs. The first seeks to ensure the operational objectives that the FCA must consider when making rules of conduct for approved persons or bank employees. I can assure your Lordships that this part of that amendment is unnecessary. The reference to the operational objectives in new Section 64A(1) attracts all aspects of these objectives as defined in Sections 1B, 1C, 1D and 1E of FiSMA, without any additional words.

The second limb of Amendment 53A, and Amendment 53B, would require both regulators to use their new powers to make rules of conduct specifically about the conduct of individuals responsible for preventing money laundering or other financial crime. I am not sure what these changes would add. The Fraud Act 2006, the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2007 already bite on bank senior managers. Adding regulatory rules mandating compliance with statutory requirements would add little. Further, the regulators already have a power to make conduct rules applying to persons in banks who have responsibility for compliance with money laundering regulations and other laws creating financial crimes. We certainly expect the regulators to use this power to make rules about aspects of conduct that include ensuring that firms comply with their obligations relating to money laundering and preventing financial crime. However, to single these areas out in primary legislation adds little bite to the existing regime and is, we believe, unnecessary. I hope, therefore, that noble Lords will agree not to press those amendments.

I also assure the noble Lords, Lord Brennan, Lord McFall and Lord Watson, that Amendment 54A is unnecessary. The reference to an application for approval in a context which refers to a person approved under Section 59 of FiSMA already always means an application under Section 60. There is no other section under which such an application can be made. I hope, therefore, that the noble Lords will agree not to press their amendment.

Finally, I turn to Amendment 100, tabled by the noble Lords, Lord Eatwell and Lord Tunnicliffe. This amendment is the same as an amendment brought forward on Report in another place. The government amendments, which implement the commission’s key recommendations, go much further than the noble Lords’ amendment, which would really just rename the existing approved persons regime as a “licensed persons regime”, and that is all. It would not deliver the real improvements sought by the parliamentary commission. I hope therefore that the noble Lords will agree not to press this amendment. I beg to move Amendment 45.

[Lord Turnbull]

My Lords, an important finding of the commission was that the existing approved persons regime was flawed. After a debacle wiping billions of pounds off the value of shareholdings, requiring the state to inject billions of pounds into the industry and take huge financial exposures, and after several serious lapses of conduct, according to my researches one person has been fined and another person has negotiated an agreement not to practise.

Our conclusion was that the APR operates mostly as an initial gateway to taking up a post, rather than serving as a system through which regulators can ensure the continuing exercise of responsibility at the most senior levels within banks. A major cause of this flaw was that responsibilities were ill defined and were not joined up, so that those at the top could claim they “didn’t know” or, “It wasn’t me”.

We proposed a two-tier system: a senior persons regime, now called a senior managers regime, covering a meaningful chain of accountabilities, which we wanted to apply to all banks and holding companies operating in the UK; and, below that, a licensing regime, where no prior approval from the regulator would be required to employ anyone but banks would have to take responsibility for ensuring that those they did employ were properly qualified and trained and that they observed a code of conduct. This would apply to those who could seriously damage the bank or the bank’s reputation or harm a customer’s reputation.

The commission welcomes many of the Government’s proposals: defining the functions of senior management; requiring senior managers to have a statement of responsibilities; extending the limitation period for regulators to take enforcement action from three years to six; recording information on a person’s regulatory history so that a new employer can find out important details about whom they are recruiting; and the reversal of the burden of proof on whether a person is fit and proper.

However, serious issues are left unresolved. Amendment 55 provides a definition of a bank to which the regime applies. I found it impossible to discover what the definition means. Does it meet the commission’s objective of covering all banks and holding companies operating in the UK? Would the Minister clarify what he means by “bank”? Could it be a ring-fenced bank, a non-ring-fenced entity conducting investment activities within a group, a whole group or a freestanding investment bank? In our view, the new senior managers regime should apply to all such entities. It would make a mockery of the scheme if, as I suspect may be the case, it applied only to banks taking deposits from the general public—that is, ring-fenced banks. It would be completely unacceptable if the regime did not apply, for example, to the senior managers overseeing the LIBOR traders, to those overseeing rogue traders such as the “London Whale”, to those overseeing the marketing of highly dubious packages of sliced and diced mortgages or to those engaged in the mis-selling of interest rate swaps. I very much hope that the Minister will be able to give us an answer today or address this between now and Report.

There is no mention of the licensing regime, which the commission recommended. The Government said that they would ensure that regulators had the ability to take regulatory action against persons who were not senior persons—senior managers—or who were not subject to prior regulatory approval. There is no mention of the licensing regime in the government amendment. They have come up with something rather different in Amendment 53 on the rules of conduct. It states:

“If it appears … necessary or expedient for … advancing one or more of its operational objectives, the FCA may make rules about the conduct of the following persons”,

and those persons could be any employee of the bank.

I question whether that is the right answer. It is “may” rather than “must”, but I should have thought it essential that the FCA made rules. Is it right that it should apply to all employees from purely backroom or administrative staff? In some ways, the government scheme goes wider but it is possibly too permissive.

The final omission to highlight is that we propose that as well as an initial statement of responsibilities for each manager, there should be a handover note when people change jobs. We think that that is crucial because without it the chain of accountability breaks down, and when someone changes jobs we are back to, “I didn’t know”, or, “It wasn’t me”.

[Viscount Trenchard (Con)]

I intervene to ask the Minister to comment on some concerns that I have about this new “approved persons” or senior managers’ regime. First, I am worried that it will place British banks at a considerable disadvantage when they try to recruit the most talented managers available, not just from the United Kingdom but from around the world. Everybody agrees that bank management failed, so it is clear that the supervision of senior mangers needs to be enhanced and improved. For example, someone may be offered a job to work in Hong Kong, where he would probably pay less tax anyway, and he is unlikely to run the risk of being individually liable or culpable in that jurisdiction. I am not sure which other jurisdictions intend to introduce some kind of senior managers’ regime such as this.

My second concern is that it seems to me that it is up to the manager to prove that he was not negligent in the exercise of his responsibilities. It is wrong that a senior manager should be deemed to be guilty unless he can prove his innocence. My third concern is that to increase the individual responsibilities of senior managers will have the unintended consequence of diminishing the responsibility of the board of directors as a whole, or the executive committee, risk committee, or whichever committee it may be. I have sat on an executive committee of a bank and often the business being discussed was not my responsibility, but I felt that I should understand what was going on and what the discussion was about because I was collectively responsible as a member of that committee. What worries me is that if it is very clear that the individual manager is going to be responsible, that effectively diminishes the responsibilities of the other members of the committee. It also diminishes the ability of the chief executive to change the responsibilities of his senior team based on his judgment, because it would be too complicated as each department or division would effectively be under the supervision of people outside the chief executive’s control. Can the Minister comment on these points as well?

17:30

[Lord Flight]

My Lords, I support the points made by the noble Viscount, Lord Trenchard. It is entirely understandable that people in this country are furious when they see individuals whom they blame for the system blowing up getting off scot free. On that front there are two points. First, if monetary policy is too lax for a long time, it will almost inevitably lead to bad lending by banks because, in some sense, banks are an automatic conduit of money. That really is what happened in the UK—because of the 2% inflation target, the Bank of England did not acknowledge that there was much higher inflation here off-set by imported deflation. We had easy money for far too long that filtered its way through into bad lending by banks. I remind the House that it was not investment banks but one or other form of bad lending—old-fashioned bad lending such as HBOS or buying CDO instruments from the US. It is not just individuals when a banking system blows up but the background as well.

Secondly, I blame greatly the useless and negligent regulators as well. Why did they not spot the problem? Why should they get off scot free as well? They have a job. Their task is to keep an eye on and make sure that the banking system is safe. If they fail completely in the discharging of that, to some extent they are as guilty as reckless people running banks badly. There is certainly an argument for saying that it would be desirable to bring in draconian powers against the executives of banks, harmonised internationally. I would be more comfortable if the same sort of measures applied in the US, Hong Kong and continental Europe.

I want also to raise a slightly quirky point relating to anti money-laundering since anti money-laundering amendments have arisen. It seems to me that in some ways anti money-laundering has gone slightly over the top. Noble Lords may be aware that, following the large fine given by the US authorities to HSBC, HSBC has simply fired all its US clients in the UK. It has closed their accounts. It has said it no longer wants the risk of dealing with Americans. This has caused huge inconvenience to lots of Americans living in London. Going forward, I can see if other dangers present themselves to other banks, they may decide that it is not worth having a particular category of client.

FATF, which as far as I can see is an unaccountable body laying down anti money-laundering rules, decided to blacklist a number of countries it felt were not practising anti money-laundering measures adequately. This led to some 30 embassies in the UK finding their bank accounts were likewise closed by HSBC. Some of the embassies found it virtually impossible to obtain a new bank account. If there was a branch of a bank from their country in this country they could go there but most other banks would not take them on as a client because they had been blacklisted by FATF. That again seemed slightly to fly in the face of embassies being approved by the Foreign and Commonwealth Office. Its reaction to this matter, I gather, was to express regret but not to do anything. I raised this with Andrew Bailey from the PRA. He felt it was extremely wrong and was quite surprised it had happened. This is a slightly different issue from where we are in the Bill but I would just say to the Minister that the Treasury needs to keep a little watch on what is going on in the anti money-laundering territory and its knock-on effects. I certainly think it is time that FATF, which is the top body laying down all this, were accountable to somebody. Both the Treasury and the Foreign and Commonwealth Office effectively said to me that they could not interfere with FATF—whatever it says goes.

[Lord Brennan (Lab)]

My Lords, I speak to the amendments in my name and in those of the noble Lords, Lord McFall and Lord Watson. I declare an interest as chairman of Global Financial Integrity. It is a Washington-based think tank whose purpose is to promote measures designed to limit and eventually eradicate illicit financial flows around the world, in particular those from developing countries, which presently run into hundreds of millions of dollars. It is thought that they exceed the amount of aid that developed countries contribute to the countries out of which that money comes. I have experience as non-executive director of a banking operation and have advised banks professionally.

Money-laundering, the proceeds of crime and the results of fraud represent a composite picture of international dishonesty, which has been and will continue to be practised wherever those responsible can find a banking system through which to channel the money. This is a fact of life. Many of our banks have such an international scope that they are a ready target for people wanting to use them for these illicit activities.

I invite the noble Lord, Lord Flight, if he has not already read it, to look at the congressional report on HSBC. The chairman of HSBC described it as a very sobering read and concluded that bankers had lost the right to self-determination on such issues. When we come to the part of the Bill that controls how and what people in banks do so that this kind of dishonesty is not furthered, we should err on the side of authority. I invite those advising the Minister to avoid the legislative naivety I dealt with at Second Reading, or in months to come the Bill will result in many hours of detailed inquiry and comment by lawyers advising banks. The first rule the lawyers will pick up is that that which is not stated in this Bill was neither meant nor intended. The Bill, if it is to restore public trust and avoid the kind of risks I have described in dishonest money transfers, should err on the side of authority.

The amendments I am about to speak to were produced by independent counsel, invited to produce amendments that sought to meet the concerns I and my noble friends have. We played no part in the drafting of these amendments, so let us have a care. If a professional advising us as to the amendments produces this level of authority as being required, what do you think those seeking to protect themselves against it will do in terms of legal expense and inquiry?

My final point before I turn to the amendments in detail is by way of introduction. The noble Lord, Lord Flight, in his usual reserved manner, said, “What about the reckless disregard of regulators in the past of their responsibilities?”. I do not think that we are entitled to repose into the hands of future regulators a degree of confidence that past experience shows would be misplaced. They should be told the scope of how they are to do things and what they are to do because we are talking about bank involvement in criminality.

Amendments 46A and 46B go to the question of strengthening the senior management function—the senior person’s regime—so as to include, with precision and clarity, an obligation on the banking system specifically to deal with the risk of money-laundering and of dealing with the proceeds of crime or the results of fraud. There should be no legislative fault in precision and clarity when dealing with criminality.

The amendments seek to ensure that the definition of “senior management function” should be seen to include those areas that I have just mentioned in terms of compliance. Those in banking must comply and must avoid the risk of non-compliance. The FCA, in specifying senior management functions, will require them to do things, including a minimum threshold for sums to be regulated. Is this too much? It was not thought to be too much in the United States, which has a far bigger banking system than ours. Would it run a risk of damaging our banks? It has not in the United States. It is ours that have suffered the penalties, not theirs. These amendments seek to establish a norm—not some Anglo-Saxon aberration—for proper cross-border behaviour in the banking world.

Your Lordships will note that Amendment 46A uses the words, in proposed new paragraph (b)(iii),

“related to or resulting from”.

In other words, it gives a broad reach to responsibility. Amendment 46B makes specific reference to the statutes that have to be borne in mind. It is hardly a criticism to be met to say that people must obey the criminal law—of course they must. This statute—the Bill and the amendment—remind people in statutory wording of their civic obligation, as well as their professional obligation, to obey the law. It is designed to stop the defence of, “Nobody told me. It was not my job”. The two amendments are straightforward and build on the Government’s well deserved intention to improve the law.

17:44

Turning to the issue of senior persons, I was surprised that the Minister stated that Amendment 47A might result in the unintended consequence of drawing into the line of fire junior staff when a senior should be responsible. In fact, the risk we asked counsel to deal with was exactly the opposite—the risk of senior people using juniors as an escape route by a system they devised. That is exactly the opposite of the interpretation put upon it by the Minister.

The amendment is designed to avoid the money-laundering reporting officer being the only one to carry the can: it includes his superiors as well, hence the words in the amendment,

“all persons responsible for management of persons”.

We do not want the courts littered with trials about superior orders and tuppeny-ha’penny defences based on statutorily loose language.

I turn, finally, to the question of standards of behaviour and rules of conduct. The amendments concerned are Amendments 53A, 53B and 54A. The point I wish to make by way of introduction—again meeting something that was said by the noble Viscount, Lord Trenchard, and the noble Lord, Lord Flight—is that in London we are dealing with international banking. We are inviting rules to be observed by not only British citizens but foreign workers in our banks, who are expected to observe and apply our laws. Under these amendments the FCA and the PRA must make appropriate rules in relation to statutory responsibilities. The rules must be designed to avoid the risk of participation in such crime.

I have taken some time on this because out there, despite all the technical stuff we talk about in certain debates, the one thing the public will expect out of the Bill is that it will contain provisions designed to restore trust, domestically and internationally, in our banking system. To suggest that these amendments are unnecessary is naivety. They are necessary. There is no loss to their intent by inclusion but there is much to be gained. I ask the Committee to look at these amendments with favour.

[Lord McFall of Alcluith]

My Lords, it is a pleasure to follow the noble Lord, Lord Brennan, and to have my name on these amendments. At Second Reading, I mentioned that the Parliamentary Commission on Banking Standards was charged with looking at culture and standards. We found a culture that was rotten and standards that were abysmally low. That applies particularly in the area of senior management and we need to ensure that the individuals, the organisations and the regulator do something about it.

My concern is that these amendments might not fully deal with the anti money-laundering failings that we have seen. I looked to the Economist, courtesy of the December 2012 issue, to recap on what we have seen in terms of egregious examples. The biggest money-laundering settlement with the US authorities was made by HSBC, which settled for $1,921,000,000—about $2 billion. Its money-laundering activities involved countries such as Cuba, Iran, Libya, Mexico, Myanmar and Sudan. Standard Chartered’s settlement was $667 million and the countries with which it was involved were Iran, Libya, Myanmar and Sudan. RBS had a $500 million settlement and it was involved with Iran and Libya. Lloyds Banking Group’s was $350 million and was involved with Iran and Sudan. The settlement for Barclays was $298 million and the countries were Cuba, Iran, Myanmar and Sudan. These were all UK-based companies, so our integrity as a financial centre in London is at risk as a result of the failings that we have seen.

The issue of HSBC is important because it took over a bank in Mexico. The group chief executive, Stuart Gulliver, and the group chairman, Douglas Flint, came before the Parliamentary Commission on Banking Standards. I asked Stuart Gulliver question 3777:

“Mr Gulliver, after acquiring the Mexican bank, it was known right up to board level that the bank had few, if any, money laundering controls, and that the affiliate did not meet group standards. So why was it allowed to continue correspondent banking, when it was known that it didn’t meet group standards? Was it wilful ignorance or were the systems not in place for that?”.

Stuart Gulliver said:

“I think the answer lies—I think the Commission has seen this in a number of instances—with culture. The culture failures were at two levels. We bought a bank in Mexico that we bought cheaply because it was in distress. That bank, as you can see from the documentation, clearly had inadequate anti-money laundering systems. We ourselves were too slow to put in place anti-money laundering systems that would be up to the standards we would all expect.”

I intervened and said:

“But you knew from day one of acquiring the bank that there were problems”.

Stuart Gulliver replied that, yes, he knew from day one; so a global bank with a reputation in London acquired a bank in Mexico, knowing from day one that it did not have adequate anti money-laundering facilities.

Then I quoted the head of group compliance, David Bagley, who had said that his,

“‘mandate was limited to advising, recommending, and reporting. My job was not—and I did not have the authority, resources, support or infrastructure—to ensure that all of these global affiliates followed the Group’s compliance standards. Rather, final authority and decision-making rested with local line management in each affiliate’”.

I continued my questioning:

“In October 2002, a month before HSBC acquired the bank in Mexico, David Bagley said in an e-mail: ‘There is no recognisable compliance or money laundering function’. Is that not amazing?”.

Was that not amazing for a global bank with the reputation it had? My point to the Minister is that he should not accept the words of the banks, because one of the things that the Parliamentary Commission on Banking Standards was tired of hearing was executives saying: “These were the problems that existed in the past. We have sorted them out. There are new people in place; ergo the problem will not exist”. However, at the Parliamentary Commission on Banking Standards, we were seeing examples every month of these egregious behaviours, so we have to ensure that both the regulator and the companies have the necessary authority and that the regulator enforces that.

On the issue of HSBC and the Mexican drugs, these are not victimless crimes. To put it into context, more than 35,000 people died at the hands of Mexican drug gangs at the time HSBC was involved in this money-laundering operation. The chair of the Senate Investigations Subcommittee, when referring to the widespread anti money-laundering failures of HSBC, described its culture as “perversely polluted”.

The Financial Conduct Authority itself confirmed how widespread the problem was. In 2011, it published a review into how banks deal with situations of high money risks. It found that 75% of banks were not taking adequate measures to ensure that they met their legal obligations and that more than a third were willing to accept business with a high degree of money-laundering risk if they thought they could get away with it. Based on that 2011 review and other findings, the FCA concluded that for UK banks,

“the level of anti-money laundering compliance is a serious concern … the weaknesses we see in firms’ dealings with high-risk customers is a serious and persistent problem”.

As the Parliamentary Commission on Banking Standards noted in its final report, by failing to prevent criminals from abusing our financial system, the banks are compromising the integrity of this sector and our economy as a whole. By failing to prevent money- laundering, banks are making the UK vulnerable to tax evaders, drug smugglers, arms traffickers and corrupt politicians laundering their ill gotten gains. The potential for a major British bank losing its licence in a major market would have huge ramifications for the UK economy. HSBC came perilously close to losing its licence. The Justice Department was of a mind to take its licence away and we all know that there was involvement from the Foreign Office and elsewhere to ensure that that licence was not indeed taken away. This issue is hugely serious for the integrity of our banks and for the economy.

The Parliamentary Commission on Banking Standards highlighted a number of general causes for the abysmal standards in the UK banking sector. Two of the most important ones were the lack of personal responsibility for senior bankers and poor enforcement of legal obligations by the regulators. I well remember that when Tracey McDermott, the director of enforcement, came before the commission we had another egregious example—one of the star traders of UBS losing billions of pounds. When we asked her what went wrong, she said, “We investigated the bank and the trail went cold”. The trail went cold because there was no list of individuals responsible for particular issues in the bank.

One of the things we would like to see is the responsibility flipped to individual bankers. Time and time again, as was mentioned earlier, we had senior bankers with PPI issues coming before us and saying, “We knew nothing about it”. It was a no-see, no-tell policy. They were evading the responsibility and they were evading being honest with the Parliamentary Commission on Banking Standards because if they had been honest with us, they would have been culpable.

Since we have had the Parliamentary Commission on Banking Standards, I have had a number of communications from one or two of the executives who came before us, asking whether I would meet them so they could explain how they went about their business and tell me about the restrictions placed on them within the organisations themselves. They wanted to demonstrate that they had personal integrity, notwithstanding the fact that everything—the whole ship—went down in terms of the organisation. I did see them.

This issue of a no-see, no-tell policy is really important. The noble Lord, Lord Turnbull, made the point about a handover note. It would seem to be a minor point, but this is hugely important. The Government must ensure that they get that right by allowing the regulator to lay down—“may lay down” are the words in the legislation—elements of the conduct of business. There has to be a real attempt here to ensure that full responsibility is taken by the senior executives.

It was clear that even when personal liability could be established the regulator rarely took up the case and when it did the punishment for individuals was non-existent or weak. I mentioned that the regulator was captured, cowed and conned by the industry. We need to ensure that the regulator has a spine in future to ensure that the organisations take individual responsibility and, if they do not, if it knows who is responsible, make its enforcement division very strict on the matter.

I suggest that, given the poor record of regulation, it is incumbent on us in Parliament to give the clearest steer possible, so that the commission’s recommendations are not diluted during the second, regulator-led stage of implementation. There needs to be firmness from both the regulator and Parliament. I hope that the amendments indicate to the Government that the anti money-laundering area is one that they should look at again and that they should come back before Report stage with something meaningful for us to address.

18:00

[Lord Lawson of Blaby]

My Lords, I do not want to go into the issue of money-laundering; we have had a good debate on it and I am sure that my noble friend may have some further observations to make in the light of what has been said.

I endorse very strongly what the noble Lord, Lord Turnbull, had to say when speaking to this group of amendments. The Government are indeed to be commended on this series of amendments. However, as the noble Lord, Lord Turnbull, pointed out, in certain important ways, they do not go far enough. There is also the critical question of the definition of a bank in government Amendment 55. We would like to hear very clearly what is the definition of a bank and we would like the Government to look again at the points that the noble Lord, Lord Turnbull, my fellow commissioner on the banking commission, made. Although the Government have made a huge advance, there are still important areas where they have not gone far enough.

I should also like to address what lies behind this and what my noble friends Lord Trenchard and Lord Flight said in casting doubt on the whole drift of the provision. We have sought to say that there must be personal responsibility on members of the senior management in banks. It is not good enough for there simply to be fines on banks when things have gone wrong and there has been culpability. What happens if there are fines on banks? Who bears the burden? It is the owners of the banks, the shareholders. The shareholders are the innocent victims here. There must be individual responsibility on the management where such behaviour can be demonstrated or where the management neglectfully failed to exercise responsibility.

As the noble Lords, Lord Turnbull and Lord McFall, said, in hearing evidence, the commission heard one of two things: either, “It wasn’t me; it was a collective board decision, so no individual is responsible”; or, “It wasn’t me; I had no idea what the traders in my bank were doing; it was all them”. Of course, we strongly suspected that the reason that they had no idea what the traders were doing was that they took great care not to know. The point is simple: if they did not know what the traders were doing, they were culpable. It is their business to know what their traders are doing. That will not wash either.

Then we have heard the excuse: “What about the regulators? The regulators were at fault”. So they were; that is beyond dispute. The Government have introduced a new system of regulation and supervision which they hope will be better than the one that preceded it. We will come to this later, but we have suggested ways in which that, in our judgment, needs to be further strengthened. That does not exculpate the bankers.

It has also been suggested that the Bank of England was pursuing an inappropriately cheap money policy and, therefore: “What were the bankers meant to do? It is the Bank of England’s fault”. I shall not detain the House by going into this now, but it is arguable whether the cheap money policy was wrong or right at the time. I think that you could make a very good case that it was appropriate at the time, but anyhow, whether it was wrong or right, it is no good a banker saying, “I couldn’t help making a bad loan. I couldn’t help taking excessive risks. I couldn’t help being reckless”. That is absurd and pathetic.

Of course, others were culpable. The auditors were culpable. They never raised a finger to warn the boards of the banks of the risks that they were running. Again, we all know that the ratings agencies were culpable. The ratings agencies made mistakes in calling rubbish derivatives triple-A. But at the end of the day, the buck stops with the bankers. It is their responsibility. That is what they are paid to do. It is their judgment that they are meant to exercise.

Finally, we were told, “Oh, there may be other jurisdictions, such as Hong Kong”, or wherever, “where standards are lower, so we cannot afford to have higher standards and more direct responsibility than in Hong Kong”. That is no good at all. The standards in the City of London should be the highest in the world. The whole thinking behind the commission on banking standards was that we wanted to clean up banking, not to destroy it, so that British banking can be even stronger and make an even greater contribution to the British economy than it has in the past. That is what we were about.

Personal responsibility is not the whole of the solution, but personal responsibility of the senior management is a vital and necessary element. Therefore, as I said, I commend the Government for having moved a long way in that direction, but a little more needs to be done, as the noble Lord, Lord Turnbull, pointed out.

[Lord Watson of Invergowrie (Lab)]

My Lords, I am proud to have my name associated with that of my noble friends Lord Brennan and Lord McFall in this group of amendments.

I certainly agree with much of what was said by the noble Lord, Lord Lawson, not least when he said that we have covered the question of money-laundering in some detail. Indeed we have, but I shall not apologise for reinforcing some of the points made and, I hope, finding one or two that have not been made. At its mildest, it is disappointing to hear the Minister say that the amendments are unnecessary and that what they are intended to achieve is largely covered in the Bill or in the government amendments

My noble friend Lord Brennan called that naivety. Yes it is; I would say that it is also complacent in the extreme. The examples given by my noble friend Lord McFall show that the current system for British banking is not working. The huge fines levied on HSBC and Standard Chartered by the US authorities showed that the US authorities do not think that British banking standards are high enough. I absolutely concur with the view of the noble Lord, Lord Lawson, that the standards of British banking should be the highest in the world. If that puts off some people from working in this country, so much the better.

It should be stressed that money-laundering regulations in the UK are designed to protect our financial system. That is primarily why they are there. Money-laundering is more widely defined in the UK than in several other jurisdictions, notably the USA and much of Europe. UK money-laundering offences are not limited to the proceeds of serious crimes, nor are there any monetary limits. Financial transactions need no money-laundering design or purpose for our laws to consider them a money-laundering offence. A money-laundering offence under existing legislation need not even involve money, since the money-laundering legislation covers assets of any description. The law applies to a person who by criminal conduct evades a liability such as a taxation liability, and that individual is deemed to have obtained a sum of money equal in value to the liability evaded. That is a very important point. Just a week ago HMRC announced that every year some £35 billion of taxes due in this country is not collected.

With that in mind, we should be careful about setting aside the idea that money-laundering is an issue. I suggest that it is very much an issue. My noble friends have rightly outlined a number of reasons why we really cannot afford to miss the opportunity the Bill provides to deal with failures in anti money-laundering compliance. Not only would that compromise the outstanding work and considerable efforts of the Parliamentary Commission on Banking Standards, it could have a tragic human cost. Some of the most vulnerable people in poor countries around the world suffer in many ways as a result of the effects of money-laundering.

I want to stress the matter of our own economy. The parliamentary commission rightly argued that good standards in the banking industry are important for not only the health of that sector, but the wider UK economy as a whole. Correspondingly, failures in standards jeopardise the health of our economy. That may seem self-evident, but surely the banking sector in this country has been responsible for enough damage to our economy in recent years.

It is vital that we take the opportunity to ensure that failures to comply with anti money-laundering laws and other financial regulations do not lead to any further damage. I suggest that there is a real risk of that, notwithstanding that, as was highlighted by the noble Lord, Lord Flight, HSBC has taken rather stringent measures as a result of being hauled over the coals in the US. If as a result some individuals have lost out or been inconvenienced, as he seemed to be suggesting, then that is regrettable. However, it is really pretty small beer compared to some of the issues involved in and the amounts affected by money-laundering throughout the world, often with the involvement of parts of the British banking sector.

When dealing with this issue it is important that we do not easily say that it is all right, that the legislation covers everything we need, and that there is no need for amendments such as these. In preparing for this part of our discussions this afternoon, I looked at the Bill in detail. I was able to find a total of eight separate pieces of legislation mentioned in the Bill, as it was originally published. Not once in the Bill did I find any mention of the words “anti money-laundering”, for a start. Nor did I find any mention at all of the three pieces of legislation—the Proceeds of Crime Act 2002, the Fraud Act 2006, or the Money Laundering Regulations 2007—in some of the amendments we are discussing. Apparently the Government do not think that there is any need to link, at least explicitly, those pieces of legislation with the Bill. That is a grave mistake.

My noble friend Lord Glasman came up with a phrase that struck a chord, certainly with me and I suspect also with other noble Lords: without incentives to virtue, you get incentives to vice. That is absolutely the case, and I very much hope that the Minister will reconsider what I believe to be his rather complacent position on these amendments.

[Baroness Noakes (Con)]

My Lords, for various reasons I have not yet had an opportunity to speak to the Bill. As this is my first appearance, I declare an interest as recorded in the register as a non-executive director of the Royal Bank of Scotland Group plc. I emphasise that what I am about to say represents my personal views, and in no way represents anything that I have been asked or encouraged to say by the Royal Bank of Scotland.

I want to comment on the group of amendments that the noble Lord, Lord Brennan, introduced when he raised the extremely important issue of anti money-laundering and the legislative provisions that he referred to, and on my noble friend Lord Newby’s comments about seeking to import specific references into this group of amendments. I should say that I support the intention of the amendments which the Government have brought forward to have a much enhanced set of standards and supervision for those taking management responsibilities within banks.

My concern about the amendments introduced by the noble Lord, Lord Brennan, is that by singling out one group of activities, however important, we might give the impression that a lot of other things are not as important. The schema at the moment is drafted quite generically. It will eventually leave a lot to the discretion of the regulators—which I think is right—so that they can operate it in an effective manner. However, by singling out the particular legislation that the noble Lord, Lord Watson of Invergowrie, referred to—the Fraud Act, the Proceeds of Crime Act and the Money Laundering Regulations—it seems to me that a lot of things are not said.

18:15

The noble Lord referred to lawyers immediately looking at what is said and what is not said in legislation. I therefore put it to him that after his amendments a number of important things would not be said in this legislation, which might lead people to think that they were not intended to be covered. For example, issues which are similar to money-laundering but which were not mentioned by the noble Lord’s amendments are terrorism financing offences and sanctions offences. These are very similar, and the banks operate very similar systems to deal with money-laundering and to stop unauthorised financial transactions with terrorists and those on sanctions lists. However, the noble Lord’s amendments do not cover these.

Stepping away from that, other potentially criminal activities would not be mentioned by the legislation after the noble Lord’s amendments. I single out the new offence which was introduced post-LIBOR, the offence of rate manipulation, for which I cannot remember the exact term. This would be another criminal activity which would not be mentioned by the Bill. Beyond that, there would be a lot of very important compliance and conduct issues that are managed by banks which would not be caught by any specific criminality, but nevertheless would have devastating consequences for individuals. Within the definition these could involve a serious risk of consequences to the authorised person or business interest of the United Kingdom, and therefore should be caught.

Banks must responsibly manage a whole range of conduct and compliance issues. My point is not that I am against trying to ensure that money-laundering is within the legislation. I am sure that money-laundering offences will be fully taken into account by the PRA when it implements the new regimes. My problem is that by mentioning them we have omitted to mention some other really important things which should definitely be covered.

[Baroness Liddell of Coatdyke]

My Lords, I found that to be a very interesting speech from the noble Baroness, Lady Noakes. She took up a point that I had been thinking about, but we come at the prevention of terrorism from a different point of view. I believe that with this legislation the prevention of terrorism interface would be through money-laundering. Certainly it could be wider than that in relation to sanctions regimes and so on, but the specific area of prevention of terrorism relates quite directly to the ability of organisations such as al-Qaeda to put money through the system, apparently cleanly. They hope—and are able to be fairly confident—that there would not be the rigorous review and analysis that there should be by sufficiently senior people within the banking system.

I do not have the knowledge and expertise of some of the excellent speeches that we have heard this afternoon, but I have an interest in legislating to prevent terrorism. It is a critical part of our banking system, and I am grateful to the noble Baroness for raising that. I hope that this is something that the Minister will look at.

The noble Viscount, Lord Trenchard, who I regret is not in his place, said something which I must admit prompted me to speak in support of the amendments of my noble friends. He spoke about the fact that we would seek to attract the best bankers, because they would be lured to places such as Singapore and Hong Kong and even increasingly to Shanghai. If a banker is sufficiently venal that he or she would chase the biggest pound, when bankers are not exactly paid the national minimum wage, rather than seeking to operate in an environment of the utmost integrity, then frankly I am not all that sure that we would want them in the British banking system. We have the ability through this legislation to underline our position as the greatest financial services centre in the world. It is specifically because of the venal attitude that we have seen that this economy and economies around the world were almost brought down.

I hope that in looking at the anti money-laundering aspects which my noble friends have raised in their amendments, the Government will think again about this. I do not think that there is a vast chasm here, and I do not take the view of the noble Lord, Lord Flight, who I often agree with, that there is far too much anti money-laundering legislation. Yes, that legislation can be profoundly irritating when you come up against it. There are an awful lot of things in life now that are profoundly irritating, such as having to put your toothpaste into a plastic bag at the airport. However, we live with them because we know why we have to.

[Lord Flight]

I clearly did not make my point correctly. I was simply trying to say that I have seen reactions to anti money-laundering arrangements, namely HSBC sacking all its US clients and 26 embassies in the UK being blacklisted by the FATF and having problems getting bank accounts. By the way, 10 of those embassies belonged to members of the EU. It is right to focus on anti money-laundering for the reasons which noble Lords correctly pointed to, but people do not take account of the other side of the coin. What is happening, as I described—and it will increasingly happen—is that people who come from countries that have been FATF-blacklisted will find it impossible to get a bank account, although they may be completely innocent.

[Lord Eatwell]

My Lords, I have an amendment in this group and it may be for the convenience of the Committee if I speak to it now. Before doing so, I would like to make two comments about the discussion that has gone on so far. First, Amendment 55 in the name of the noble Lord, Lord Deighton, which includes the meaning of what is a bank, requires very careful exposition by the Minister, because if it says what it appears to say then it seriously undermines the whole discussion about the senior persons regime that we have been having up until now.

Secondly, on the amendments tabled by my noble friend Lord Brennan and his colleagues, it seems that it is incumbent on the Treasury between now and Report to produce a written report demonstrating the noble Lord’s claim that these amendments are unnecessary; showing that the current regime is fully in accord with the latest FATF principles; and therefore providing the comfort which my noble friend might seek if his amendments are indeed unnecessary. Perhaps the noble Lord could also take in some of the points made by the noble Baroness, Lady Noakes, as there are areas that the noble Baroness wants to be sure are equally well covered. Particularly with respect to the issues raised about anti money-laundering and prevention of terrorism principles, it is crucial, as those principles are conveyed into legislation, that we are absolutely clear—and the legislation is clear and explicit—on this matter.

Amendment 100, which is in my name and that of my noble friend Lord Tunnicliffe, proposes to introduce a licensing regime to apply to all approved persons. The noble Lord, Lord Newby, made the extraordinary remark that this would weaken what was elsewhere in the regime as set out in the Government’s amendments. However, I was heartened to hear the noble Lord, Lord Turnbull, use the word licence as I did, and to hear him quote almost word for word the specification of,

“minimum thresholds of competence … integrity, professional qualifications, continuous professional development”,

and so on, which is included in our amendment.

Amendment 100 would significantly strengthen the requirement for approved persons to be suitably qualified in this country, to be licensed and to face the possibility of having the licence removed. Doctors, teachers and lawyers all require some form of professional licence, so why not approved persons in banking? If the noble Lord really undertook to understand this amendment he would realise that it fits precisely with the goals of the commission and would significantly strengthen the quality of regulation and approval of those working in the banking sector in this country.

[Lord Desai]

My Lords, I support what my noble friend Lord Eatwell said and speak in relation to what the noble Lord, Lord Lawson, said. People who are supposed to be responsible for the conduct of, as it were, their inferiors in the bank sometimes do not understand what is happening below them. Certainly, in the case of Baring Brothers the management did not understand what Nick Leeson was doing. This is a matter of competence. I very strongly support this amendment because we ought to have periodic examinations of people in charge of banks, and see whether they pass those examinations, because the profession is changing and they are way behind a changing business.

[Lord Phillips of Sudbury]

My Lords, I support very much what the noble Lord, Lord Eatwell, has just said. We need a clear and authoritative report from my noble friend the Minister as to who is right between the noble Lord, Lord Brennan, who is a highly distinguished lawyer, and those who are advising my noble friend. If there is any doubt about the matter, I see virtue in the amendments put down in the names of the noble Lords, Lord Brennan, Lord McFall and Lord Watson of Invergowrie. I commend the organisations that have helped to craft those important amendments. There again, the noble Baroness, Lady Noakes, seems to make a strong point. If on second thoughts the Minister cannot assure us that the amendment of the noble Lord, Lord Brennan, is superfluous, one would want him to assure the House that the noble Baroness’s concern is superfluous.

[Lord Newby]

My Lords, perhaps I may start by dealing with the three points on which the noble Lord, Lord Turnbull, sought clarification. The first was on the definition of “bank” for the purposes of these amendments. The regime will apply to all UK institutions that have permission to take deposits. That covers ring-fenced banks, other banks, building societies, credit unions and some wholesale deposit takers, but it does not cover things which in popular parlance are called banks but which do not take deposits.

[Lord Turnbull]

If a bank divides itself under the new regime into a ring-fenced bank which takes deposits and puts its investment activities—derivatives, underwriting and proprietary trading—into a non-ring-fenced bank which does not take deposits, does it mean that that mass of activity will not be covered by the regime? Much of the malefaction took place in that area.

[Lord Newby]

My Lords, I repeat: it is limited to banks that take deposits, because the view is that they are of a different order of significance in the system. I think that we have a difference of view.

[Lord Turnbull]

The question then becomes, “Should it be those areas?”, and a question of whether the Minister will take this back to the Treasury and come up with a scheme that includes them. I do not think it will be understood that the people supervising some of the activities that I mentioned are not covered by it. We are actually weakening the regime.

18:29

[Lord Newby]

I will take it back to the Treasury, but I want the noble Lord to be in no doubt as to what the Government are currently proposing.

[Lord Lawson of Blaby]

May I reinforce what others have said? I am horrified by the Minister’s explanation. He must take it back to the Treasury and get the Treasury to think again. I refresh his memory, for example, about the evidence that we took from UBS. Not only was it culpable to an extraordinary degree in the LIBOR scandal but its top management also said that it knew nothing about what its traders were doing. This was in spite of the fact that when it had its capital-raising exercise, it presented to all the funds that its great profit centre was trading in LIBOR derivatives. Then it said, “We know nothing about it”. This made it immensely culpable. The Minister is saying that if you had a bank that was not taking retail deposits but was doing just that, there would be no individual responsibility at all under this Bill. I am afraid that he must look at that again.

[Lord Eatwell]

I would like to reinforce the position of the official Opposition on this. We are totally behind what the noble Lords, Lord Lawson and Lord Turnbull, have said. It is disgraceful to suggest that investment banks that are not deposit-taking but offer a wide range of financial services should not come under this senior persons regime.

[Baroness Noakes]

Was the Minister talking about retail deposits, as I believe my noble friend Lord Lawson has interpreted him saying, or, as the legislation seems to me to say, about deposit-taking more widely? Deposit-taking is not confined to retail banking on ring-fenced operations. Deposit-taking occurs across the whole range of banking activities, as far as I am aware. Will he clarify to what kinds of activity he intend this to apply?

[Lord Newby]

The definition relates to deposit-taking, retail and wholesale.

[Lord Flight]

Could I add my support? It seems to me that it is in investment banking territory where there is the greatest scope and where there has been the most inappropriate behaviour. It was Lehmans that nearly brought the whole system down. Part of the intent of the ring-fence is that what is in it is much simpler banking. The whole argument does not stand up unless investment banks are very much covered by the new regime.

[Lord Eatwell]

As clarification, given what the Minister has said about wholesale deposits, if there was an organisation providing banking services on a fee-based basis, would it be alone? Would it be exempt?

[Lord Newby]

My Lords, unless it was taking deposits it would be exempt under the amendments as they stand. It is fair to say that I have heard what the House has said and I will relay it with all force to my colleagues in the Treasury, who will not have had the privilege to hear it directly.

[Lord McFall of Alcluith]

It would be easy to put a note in the Library about which institutions will be affected and which will not, so that we can see for ourselves and there is no misinterpretation when we look at this further on Report.

[Lord Newby]

I am not sure that I can undertake to give a comprehensive list, but I am sure that I can undertake that we would explain which named organisations fall on both sides of that definition.

The next point made by the noble Lord, Lord Turnbull, was about the licensing regime. He made a common point about “may” as opposed to “must”, something that we debate at huge length. There is no doubt that there will be not a licensing regime in his terms, but there will be rules of conduct that will cover all employees for whom they are relevant. The intention is not for the cleaners to be covered by these rules. It is perfectly well understood with the PRA that it will not only produce the rules but set out the scope of which employees will be covered by them.

The noble Lord asked about the handover note. Our view is that we do not need primary legislation to require handover notes. The regulators can require that in their rules, and I am sure that they plan to. When senior managers take on a new job, new statements of responsibilities are required so that there is absolute clarity on what the senior manager is responsible for. We see these as fulfilling the purpose that he had in mind, and which other people might colloquially think of as a handover note.

The noble Viscount, Lord Trenchard, raised the question about whether British banks would be at a disadvantage. I cannot really add to the comments of my noble friend Lord Lawson and others, other than to say that the Government believe that it is in the long-term interest not only of bank customers but of the City of London that the highest possible standards are followed here. If individual bankers feel that they do not want to operate to the highest possible standards, they should go somewhere else.

The noble Viscount, Lord Trenchard, and the noble Lord, Lord Flight, asked whether the senior management regime undermines collective responsibility. We do not think that it does. It ensures that individuals are held to account when things go wrong. It will not change the way in which decisions are taken in a collective manner.

The noble Lord, Lord Flight, raised a point that has been made a number of times: why did the regulatory system get away with it, and why has no action been taken? The answer is that the restructuring of the system was undertaken to try to ensure that we did not have the same problems again. The Government believe that that is how you stop the laxity of the past, and that we begin to instil a new culture by having different organisations, objectives and rules. The regulatory regime has not gone through this process unamended.

Moving on to the amendments introduced by the noble Lord, Lord Brennan, I assure him that there is no difference of view between him and other noble Lords who supported this amendment about the significance of money-laundering and the need for it to be tackled effectively, nor of the scale of it. The scale of money-laundering is very large, and the Government and the regulators are determined to cut it down.

I would like to make some points against the amendments and in response to some of the things that have been said. The most important point was that raised by the noble Baroness, Lady Noakes. The requirements for senior managers to stay within the law on money-laundering are no different from those to keep to the law in every other area where there is law. The noble Lord has a laudable interest in money-laundering while the noble Baroness is interested in anti-terrorism legislation. There may be an overlap, but they are distinct. Other noble Lords are interested in other things, where bankers have a legal responsibility to keep within the law. Singling out money-laundering, at a point where it is not required in order to be covered by the legislation, serves no useful purpose and can be positively unhelpful. However, I am happy to take up the sensible suggestion from the noble Lord, Lord Eatwell, that we provide a letter of comfort, as it were, between now and Report to confirm that the regulator takes this extremely seriously, and that we begin to explain how the obligation under the law will be undertaken.

The noble Lord, Lord McFall, repeated that in the past the trail could go cold. The great thing about these provisions is that they deal explicitly with that. To say that the trail goes cold will no longer be a defence.

[Lord McFall of Alcluith]

The reason I said that is that Tracey McDermott, the present FCA director of enforcement, came before the committee and answered that question in all honesty. She said that what is needed is a chart of organisations to determine who is responsible for what and a handover document. That is at the start at the moment; it has not been fleshed out. That is the reason why I brought that point to the Minister.

[Lord Newby]

When this amendment is enacted, it will ensure that a senior manager will have his or her areas of responsibility explicitly set out on appointment and that he or she will be held responsible for everything that happens on their watch in that area. It will no longer be a defence to say, “The trail ran cold” or “Nobody told me about it”, as long as they might reasonably be expected to know about it. That is a killer point in respect of this amendment.

The noble Lord, Lord Watson, said that the Government are complacent, as HSBC has shown. It is in part because of the HSBC experience that this series of amendments has been introduced. We are confident that they will stop that happening again.

The noble Lord, Lord Eatwell, set out the arguments for a licensing regime. The Government believe that the code of conduct we are proposing, which will cover all those involved in banking activities, is a proportionate response to the need for the kind of principles followed by people on a day-to-day basis in the banking sector that the noble Lord wants covered by the licensing regime. We are confident that the Government will achieve that.

I hope that I have dealt with most of the points that were raised. I commend the amendment to the Committee.

Amendment 45 agreed.

Amendment 46

Moved by

[Lord Newby]

46: After Clause 12, insert the following new Clause—
“Senior management functions
After section 59 of FSMA 2000 insert—“59ZA Senior management functions
(1) This section has effect for determining whether a function is for the purposes of section 59(6) and (6B) a senior management function.
(2) A function is a “senior management function”, in relation to the carrying on of a regulated activity by an authorised person, if—
(a) the function will require the person performing it to be responsible for managing one or more aspects of the authorised person’s affairs, so far as relating to the activity, and(b) those aspects involve, or might involve, a risk of serious consequences—(i) for the authorised person, or(ii) for business or other interests in the United Kingdom.(3) In subsection (2)(a) the reference to managing one or more aspects of an authorised person’s affairs includes a reference to taking decisions, or participating in the taking of decisions, about how one or more aspects of those affairs should be carried on.””

[Lord Newby]

My Lords, I beg to move.

Amendment 46A (to Amendment 46)

Tabled by

[Lord Brennan]

46A: After Clause 12, line 13, leave out paragraph (b) and insert—
“(b) those aspects involve, or might involve, a risk of—(i) serious consequences for the authorised person, or(ii) serious consequences for business or other interests in the United Kingdom, or(iii) conduct or omissions by or on behalf of an authorised person related to or resulting from the authorised person transacting with criminal property for its benefit or for the benefit on behalf of other persons.”

[Lord Brennan]

My Lords, I am grateful to the Minister for telling us that he will write in due course about the matters that I raised. If the Committee will forgive me for using a graceless Americanism, we are not talking about legislative refinement—this is hardball. It is serious stuff out there in the commercial world.

I reassure the noble Baroness, Lady Noakes, that I have assumed that money-laundering has its technical meaning, which is using a bank to convert illicit money into a licit flow, which would include tourism and so on, but if necessary that can be dealt with by way of a bigger list in due course.

Amendment 46A (to Amendment 46) not moved.

Amendment 46B (to Amendment 46) not moved.

Amendment 46 agreed.

Amendment 47

Moved by

[Lord Newby]

47: After Clause 12, insert the following new Clause—
“Statements of responsibilities
(1) Section 60 of FSMA 2000 (applications for approval) is amended as follows.
(2) After subsection (2) insert—
“(2A) If—
(a) the application is for the approval of a person to perform a designated senior management function, and(b) the authorised person concerned is a bank,the appropriate regulator must require the application to contain, or be accompanied by, a statement setting out the aspects of the affairs of the authorised person concerned which it is intended that the person will be responsible for managing in performing the function.(a)The administrator must obtain the approval of the Bank of England to any proposals under sub-para. (1).(b)Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to the objective in section (Objective of FMI administration) of this Act.(c)Ignore sub-para. (3)(b).(a)Before making an application in reliance on this paragraph the FMI administrator must give notice to the Bank of England, which is to be entitled to participate in the proceedings.(b)In making directions the court must have regard to the objective in section (Objective of FMI administration) of this Act.(a)Ignore sub-paras. (1) and (3).(b)The Bank of England may apply to the court for the variation or revocation of any directions given by the court.()“(2) Where a company is in FMI administration, a creditor or member of the company may apply to the court claiming that the FMI administrator is conducting himself or herself in a manner preventing the achievement of the objective of the FMI administration as quickly and efficiently as is reasonably practicable.”()“(1) On an application made by a person mentioned in sub-paragraph (2), the court may provide for the appointment of an FMI administrator of a company to cease to have effect from a specified time.()(2) The persons who may apply to the court under sub-paragraph (1) are— ()(a) the Bank of England;()(b) with the consent of the Bank, the FMI administrator.”(a) Para. 91(1) applies as if the only person who could make an application were the Bank of England.(b) Ignore para. 91(2).(a) in accordance with directions of the Bank of England, and(b) if the Bank is satisfied that they will not prejudice the objective in section (Objective of FMI administration) of this Act.(a) In considering making an order in reliance on section 241 the court must have regard to the objective in section (Objective of FMI administration) of this Act.(b)Ignore subsections (2A)(a) and (3) to (3C).(2B) A statement provided under subsection (2A) is known as a “statement of responsibilities”.
(2C) In subsection (2A) “designated senior management function” means a function designated as a senior management function under section 59(6B) or (6C).”
(3) After subsection (6) insert—
“(6A) Subsection (6) applies to references to a bank as it applies to references to the authorised person concerned.””

[Lord Newby]

My Lords, I beg to move.

Amendment 47A (to Amendment 47) not moved.

Amendment 47 agreed.

Amendments 48 to 52

Moved by

[Lord Newby]

48: After Clause 12, insert the following new Clause—
“Power to give approval subject to conditions or for limited period
(1) Section 61 of FSMA 2000 (determination of applications) is amended as follows.
(2) For subsection (1) substitute—
“(1) The regulator to which an application for approval is made under section 60 may grant the application only if—
(a) it is satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates, or(b) in a case where the application is for approval to perform a designated senior management function in relation to the carrying on of a regulated activity by a bank (a “bank-related senior management application”), it is satisfied that the condition in paragraph (a) will be met if the application is granted subject to one or more conditions (as to which, see subsection (2B)).”(3) In subsection (2), for “deciding that question” substitute “determining the application”.
(4) After subsection (2A) insert—
“(2B) The regulator to which a bank-related senior management application is made under section 60 may in particular—
(a) grant the application subject to any conditions that the regulator considers appropriate, and(b) grant the application so as to give approval only for a limited period.(2C) A regulator may exercise the power under paragraph (a) or (b) of subsection (2B) only if—
(a) where the regulator is the FCA, it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives, and (b) where the regulator is the PRA, it appears to the PRA that it is desirable to do so in order to advance any of its objectives.(2D) Consent given by the FCA for the granting of the application may be conditional on the manner in which the PRA exercises its power under subsection (2B).”
(5) After subsection (3) insert—
“(3ZA) In the case of a bank-related senior management application, the reference in subsection (3)(a) to granting the application is a reference to granting it without imposing conditions or limiting the period for which the approval has effect.”
(6) After subsection (5) insert—
“(6) In this section—
(a) “designated senior management function” means a function designated as a senior management function under section 59(6B) or (6C);(b) any reference to a bank includes a reference to a person who has applied for permission under Part 4A and will be a bank if permission is given.”(7) In section 62 of FSMA 2000 (applications for approval: procedure and right to refer to Tribunal)—
(a) in subsection (2), after “the application” insert “, or to grant the application subject to conditions or for a limited period (or both)”;(b) in subsection (3), after “the application” insert “, or to grant the application subject to conditions or for a limited period (or both)”;(c) in subsection (4), after “the application” insert “, or to grant the application subject to conditions or for a limited period (or both)”.”

49: After Clause 12, insert the following new Clause—
“Changes in responsibilities of senior managers
After section 62 of FSMA 2000 insert—“62A Changes in responsibilities of senior managers
(1) This section applies where—
(a) an authorised person has made an application to the appropriate regulator for approval under section 59 for a person to perform a designated senior management function,(b) the application contained, or was accompanied by, a statement of responsibilities under section 60(2A), and(c) the application has been granted.(2) If, since the granting of the application, there has been any significant change in the aspects of the authorised person’s affairs which the person is responsible for managing in performing the function, the authorised person must provide the appropriate regulator with a revised statement of responsibilities.
(3) The appropriate regulator may require the authorised person—
(a) to provide information which the person is required to give under this section in such form as the appropriate regulator may direct, or(b) to verify such information in such a way as the appropriate regulator may direct.(4) In this section—
“the appropriate regulator” has the same meaning as in section 60;
“designated senior management function” means a function designated as a senior management function under section 59(6B) or (6C).””

50: After Clause 12, insert the following new Clause—
“Variation of approval
After section 63 of FSMA 2000 insert—“63ZA Variation of senior manager’s approval at request of bank
(1) Where an application for approval under section 59 is granted subject to conditions, the authorised person concerned may apply to the appropriate regulator to vary the approval by—
(a) varying a condition,(b) removing a condition, or(c) imposing a new condition.(2) “The appropriate regulator”—
(a) in the case of an application for variation of an approval in a way described in subsection (1)(a) or (b), means whichever of the FCA or the PRA imposed the condition concerned;(b) in the case of an application for variation of an approval in the way described in subsection (1)(c), means the regulator who gave the approval.(3) The PRA must consult the FCA before determining an application under this section, unless the application relates to the variation or removal of a condition which was imposed by the PRA in exercise of its power under section 63ZB.
(4) The regulator to which an application is made under this section must, before the end of the period for consideration, determine whether—
(a) to grant the application; or(b) to give a warning notice under section 62(2).(5) “The period for consideration” means the period of 3 months beginning with the date on which the regulator receives the application.
(6) The FCA may refuse an application under this section if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
(7) The PRA may refuse an application under this section if it appears to the PRA that it is desirable to do so in order to advance any of its objectives.
(8) The following provisions apply to an application made under this section for variation of an approval as they apply to an application for approval made under section 60—
(none) section 60(2) to (8),(none) section 61(4) and (5),(none) section 62.63ZB Variation of senior manager’s approval on initiative of regulator
(1) The FCA may vary an approval under section 59 given by the FCA or the PRA for the performance of a designated senior management function in relation to the carrying on of a regulated activity by a bank if the FCA considers that it is desirable to do so in order to advance one or more of its operational objectives.
(2) The PRA may vary an approval under section 59 for the performance of a designated senior management function in relation to the carrying on of a regulated activity by a bank if—
(a) either—(i) the PRA gave the approval, or(ii) the FCA gave the approval and the bank is a PRA-authorised person, and(b) the PRA considers that it is desirable to do so in order to advance any of its objectives.(3) A regulator may vary an approval by—
(a) imposing a condition,(b) varying a condition,(c) removing a condition, or(d) limiting the period for which the approval is to have effect.(4) Before one regulator varies an approval given by the other regulator, it must consult the other regulator.
(5) In this section “designated senior management function” means a function designated as a senior management function under section 59(6B) or (6C).
63ZC Exercise of power under section 63ZB: procedure
(1) This section applies to an exercise, by either regulator, of the power to vary an approval under section 63ZB.
(2) A variation takes effect—
(a) immediately, if the notice given under subsection (4) states that that is the case,(b) on such date as is specified in the notice, or(c) if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.(3) A variation may be expressed to take effect immediately (or on a specified date) only if the regulator concerned, having regard to the ground on which it is exercising the power to vary, reasonably considers that it is necessary for the variation to take effect immediately (or on that date).
(4) If either regulator proposes to vary an approval or varies an approval with immediate effect, it must give each of the interested parties written notice.
(5) The notice must—
(a) give details of the variation,(b) state the regulator’s reasons for the variation,(c) inform the interested parties that each of them may make representations to the regulator within such period as may be specified in the notice (whether or not any of the interested parties has referred the matter to the Tribunal),(d) inform the interested parties of when the variation takes effect, and(e) inform the interested parties of the right of each of them to refer the matter to the Tribunal.(6) “The interested parties”, in relation to an approval, are—
(a) the person on whose application it was given (“A”),(b) the person in respect of whom it was given (“B”), and(c) the person by whom B’s services are retained, if not A.(7) The regulator giving the notice may extend the period allowed under the notice for making representations.
(8) If having considered the representations made by the interested parties, the regulator decides—
(a) to vary the approval, or(b) if the variation has taken effect, not to rescind it,it must give each of the interested parties written notice.(a) The administrator must obtain the approval of the Bank of England to any proposals under sub-para. (1).(b) Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to the objective in section (Objective of FMI administration) of this Act.(c) Ignore sub-para. (3)(b).(a) Before making an application in reliance on this paragraph the FMI administrator must give notice to the Bank of England, which is to be entitled to participate in the proceedings.(b) In making directions the court must have regard to the objective in section (Objective of FMI administration) of this Act.(a) Ignore sub-paras. (1) and (3).(b) The Bank of England may apply to the court for the variation or revocation of any directions given by the court.()“(2) Where a company is in FMI administration, a creditor or member of the company may apply to the court claiming that the FMI administrator is conducting himself or herself in a manner preventing the achievement of the objective of the FMI administration as quickly and efficiently as is reasonably practicable.” ()“(1) On an application made by a person mentioned in sub-paragraph (2), the court may provide for the appointment of an FMI administrator of a company to cease to have effect from a specified time.()(2) The persons who may apply to the court under sub-paragraph (1) are—()(a) the Bank of England;()(b) with the consent of the Bank, the FMI administrator.”(a) Para. 91(1) applies as if the only person who could make an application were the Bank of England.(b) Ignore para. 91(2).(a) in accordance with directions of the Bank of England, and(b) if the Bank is satisfied that they will not prejudice the objective in section (Objective of FMI administration) of this Act.(a) In considering making an order in reliance on section 241 the court must have regard to the objective in section (Objective of FMI administration) of this Act.(b) Ignore subsections (2A)(a) and (3) to (3C).(9) If having considered the representations made by the interested parties, the regulator decides—
(a) not to vary the approval, (b) to vary the approval in a different way, or(c) if the variation has taken effect, to rescind it,it must give each of the interested parties written notice.(a) The administrator must obtain the approval of the Bank of England to any proposals under sub-para. (1).(b) Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to the objective in section (Objective of FMI administration) of this Act.(c) Ignore sub-para. (3)(b).(a) Before making an application in reliance on this paragraph the FMI administrator must give notice to the Bank of England, which is to be entitled to participate in the proceedings.(b) In making directions the court must have regard to the objective in section (Objective of FMI administration) of this Act.(a) Ignore sub-paras. (1) and (3).(b) The Bank of England may apply to the court for the variation or revocation of any directions given by the court.()“(2) Where a company is in FMI administration, a creditor or member of the company may apply to the court claiming that the FMI administrator is conducting himself or herself in a manner preventing the achievement of the objective of the FMI administration as quickly and efficiently as is reasonably practicable.”()“(1) On an application made by a person mentioned in sub-paragraph (2), the court may provide for the appointment of an FMI administrator of a company to cease to have effect from a specified time.()(2) The persons who may apply to the court under sub-paragraph (1) are—()(a) the Bank of England;()(b) with the consent of the Bank, the FMI administrator.”(a) Para. 91(1) applies as if the only person who could make an application were the Bank of England. (b) Ignore para. 91(2).(a) in accordance with directions of the Bank of England, and(b) if the Bank is satisfied that they will not prejudice the objective in section (Objective of FMI administration) of this Act.(a) In considering making an order in reliance on section 241 the court must have regard to the objective in section (Objective of FMI administration) of this Act.(b) Ignore subsections (2A)(a) and (3) to (3C).(10) A notice under subsection (8) must inform the interested parties of the right of each of them to refer the matter to the Tribunal.
(11) A notice under subsection (9)(b) must comply with subsection (5).
(12) If a notice informs the interested parties of the right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(13) For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
(14) “Approval” means an approval under section 59.””

51: After Clause 12, insert the following new Clause—
“Statement of policy
After section 63ZC of FSMA 2000 (inserted by section (Variation of approval) above) insert—“63ZD  Statement of policy relating to conditional approval and variation
(1) Each regulator must prepare and issue a statement of its policy with respect to—
(a) its giving of approval under section 59 subject to conditions or for a limited period only, and(b) its variation under section 63ZA or 63ZB of an approval given under section 59.(2) A regulator may at any time alter or replace a statement issued by it under this section.
(3) If a statement issued under this section is altered or replaced by a regulator, the regulator must issue the altered or replacement statement.
(4) A statement issued under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(5) A regulator may charge a reasonable fee for providing a person with a copy of a statement published under this section.
(6) A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
63ZE Statement of policy: procedure
(1) Before issuing a statement of policy under section 63ZD, a regulator (“the issuing regulator”) must—
(a) consult the other regulator, and (b) publish a draft of the proposed statement in the way appearing to the issuing regulator to be best calculated to bring it to the attention of the public.(2) The duty of the FCA to consult the PRA under subsection (1)(a) applies only in so far as the statement of policy applies to persons whose approval under section 59 relates to the performance of a function designated by the FCA as a senior management function under section 59(6B) in relation to the carrying on by PRA-authorised persons of regulated activities.
(3) The draft must be accompanied by notice that representations about the proposal may be made to the issuing regulator within a specified time.
(4) Before issuing the proposed statement, the issuing regulator must have regard to any representations made to it in accordance with subsection (3).
(5) If the issuing regulator issues the proposed statement it must publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection (3), and(b) its response to them.(6) If the statement differs from the draft published under subsection (1) in a way which is in the opinion of the issuing regulator significant, the issuing regulator—
(a) must before issuing it carry out any consultation required by subsection (1)(a), and(b) must (in addition to complying with subsection (5)) publish details of the difference. (7) The issuing regulator may charge a reasonable fee for providing a person with a draft published under subsection (1)(b).
(8) This section also applies to a proposal to alter or replace a statement.””

52: After Clause 12, insert the following new Clause—
“Extension of limitation periods for imposing sanctions
(1) Section 63A of FSMA 2000 (power to impose penalties) is amended as follows.
(2) In subsection (4), for “period of three years” substitute “relevant period”.
(3) After subsection (5A) insert—
“(5B) “The relevant period” is—
(a) in relation to the performance of a controlled function without approval before the day on which this subsection comes into force, the period of 3 years, and(b) in relation to the performance of a controlled function without approval on or after that day, the period of 6 years.”(4) Section 66 of FSMA 2000 (disciplinary powers) is amended as follows.
(5) In subsection (4), for “period of three years” substitute “relevant period”.
(6) After subsection (5) insert—
“(5ZA) “The relevant period” is—
(a) in relation to misconduct which occurs before the day on which this subsection comes into force, the period of 3 years, and(b) in relation to misconduct which occurs on or after that day, the period of 6 years.””

Amendments 48 to 52 agreed.

Amendment 53

Moved by

[Lord Newby]

53: After Clause 12, insert the following new Clause—
“Rules of conduct
(1) Part 5 of FSMA 2000 (performance of regulated activities) is amended as follows.
(2) Omit sections 64 and 65 (and the italic cross-heading preceding them).
(3) Before section 66 insert—
“Conduct of approved persons and others64A Rules of conduct
(1) If it appears to the FCA to be necessary or expedient for the purpose of advancing one or more of its operational objectives, the FCA may make rules about the conduct of the following persons—
(a) persons in relation to whom either regulator has given its approval under section 59;(b) persons who are employees of banks. (2) If it appears to the PRA to be necessary or expedient for the purpose of advancing any of its objectives, the PRA may make rules about the conduct of the following persons—
(a) persons in relation to whom it has given its approval under section 59;(b) persons in relation to whom the FCA has given its approval under section 59 in respect of the performance by them of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity;(c) persons who are employees of PRA-authorised banks.(3) In subsection (2)—
“PRA-authorised bank” means a bank that is a PRA-authorised person, and
“relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).
(4) Rules made under this section must relate to the conduct of persons in relation to the performance by them of qualifying functions.
(5) In subsection (4) “qualifying function”, in relation to a person, means a function relating to the carrying on of activities (whether or not regulated activities) by—
(a) in the case of an approved person, the person on whose application approval was given, and(b) in any other case, the person’s employer.(6) In this section any reference to an employee of a person (“P”) includes a reference to a person who—
(a) personally provides, or is under an obligation personally to provide, services to P under an arrangement made between P and the person providing the services or another person, and(b) is subject to (or to the right of) supervision, direction or control by P as to the manner in which those services are provided,and “employer” is to be read accordingly.””(a)The administrator must obtain the approval of the Bank of England to any proposals under sub-para. (1).(b)Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to the objective in section (Objective of FMI administration) of this Act.(c)Ignore sub-para. (3)(b).(a)Before making an application in reliance on this paragraph the FMI administrator must give notice to the Bank of England, which is to be entitled to participate in the proceedings.(b)In making directions the court must have regard to the objective in section (Objective of FMI administration) of this Act.(a)Ignore sub-paras. (1) and (3).(b)The Bank of England may apply to the court for the variation or revocation of any directions given by the court.()“(2) Where a company is in FMI administration, a creditor or member of the company may apply to the court claiming that the FMI administrator is conducting himself or herself in a manner preventing the achievement of the objective of the FMI administration as quickly and efficiently as is reasonably practicable.”()“(1) On an application made by a person mentioned in sub-paragraph (2), the court may provide for the appointment of an FMI administrator of a company to cease to have effect from a specified time. ()(2) The persons who may apply to the court under sub-paragraph (1) are—()(a) the Bank of England;()(b) with the consent of the Bank, the FMI administrator.”(a) Para. 91(1) applies as if the only person who could make an application were the Bank of England.(b) Ignore para. 91(2).(a) in accordance with directions of the Bank of England, and(b) if the Bank is satisfied that they will not prejudice the objective in section (Objective of FMI administration) of this Act.(a) In considering making an order in reliance on section 241 the court must have regard to the objective in section (Objective of FMI administration) of this Act.(b) Ignore subsections (2A)(a) and (3) to (3C).

[Lord Newby]

My Lords, I beg to move.

Amendments 53A and 53B (to Amendment 53) not moved.

Amendment 53 agreed.

Amendment 54

Moved by

[Lord Newby]

54: After Clause 12, insert the following new Clause—
“Definition of “misconduct”
(1) In section 66 of FSMA 2000 (disciplinary powers)—
(a) after subsection (1) insert—“(1A) For provision about when a person is guilty of misconduct for the purposes of action by a regulator—
(a) see section 66A, in the case of action by the FCA, and(b) see section 66B, in the case of action by the PRA.”;(b) omit subsections (2), (2A), (6) and (7).(2) After that section insert—
“66A Misconduct: action by the FCA
(1) For the purposes of action by the FCA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
(2) Condition A is that—
(a) the person has at any time failed to comply with rules made by the FCA under section 64A, and(b) at that time the person was—(i) an approved person, or(ii) an employee of a bank.(3) Condition B is that—
(a) the person has at any time been knowingly concerned in a contravention of a relevant requirement by an authorised person, and(b) at that time the person was—(i) an approved person in relation to the authorised person, or(ii) in the case of an authorised person that is a bank, an employee of the bank.(4) In this section “relevant requirement” means a requirement—
(a) imposed by or under this Act, or(b) imposed by any qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order. (5) Condition C is that—
(a) the person has at any time been a senior manager in relation to an authorised person that is a bank,(b) there has at that time been (or continued to be) a contravention of a relevant requirement by the bank, and(c) the senior manager was at that time responsible for the management of any of the bank’s activities in relation to which the contravention occurred.(6) But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the FCA that P had taken such steps as a person in P’s position could reasonably be expected to take to avoid the contravention occurring (or continuing).
(7) For the purposes of subsection (5)—
“senior manager”, in relation to an authorised person that is a bank, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the bank of a regulated activity;
“designated senior management function” means a function designated as a senior management function under section 59(6B) or (6C).
(8) In this section—
“approved person”—
(a) means a person in relation to whom an approval is given under section 59, and(b) in relation to an authorised person, means a person in relation to whom such approval is given on the application of the authorised person;“employee”, in relation to a person, has the same meaning as in section 64A.
“66B Misconduct: action by the PRA
(1) For the purposes of action by the PRA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
(2) Condition A is that—
(a) the person has at any time failed to comply with rules made by the PRA under section 64A, and(b) at that time the person was—(i) an approved person, or(ii) an employee of a PRA-authorised bank.(3) Condition B is that—
(a) the person has at any time been knowingly concerned in a contravention of a relevant requirement by a PRA-authorised person, and(b) at that time the person was—(i) an approved person in respect of the performance of a relevant senior management function in relation to the carrying on by the PRA-authorised person of a regulated activity, or(ii) in the case of an authorised person that is a bank, an employee of the bank.(4) In this section “relevant requirement” means a requirement—
(a) imposed by or under this Act, or(b) imposed by any qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.(5) Condition C is that—
(a) the person has at any time been a senior manager in relation to a PRA-authorised bank,(b) there has at that time been (or continued to be) a contravention of a relevant requirement by the bank, and(c) the senior manager was at that time responsible for the management of any of the bank’s activities in relation to which the contravention occurred. (6) But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the PRA that P had taken such steps as a person in P’s position could reasonably be expected to take to avoid the contravention occurring (or continuing).
(7) For the purposes of subsection (5)—
“senior manager”, in relation to an authorised person that is a bank, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the bank of a regulated activity;
“designated senior management function” means a function designated as a senior management function under section 59(6B) or (6C).
(8) In this section—
“approved person”—
(a) means a person in relation to whom—(a) the PRA has given its approval under section 59, or(b) the FCA has given its approval under section 59 in respect of the performance by the person of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity, and(b) in relation to an authorised person, means a person in relation to whom approval under section 59 is given on the application of the authorised person;“employee”, in relation to a person, has the same meaning as in section 64A;
“PRA-authorised bank” means a bank that is a PRA-authorised person;
“relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).””

[Lord Newby]

My Lords, I beg to move.

Amendment 54A (to Amendment 54) not moved.

Amendment 54 agreed.

Amendments 55 to 57

Moved by

[Lord Newby]

55: After Clause 12, insert the following new Clause—
“Meaning of “bank”
(none) In Part 5 of FSMA 2000 (performance of regulated activities), after section 71 insert—
““Bank”71A Meaning of “bank”
(1) In this Part “bank” means a UK institution which has permission under Part 4A to carry on the regulated activity of accepting deposits.
(2) But “bank” does not include an insurer.
(3) In this section—
(a) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;(b) “insurer” means an institution which is authorised under this Act to carry on the regulated activity of effecting or carrying out contracts of insurance as principal.(4) Subsections (1) and (3)(b) are to be read in accordance with section 22, taken with Schedule 2 and any order under section 22.””

56: After Clause 12, insert the following new Clause—
“Recording information about senior managers
(1) Section 347 of FSMA 2000 (the record of authorised persons etc.) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (g), after sub-paragraph (iii) insert—“(iv) in a case where the relevant authorised person is a bank, whether or not the person is a senior manager;”;(b) after that paragraph insert—“(h) in the case of an approved person who is a senior manager in relation to an authorised person that is a bank—(i) whether a final notice has been given to the person under section 390; and(ii) if so, any information about the matter to which the notice relates which has been published under section 391(4).”(3) After subsection (8) insert—
“(8A) In this section—
“senior manager”, in relation to an authorised person that is a bank, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the bank of a regulated activity,
“bank” has the same meaning as in Part 5 (see section 71A), and
“designated senior management function” means a function designated as a senior management function under section 59(6B) or (6C).””

57: After Clause 12, insert the following new Clause—
“Consequential amendments relating to Part 4
(none) Schedule (Consequential amendments relating to Part 4) (which contains further amendments relating to the provisions of this Part) has effect.”

Amendments 55 to 57 agreed.

Amendment 58

Moved by

[Lord Newby]

58: After Clause 12, insert the following new Clause—
“Offence relating to decision that results in bank failure
(1) A person (“S”) commits an offence if—
(a) at a time when S is a senior manager in relation to a bank (“B”), S—(i) takes, or agrees to the taking of, a decision by or on behalf of B as to the way in which the business of a group bank is to be carried on, or(ii) fails to take steps that S could take to prevent such a decision being taken,(b) at the time of the decision, S is aware of a risk that the implementation of the decision may cause the failure of the group bank,(c) in all the circumstances, S’s conduct in relation to the taking of the decision falls far below what could reasonably be expected of a person in S’s position, and(d) the implementation of the decision causes the failure of the group bank.(2) A “group bank”, in relation to a bank (“B”), means B or any other bank that is a member of B’s group for the purpose of FSMA 2000 (see section 421 of that Act).
(3) Subsections (1) and (2) are to be read with the interpretative provisions in section (Interpretation of terms used in offence).
(4) A person guilty of an offence under this section is liable—
(a) on summary conviction—(i) in England and Wales, to imprisonment for a term not exceeding 12 months (or 6 months, if the offence was committed before the commencement of section 154(1) of the Criminal Justice Act 2003) or a fine, or both; (ii) in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum, or both;(iii) in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum, or both;(b) on conviction on indictment, to imprisonment for a term not exceeding 7 years or a fine, or both.”

[Lord Newby]

My Lords, we now turn to one of the key recommendations of the PCBS: the introduction of a new criminal offence of reckless misconduct in the management of a bank. The commission argued convincingly that existing sanctions for financial crime,

“do not cover the apparent mismanagement and failure of control by senior bankers”,

and that the risk of a criminal conviction and a prison sentence would give senior officers of UK banks pause for thought. As the Government made clear in our response to the commission, we believe that there is a strong case for the introduction of such an offence. Serious bank failure results in severe economic disruption and considerable losses for taxpayers.

In line with the commission’s recommendations, the new offence will be applicable only to individuals who are covered by the new senior managers regime. Senior managers could be liable if they take a decision which leads to the failure of the bank or fail to take steps available to them to prevent such a decision being taken. The offence will apply only to behaviour that falls far below the standard that could reasonably be expected of a person in their position, which is a similar test to that for corporate manslaughter. In addition, at the time when the decision was taken the senior manager must have been aware of a risk that its implementation may cause the failure of the bank. Limiting the application of the offence to individuals who are covered by the senior managers regime, and the precise definition of when a bank has failed for the purposes of the offence, mean that those affected should be in no doubt as to their potential criminal liability.

The maximum sentence for the new offence will be seven years in prison and/or an unlimited fine on indictment. This is in line with the recommendation of the commission, which argued that the offence must carry the possibility of a prison sentence to be effective, as with other offences of similar gravity under FiSMA, such as misleadingly manipulating benchmarks such as LIBOR. The commission said that it,

“would expect this offence to be pursued in cases involving only the most serious of failings ... and not predominantly against smaller operators where proving responsibility is easier, but the harm is much lower”.

The Government endorse this position, and the offence will therefore apply to banks and building societies but not to credit unions.

One area where we do not agree with the commission is on its proposal that there should be a time limit of one year within which criminal charges could be brought following successful civil enforcement action. I have considerable sympathy with its arguments that laws forbidding disclosure of information with regard to criminal proceedings could mean that the publication of information around a bank failure—information that it would be in the public interest to release—would be suppressed until court proceedings had concluded. However, it is very unusual to have a time limit on bringing charges relating to serious criminal offences such as this and, given the likely complexities of many of the cases that will be tried under this offence, such a time limit may seriously limit the regulators’ ability to prosecute. The offence introduced by this amendment will be a vital tool in ensuring that those at the top of our banks are focused on taking prudent and measured decisions and in holding them to account for reckless behaviour that falls short of that standard.

I now address the amendments in this group. On Amendment 58, the PCBS recommended an offence of reckless misconduct. In order for a person’s behaviour to be reckless, they must be aware of the risks that they are taking. The insertion of the text proposed by Amendment 58A would allow for the possibility that a manager acting without knowledge of the possible effects of their actions could also be guilty of the offence. A key aspect of making an offence prosecutable is that the person concerned must know that they are at risk of committing the crime. There are other, civil, sanctions, which FSMA provides for, which can apply if a senior manager has acted incompetently rather than criminally recklessly. For example, if a senior manager in a bank fails to comply with binding statements of principle issued by the regulator, they can be penalised. These penalties can be heavy, including up to an unlimited fine. In light of this, I hope that the noble Lord will withdraw his amendment.

On Amendment 58B, we have thought very carefully about the wording of this offence, and have built upon robust precedent where possible. Referring to conduct that is “far below” that which would be expected has precedents in the Law Commission’s proposal for a statutory offence of killing by gross carelessness, and in legislation creating the offence of corporate manslaughter. So we have used this particular phrase knowing that it works and can be effectively interpreted by the courts. The offence must be precise enough to comply with principles of legal certainty and fairness. There is no precedent in UK criminal law for criminalising behaviour that is merely unreasonable. To do so would amount to an indiscriminate diffusion of criminal liability in a way that would make it hard for individuals to know with sufficient certainty when they might be committing an offence.

We also need to be very aware of the incentives that the offence creates. There would be a considerable risk that a broader, vaguer offence would put talented executives off taking on senior management positions, and the Government are keen to get the balance right between punishing genuine recklessness and supporting appropriate risk-taking. This would be a particular risk when people consider whether to take on a senior role in a troubled bank just when it was most important for it to have highly capable leadership.

I understand that the intention of Amendment 58C is to make the offence more objective. First, the reasonableness test as currently drafted gives a clear, objective test of when the crime has been committed by a senior manager. It will enable the jury to consider whether the defendant’s behaviour was reasonable, taking into account the position they were actually in. To be precise, it requires the jury to consider what conduct could, in all the circumstances, reasonably be expected of a person holding the position in the bank which that individual senior manager held.

This amendment would, arguably, remove this clarity and ask the jury to consider whether the person’s behaviour was reasonable in a more general way. Such a test would be likely to be harder to apply to particular cases, and in some cases could be inappropriate. It is important to note that there can be no one clear definition of what could be expected of a person in a senior management position in a bank. Such drafting fails to take account of, for example, which particular senior management role the defendant was undertaking, in what kind of banking institution and what the institution’s business model was. This amendment would change the current reasonableness test to one that it would be extremely difficult for a jury to apply in any meaningful way, making the offence less certain and prosecution more problematic.

On Amendment 59A, the Government are introducing this offence to close a gap in financial crime legislation. There are currently no criminal powers available to sanction senior managers who have recklessly caused their banks to fail. This is a clear shortcoming, which we are now remedying. As we have already debated, though, offences already exist for failing to comply with the Fraud Act, the Proceeds of Crime Act or the Money Laundering Regulations. Individuals can be prosecuted under these Acts, and any sentencing following the successful prosecution of these offences would take into account how serious these breaches were, so it is difficult to see what benefit this amendment would add. Further, if a bank is found to have committed an offence under the Fraud Act 2006 or under the Money Laundering Regulations 2007, senior managers of the bank could also be found guilty if they have consented to or connived in the commission of the offence by the bank. As previously noted, the new senior managers regime will also provide enhanced accountability in these areas. So there is no lack of individual accountability in cases where banks fail to comply with the requirements of the 2006 Act or the 2007 Regulations.

We believe that we have introduced a sensible definition and an important piece in the jigsaw of improved accountability for individuals by our amendments, and I commend them to the House.

Amendment 58A*

Moved by

[Lord Brennan]

58A*: After Clause 12, line 10, after “aware” insert “or should have been aware”

[Lord Brennan]

My Lords, I will deal briefly with these amendments concerning the creation of an offence in relation to a decision that results in bank failure. The amendments are designed to test the definitional value of the present clause, and work on the realistic expectation that once this becomes statute there will be a very much reduced prospect of people committing such an offence, particularly if they face up to seven years in prison on indictment. So the purpose of this section is more of a deterrent, although it has a punitive value if there is a transgression. It is with that in mind that these amendments were put forward.

I shall address Amendments 58A, B and C in turn. My reading of this draft offence does not include any use of the words “reckless” or “recklessness”. It would be unwise in legal terms to equate its contents with some broad description to be used as a synonym, or understood synonym, of “recklessness”, which is a term of art in the law.

Amendment 58A deals with the following risk. It is likely that there will be more cases of one or more people being involved—two, three, four, five, whatever it might be—than a singleton defendant in a bank failure. If the bank is operating properly, it is almost inconceivable that one person could engineer its failure without the knowledge of others. Therefore I predict that if they are brought to trial, one or more of them will say, “I did not know; it was that man, not me.” This particular amendment is designed to cover that situation. “Should have been aware” implies “should have been aware by reason of competent and honest practice of appropriate banking standards”. It is an entirely reasonable test, and it gets over the point that the noble Lord, Lord Lawson, was telling us about earlier, of elective ignorance: “I don’t want to know”; or wilful blindness: “I don’t want to know because I’m never going to ask”. Many would think that both of those situations involve culpability. You cannot get away with it by shutting your mind to that which you should have known by professional standards and proper competence. So the time between now and Report should involve a consideration of how this clause is to be used if it becomes an offence where there is more than one defendant. Even if there is only one, he can blame someone who is not before the court.

I now turn to Amendment 58B. Corporate manslaughter is rarely brought to court. It is normally brought to court in respect of a flagrant breach of health and safety standards, usually in the construction industry, energy, or whatever it might be that causes a terrible accident. In other words, the incident speaks for itself. The word “far” in that context adds nothing to the impact of the event, and I suspect that most juries will not pay any attention to the word “far” when they are directing—they will look at the event. Between now and Report I want the Government to consider this question: how on earth will a judge directing a jury interpret the word “far” in respect of refined banking practices that may cause a concatenation of events that lead to a failure? It is an extremely loose word to use in this context, and I invite reconsideration of it or its omission.

19:02

Amendment 58C is directed, as was suggested, at creating an objective test. The wording that is used,

“a senior management position in relation to a bank”,

makes it an entirely objective test. It prevents a person who is charged claiming that in his particular context, looking at it from his particular point of view, he did his best. That is simply not enough. The greater the responsibility, the more objective the test should be in this banking context.

I turn to Amendment 59A. I will not repeat the point about the statutes, although they are referred to. However, I invite the House to note that there is an intention here to deal with something where there has been a serious or systematic failure, not just in respect of those statutes but in respect of such other financial compliance obligations as may be specified in rules made by the FCA. In other words, the matter arises in respect of people who seriously fail in their duty to comply with the appropriate standards and competences envisaged by this section. It is not likely, but it is conceivable, that there will be situations in which a failure occurs because of a system collapse in which particular people were responsible, which system had been carried on systematically or involved a serious breach of compliance requirements by the FCA.

I close with the following thought. One wants to have on the statute book an offence that makes people think when they are in their job, “I’m not going to jail for this; I won’t take the risk”. I beg to move.

[Lord Eatwell]

My Lords, my noble friend Lord Brennan has made some powerful points. I draw the attention of the House to the fact that, as in the previous group of amendments we were discussing, these offences will apply only to institutions that accept deposits. It therefore leaves out a whole series of institutions that I believe the noble Lords, Lord Turnbull and Lord Lawson, would also feel should be included under these offences.

[Lord Phillips of Sudbury]

My Lords, I commend the Government on bringing forward Amendment 58. It has been a source of great public disaffection that over the past few years the number of people in the City responsible for some really gross acts of criminality who have been brought to book could be measured on the fingers of two hands; indeed, the noble Lord, Lord Turnbull, referred earlier to the pathetic enforcement statistics. This provision is therefore vital. However, I have two thoughts regarding the way in which this is framed: first, that it is too severe, and secondly, that it is too light, or slight.

The title of the clause is:

“Offences relating to decision”—

I suppose they mean “a decision”—

“that results in bank failure”.

I note that in two places in the clause itself it talks about a decision that “causes” a bank failure. There is a difference in the meaning of the words, “resulting” in a bank failure and “causing” it. The word “causing” is absolutely direct in a way that “resulting” is not. Perhaps the Minister might like to look at that.

The other point that strikes me about the wording of this clause is in Amendment 58(1)(c) and (d). Paragraph (c) says,

“in all the circumstances, S’s conduct in relation to the taking of the decision falls far below what could reasonably be expected of a person in S’s position”.

The noble Lord, Lord Brennan, has already made points on this. That is unsatisfactory in another sense. However, if we are—as we are—making criminal offences out of the conduct defined in this new clause, there should be a clear indication that no one can be convicted unless there is a want of integrity or honesty on the part of the person convicted. That is a fundamental principle of British criminal law. However concerned we are, and I certainly am, to bring to book the many malefactors who have ruined the reputation of the City in recent years, one cannot do it at the cost of changing or undermining that fundamental test of criminality, intent, bad faith, dishonesty or want of integrity—call it what you like. The language here does not clearly require that intent and want of integrity. There are cases that would fall within Amendment 58 that would not satisfy the normal test of mens rea in criminal offences.

I will refer briefly to Amendment 60 in this group, which is about the institution of proceedings. Subsection (4) says:

“In exercising its power to institute proceedings for an offence, the FCA or the PRA must comply with any conditions or restrictions imposed in writing by the Treasury”.

Those are the words. I cannot see anywhere, in this amendment or elsewhere, a requirement for the conditions or restrictions imposed in writing by the Treasury to be made public. Surely it is a fundamental requirement of restrictions or conditions that will potentially lead firms and individuals into the criminal courts that those conditions or restrictions be made public.

[Baroness Noakes]

My Lords, my first thought on seeing this new offence relating to bank failure was to be mildly appalled at something that might possibly impinge on one’s personal life, but I have tried to put that to one side and to look at this clause dispassionately. What concerns me is a point raised by the noble Lord, Lord Phillips of Sudbury, which relates to causation. That is mentioned several times in this clause, but one of the conditions in subsection (1)(d) of the new clause proposed by Amendment 58 is that,

“the implementation of the decision causes the failure of the group”.

Is it clear that single decisions cause failures of the nature that we are talking about? I ask him to think, in the context of the failures that existed in the wake of the 2008 financial crisis, whether any one of those, had they occurred today and been dealt with under existing legislation, could have technically satisfied the wording in this offence. Even in the simplest case of failure, which was probably Northern Rock, it was not as simple as one decision or even one group of decisions. There were multiple points of decision which contributed. Certainly, when one gets to something as complicated as the failure of Lehman Brothers, I would be absolutely astonished if anybody could have pointed to one decision causing one failure.

[Lord Newby]

My Lords, I will try to sum up some of those points. One of the big challenges that we faced in producing the exact terms of this amendment was to produce a sanction which is a credible offence and could be successfully prosecuted. Setting the conditions to include that in all the circumstances the individual’s conduct fell far below what could reasonably be expected of them and that they were aware of the risk that a decision could cause the bank to fail gives us the clarity that we need. This will capture behaviour which in normal parlance or in normal view would be considered reckless.

The noble Lord, Lord Brennan, said that he was keen that this new offence should make people think. It will make people think, but equally it must have within it a degree of certainty that means that an offence could be prosecutable. This necessarily circumscribes the way in which we define it.

I can confirm to the noble Lord, Lord Eatwell, that his interpretation of the provisions in the Bill is correct.

[Lord Lawson of Blaby]

May I ask my noble friend one question? The commission’s recommendations refer to this as reckless misconduct. The word “reckless” is very important. Speaking to this, the Minister used the word “reckless”, but I do not see it in the amendment. Can he explain why?

[Lord Newby]

Yes, I hope I can. As I was just saying, we had to put in the Bill a form of words that would create a credible offence that could be successfully prosecuted. The two requirements that an individual’s conduct had to fall far below what could reasonably be expected of them and that they were aware of the risk they were taking, would, in the view of the lawyers, capture recklessness. It is a definition of recklessness without the use of the word. The wording gives a greater chance of having a credible offence than using the word “reckless”. It is an attempt to make sure that we have got something that we could use, while capturing the concept.

The noble Lord, Lord Phillips, asked about the difference between the heading and the text. My understanding is that headings of sections of the Bill do not constitute part of the Bill for legal reasons. It may be possible to improve the heading, but the noble Lord should not worry about it. The noble Lord asked whether any restrictions on conditions which were imposed might be made public. At first sight, I cannot see any reason why that should not be the case, but I will write to him to confirm the position.

We have had a good debate on these amendments. I commend the government amendments to the House.

[Lord Phillips of Sudbury]

I do not think the Minister has adequately dealt with the point made by my noble friend Lady Noakes and partly by myself. Surely it is an inescapable point that if you say that someone has to cause the failure of a bank, that is a direct and hugely demanding test. If it had said instead that the decision significantly contributed to the failure of a bank then I think my noble friend and I would be content because it satisfies justice as well as practicality. Is he not concerned that this will undermine the whole purpose of this amendment?

[Lord Newby]

I do not think it undermines the whole purpose of the amendment. It obviously reduces the scope of cases which can be brought under this amendment, but the challenge that the lawyers have had is to make sure, as far as possible, that there is the certainty of what constitutes an offence, which is required under human rights legislation. That has been one of the principle drivers for the particular form of words that we have got. I accept the noble Baroness’s point that in some cases there will be a whole raft of contributory decisions which over a period lead to a bank failing. It will be, I accept, more difficult to bring a prosecution in those cases. It is not inconceivable, however, to argue, without having any particular case in mind, that if a senior executive of a bank persuaded the board to make an acquisition knowing that it was a very risky acquisition which if it went wrong could bring the bank down, that decision would fall squarely, as I understand it, within the scope of the Government’s proposals. I do not think it is outside the realms of possibility that a senior manager in the bank might take such a decision.

19:15

[Lord Brennan]

My Lords, I raise the question briefly about recklessness for the Government to consider. Let us suppose a senior manager reports to a chief executive officer saying, “I want to tell you about the following risks that would arise if decision A,B or C is taken”. The CEO is of the imperial kind and tells him not to waste his time, that he is not interested in risk, and to get on with it and make the decision. In those circumstances, the present legislation as it is drafted would justify a decision to prosecute the manager because he went ahead despite the risk, but not the CEO because he never actually knew what the risk was; he just ordered the junior to go ahead and do it.

The point about recklessness, which the lawyers advising Ministers should consider again, is what you do in the more likely scenario in banking, not of a round table where people are all carefully considering risks but of high speed commercial dynamics in which somebody forces a decision to be taken, not caring what the risk consequence is. How do you deal with that?

In the mean time, I beg leave to withdraw my amendment.

Amendment 58A, as an amendment to Amendment 58, withdrawn.

Amendments 58B and 58C, as amendments to Amendment 58, not moved..

Amendment 58 agreed.

Amendment 59

Moved by

[Lord Newby]

59: After Clause 12, insert the following new Clause—
“Interpretation of terms used in offence
(1) This section has effect for the interpretation of section (Offence relating to decision that results in bank failure).
(2) “Bank” means a UK institution which has permission under Part 4A of FSMA 2000 to carry on the regulated activity of accepting deposits.
(3) But “bank” does not include—
(a) an insurer, or(b) a credit union. (4) In subsections (2) and (3)—
(a) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;(b) “insurer” means an institution which is authorised under FSMA 2000 to carry on the regulated activity of effecting or carrying out contracts of insurance as principal;(c) “credit union” means a credit union as defined by section 31 of the Credit Unions Act 1979 or a credit union as defined by Article 2(2) of the Credit Unions (Northern Ireland) Order 1985.(5) Subsections (2) and (4)(b) are to be read in accordance with section 22 of FSMA 2000, taken with Schedule 2 to that Act and any order under that section.
(6) A person is a “senior manager” in relation to a bank if, under an arrangement entered into by the bank, or by a contractor of the bank, in relation to the carrying on by the bank of a regulated activity, the person performs a function that is designated as a senior management function—
(a) by the FCA under subsection (6B) of section 59 of FSMA 2000 (approval for particular arrangements), or(b) by the PRA under subsection (6C) of that section.(7) A bank (“B”) is to be regarded as failing where—
(a) B enters insolvency,(b) any of the stabilisation options in Part 1 of the Banking Act 2009 is achieved in relation to B, or(c) B is taken for the purposes of the Financial Services Compensation Scheme to be unable, or likely to be unable, to satisfy claims against B.(8) In subsection (7)(a) “insolvency” includes—
(a) bankruptcy,(b) liquidation,(c) bank insolvency,(d) administration,(e) bank administration,(f) receivership,(g) a composition between B and B’s creditors, and(h) a scheme of arrangement of B’s affairs.”

Amendment 59A, as an amendment to Amendment 59, not moved

Amendment 59 agreed.

Amendment 60

Moved by

[Lord Newby]

60: After Clause 12, insert the following new Clause—
“Institution of proceedings
(1) In this section “an offence” means an offence under section (Offence relating to decision that results in bank failure).
(2) Proceedings for an offence may be instituted in England and Wales only—
(a) by the FCA, the PRA or the Secretary of State, or(b) by or with the consent of the Director of Public Prosecutions.(3) Proceedings for an offence may be instituted in Northern Ireland only—
(a) by the FCA, the PRA or the Secretary of State, or(b) by or with the consent of the Director of Public Prosecutions for Northern Ireland.(4) In exercising its power to institute proceedings for an offence, the FCA or the PRA must comply with any conditions or restrictions imposed in writing by the Treasury.
(5) Conditions or restrictions may be imposed under subsection (4) in relation to—
(a) proceedings generally, or(b) such proceedings, or categories of proceedings, as the Treasury may direct.”

Amendment 60 agreed.

Amendment 60A

Moved by

[Lord Newby]

60A: After Clause 12, insert the following new Clause—
“Part 5Regulation of payment systemsOverview
(1) This Part contains provision for the establishment of a new body (the “Payment Systems Regulator”) to exercise functions in relation to payment systems.
(2) Section (The Payment Systems Regulator) provides for the establishment of the Payment Systems Regulator.
(3) Sections (Meaning of “payment system”) and (Participants in payment systems etc) contain definitions of “payment system” and related terms.
(4) Sections (Designation orders) to (Revocation of designation orders) make provision about designating a payment system as a regulated payment system.
(5) Sections (Regulator’s general duties in relation to payment systems) to (Regulatory principles) contain provision about the general duties of the Payment Systems Regulator under this Part.
(6) Sections (Directions) to (Amendments relating to Regulator’s competition powers) confer various regulatory and competition functions on the Payment Systems Regulator.
(7) Sections (Complaints by representative bodies) to (Complaints: guidance) contain provision about the making of complaints to the Payment Systems Regulator.
(8) Sections (Meaning of “compliance failure”) to (Enforcement of requirement to dispose of interest in payment system) contain provision about enforcement and appeals.
(9) Sections (Power to obtain information or documents) to (Reports) contain supplementary powers.
(10) Sections (Duty of regulators to ensure co-ordinated exercise of functions) to (Power of PRA to require Regulator to refrain from specified action) contain provision about the Payment Systems Regulator’s relationship with other regulators.
(11) Sections (Regulator’s general duty to consult) to (Competition scrutiny) contain provision about consultation, accountability and oversight.
(12) Sections (Relationship with Part 8 of the Payment Services Regulations 2009) to (Interpretation) contain miscellaneous and supplemental provision.”

[Lord Newby]

My Lords, these amendments will create a new competition-focused utility-style regulator equipped with the full range of powers to tackle the deeply rooted issues in the market for payment system. The Government have serious concerns about the structure of the payment systems market, which sees problems in three main areas: competition, innovation and responsiveness to consumer needs.

Under the existing self-regulatory framework, there is no systematic oversight holding the big banks, payment scheme companies and infrastructure providers to account. Large banks jointly own the payment system companies and the infrastructure provider, and they dominate the Payments Council, the pseudo-regulatory body responsible for setting industry strategy. This allows the incumbent players to erect barriers to entry, preventing challenger banks from competing on a level playing field. It also limits incentives for the systems to innovate and respond to consumer needs, as there is no competitive advantage to any bank in doing so. There are also competition concerns in the international card schemes, as highlighted by the European Commission’s proposed regulation capping multilateral interchange fees. The card schemes have an incentive to increase interchange fees to encourage banks to issue their cards, but merchants have little opportunity to influence this process, and have no real option but to accept the major payment cards.

The first objective of the regulator will be to address the problems arising from imperfect competition. To tackle barriers to entry in banking arising from access conditions for the payment schemes, the payment systems regulator will have powers to tackle anti-competitive fees, terms and conditions, and to mandate access to the core systems. If deemed necessary, it will be able to break up the current ownership structures to create a landscape where fair competition can thrive. Secondly, the regulator will examine issues relating to innovation. Payment systems are characterised by strong network effects. Just as owning a telephone brings little benefit if no one else has one, each user gains added value from a payment system with the addition of further users. The shared ownership of the interbank payment systems by the banks reinforces this, because no single bank stands to gain an advantage over the others by investing in and developing the systems. This tendency to underinvest means that, while there have been some important innovations in recent years, they have too often required the Government’s or the OFT’s intervention to drive change, and the industry has taken too long to realise their full benefits.

The Government want to challenge underinvestment and lack of innovation in the co-owned systems. They want a payments industry that rewards entrepreneurial behaviour and develops systems that are innovative, efficient and effective. Therefore, the regulator will have an objective to promote the development of, and innovation in, payment systems.

The third problem identified in the market is the failure of the industry to respond to end-user needs. This, too, stems from the market’s network characteristics and ownership structures, which mean that failing to respond to end-user needs incurs no competitive disadvantage to any of the banks. This makes it possible for the banks to take decisions about the provision of services, even if this is directly against the interests of the wider public, as we saw in 2009 when the industry attempted to abolish cheques. The Government want to see a market where payment systems work for end-users, rather than one that serves only the self-interest of the big established banks.

Successive Governments and UK regulatory authorities have been trying to find a viable solution for these problems for more than a decade, dating back to Sir Don Cruickshank’s report to the Treasury in 2000 recommending that the Government create a utility-style regulator for payment systems. Instead, however, the process resulted in the creation of the industry-dominated Payments Council. In February, the Chancellor announced that the Government would introduce a new regulator to open up payment systems. Over the summer, the Parliamentary Commission on Banking Standards endorsed the Government’s commitment to bring payment systems into formal regulation. In their response to the final report of the PCBS, the Government confirmed that they will ask the payments regulator, once established, to urgently examine account portability.

I turn to the details of these amendments. They establish the payment systems regulator as a separate legal entity established by the FCA. This provides bespoke objectives and powers to address the distinctive problems in the market for payment systems, and allows for the benefits of close co-ordination with the FCA. The objectives of the regulator will be to promote competition, innovation and the interests of service users. The payment systems regulator will oversee all domestic payment systems brought into scope by being designated by HM Treasury. Initially, it is expected that the main interbank schemes and international card schemes will be designated. Once a system is designated, the regulator will have powers over that system’s operators, infrastructure providers and payment service providers that provide payment services using the system. This new regime will not affect the existing role of the Bank of England under the Banking Act 2009 in overseeing recognised interbank systems for stability purposes. The Bank will be excluded from the scope of regulation in its current capacity as a payments system participant. There will also be a duty for the co-ordinated exercise of functions between the PSR, FCA, Bank and PRA, and a memorandum of understanding setting out how this will happen.

The payment systems regulator will be equipped with a toolkit of regulatory powers enabling it to address the deep, structural issues causing problems in the market for payment systems. To open up access and encourage greater competition, the regulator will be able to intervene and require changes to any anti-competitive fees, or terms and conditions of an agreement for access to a regulated system. It will have powers to require the provision of both direct and indirect access to payment systems. It will also have competition powers to enforce Competition Act 1998 prohibitions against anti-competitive agreements and abuse of dominance, and to make market investigation references to the Competition and Markets Authority. These competition functions will be exercisable concurrently with the CMA. Ultimately, if the payment systems regulator determines that the current ownership structures need to be broken up to achieve adequate competition, it will have the power to require disposals of interests in operators of regulated systems.

In furthering access and competition, the regulator will also address underinvestment by the industry and the slow pace of innovation. There is no shortage of players who want to be able to innovate in this space, and with greater access to the core systems and infrastructure, inventive, entrepreneurial players will be able to bring propositions to market when they have previously been blocked from doing so. Greater competitive pressure on industry participants can be expected to drive up standards and force payment system owners, operators and payment service providers to deliver improvements in the payment systems space. However, in cases where market forces are still unable to play out, if the big incumbent banks resist, the regulator will have powers to drive through improvements as it sees fit, by issuing directions that require or prohibit action by participants in regulated systems, and this includes requiring specific developments to be pursued.

In advancing its service-user objectives, the regulator will be able to require or prohibit the taking of action in the operation, management and development of payment systems. This means that it can prevent the industry ignoring the legitimate needs of consumers—for instance, by trying to abolish cheques. The payment systems regulator will be able to publish details of a compliance failure and to impose financial penalties; if deemed necessary, it will be able to require owners of payment systems to dispose of their interests in them, subject to Treasury approval.

Taken together, these amendments create a strong, competition-focused regulator, which will have the right objectives, functions and powers to ensure that conditions in the payment systems market are such that challenger banks and innovative non-bank players are given a level playing field to challenge the big incumbent banks; innovation takes place to facilitate useful new services for businesses and consumers; and decisions on the provision of payment options are taken in the interests of all users of payment systems, not just the interests of the big banks. I commend these amendments to the Committee.

[Lord Eatwell]

My Lords, I have a number of queries about another set of amendments that are longer than the original Bill. First, I support entirely the notion of establishing a payments regulator, but why is it being established as yet another independent regulator? Surely, covering the activities that it refers to—the nature of markets and settlement systems, which are akin to clearing and settlement in business and financial services in general—is the clear role of the FCA. Why are we establishing an extra organisation? After all, one thing that we have learnt through the financial crisis is that communication between organisations is less than perfect, even in the best of all possible worlds. Surely it would be better if this was simply a division of the FCA rather than an organisation having, as the schedule makes clear, an entirely separate board and chairman. This seems to be a proliferation of institutions with no purpose when we already have the FCA there to do the job.

Secondly, I want to explore the competition objective a little more. It is very clear that enhancing competition by giving access to payment systems is highly desirable. It is also clear that users might benefit from competition. What is not terribly clear is whether we want to have very diverse structures in the fundamental architecture of the payments system, which is absolutely core to the banking system. It recalls to me the early days of the railways when there were more than a dozen railways from London to Brighton, as they all competed with one another. This was not conducive either to the effective development of the railway companies or the provision eventually of a proper service to passengers. Therefore, I am a little puzzled, given the essential role of the payments architecture as being absolutely fundamental to the operation of the banking system, as to whether we want to see diverse structures and how they might be related to one another. I wonder what the Government’s thoughts are on this.

My third point also refers to the nature of fundamental market infrastructure. Within these new clauses it is the responsibility of the regulator to assure maintenance of service. However, another part of the Bill, which we will look at next, is labelled “fundamental market infrastructure” and is also devoted to the maintenance of market service more generally. The responsible authority for maintaining market service is different in the two cases. In one it is the Treasury; in the other it is the Bank of England. Why do we have two different authorities responsible for the maintenance of fundamental market infrastructure when the payments system is undoubtedly part of fundamental market infrastructure? It seems to me that, in inserting this desirable measure into the Bill, the fact that it has created some ambiguities and inconsistencies has not been noticed.

19:31

[Lord Turnbull]

My Lords, this is another example of where we should be careful what we wish for. The Treasury committee and the parliamentary commission both welcomed the Government’s damascene conversion —that was what it was called in our report—announced in the Budget last year to create a payments regulator. However, this has been done in a quite extraordinary way with some 40 pages of amendments having been produced only two or three days before we were due to examine them. Although the new clauses were published following a process of consultation, there does not seem to be time for anyone in Parliament or anyone affected by them to scrutinise them. How can we tell whether what has been drafted is workable, reflects the views expressed in the consultation or will deliver what the Government want? From a procedure point of view, the usual channels might consider whether the gap between Committee and Report might be rather longer than normal so that we get a chance to look at not just this but also at the bail-in provisions as we have only had a small amount of time to consider them.

Through much of the consideration in Committee my view has been pretty close to that of the noble Lord, Lord Eatwell. However, as regards whether this body should be independent or part of the FCA, I am in the other camp. One of the key features here is that there is doubt about whether competition comes high enough up the FCA’s priorities. We shall come to later amendments whereby the parliamentary commission wanted to push competition higher up the FCA’s priorities. The proposal before us serves the interests of competition better than by making the body under discussion another department within the FCA, so there is another side to the case.

[Lord Flight]

I support these amendments. The biggest part of the Bill is concerned with creating competition in the banking industry. The thought had crossed my mind that we are proliferating yet another regulator but I am persuaded by the argument advanced by the noble Lord, Lord Turnbull, that it might get lost within the FCA which has many other things to focus than competition. However, I make the small point that in the past year the Payments Council has done a good job in bringing in the ability to transfer a bank account within seven days. Although the new body will be more representative, the Payments Council should not be overcriticised for what it has achieved while it has existed.

[Lord Higgins]

Those of us who have been through many legislative processes may be a little appalled to find that it takes 40 pages of amendments to establish a payments regulator. I wish to ask one or two simple questions. On whom will the cost of this regulation fall? Have we an estimate of what it is likely to be? The Minister referred to what I believe was the lamentable attempt to get rid of the cheque system. Will this proposal stand up if the cheque system is changed? As far as international transactions are concerned, will the regulator be concerned with payments which are made internationally?

[Baroness Noakes]

My Lords, my initial reaction to these new clauses was that they constituted a sledgehammer to crack a nut. It seems to me that creating another regulator in a territory which is well occupied by regulators is unnecessary in this case. To that extent I support the noble Lord, Lord Eatwell. One has only to look at government Amendment 60YYH to see that the new regulator will have to co-ordinate with the Bank of England, the FCA and the PRA. These bodies already have to co-ordinate among themselves for different purposes in any event. I think that the world is slightly going mad on this. My noble friend Lord Higgins asks who will pay for the regulator. Obviously, the people who will operate the payment systems will pay for the regulator. I suspect that this arrangement will be more expensive than the existing Payments Council system. I do not know how much more expensive it will be. I believe that we should be told what the costs are because they will inevitably end up being paid for by the businesses and individuals who use payments systems. There is no one else.

I have one question with two parts for my noble friend which relates to the powers in government Amendments 60S and 60T. One part relates to the power to require access to payment systems. I completely understand that. If you are to promote competition, you need powers to require access. The other relates to the variation of agreements relating to payment systems to take out anti-competitive elements in arrangements that have already been made. Both those measures could have financial consequences for those who operate payment systems. I do not object to the principle involved, but where in these 40 pages of amendments can I find the principles that the payments regulator has to use in deciding how he approaches those decisions? I assume that he cannot have unlimited discretion to decide who will pay for what and on what terms. However, there appear to be no basic financial principles underpinning this arrangement in the 40 pages of amendments, which seems to me a lacuna.

[Lord Phillips of Sudbury]

My Lords, for the record, these amendments cover exactly 52 pages. The only other point I wish to make—I agree with the noble Lord, Lord Eatwell, here—is that, despite the payment system having its own regulator, new subsection (3) of government Amendment 60B states:

“The FCA must take such steps as are necessary to ensure that the Payment Systems Regulator is, at all times, capable of exercising”,

its functions. It has the job of overseeing the regulator, so why on earth does it not do the job itself?

[Lord Sharkey]

My Lords, I have two simple questions. One is to do with the innovation objective. Government Amendment 60M states:

“The innovation objective is to promote the development of, and innovation in, payment systems”.

It just occurred to me to ask whether there is any example of a regulator successfully promoting innovation. I would be interested to hear the Minister’s reply to that.

[Lord Lawson of Blaby]

It would be an innovation.

[Lord Sharkey]

An innovation regulator.

[Lord Lawson of Blaby]

No, it would be an innovation.

[Lord Sharkey]

Government Amendment 60U is headed, “Power to require disposal of interest in payment system”. New subsection (2) states:

“The power conferred … may be exercised only if the Payment Systems Regulator is satisfied that, if the power is not exercised, there is likely to be a restriction or distortion of competition in—

(a) the market for payment systems, or

(b) a market for services provided by payment systems”.

How is that a remedy for anything? When it comes to divestment or disposal, is it the Government’s notion that someone will pick up the shares that have been disposed of; and, if so, who will it be? What would be the incentive for anyone to pick them up?

[Lord Newby]

My Lords, I am grateful for the wide welcome given to these provisions.

[Noble Lords]

Oh!

[Lord Newby]

A number of noble Lords raised the same question and have come down on different sides. Should we have a separate regulator or should it be just a division in the FCA? In the end, it was a question about how important we thought the issue was. A division in the FCA would be a division among a lot of divisions. The staff of a division in the FCA would probably be at a somewhat more junior level than that of a chief executive of an important regulator. The priority that the overall body, namely the FCA, would give to this would obviously be somewhat less than a body on its own could give, because the sole concern of the people working for it would be to make the scheme work.

It would have been possible to do it in the FCA. In a sense, you literally pays your money and takes your choice. Our view is that this is a fundamental element of the system that needs shaking up and the best way to do it is to have a group of people whose sole interest—and whose career interest—is associated with making this thing work. That is why the body is being established on its own.

The second question of the noble Lord, Lord Eatwell, was about the definition of competition. As he said, competition in terms of access and users is clearly desirable. Will it be desirable or possible to have diverse structures for all elements of the system? Almost certainly not; some parts of it are a natural monopoly. That is one reason why a regulator is needed. At the moment, you have a natural monopoly controlled by a small group of banks. What we want to do is open up that access but give more scope for looking at options, which at the moment are closed down by the structure. My personal view is that it is highly unlikely that the basic plumbing of the system will replicate the situation in the railways; it would make no sense. However, there may be elements of the payments system, including new forms of payment, which may be susceptible to competition, and we want the regulator to have that in its purview and look at it. There is no suggestion that we are seeking to break up those elements of the system that form a natural monopoly.

The noble Lord also asked about maintenance of service. There is a difference between what the regulator will be doing on a day-to-day basis in making sure that the whole system works effectively and what happens if the whole thing is failing. That is the difference in the second provision, which we will come on to later, about resolution. The people to look after resolution when something has failed are not necessarily the best people to be doing the day-to-day management of it.

[Lord Eatwell]

My Lords, I beg the noble Lord’s pardon, but the question related to a possibility of interruption of service. Amendment 62 states:

“The Treasury may by order designate a company”,

and so on, to maintain the service. We then move on to the next section relating to fundamental market infrastructure, which states that the maintenance of service is the responsibility of the Bank of England. There is an inconsistency here. As regards the issue of the infrastructure as a payments system and the issue of all other aspects of back-office infrastructure, the Treasury is responsible for one and the Bank of England is responsible for the other. However, they are so interrelated and interdependent that it does not really make sense. You have either one or the other. I do not mind which. I would prefer the Bank of England to be responsible because it is closer to the payments system, but you do not have both.

19:45

[Lord Newby]

My Lords, I will have another look at that. The noble Lord has a problem which I do not have to the same extent, but he makes a perfectly reasonable point and we will look at it.

The noble Lord, Lord Higgins, asked a couple of questions—one about cost and the other about international payments. The cost of the activities comes from the FCA budget and is therefore borne by the regulated population. It is not known at this stage what the level of fees or the detailed budget will be. These will be determined by the FCA. The regulator will be concerned with UK payments systems only.

[Lord Higgins]

I am not quite clear about who is paying this cost. Am I right in thinking that it is the people using the chequing system? My second question was: is this regulatory system compatible with a change in the underlying system from, say, cheques to the system used in the Netherlands? Thirdly, am I right in understanding that the noble Lord said that this arrangement will cover only domestic, not international, transactions? Should we not be covering both?

[Lord Newby]

It will cover the UK end of international transactions. The counterparty in another country is regulated by that country’s operations, not by the UK end of it. Obviously, close working between both countries is required but we are dealing with the pipes that leave the UK. Once they have left the UK, the pipes are regulated by someone else. As far as cheques are concerned, if there were to be a decision or view expressed that cheques had come to the end of their useful life, it will not fall under the purview of the regulator to effect that change. I think that I am right in saying that the budget forms part of the FCA’s overall budget, as set out in the legislation. Therefore, the overall financial services sector pays into the FCA for a whole raft of specialist functions. This is no different from anything else that is funded by the FCA.

[Lord Eatwell]

Perhaps I may follow that. The overall financial services industry, or that bit of it which is regulated by the FCA, some of which has nothing to do with banking and payments systems, has to pay for this regulator. On top of that, let us remember that he who pays the piper calls the tune. All this stuff about separate careers and career paths is subsumed by the fact that the financial controller of the FCA will control the funds going into this organisation. I take the argument of the noble Lord, Lord Turnbull, about the focus on this role, but I really do not understand why you cannot have a division with a senior figure in charge of it, and therefore some clarity within the FCA.

[Lord Newby]

My Lords, I am extremely sorry that the noble Lord does not understand. We just have a difference of view about that. The noble Baroness, Lady Noakes, asked about the kind of action that the regulator could take and whether it could, in effect, behave unreasonably. The answer is—

[Baroness Noakes]

I did not question whether or not it could behave reasonably because all regulators are supposed to behave reasonably, and can be challenged if they do not. I asked the Minister to address specific points. There are amendments here about granting access and varying the terms of existing agreements. I asked where in the 40, which I am told is now 52, pages of amendments that we are asked to consider in this group are the financial principles that will guide this new regulator in imposing terms for this new access or in varying existing access rights. I was trying to tease out, for example, whether the regulator will have the power to impose subsidies on existing payments regulators or whether he will be required to ensure that the payment system operators can cover their costs. Therefore, I asked: where are the financial principles which the regulator has to use in exercising the powers that are granted by two of the amendments in this group?

[Lord Newby]

I am extremely sorry; I misunderstood the noble Baroness. I think that I shall have to write to her on that point.

My noble friend Lord Sharkey asked whether this was the only case in which a regulator had innovation as part of his remit. I simply do not know but I think that the noble Lord, Lord Lawson, pointed out that, if it were, that might indeed be an innovation. If it is an innovation, we think that it is a good one.

In terms of divestment and who picks up the shares, we are saying that this is something that the regulator should have the power to look at as one possibility. There is no blueprint in Treasury minds as to how he will do it or whether he will do it and, if so, who the beneficiaries will be. It is something that we want to have as an option for the regulator to look at. We want to give the regulator the greatest possible scope to come up with alternative ways of developing the system and possibly of generating new sources of funding for the innovation, which we are also keen on.

I am sure that I have omitted a number of points. My noble friend Lord Phillips raised a question concerning subsection (3) of the proposed new clause in Amendment 60B and I have now forgotten what he asked. Perhaps he would like to ask it again. He is indicating that he would not—that is good.

[Lord Martin of Springburn (CB)]

I have been very interested in what has been said about the regulator. Obviously the regulator has to work at arm’s length from those he is regulating. If any hospitality is offered to the regulator, is that put in a register that can be seen by the public? In other words, will we have transparency in this matter?

[Lord Newby]

I will write to the noble Lord as I do not have the faintest clue, except to say that I am sure that this regulator will follow the same rules as other regulators, but I simply do not know what their rules are in respect of hospitality. I suspect that, like Ministers, there will be some de minimis figure below which they will not need to make such a declaration and beyond which they will. However, I will check that.

Amendment 60A agreed.

Amendments 60B to 60YYV

Moved by

[Lord Newby]

60B: After Clause 12, insert the following new Clause—
“The Payment Systems Regulator
(1) The FCA must establish a body corporate to exercise the functions conferred on the body by or under this Part.
(2) The body established under subsection (1) is referred to in this Part as the Payment Systems Regulator.
(3) The FCA must take such steps as are necessary to ensure that the Payment Systems Regulator is, at all times, capable of exercising the functions referred to in subsection (1).
(4) In complying with the duty imposed by subsection (3) the FCA may, in particular—
(a) provide staff to the Payment Systems Regulator, and(b) provide services to the Payment Systems Regulator which the FCA considers would facilitate the exercise of any of those functions.(5) Schedule (The Payment Systems Regulator) (which contains further provision about the Payment Systems Regulator) has effect.”

60C: After Clause 12, insert the following new Clause—
“Meaning of “payment system”
(1) In this Part “payment system” means a system which is operated by one or more persons in the course of business for the purpose of enabling persons to make transfers of funds, and includes a system which is designed to facilitate the transfer of funds using another payment system.
(2) But “payment system” does not include—
(a) any arrangements for the physical movement of cash;(b) a system which does not make any provision for the transfer of funds by payers, or to recipients, in the United Kingdom;(c) a securities settlement system operated by a person approved under regulations under section 785 of the Companies Act 2006 (provision enabling procedures for evidencing and transferring title);(d) a system operated by a recognised clearing house;(e) any other system whose primary purpose is not that of enabling persons to transfer funds.(3) In this section—
“recognised clearing house” has the meaning given by section 285(1) of FSMA 2000;
“securities settlement system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument, and which facilitate supplementary and incidental matters.
(4) The Treasury may by order amend this section so as to—
(a) add descriptions of systems or arrangements that are not to be regarded as payment systems, or(b) vary or remove any such description.”

60D: After Clause 12, insert the following new Clause—
“Participants in payment systems etc
(1) This section applies for the purposes of this Part.
(2) The following persons are “participants” in a payment system—
(a) the operator of the payment system (see subsection (3));(b) any infrastructure provider (see subsection (4));(c) any payment service provider (see subsection (5)).(But see also subsection (8).) (3) “Operator”, in relation to a payment system, means any person with responsibility under the system for managing or operating it; and any reference to the operation of a payment system includes a reference to its management.
(4) “Infrastructure provider”, in relation to a payment system, means any person who provides or controls any part of the infrastructure used for the purposes of operating the payment system.
(5) “Payment service provider”, in relation to a payment system, means any person who provides services to persons who are not participants in the system for the purposes of enabling the transfer of funds using the payment system.
(6) A payment service provider has “direct access” to a payment system if the payment service provider is able to provide services for the purposes of enabling the transfer of funds using the payment system as a result of arrangements made between the payment service provider and the operator of the payment system.
(7) Any reference to participation in a payment system is to be read in accordance with this section, and in particular—
(a) in the case of an operator of a payment system, includes a reference to developing the system, and(b) in the case of a payment service provider with direct access to a payment system, includes a reference to entering into an agreement with a person to enable the person to become a payment service provider in relation to the system.(8) The Bank of England is not to be regarded as a participant of any kind in any payment system.”

60E: After Clause 12, insert the following new Clause—
“Designation orders
(1) The Treasury may by order (a “designation order”) designate a payment system as a regulated payment system for the purposes of this Part.
(2) A designation order must specify in as much detail as is reasonably practicable the arrangements that constitute the payment system.”

60F: After Clause 12, insert the following new Clause—
“Designation criteria
(1) The Treasury may make a designation order in respect of a payment system only if they are satisfied that any deficiencies in the design of the system, or any disruption of its operation, would be likely to have serious consequences for those who use, or are likely to use, the services provided by the system.
(2) In considering whether to make a designation order in respect of a payment system, the Treasury must have regard to—
(a) the number and value of the transactions that the system presently processes or is likely to process in the future,(b) the nature of the transactions that the system presently processes or is likely to process in the future,(c) whether those transactions or their equivalent could be handled by other payment systems, and(d) the relationship between the system and other payment systems.”

60G: After Clause 12, insert the following new Clause—
“Procedure
(1) Before making a designation order in respect of a payment system the Treasury must—
(a) consult the Payment Systems Regulator and, if the system is a recognised inter-bank payment system, the Bank of England,(b) notify the operator of the system, and(c) consider any representations made.(2) In considering whether to make a designation order in respect of a payment system, the Treasury may rely on information provided by—
(a) the Bank of England,(b) the FCA,(c) the PRA, or(d) the Payment Systems Regulator.”

60H: After Clause 12, insert the following new Clause—
“Amendment of designation order
(1) The Treasury may amend a designation order.
(2) Before amending a designation order made in respect of a payment system, the Treasury must—
(a) consult the Payment Systems Regulator and, if the payment system is a recognised inter-bank payment system, the Bank of England,(b) notify the operator of the payment system, and(c) consider any representations made.(3) The Treasury must consider any request by the operator of a regulated payment system for the amendment of its designation order.”

60J: After Clause 12, insert the following new Clause—
“Revocation of designation orders
(1) The Treasury may revoke a designation order.
(2) The Treasury must revoke a designation order if they are not satisfied that the criteria in section (Designation criteria) are met in respect of the payment system to which the order relates.
(3) Before revoking a designation order made in respect of a payment system, the Treasury must—
(a) consult the Payment Systems Regulator and, if the payment system is a recognised inter-bank payment system, the Bank of England,(b) notify the operator of the payment system, and (c) consider any representations made.(4) The Treasury must consider any request by the operator of a regulated payment system for the revocation of its designation order.”

60K: After Clause 12, insert the following new Clause—
“Regulator’s general duties in relation to payment systems
(1) In discharging its general functions relating to payment systems the Payment Systems Regulator must, so far as is reasonably possible, act in a way which advances one or more of its payment systems objectives.
(2) The payment systems objectives of the Payment Systems Regulator are—
(a) the competition objective (see section (The competition objective)),(b) the innovation objective (see section (The innovation objective)), and(c) the service-user objective (see section (The service-user objective)).(3) In discharging its general functions relating to payment systems the Payment Systems Regulator must have regard to—
(a) the importance of maintaining the stability of, and confidence in, the UK financial system,(b) the importance of payment systems in relation to the performance of functions by the Bank of England in its capacity as a monetary authority, and(c) the regulatory principles in section (Regulatory principles).(4) The general functions of the Payment Systems Regulator relating to payment systems are—
(a) its function of giving general directions under section (Directions) (considered as a whole),(b) its functions in relation to the giving of general guidance under section (Guidance) (considered as a whole), and(c) its function of determining the general policy and principles by reference to which it performs particular functions.”

60L: After Clause 12, insert the following new Clause—
“The competition objective
(1) The competition objective is to promote effective competition in—
(a) the market for payment systems, and(b) the markets for services provided by payment systems,in the interests of those who use, or are likely to use, services provided by payment systems.(2) The reference in subsection (1) to promoting effective competition includes, in particular, promoting effective competition—
(a) between different operators of payment systems,(b) between different payment service providers, and(c) between different infrastructure providers.(3) The matters to which the Payment Systems Regulator may have regard in considering the effectiveness of competition in a market mentioned in subsection (1) include—
(a) the needs of different persons who use, or may use, services provided by payment systems,(b) the ease with which persons who may wish to use those services can do so,(c) the ease with which persons who obtain those services can change the person from whom they obtain them,(d) the needs of different payment service providers or persons who wish to become payment service providers,(e) the ease with which payment service providers, or persons who wish to become payment service providers, can provide services using payment systems,(f) the ease with which payment service providers can change the payment system they use to provide their services,(g) the needs of different infrastructure providers or persons who wish to become infrastructure providers, (h) the ease with which infrastructure providers, or persons who wish to become infrastructure providers, can provide infrastructure for the purposes of operating payment systems,(i) the needs of different operators of payment systems,(j) the ease with which operators of payment systems can change the infrastructure used to operate the payment systems,(k) the level and structure of fees, charges or other costs associated with participation in payment systems,(l) the ease with which new entrants can enter the market,(m) how far competition is contributing to the development of efficient and effective infrastructure for the purposes of operating payment systems,(n) how far competition is encouraging innovation.”

60M: After Clause 12, insert the following new Clause—
“The innovation objective
(1) The innovation objective is to promote the development of, and innovation in, payment systems in the interests of those who use, or are likely to use, services provided by payment systems, with a view to improving the quality, efficiency and economy of payment systems.
(2) The reference in subsection (1) to promoting the development of, and innovation in, payment systems includes, in particular, a reference to promoting the development of, and innovation in, infrastructure to be used for the purposes of operating payment systems.”

60N: After Clause 12, insert the following new Clause—
“The service-user objective
The service-user objective is to ensure that payment systems are operated and developed in a way that takes account of, and promotes, the interests of those who use, or are likely to use, services provided by payment systems.”

60P: After Clause 12, insert the following new Clause—
“Regulatory principles
(none) The regulatory principles referred to in section (Regulator’s general duties in relation to payment systems)(3)(c) are as follows—
(a) the need to use the resources of the Payment Systems Regulator in the most efficient and economic way;(b) the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction;(c) the desirability of sustainable growth in the economy of the United Kingdom in the medium or long term;(d) the general principle that those who use services provided by payment systems should take responsibility for their decisions;(e) the responsibilities of the senior management of persons subject to requirements imposed by or under this Part, including those affecting persons who use services provided by payment systems, in relation to compliance with those requirements; (f) the desirability where appropriate of the Payment Systems Regulator exercising its functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons subject to requirements imposed by or under this Part;(g) the desirability in appropriate cases of the Payment Systems Regulator publishing information relating to persons on whom requirements are imposed by or under this Part, or requiring such persons to publish information, as a means of contributing to the advancement by the Payment Systems Regulator of its payment systems objectives;(h) the principle that the Payment Systems Regulator should exercise its functions as transparently as possible.”

60Q: After Clause 12, insert the following new Clause—
“Directions
(1) The Payment Systems Regulator may give directions in writing to participants in regulated payment systems.
(2) A direction given to a participant in a regulated payment system may—
(a) require or prohibit the taking of specified action in relation to the system;(b) set standards to be met in relation to the system.(3) A direction under this section may apply—
(a) generally,(b) in relation to all operators, all infrastructure providers or all payment service providers, or(c) in relation to specified persons or persons of a specified description. (4) The Payment Systems Regulator must publish any direction given under this section that applies as mentioned in subsection (3)(a) or (b).
(5) A direction under this section that applies as mentioned in subsection (3)(a) is referred to in this Part as a “general direction”.”

60R: After Clause 12, insert the following new Clause—
“System rules
(1) The Payment Systems Regulator may require the operator of a regulated payment system—
(a) to establish rules for the operation of the system;(b) to change the rules in a specified way or so as to achieve a specified purpose;(c) to notify the Payment Systems Regulator of any proposed change to the rules;(d) not to change the rules without the approval of the Payment Systems Regulator.(2) A requirement under subsection (1)(c) or (d) may be general or specific.”

60S: After Clause 12, insert the following new Clause—
“Power to require access to payment systems
(1) This section applies where a person (“the applicant”) applies for an order under this section.
(2) The Payment Systems Regulator may by order require the operator of a regulated payment system to enable the applicant to become a payment service provider in relation to the system.
(3) The Payment Systems Regulator may by order require any payment service provider with direct access to a regulated payment system to enter into an agreement with the applicant to enable the applicant to become a payment service provider in relation to the system.
(4) An order under this section may provide for the applicant to become a payment service provider in relation to a payment system—
(a) for a period specified in the order;(b) on terms and conditions specified in the order.”

60T: After Clause 12, insert the following new Clause—
“Variation of agreements relating to payment systems
(1) This section applies to the following agreements—
(a) any agreement made between the operator of a regulated payment system and a payment service provider;(b) any agreement made between a payment service provider with direct access to a regulated payment system and another person for the purpose of enabling that other person to become a payment service provider in relation to the system;(c) any agreement concerning fees or charges payable in connection with— (i) participation in a regulated payment system, or(ii) the use of services provided by a regulated payment system.(2) The Payment Systems Regulator may, on the application of a party to an agreement to which this section applies, vary the agreement by—
(a) varying any of the fees or charges payable under the agreement, or(b) in the case of an agreement within subsection (1)(a) or (b), varying any other terms and conditions relating to the payment service provider’s participation in the payment system.(3) In the case of an agreement within subsection (1)(b), the reference in subsection (2)(b) to the payment service provider is to the payment service provider which does not have direct access to the payment system.
(4) The power under this section to vary any fee or charge includes power to specify a maximum fee or charge.
(5) If the Payment Systems Regulator varies an agreement under this section, the agreement has effect subject to the variation.”

60U: After Clause 12, insert the following new Clause—
“Power to require disposal of interest in payment system
(1) The Payment Systems Regulator may require a person who has an interest in the operator of a regulated payment system to dispose of all or part of that interest.
(2) The power conferred by subsection (1) may be exercised only if the Payment Systems Regulator is satisfied that, if the power is not exercised, there is likely to be a restriction or distortion of competition in—
(a) the market for payment systems, or(b) a market for services provided by payment systems. (3) The Payment Systems Regulator may not exercise the power conferred by subsection (1) without the consent of the Treasury.
(4) If the Payment Systems Regulator decides to exercise the power conferred by subsection (1) in relation to a person who has an interest in the operator of a regulated payment system—
(a) the Payment Systems Regulator must notify the relevant competition authorities (see subsection (5)), and(b) the relevant competition authorities may not take any action in relation to the person that would require the person to dispose of all or part of that interest.(5) The relevant competition authorities are—
(a) the Secretary of State,(b) the Competition and Markets Authority, and(c) the FCA.”

60V: After Clause 12, insert the following new Clause—
“The Regulator’s functions under Part 4 of the Enterprise Act 2002
(1) The functions to which this subsection applies (“the concurrent functions”) are to be concurrent functions of the Payment Systems Regulator and the Competition and Markets Authority (“the CMA”).
(2) Subsection (1) applies to the functions of the CMA under Part 4 of the Enterprise Act 2002 (market investigations), so far as those functions—
(a) are exercisable by the CMA Board (within the meaning of Schedule 4 to the Enterprise and Regulatory Reform Act 2013), and(b) relate to participation in payment systems.(3) But subsection (1) does not apply to functions under the following sections of the Enterprise Act 2002—
(none) section 166 (duty to maintain register of undertakings and orders);(none) section 171 (duty to publish guidance).(4) So far as is necessary for the purposes of, or in connection with, subsections (1) and (2)—
(a) references in Part 4 of the Enterprise Act 2002 to the CMA (including references in provisions of that Act applied by that Part) are to be read as including references to the Payment Systems Regulator,(b) references in that Part to section 5 of that Act are to be read as including references to section (Information relating to Regulator’s competition functions) of this Act, and(c) references in that Part to consumers are to be read as including references to any person who uses, or is likely to use, services provided by payment systems in the course of a business carried on by the person.(5) But subsection (4) does not apply—
(a) in relation to section 166 or 171 of that Act, or(b) where the context otherwise requires. (6) Section 130A of the Enterprise Act 2002 is to have effect in relation to the Payment Systems Regulator by virtue of subsections (1) and (2) as if—
(a) in subsection (2)(a) of that section, the reference to the acquisition or supply of goods or services of one or more than one description in the United Kingdom were a reference to the participation in payment systems used to provide services in the United Kingdom, and(b) in subsection (2)(b) of that section, the reference to the extent to which steps can and should be taken were a reference to the extent to which steps that might include steps under Part 4 of that Act can and should be taken.”

60W: After Clause 12, insert the following new Clause—
“Restrictions on exercise of functions under Part 4 of the Enterprise Act 2002
(1) Before the CMA or the Payment Systems Regulator first exercises any of the concurrent functions in relation to any matter, it must consult the other.
(2) Neither the CMA nor the Payment Systems Regulator may exercise any of the concurrent functions in relation to any matter if any of those functions have been exercised in relation to that matter by the other.
(3) In subsections (1) and (2) “the concurrent functions” has the same meaning as in section (The Regulator’s functions under Part 4 of the Enterprise Act 2002).
(4) Before the FCA or the Payment Systems Regulator first exercises any of the concurrent functions in relation to any matter, it must consult the other.
(5) Neither the FCA nor the Payment Systems Regulator may exercise any of the concurrent functions in relation to any matter if any of those functions have been exercised in relation to that matter by the other.
(6) In subsections (4) and (5) “the concurrent functions”—
(a) in relation to the Payment Systems Regulator, has the same meaning as in section (The Regulator’s functions under Part 4 of the Enterprise Act 2002), and(b) in relation to the FCA, means the functions which by virtue of section 234J of FSMA 2000 are concurrent functions of the FCA and the CMA.(7) In this section “the CMA” means the Competition and Markets Authority.”

60X: After Clause 12, insert the following new Clause—
“The Regulator’s functions under the Competition Act 1998
(1) The functions to which this subsection applies (“the concurrent functions”) are to be concurrent functions of the Payment Systems Regulator and the Competition and Markets Authority (“the CMA”).
(2) Subsection (1) applies to the functions of the CMA under the provisions of Part 1 of the Competition Act 1998, so far as relating to any of the following that relate to participation in payment systems—
(a) agreements, decisions or concerted practices of the kind mentioned in section 2(1) of that Act,(b) conduct of the kind mentioned in section 18(1) of that Act,(c) agreements, decisions or concerted practices of the kind mentioned in Article 101(1) of the Treaty on the Functioning of the European Union, and(d) conduct which amounts to abuse of the kind mentioned in Article 102 of the Treaty on the Functioning of the European Union.(3) But subsection (1) does not apply to functions under the following sections of that Act—
(none) section 31D(1) to (6) (duty to publish guidance);(none) section 38(1) to (6) (duty to publish guidance about penalties);(none) section 40B(1) to (4) (duty to publish statement of policy on penalties); (none) section 51 (rules).(4) So far as necessary for the purposes of, or in connection with, the provisions of subsections (1) and (2), references to the CMA in Part 1 of the Competition Act 1998 are to be read as including references to the Payment Systems Regulator.
(5) But subsection (4) does not apply—
(a) in relation to sections 31D(1) to (6), 38(1) to (6), 40B(1) to (4), 51, 52(6) and (8) and 54 of that Act, or(b) where the context otherwise requires.”

60Y: After Clause 12, insert the following new Clause—
“Duty to consider exercise of powers under Competition Act 1998
(1) Before exercising any powers within subsection (2), the Payment Systems Regulator must consider whether it would be more appropriate to proceed under the Competition Act 1998.
(2) The powers referred to in subsection (1) are—
(a) its power to give a direction under section (Directions) (apart from the power to give a general direction);(b) its power to impose a requirement under section (System rules) (apart from the power to impose a requirement on all operators of regulated payment systems);(c) its powers under sections (Power to require access to payment systems), (Variation of agreements relating to payment systems) and (Power to require disposal of interest in payment system).(3) The Payment Systems Regulator must not exercise the power if it considers that it would be more appropriate to proceed under the Competition Act 1998.”

60YA: After Clause 12, insert the following new Clause—
“Provision of information and assistance to a CMA group
(1) For the purpose of assisting a CMA group in carrying out a relevant investigation, the Payment Systems Regulator must give the CMA group—
(a) any relevant information which it has in its possession, and (b) any other assistance which the CMA group may reasonably require in relation to any matters falling within the scope of the investigation.(2) A “relevant investigation” is an investigation carried out on a reference made by the Payment Systems Regulator under section 131 of the Enterprise Act 2002 by virtue of section (The Regulator’s functions under Part 4 of the Enterprise Act 2002).
(3) “Relevant information”, in relation to a relevant investigation, is information—
(a) which relates to matters falling within the scope of the investigation, and(b) which—(i) is requested by the CMA group for the purpose of the investigation, or(ii) in the opinion of the Payment Systems Regulator, it would be appropriate to give to the CMA group for that purpose.(4) A CMA group, in carrying out a relevant investigation, must take into account any information given to it under this section.
(5) In this section “CMA group” has the same meaning as in Schedule 4 to the Enterprise and Regulatory Reform Act 2013.”

60YB: After Clause 12, insert the following new Clause—
“Information relating to Regulator’s competition functions
(1) For the purpose of the functions conferred on it by sections (Power to require disposal of interest in payment system) to (Provision of information and assistance to a CMA group) the Payment Systems Regulator is to have the function of keeping under review—
(a) the market for payment systems, and(b) the markets for services provided by payment systems. (2) The function conferred by subsection (1) is to be carried out with a view to (among other things) ensuring that the Payment Systems Regulator has sufficient information to take informed decisions and to carry out its other functions effectively.”

60YC: After Clause 12, insert the following new Clause—
“Exclusion of general duties
(1) Section (Regulator’s general duties in relation to payment systems) (the Payment Systems Regulator’s general duties) does not apply in relation to anything done by the Payment Systems Regulator in the carrying out of its functions by virtue of sections (The Regulator’s functions under Part 4 of the Enterprise Act 2002) to (Provision of information and assistance to a CMA group).
(2) But in the carrying out of any functions by virtue of sections (The Regulator’s functions under Part 4 of the Enterprise Act 2002) to (Provision of information and assistance to a CMA group), the Payment Systems Regulator may have regard to any of the matters in respect of which a duty is imposed by section (Regulator’s general duties in relation to payment systems) if it is a matter to which the Competition and Markets Authority is entitled to have regard in the carrying out of those functions.”

60YD: After Clause 12, insert the following new Clause—
“Supplementary provision
(1) If any question arises as to whether, by virtue of sections (The Regulator’s functions under Part 4 of the Enterprise Act 2002) and (The Regulator’s functions under the Competition Act 1998), any functions fall to be, or are capable of being, carried out by the Payment Systems Regulator in relation to any particular case, that question is to be referred to, and determined by, the Treasury.
(2) No objection is to be taken to anything done under the Competition Act 1998 or Part 4 of the Enterprise Act 2002 by or in relation to the Payment Systems Regulator on the ground that it should have been done by or in relation to the Competition and Markets Authority.”

60YE: After Clause 12, insert the following new Clause—
“Amendments relating to Regulator’s competition powers
(1) In section 9E of the Company Directors Disqualification Act 1986 (interpretation of sections 9A to 9D), in subsection (2), after paragraph (f) insert—
“(g) the Payment Systems Regulator established under section (The Payment Systems Regulator) of the Financial Services (Banking Reform) Act 2013.”(2) In section 54 of the Competition Act 1998 (regulators), in subsection (1), omit the “and” at the end of paragraph (g) and after paragraph (h) insert—
“(i) the Payment Systems Regulator established under section (The Payment Systems Regulator) of the Financial Services (Banking Reform) Act 2013.”(3) In section 136 of the Enterprise Act 2002 (investigations and reports on market investigation references)—
(a) in subsection (7), at the end insert—“(j) in relation to the Payment Systems Regulator, section (The Regulator’s functions under Part 4 of the Enterprise Act 2002) of the Financial Services (Banking Reform) Act 2013.”;(b) in subsection (8), for “or Monitor” substitute “, Monitor or the Payment Systems Regulator.”;(c) at the end insert—“(10) In this section “the Payment Systems Regulator” means the body established under section (The Payment Systems Regulator) of the Financial Services (Banking Reform) Act 2013.”
(4) In section 52(4) of the Enterprise and Regulatory Reform Act 2013 (power to remove concurrent competition functions of sectoral regulators), after paragraph (f) insert—
“(g) the Payment Systems Regulator established under section (The Payment Systems Regulator) of the Financial Services (Banking Reform) Act 2013.” (5) In Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (the Competition and Markets Authority), in paragraph 16 (concurrency report), at the end of sub-paragraph (7) insert—
“(h) the Payment Systems Regulator established under section (The Payment Systems Regulator) of the Financial Services (Banking Reform) Act 2013.””

60YF: After Clause 12, insert the following new Clause—
“Complaints by representative bodies
(1) A designated representative body may make a complaint to the Payment Systems Regulator that a feature, or combination of features, of a market in the United Kingdom for services provided by payment systems is, or appears to be, significantly damaging the interests of those who use, or are likely to use, those services (“service-users”).
(2) “Designated representative body” means a body designated by the Treasury by order.
(3) The Treasury—
(a) may designate a body only if it appears to them to represent the interests of service-users of any description, and(b) must publish in such manner as they think fit (and may from time to time vary) criteria to be applied by them in determining whether to make or revoke a designation.(4) The reference in subsection (1) to a feature of a market in the United Kingdom for services provided by payment systems is a reference to—
(a) the structure of the market concerned or any aspect of that structure,(b) any conduct (whether or not in the market concerned) of one or more than one person who supplies or acquires services in the market concerned, or(c) any conduct relating to the market concerned of customers of any person who supplies or acquires services,and “conduct” includes any failure to act (whether or not intentional) and any other unintentional conduct. (5) In this section “market in the United Kingdom” includes a market which operates only in a part of the United Kingdom.
(6) In section 234C of FSMA 2000 (complaints by consumer bodies), after subsection (1) insert—
“(1A) But a complaint may not be made to the FCA under this section if it is a complaint which could be made to the Payment Systems Regulator by a designated representative body under section (Complaints by representative bodies) of the Financial Services (Banking Reform) Act 2013 (complaints by representative bodies).
“Designated representative body” and “the Payment Systems Regulator” have the same meaning in this subsection as they have in that section.””

60YG: After Clause 12, insert the following new Clause—
“Response by Regulator
(1) The Payment Systems Regulator must within 90 days after the day on which it receives a complaint under section (Complaints by representative bodies) publish a response stating how it proposes to deal with the complaint, and in particular—
(a) whether it has decided to take any action, or to take no action, and(b) if it has decided to take action, what action it proposes to take.(2) The response must—
(a) include a copy of the complaint, and(b) state the Payment Systems Regulator’s reasons for its proposals.(3) The Treasury may by order amend subsection (1) by substituting any period for the period for the time being specified there.”

60YH: After Clause 12, insert the following new Clause—
“Complaints: guidance
(1) The guidance given by the Payment Systems Regulator under section (Guidance)—
(a) must include guidance about the presentation of a reasoned case for a complaint under section (Complaints by representative bodies), and(b) may include guidance about any other matters that appear to the Payment Systems Regulator to be appropriate for the purposes of that section.(2) Guidance given in accordance with subsection (1) is to be treated as general guidance for the purposes of this Part.”

60YJ: After Clause 12, insert the following new Clause—
“Meaning of “compliance failure”
In this Part “compliance failure” means a failure by a participant in a regulated payment system to—(a) comply with a direction given under section (Directions), or(b) comply with a requirement imposed under section (System rules) or (Power to require access to payment systems).”

60YK: After Clause 12, insert the following new Clause—
“Publication of compliance failures etc
(1) The Payment Systems Regulator may publish details of a compliance failure by a participant in a regulated payment system.
(2) The Payment Systems Regulator may publish details of a sanction imposed under section (Penalties).”

60YL: After Clause 12, insert the following new Clause—
“Penalties
(1) The Payment Systems Regulator may require a participant in a regulated payment system to pay a penalty in respect of a compliance failure.
(2) A penalty—
(a) must be paid to the Payment Systems Regulator, and(b) may be enforced by the Payment Systems Regulator as a debt.(3) The Payment Systems Regulator must prepare a statement of the principles which it will apply in determining—
(a) whether to impose a penalty, and(b) the amount of a penalty. (4) The Payment Systems Regulator must—
(a) publish the statement on its website,(b) send a copy to the Treasury,(c) review the statement from time to time and revise it if necessary (and paragraphs (a) and (b) apply to a revision), and(d) in applying the statement to a compliance failure, apply the version in force when the compliance failure occurred.”

60YM: After Clause 12, insert the following new Clause—
“Warning notices
(1) Before imposing a sanction on any person the Payment Systems Regulator must—
(a) give the person a notice in writing (a “warning notice”),(b) give the person at least 21 days to make representations,(c) consider any representations made, and(d) as soon as is reasonably practicable, give the person a notice in writing stating whether or not it intends to impose the sanction.(2) In subsection (1) any reference to imposing a sanction is a reference to—
(a) publishing details under section (Publication of compliance failures etc)(1), or(b) requiring the payment of a penalty under section (Penalties).”

60YN: After Clause 12, insert the following new Clause—
“Injunctions
(1) If, on the application of the Payment Systems Regulator, the court is satisfied—
(a) that there is a reasonable likelihood that there will be a compliance failure, or(b) that there has been a compliance failure and there is a reasonable likelihood that it will continue or be repeated,the court may make an order restraining the conduct constituting the failure. (2) If, on the application of the Payment Systems Regulator, the court is satisfied—
(a) that there has been a compliance failure by a participant in a regulated payment system, and(b) that there are steps which could be taken for remedying the failure,the court may make an order requiring the participant, and anyone else who appears to have been knowingly concerned in the failure, to take such steps as the court may direct to remedy it.(3) If, on the application of the Payment Systems Regulator, the court is satisfied—
(a) that there may have been a compliance failure by a participant in a regulated payment system, or(b) that a person may have been knowingly concerned in a compliance failure,the court may make an order restraining the participant or the person (as the case may be) from dealing with any assets which it is satisfied the participant or person is reasonably likely to deal with. (4) The jurisdiction conferred by this section is exercisable—
(a) in England and Wales and Northern Ireland, by the High Court, and(b) in Scotland, by the Court of Session. (5) In this section—
(a) references to an order restraining anything are, in Scotland, to be read as references to an interdict prohibiting that thing,(b) references to remedying a failure include mitigating its effect, and(c) references to dealing with assets include disposing of them.”

60YP: After Clause 12, insert the following new Clause—
“Appeals: general
(1) A person who is affected by any of the following decisions of the Payment Systems Regulator may appeal against the decision—
(a) a decision to give a direction under section (Directions) (other than a general direction),(b) a decision to impose a requirement under section (System rules) (other than a requirement imposed on all operators of regulated payment systems),(c) a decision to exercise its power under section (Power to require access to payment systems), (Variation of agreements relating to payment systems) or (Power to require disposal of interest in payment system),(d) a decision to impose a sanction.(2) In subsection (1) the reference to imposing a sanction is a reference to—
(a) publishing details under section (Publication of compliance failures etc)(1), or(b) requiring the payment of a penalty under section (Penalties).(3) If the decision is a CAT-appealable decision, the appeal must be made to the Competition Appeal Tribunal in accordance with section (Appeals to Competition Appeal Tribunal).
(4) A “CAT-appealable decision” means—
(a) a decision to give a direction under section (Directions),(b) a decision to impose a requirement under section (System rules), or(c) a decision to publish details under section (Publication of compliance failures etc)(1).(5) If the decision is a decision to impose a penalty on the person under section (Penalties), the appeal must be made to the Competition Appeal Tribunal in accordance with section (Appeals in relation to penalties).
(6) If the decision is a CMA-appealable decision, the appeal must be made to the Competition and Markets Authority (“the CMA”) in accordance with section (Appeals to Competition and Markets Authority).
(7) A “CMA-appealable decision” means—
(a) a decision to impose a requirement under section (Power to require access to payment systems),(b) a decision to vary an agreement under section (Variation of agreements relating to payment systems), or (c) a decision to impose a requirement under section (Power to require disposal of interest in payment system).(8) The permission of the CMA is required for an appeal to be made in accordance with section (Appeals to Competition and Markets Authority).
(9) The CMA may refuse permission for an appeal only if—
(a) the appeal is made for reasons that are trivial or vexatious, or(b) the appeal has no reasonable prospect of success.”

60YQ: After Clause 12, insert the following new Clause—
“Appeals to Competition Appeal Tribunal
(1) This section applies where a person is appealing to the Competition Appeal Tribunal (“the Tribunal”) against a CAT-appealable decision.
(2) The means of making an appeal is by sending the Tribunal a notice of appeal in accordance with Tribunal rules.
(3) The notice of appeal must be sent within the period specified, in relation to the decision appealed against, in those rules.
(4) In determining an appeal made in accordance with this section, the Tribunal must apply the same principles as would be applied by a court on an application for judicial review.
(5) The Tribunal must either—
(a) dismiss the appeal, or(b) quash the whole or part of the decision to which the appeal relates.(6) If the Tribunal quashes the whole or part of a decision, it may refer the matter back to the Payment Systems Regulator with a direction to reconsider and make a new decision in accordance with its ruling.
(7) The Tribunal may not direct the Payment Systems Regulator to take any action which it would not otherwise have the power to take in relation to the decision.
(8) The effect of a decision to publish details under section (Publication of compliance failures etc)(1) is suspended by the making of an appeal against the decision (and the details may not be published until the appeal has been determined).
(9) The effect of any other CAT-appealable decision is not suspended by the making of an appeal against the decision.
(10) In this section and section (Appeals in relation to penalties) “Tribunal rules” means rules under section 15 of the Enterprise Act 2002.”

60YR: After Clause 12, insert the following new Clause—
“Appeals in relation to penalties
(1) This section applies where a person is appealing to the Competition Appeal Tribunal (“the Tribunal”) against a decision to impose a penalty under section (Penalties).
(2) The person may appeal against—
(a) the imposition of the penalty,(b) the amount of the penalty, or(c) any date by which the penalty, or any part of it, is required to be paid.(3) The means of making an appeal is by sending the Tribunal a notice of appeal in accordance with Tribunal rules.
(4) The notice of appeal must be sent within the period specified, in relation to the decision appealed against, in those rules.
(5) The Tribunal may do any of the following—
(a) uphold the penalty;(b) set aside the penalty;(c) substitute for the penalty a penalty of an amount decided by the Tribunal;(d) vary any date by which the penalty, or any part of it, is required to be paid.(6) If an appeal is made in accordance with this section, the penalty is not required to be paid until the appeal has been determined.
(7) Subsections (2), (5) and (6) do not restrict the power to make Tribunal rules; and those subsections are subject to Tribunal rules.
(8) Except as provided by this section, the validity of the penalty may not be questioned by any legal proceedings whatever.
(9) In the case of an appeal made in accordance with this section, a decision of the Tribunal has the same effect as, and may be enforced in the same manner as, a decision of the Payment Systems Regulator.”

60YS: After Clause 12, insert the following new Clause—
“Appeals to Competition and Markets Authority
(1) This section applies where a person is appealing to the Competition and Markets Authority (“the CMA”) against a CMA-appealable decision.
(2) In determining the appeal the CMA must have regard, to the same extent as is required of the Payment Systems Regulator, to the matters to which the Payment Systems Regulator must have regard in discharging its functions under this Part.
(3) In determining the appeal the CMA—
(a) may have regard to any matter to which the Payment Systems Regulator was not able to have regard in relation to the decision, but(b) must not, in the exercise of that power, have regard to any matter to which the Payment Systems Regulator would not have been entitled to have regard in reaching its decision had it had the opportunity of doing so. (4) The CMA must either—
(a) dismiss the appeal, or(b) quash the whole or part of the decision to which the appeal relates.(5) The CMA may act as mentioned in subsection (4)(b) only to the extent that it is satisfied that the decision was wrong on one or more of the following grounds—
(a) that the Payment Systems Regulator failed properly to have regard to any matter mentioned in subsection (2);(b) that the Payment Systems Regulator failed to give the appropriate weight to any matter mentioned in subsection (2);(c) that the decision was based, wholly or partly, on an error of fact;(d) that the decision was wrong in law.(6) If the CMA quashes the whole or part of a decision, it may either—
(a) refer the matter back to the Payment Systems Regulator with a direction to reconsider and make a new decision in accordance with its ruling, or(b) substitute its own decision for that of the Payment Systems Regulator.(7) The CMA may not direct the Payment Systems Regulator to take any action which it would not otherwise have the power to take in relation to the decision.
(8) Schedule (Procedure for appeals to the CMA) contains further provision about the making of appeals in accordance with this section.”

60YT: After Clause 12, insert the following new Clause—
“Enforcement of requirement to dispose of interest in payment system
(1) A requirement imposed under section (Power to require disposal of interest in payment system) is enforceable by civil proceedings brought by the Payment Systems Regulator for an injunction or for interdict or for any other appropriate relief or remedy.
(2) Civil proceedings may not be brought to enforce a requirement imposed under that section unless—
(a) the time for bringing an appeal against the decision to impose the requirement has expired and no appeal has been brought within that time, or(b) the person on whom the requirement was imposed has within that time brought such an appeal and the appeal has been dismissed or withdrawn.”

60YU: After Clause 12, insert the following new Clause—
“Power to obtain information or documents
(1) The Payment Systems Regulator may by notice in writing require a person to provide information or documents—
(a) which the Payment Systems Regulator thinks will help the Treasury in determining whether to make a designation order, or(b) which the Payment Systems Regulator otherwise requires in connection with its functions under this Part.(2) In particular, a notice under subsection (1) may require a participant in a regulated payment system to notify the Payment Systems Regulator if events of a specified kind occur.
(3) A notice under subsection (1) may require information or documents to be provided—
(a) in a specified form or manner;(b) at a specified time;(c) in respect of a specified period.(4) The Payment Systems Regulator may disclose information obtained by virtue of this section to—
(a) the Treasury;(b) the Bank of England;(c) the FCA;(d) the PRA;(e) the Office of Communications;(f) an authority in a country or territory outside the United Kingdom that exercises functions similar to those of the Treasury, the Bank of England, the FCA, the PRA or the Payment Systems Regulator in relation to payment systems;(g) the European Commission;(h) the European Central Bank;(i) the Bank for International Settlements.(5) Subsection (4)—
(a) overrides any requirement to keep information in confidence, and(b) is without prejudice to any other power to disclose information.(6) The Treasury may by regulations permit the disclosure of information obtained by virtue of this section to a specified person.
(7) The Payment Systems Regulator may publish information obtained by virtue of this section.
(8) The Treasury may make regulations about the manner and extent of publication under subsection (7).
(9) In subsection (4)(f) the reference to payment systems is to be read as if subsection (2)(b) of section (Meaning of “payment system”) were omitted.”

60YV: After Clause 12, insert the following new Clause—
“Reports by skilled persons
(1) The Payment Systems Regulator may—
(a) require a person who is a participant in a regulated payment system (“the relevant participant”) to provide the Payment Systems Regulator with a report on any matter relating to the system (“the matter concerned”), or(b) appoint a person to provide the Payment Systems Regulator with a report on the matter concerned.(2) The power conferred by subsection (1)(a) is exercisable by giving the relevant participant a notice in writing.
(3) When acting under subsection (1)(a), the Payment Systems Regulator may require the report to be in a form specified in the notice.
(4) The Payment Systems Regulator must give written notice of an appointment under subsection (1)(b) to the relevant participant.
(5) A person appointed to make a report under this section—
(a) must be a person appearing to the Payment Systems Regulator to have the skills necessary to make a report on the matter concerned, and (b) where the appointment is to be made by the relevant participant, must be a person nominated or approved by the Payment Systems Regulator.(6) It is the duty of—
(a) the relevant participant, and(b) any person who is providing (or who has at any time provided) services to the relevant participant in relation to the matter concerned,to give the person appointed to prepare a report all such assistance as the appointed person may reasonably require.(7) The obligation imposed by subsection (6) is enforceable, on the application of the Payment Systems Regulator, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
(8) The Payment Systems Regulator may direct the relevant participant to pay any expenses incurred by the Payment Systems Regulator in relation to an appointment under subsection (1)(b).”

60YW: After Clause 12, insert the following new Clause—
“Appointment of persons to conduct investigations
(1) If it considers that it is desirable to do so in order to advance any of its payment systems objectives, the Payment Systems Regulator may appoint one or more competent persons to conduct an investigation on its behalf into the nature, conduct or state of the business of any participant in a regulated payment system.
(2) If it appears to the Payment Systems Regulator that there are circumstances suggesting that there may have been a compliance failure, the Payment Systems Regulator may appoint one or more competent persons to conduct an investigation on its behalf.”

60YX: After Clause 12, insert the following new Clause—
“Investigations: general
(1) This section applies if the Payment Systems Regulator appoints one or more competent persons (“investigators”) under section (Appointment of persons to conduct investigations) to conduct an investigation on its behalf.
(2) The Payment Systems Regulator must give written notice of the appointment of an investigator to the person who is the subject of the investigation.
(3) Subsections (2) and (9) do not apply if—
(a) the Payment Systems Regulator believes that the notice required by subsection (2) or (9) would be likely to result in the investigation being frustrated, or(b) the investigator is appointed under subsection (2) of section (Appointment of persons to conduct investigations).(4) A notice under subsection (2) must—
(a) specify the provision under which the investigator was appointed, and(b) state the reason for the appointment.(5) Nothing prevents the Payment Systems Regulator from appointing as an investigator—
(a) a member of its staff, or(b) a member of staff of the FCA.(6) An investigator who conducts an investigation must make a report of the investigation to the Payment Systems Regulator.
(7) The Payment Systems Regulator may, by a direction to an investigator, control—
(a) the scope of the investigation,(b) the period during which the investigation is to be conducted,(c) the conduct of the investigation, and(d) the reporting of the investigation.(8) A direction may, in particular—
(a) confine the investigation to particular matters;(b) extend the investigation to additional matters;(c) require the investigator to discontinue the investigation or to take only those steps that are specified in the direction;(d) require the investigator to make such interim reports as are so specified.(9) If there is a change in the scope or conduct of the investigation and, in the opinion of the Payment Systems Regulator, the person who is the subject of the investigation is likely to be significantly prejudiced by not being made aware of it, that person must be given written notice of the change.”

60YY: After Clause 12, insert the following new Clause—
“Powers of persons appointed under section (Appointment of persons to conduct investigations)
(1) An investigator may require any person within subsection (2) —
(a) to attend before the investigator at a specified time and place and answer questions, or(b) otherwise to provide any information which the investigator requires. (2) The persons referred to in subsection (1) are—
(a) the person who is the subject of the investigation (“the person under investigation”); (b) any person connected with the person under investigation;(c) in the case of an investigation into whether there has been a compliance failure, any person who in the investigator’s opinion is or may be able to give information which is or may be relevant to the investigation.(3) An investigator may also require any person to produce at a specified time and place any specified documents or documents of a specified description.
(4) A requirement under subsection (1) or (3) may be imposed only so far as the investigator concerned reasonably considers the question, provision of information or production of the document to be relevant to the purposes of the investigation.
(5) In the case of an investigation into whether there has been a compliance failure, the investigator may also require any person falling within subsection (2)(c) to give the investigator all assistance in connection with the investigation which the person is reasonably able to give.
(6) For the purposes of this section, a person is connected with the person under investigation (“A”) if the person is or has at any relevant time been—
(a) a member of A’s group,(b) a controller of A, or(c) a partnership of which A is a member.(7) In this section—
“controller” has the same meaning as in FSMA 2000 (see section 422 of that Act);
“group” has the same meaning as in FSMA 2000 (see section 421 of that Act);
“investigator” means a person conducting an investigation under section (Appointment of persons to conduct investigations);
“specified” means specified in a notice in writing.”

60YYA: After Clause 12, insert the following new Clause—
“Information and documents: supplemental provisions
(1) In this section “relevant document” means a document produced in response to a requirement imposed under section (Power to obtain information or documents) or (Powers of persons appointed under section (Appointment of persons to conduct investigations)).
(2) In a case where—
(a) the Payment Systems Regulator has power under section (Power to obtain information or documents), or an investigator has power under section (Powers of persons appointed under section (Appointment of persons to conduct investigations)), to require a person to produce a document, but(b) it appears that the document is in the possession of another person,the power may be exercised in relation to that other person. (3) Any person to whom a relevant document is produced may—
(a) take copies or extracts from the document, or(b) require the person producing the document, or any relevant person (see subsection (4)), to provide an explanation of the document.(4) “Relevant person”, in relation to a person who is required to produce a document, means a person who—
(a) has been or is or is proposed to be a director or controller of that person,(b) has been or is an auditor of that person,(c) has been or is an actuary, accountant or lawyer appointed or instructed by that person, or(d) has been or is an employee of that person.(5) A relevant document may be retained for so long as the person to whom it is produced considers that it is necessary to retain it (rather than copies of it) for the purposes for which the document was requested.
(6) If the person to whom a relevant document is produced has reasonable grounds for believing—
(a) that the document may have to be produced for the purposes of any legal proceedings, and(b) that it might otherwise be unavailable for those purposes,it may be retained until the proceedings are concluded. (7) If a person who is required under section (Power to obtain information or documents) or (Powers of persons appointed under section (Appointment of persons to conduct investigations)) to produce a document fails to do so, the Payment Systems Regulator or an investigator may require the person to state, to the best of the person’s knowledge and belief, where the document is.
(8) A lawyer may be required under section (Power to obtain information or documents), (Powers of persons appointed under section (Appointment of persons to conduct investigations)) or this section to provide the name and address of a client.
(9) A person may not be required under section (Power to obtain information or documents), (Powers of persons appointed under section (Appointment of persons to conduct investigations)) or this section to disclose information or produce a document in respect of which the person owes an obligation of confidence as a result of carrying on the business of banking unless—
(a) the person is the person under investigation or a member of that person’s group;(b) the person to whom the obligation of confidence is owed is the person under investigation or a member of that person’s group;(c) the person to whom the obligation of confidence is owed consents to the disclosure or production, or(d) the imposing on the person of a requirement with respect to such information or document has been specifically authorised by the Payment Systems Regulator. (10) If a person claims a lien on a document, its production under section (Power to obtain information or documents) or (Powers of persons appointed under section (Appointment of persons to conduct investigations)) does not affect the lien.
(11) In this section—
“controller” has the same meaning as in FSMA 2000 (see section 422 of that Act);
“group” has the same meaning as in FSMA 2000 (see section 421 of that Act);
“investigator” means a person appointed under section (Appointment of persons to conduct investigations).”

60YYB: After Clause 12, insert the following new Clause—
“Admissibility of statements made to investigators
(1) A statement made to an investigator by a person in compliance with an information requirement is admissible in evidence in any proceedings, so long as it also complies with any requirements governing the admissibility of evidence in the circumstances in question.
(2) But in criminal proceedings in which that person is charged with an offence to which this subsection applies—
(a) no evidence relating to the statement may be adduced by or on behalf of the prosecution, and(b) no question relating to the statement may be asked by or on behalf of the prosecution,unless evidence relating to the statement is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person. (3) Subsection (2) applies to any offence other than—
(a) an offence under section (Enforcement of information and investigation powers)(6);(b) an offence under section 5 of the Perjury Act 1911 (false statements made otherwise than on oath);(c) an offence under section 44(2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made otherwise than on oath);(d) an offence under Article 10 of the Perjury (Northern Ireland) Order 1979.(4) In this section—
“information requirement” means a requirement imposed by an investigator under section (Powers of persons appointed under section (Appointment of persons to conduct investigations)) or (Information and documents: supplemental provisions);
“investigator” means a person appointed under section (Appointment of persons to conduct investigations).”

60YYC: After Clause 12, insert the following new Clause—
“Entry of premises under warrant
(1) A justice of the peace may issue a warrant under this section if satisfied on information on oath given by or on behalf of the Payment Systems Regulator or an investigator that there are reasonable grounds for believing that the first or second set of conditions is satisfied.
(2) The first set of conditions is—
(a) that a person on whom an information requirement has been imposed has failed (wholly or in part) to comply with it, and(b) that on the premises specified in the warrant— (i) there are documents which have been required, or(ii) there is information which has been required.(3) In this section “information requirement” means—
(a) a requirement imposed by the Payment Systems Regulator under section (Power to obtain information or documents) or (Information and documents: supplemental provision), or(b) a requirement imposed by an investigator under section (Powers of persons appointed under section (Appointment of persons to conduct investigations)) or (Information and documents: supplemental provisions).(4) The second set of conditions is—
(a) that the premises specified in the warrant are premises of a participant in a regulated payment system,(b) that there are on the premises documents or information in relation to which an information requirement could be imposed, and(c) that if such a requirement were to be imposed— (i) it would not be complied with, or(ii) the documents or information to which it related would be removed, tampered with or destroyed.(5) A warrant under this section authorises a constable—
(a) to enter the premises specified in the warrant,(b) to search the premises and take possession of any documents or information appearing to be documents or information of a kind in respect of which a warrant under this section was issued (“the relevant kind”) or to take, in relation to any such documents or information, any other steps which may appear to be necessary for preserving them or preventing interference with them, (c) to take copies of, or extracts from, any documents or information appearing to be of the relevant kind,(d) to require any person on the premises to provide an explanation of any document or information appearing to be of the relevant kind or to state where it may be found, and(e) to use such force as may be reasonably necessary.(6) A warrant under this section may be executed by any constable.
(7) The warrant may authorise persons to accompany any constable who is executing it.
(8) The powers in subsection (5) may be exercised by a person who—
(a) is authorised by the warrant to accompany a constable, and(b) exercises those powers in the company of, and under the supervision of, a constable.(9) In England and Wales, sections 15(5) to (8) and 16(3) to (12) of the Police and Criminal Evidence Act 1984 (execution of search warrants and safeguards) apply to warrants issued under this section.
(10) In Northern Ireland, Articles 17(5) to (8) and 18(3) to (12) of the Police and Criminal Evidence (Northern Ireland) Order 1989 apply to warrants issued under this section.
(11) This section has effect in relation to Scotland as if—
(a) for any reference to a justice of the peace there were substituted a reference to a justice of the peace or a sheriff, and(b) for any reference to information on oath there were substituted a reference to evidence on oath.(12) In this section “investigator” means a person appointed under section (Appointment of persons to conduct investigations).”

60YYD: After Clause 12, insert the following new Clause—
“Retention of documents taken under section (Entry of premises under warrant)
(1) Any document of which possession is taken under section (Entry of premises under warrant) (“a seized document”) may be retained so long as it is necessary to retain it (rather than copies of it) in the circumstances.
(2) A person claiming to be the owner of a seized document may apply to a magistrates’ court or (in Scotland) the sheriff for an order for the delivery of the document to the person appearing to the court or sheriff to be the owner.
(3) If on an application under subsection (2) the court or (in Scotland) the sheriff cannot ascertain who is the owner of the seized document the court or sheriff (as the case may be) may make such order as the court or sheriff thinks fit.
(4) An order under subsection (2) or (3) does not affect the right of any person to take legal proceedings against any person in possession of a seized document for the recovery of the document.
(5) Any right to bring proceedings (as described in subsection (4)) may only be exercised within 6 months of the date of the order made under subsection (2) or (3).”

60YYE: After Clause 12, insert the following new Clause—
“Enforcement of information and investigation powers
(1) If a person other than an investigator (“the defaulter”) fails to comply with a requirement imposed under any of sections (Power to obtain information or documents) to (Entry of premises under warrant), the person imposing the requirement may certify that fact in writing to the court.
(2) If the court is satisfied that the defaulter failed without reasonable excuse to comply with the requirement, it may deal with the defaulter (and in the case of a body corporate, any director or other officer of the body) as if that person were in contempt.
(3) In subsection (2) “officer”, in relation to a limited liability partnership, means a member of the limited liability partnership.
(4) A person who knows or suspects that an investigation is being or is likely to be conducted under section (Appointment of persons to conduct investigations) is guilty of an offence if the person—
(a) falsifies, conceals, destroys or otherwise disposes of a document which the person knows or suspects is or would be relevant to such an investigation, or(b) causes or permits the falsification, concealment, destruction or disposal of such a document. (5) It is a defence for a person charged with an offence under subsection (4) to show that the person had no intention of concealing facts disclosed by the documents from the investigator.
(6) A person is guilty of an offence if the person, in purported compliance with a requirement imposed under any of sections (Power to obtain information or documents) to (Entry of premises under warrant)—
(a) provides information which the person knows to be false or misleading in a material particular, or(b) recklessly provides information which is false or misleading in a material particular.(7) A person guilty of an offence under subsection (4) or (6) is liable—
(a) on summary conviction— (i) in England and Wales, to imprisonment for a term not exceeding 12 months (or 6 months, if the offence was committed before the commencement of section 154(1) of the Criminal Justice Act 2003) or a fine, or both;(ii) in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum, or both;(iii) in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum, or both;(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine, or both.(8) Any person who intentionally obstructs the exercise of any rights conferred by a warrant under section (Entry of premises under warrant) is guilty of an offence and liable on summary conviction—
(a) in England and Wales, to imprisonment for a term not exceeding 51 weeks (or 3 months, if the offence was committed before the commencement of section 280(2) of the Criminal Justice Act 2003) or a fine, or both;(b) in Scotland, to imprisonment for a term not exceeding 3 months or a fine not exceeding level 5 on the standard scale, or both;(c) in Northern Ireland, to imprisonment for a term not exceeding 3 months or a fine not exceeding level 5 on the standard scale, or both.(9) In this section—
“court” means the High Court or, in Scotland, the Court of Session;
“investigator” means a person appointed under section (Appointment of persons to conduct investigations).”

60YYF: After Clause 12, insert the following new Clause—
“Guidance
(1) The Payment Systems Regulator may give guidance consisting of such information and advice as it considers appropriate—
(a) with respect to the operation of specified provisions of this Part;(b) with respect to any other matter relating to its functions under this Part;(c) with respect to any other matters about which it appears to the Payment Systems Regulator to be desirable to give information or advice. (2) Guidance given by the Payment Systems Regulator under this section must include guidance about how it intends to advance its payment systems objectives in discharging its functions under this Part in relation to different categories of payment system or participants in payment systems.
(3) In this Part “general guidance” means guidance given by the Payment Systems Regulator under this section which—
(a) is given— (i) to persons generally,(ii) to participants in payment systems, or regulated payment systems, generally, or(iii) to a class of participant in a payment system or regulated payment system,(b) is intended to have continuing effect, and(c) is given in writing or other legible form.(4) The Payment Systems Regulator may give financial or other assistance to persons giving information or advice of a kind which the Payment Systems Regulator could give under this section.
(5) The Payment Systems Regulator may—
(a) publish its guidance,(b) offer copies of its published guidance for sale at a reasonable price, and(c) if it gives guidance in response to a request made by any person, make a reasonable charge for that guidance.”

60YYG: After Clause 12, insert the following new Clause—
“Reports
(none) If it considers that it is desirable to do so in order to advance any of its payment systems objectives, the Payment Systems Regulator may prepare and publish a report into any matter which it considers relevant to the exercise of its functions under this Part.”

60YYH: After Clause 12, insert the following new Clause—
“Duty of regulators to ensure co-ordinated exercise of functions
(1) The following are regulators for the purposes of this section—
(a) the Payment Systems Regulator;(b) the Bank of England;(c) the FCA;(d) the PRA.(2) The regulators must co-ordinate the exercise of their relevant functions (see subsection (5)) with a view to ensuring—
(a) that each regulator consults every other regulator (where not otherwise required to do so) in connection with any proposed exercise of a relevant function in a way that may have a material adverse effect on the advancement by that other regulator of any of its objectives; (b) that where appropriate each regulator obtains information and advice from every other regulator in connection with the exercise of its relevant functions in relation to matters of common regulatory interest in cases where the other regulator may be expected to have relevant information or relevant expertise.(3) The duty in subsection (2) applies only to the extent that compliance with the duty—
(a) is compatible with the advancement by each regulator of any of its objectives, and(b) does not impose a burden on the regulators that is disproportionate to the benefits of compliance.(4) A function conferred on a regulator relates to matters of common regulatory interest if—
(a) another regulator exercises similar or related functions in relation to the same persons,(b) another regulator exercises functions which relate to different persons but relate to similar subject-matter, or(c) its exercise could affect the advancement by another regulator of any of its objectives. (5) “Relevant functions” means—
(a) in relation to the Payment Systems Regulator, its functions under this Part;(b) in relation to the Bank of England, its functions under Part 5 of the Banking Act 2009 (inter-bank payment systems);(c) in relation to the FCA, the functions conferred on it by or under FSMA 2000 (see section 1A(6) of that Act);(d) in relation to the PRA, the functions conferred on it by or under FSMA 2000 (see section 2A(6) of that Act).(6) “Objectives” means—
(a) in relation to the Payment Systems Regulator, its payment systems objectives;(b) in relation to the Bank of England, its Financial Stability Objective under section 2A of the Bank of England Act 1998;(c) in relation to the FCA, its strategic objective and operational objectives under section 1B of FSMA 2000;(d) in relation to the PRA, its general objective under section 2B of that Act.”

60YYJ: After Clause 12, insert the following new Clause—
“Memorandum of understanding
(1) The following are regulators for the purposes of this section—
(a) the Payment Systems Regulator;(b) the Bank of England; (c) the FCA;(d) the PRA.(2) The regulators must prepare and maintain a memorandum which describes in general terms—
(a) the role of each regulator in relation to the exercise of relevant functions which relate to matters of common regulatory interest, and(b) how the regulators intend to comply with section (Duty of regulators to ensure co-ordinated exercise of functions) in relation to the exercise of such functions.(3) The regulators must review the memorandum at least once in each calendar year.
(4) The regulators must give the Treasury a copy of the memorandum and any revised memorandum.
(5) The Treasury must lay before Parliament a copy of any document received by them under this section.
(6) The regulators must ensure that the memorandum as currently in force is published in the way appearing to them to be best calculated to bring it to the attention of the public.
(7) The memorandum need not relate to any aspect of compliance with section (Duty of regulators to ensure co-ordinated exercise of functions) if the regulators consider—
(a) that publication of information about that aspect would be against the public interest, or(b) that that aspect is a technical or operational matter not affecting the public.(8) In this section—
(a) the reference in subsection (2)(a) to matters of common regulatory interest is to be read in accordance with section (Duty of regulators to ensure co-ordinated exercise of functions)(4), and(b) references to relevant functions are to be read in accordance with section (Duty of regulators to ensure co-ordinated exercise of functions)(5).”

60YYK: After Clause 12, insert the following new Clause—
“Power of Bank to require Regulator to refrain from specified action
(1) Where the first, second and third conditions are met, the Bank of England may give a direction under this section to the Payment Systems Regulator.
(2) The first condition is that the Payment Systems Regulator is proposing to exercise any of its powers under this Part in relation to a participant in a regulated payment system.
(3) The second condition is that the Bank of England is of the opinion that the exercise of the power in the manner proposed may—
(a) threaten the stability of the UK financial system,(b) have serious consequences for business or other interests in the United Kingdom, or (c) have an adverse effect on the Bank’s ability to act in its capacity as a monetary authority.(4) The third condition is that the Bank of England is of the opinion that the giving of the direction is necessary in order to avoid the possible consequence falling within subsection (3).
(5) A direction under this section is a direction requiring the Payment Systems Regulator not to exercise the power or not to exercise it in a specified manner.
(6) The direction may be expressed to have effect during a specified period or until revoked.
(7) The Payment Systems Regulator is not required to comply with a direction under this section if or to the extent that in the opinion of the Payment Systems Regulator compliance would be incompatible with any EU obligation or any other international obligation of the United Kingdom.”

60YYL: After Clause 12, insert the following new Clause—
“Power of FCA to require Regulator to refrain from specified action
(1) Where the first, second and third conditions are met, the FCA may give a direction under this section to the Payment Systems Regulator.
(2) The first condition is that the Payment Systems Regulator is proposing to exercise any of its powers under this Part in relation to a participant in a regulated payment system.
(3) The second condition is that the FCA is of the opinion that the exercise of the power in the manner proposed may have an adverse effect on the ability of the FCA to comply with its duty under section 1B(1) of FSMA 2000 (FCA’s general duties).
(4) The third condition is that the FCA is of the opinion that the giving of the direction is necessary in order to avoid the possible consequence falling within subsection (3).
(5) A direction under this section is a direction requiring the Payment Systems Regulator not to exercise the power or not to exercise it in a specified manner.
(6) The direction may be expressed to have effect during a specified period or until revoked.
(7) The Payment Systems Regulator is not required to comply with a direction under this section if or to the extent that in the opinion of the Payment Systems Regulator compliance would be incompatible with any EU obligation or any other international obligation of the United Kingdom.”

60YYM: After Clause 12, insert the following new Clause—
“Power of PRA to require Regulator to refrain from specified action
(1) Where the first, second and third conditions are met, the PRA may give a direction under this section to the Payment Systems Regulator.
(2) The first condition is that the Payment Systems Regulator is proposing to exercise any of its powers under this Part in relation to—
(a) a class of PRA-authorised persons, or(b) a particular PRA-authorised person.(3) The second condition is that the PRA is of the opinion that the exercise of the power in the manner proposed may—
(a) threaten the stability of the UK financial system,(b) result in the failure of a PRA-authorised person in a way that would have an adverse effect on the stability of the UK financial system, or (c) have an adverse effect on the ability of the PRA to comply with its duty under section 2B(1) of FSMA 2000 (the PRA’s general objective).(4) The third condition is that the PRA is of the opinion that the giving of the direction is necessary in order to avoid the possible consequence falling within subsection (3).
(5) A direction under this section is a direction requiring the Payment Systems Regulator not to exercise the power or not to exercise it in a specified manner.
(6) The direction may be expressed to have effect during a specified period or until revoked.
(7) The Payment Systems Regulator is not required to comply with a direction under this section if or to the extent that in the opinion of the Payment Systems Regulator compliance would be incompatible with any EU obligation or any other international obligation of the United Kingdom.
(8) The reference in subsection (3)(b) to the “failure” of a PRA-authorised person is to be read in accordance with section 2J(3) and (4) of FSMA 2000.
(9) In this section “PRA-authorised person” has the same meaning as in FSMA 2000 (see section 2B(5) of that Act).”

60YYN: After Clause 12, insert the following new Clause—
“Regulator’s general duty to consult
(1) The Payment Systems Regulator must make and maintain effective arrangements for consulting relevant persons on—
(a) the extent to which its general policies and practices are consistent with its general duties under section (Regulator’s general duties in relation to payment systems), and(b) how its payment systems objectives may best be achieved. (2) The following are “relevant persons” for the purposes of this section—
(a) participants in regulated payment systems, and(b) those who use, or are likely to use, services provided by regulated payment systems.(3) Arrangements under this section must include the establishment and maintenance of one or more panels of persons to represent the interests of relevant persons.
(4) Where the Payment Systems Regulator establishes a panel under subsection (3), it must appoint one of the members of the panel to be its chair.
(5) The Treasury’s approval is required for the appointment or dismissal of the chair of a panel established under subsection (3).
(6) The Payment Systems Regulator must—
(a) consider representations that are made to it in accordance with arrangements made under this section, and(b) from time to time publish, in such manner as it thinks fit, responses to the representations.”

60YYP: After Clause 12, insert the following new Clause—
“Consultation by the Regulator in relation to generally applicable requirements
(1) In this section references to imposing a generally applicable requirement are to—
(a) giving a general direction, or(b) imposing a requirement under section (System rules) that applies to all operators of regulated payment systems,and references to the requirement are to be read accordingly.(2) Before imposing a generally applicable requirement, the Payment Systems Regulator must—
(a) consult the Bank of England, the FCA and the PRA, and(b) after doing so, publish a draft of the proposed requirement in the way appearing to the Payment Systems Regulator to be best calculated to bring it to the attention of the public.(3) The draft must be accompanied by—
(a) a cost benefit analysis,(b) an explanation of the purpose of the proposed requirement,(c) an explanation of the Payment Systems Regulator’s reasons for believing that imposing the requirement is compatible with its duties under section (Regulator’s general duties in relation to payment systems), and (d) notice that representations about the proposed requirement may be made to the Payment Systems Regulator within a specified time.(4) Before imposing the proposed requirement the Payment Systems Regulator must have regard to any representations made to it in accordance with subsection (3)(d).
(5) If the Payment Systems Regulator proposes to impose the requirement, it must publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection (3)(d), and(b) its response to them. (6) If the requirement differs from the draft published under subsection (2)(b) in a way which is, in the opinion of the Payment Systems Regulator, significant the Payment Systems Regulator must (in addition to complying with subsection (5)) publish details of the difference together with a cost benefit analysis.
(7) For the purposes of this section a “cost benefit analysis” is—
(a) an analysis of the costs together with an analysis of the benefits that will arise—(i) if the proposed requirement is imposed, or(ii) if subsection (6) applies, from the requirement imposed, and(b) subject to subsection (8), an estimate of those costs and of those benefits.(8) If, in the opinion of the Payment Systems Regulator—
(a) the costs or benefits referred to in subsection (7) cannot reasonably be estimated, or(b) it is not reasonably practicable to produce an estimate,the cost benefit analysis need not estimate them, but must include a statement of the Payment Systems Regulator’s opinion and an explanation of it.(9) The Payment Systems Regulator may charge a reasonable fee for providing a person with a copy of a draft published under subsection (2)(b).
(10) Subsections (2)(b) and (3) to (6) do not apply if the Payment Systems Regulator considers that the delay involved in complying with them would be prejudicial to the interests of those who use, or are likely to use, services provided by regulated payment systems.
(11) Subsections (3)(a) and (6) do not apply if the Payment Systems Regulator considers that, making the appropriate comparison—
(a) there will be no increase in costs, or(b) there will be an increase in costs but the increase will be of minimal significance.(12) In subsection (11) the “appropriate comparison” means—
(a) in relation to subsection (3)(a), a comparison between the overall position if the requirement is imposed and the overall position if it is not imposed; (b) in relation to subsection (6), a comparison between the overall position after the imposing of the requirement and the overall position before it was imposed.”

60YYQ: After Clause 12, insert the following new Clause—
“Independent inquiries
(1) Section 68 of the Financial Services Act 2012 (cases in which Treasury may arrange independent inquiries) is amended as follows.
(2) In subsection (1), for “two” substitute “three”.
(3) After subsection (3) insert—
“(3A) The third case is where it appears to the Treasury that—
(a) events have occurred in relation to a regulated payment system which caused or risked causing significant damage to business or other interests throughout the United Kingdom, and(b) those events might not have occurred, or the threat or damage might have been reduced, but for a serious failure in—(i) the system established by Part 5 of the Financial Services (Banking Reform) Act 2013 for the regulation of payment systems, or(ii) the operation of that system.”(4) In section 83(1) (interpretation), after the definition of “regulated activity” insert—
““regulated payment system” has the same meaning as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section (Interpretation) of that Act);”.”

60YYR: After Clause 12, insert the following new Clause—
“Investigations into regulatory failure
(1) Part 5 of the Financial Services Act 2012 (inquiries and investigations) is amended as follows.
(2) After section 76 insert—
“76A Duty of Payment Systems Regulator to investigate and report on possible regulatory failure
(1) Subsection (3) applies where it appears to the Payment Systems Regulator that—
(a) events have occurred in relation to a regulated payment system which had or could have had a significant adverse effect on effective competition in the interests of—(i) participants in the payment system, or(ii) those who use, or are likely to use, the services provided by the payment system, and (b) those events might not have occurred, or the adverse effect might have been reduced, but for a serious failure in—(i) the system established by Part 5 of the Financial Services (Banking Reform) Act 2013 for the regulation of payment systems, or(ii) the operation of that system.(2) Subsection (3) also applies where the Treasury direct the Payment Systems Regulator that it appears to the Treasury that the conditions in subsection (1) are met in relation to specified events.
(3) The Payment Systems Regulator must carry out an investigation into the events and the circumstances surrounding them and report to the Treasury on the result of the investigation.
(4) Subsection (3) does not apply by virtue of subsection (1) if the Treasury direct the Payment Systems Regulator that it is not required to carry out an investigation into the events concerned.
(5) In this section “participant”, in relation to a regulated payment system, has the same meaning as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section (Participants in payment systems etc) of that Act).”
(5) In section 77 (power of Treasury to require FCA or PRA to undertake investigation)—
(a) in subsection (1)(a), for “either regulator” substitute “a regulator”;(b) in subsection (3), omit the “or” at the end of paragraph (b) and after paragraph (c) insert “, or(d) a regulated payment system.”;(c) the heading of that section becomes “Power of Treasury to require regulator to undertake investigation”.(6) In section 78 (conduct of investigation), in subsection (1), for “or 74” substitute “, 74 or 76A”.
(7) In section 79 (conclusion of investigation), for “or 74” substitute “, 74 or 76A”.
(8) In section 80 (statements of policy), in subsection (1)(a), for “or 74” substitute “, 74 or 76A”.
(9) In section 81 (publication of directions), in subsection (1), after paragraph (b) insert—
“(ba) section 76A(4);”.(10) In section 83(1) (interpretation)—
(a) after the definition of “listed securities” insert—““the Payment Systems Regulator” means the body established under section (The Payment Systems Regulator) of the Financial Services (Banking Reform) Act 2013;”;
(b) in the definition of “regulator”, for “or the PRA” substitute “, the PRA or the Payment Systems Regulator”.”

60YYS: After Clause 12, insert the following new Clause—
“Competition scrutiny
(1) Chapter 4 of Part 9A of FSMA 2000 (competition scrutiny) applies to the Payment Systems Regulator’s practices and regulating provisions in relation to payment systems as it applies to the FCA’s practices and regulating provisions within the meaning of that Chapter.
(2) In subsection (1)—
(a) the reference to the Payment Systems Regulator’s practices in relation to payment systems is a reference to practices adopted by it in the exercise of functions under this Part, and(b) the reference to the Payment Systems Regulator’s regulating provisions in relation to payment systems is a reference to the following— (i) any general directions given under section (Directions);(ii) any requirements imposed under section (System rules) on all operators of regulated payment systems; (iii) any guidance given under section (Guidance).”

60YYT: After Clause 12, insert the following new Clause—
“Relationship with Part 8 of the Payment Services Regulations 2009
(1) The Payment Systems Regulator may not exercise any power under this Part for the purposes of enabling a relevant person to obtain access to, or otherwise participate in, a payment system if the payment system is one to which Part 8 of the Payment Services Regulations 2009 (S.I. 2009/209) does not apply.
(2) A person is a “relevant person” for the purposes of subsection (1) if regulation 97 of the Payment Services Regulations 2009 (prohibition on restrictive rules on access to payment systems) applies in relation to access to, or participation in, a payment system by the person.”

60YYU: After Clause 12, insert the following new Clause—
“Exemption from liability in damages for FCA and PRA
(1) In paragraph 25 of Schedule 1ZA to FSMA 2000 (FCA’s exemption from liability in damages), after sub-paragraph (1) insert—
“(1A) In sub-paragraph (1) the reference to the FCA’s functions includes its functions under Part 5 of the Financial Services (Banking Reform) Act 2013 (regulation of payment systems).”
(2) In paragraph 33 of Schedule 1ZB to FSMA 2000 (PRA’s exemption from liability in damages), after sub-paragraph (1) insert—
“(1A) In sub-paragraph (1) the reference to the PRA’s functions includes its functions under Part 5 of the Financial Services (Banking Reform) Act 2013 (regulation of payment systems).”
(3) For provision conferring immunity from liability in damages on the Bank of England in respect of its functions, see section 244 of the Banking Act 2009.”

60YYV: After Clause 12, insert the following new Clause—
“Interpretation
(1) In this Part—
“compliance failure” has the meaning given by section (Meaning of “compliance failure”);
“designation order” has the meaning given by section (Designation orders);
“direct access”, in relation to a payment system, is to be read in accordance with section (Participants in payment systems etc)(6);
“document” includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy of the information in legible form or in a form from which it can readily be produced in visible and legible form;
“general direction” has the meaning given by section (Directions)(5);
“general guidance” has the meaning given by section (Guidance)(3);
“infrastructure provider”, in relation to a payment system, has the meaning given by section (Participants in payment systems etc)(4);
“operator”, in relation to a payment system, has the meaning given by section (Participants in payment systems etc)(3);
“participant”, in relation to a payment system, has the meaning given by section (Participants in payment systems etc) (and references to participation in a payment system are to be read in accordance with that section);
“payment service provider”, in relation to a payment system, has the meaning given by section (Participants in payment systems etc)(5);
“payment system” has the meaning given by section (Meaning of “payment system”);
“recognised inter-bank payment system” means an inter-bank payment system (within the meaning of Part 5 of the Banking Act 2009) specified as a recognised system for the purposes of that Part;
“regulated payment system” means a payment system designated as a regulated payment system by a designation order;
“the UK financial system” has the meaning given by section 1I of FSMA 2000.
(2) References in this Part to the Payment Systems Regulator’s payment systems objectives are to be read in accordance with section (Regulator’s general duties in relation to payment systems)(2).
(3) References in this Part to the Bank of England’s capacity as a monetary authority are to be read in accordance with section 244 of the Banking Act 2009.”

Amendments 60B to 60YYV agreed.

House resumed. Committee to begin again not before 8.53 pm.

Children: Sexual Abuse

Tuesday 15th October 2013 Lords Chamber

Question for Short Debate

19:53

Asked by

[Baroness Howarth of Breckland]

To ask Her Majesty’s Government what steps they are taking to prevent child sex abuse, and what support they are giving to organisations involved in preventing such abuse.

[Baroness Howarth of Breckland (CB)]

My Lords, research suggests that at least one in 20 young adults in the UK experienced sexual abuse as a child, but most incidents are not reported to the police. Three-quarters of children who are abused do not tell anyone about it at the time, as has been so graphically illustrated by the Jimmy Savile scandal. Services for children and telephone helplines are a key part of the child protection framework, but it is for the Government to set that framework and to ensure that local authorities, working through their safeguarding programmes, together with the voluntary sector, carry this forward.

I therefore welcome the consultancy group established by Damian Green in the other place and I ask the Minister, the noble Lord, Lord Taylor, to ensure that this debate is brought to his attention and to that of the chair of the group. My own assessment is that primary prevention remains a weak link in the plans, with emphasis on secondary and tertiary prevention. That means that we need more emphasis on ensuring that every effort is made to stop it before it happens—in the words of the campaign, “Stop it now”. In addition, there appears to be a gap in the work of the group relating to young people and children who abuse other children. Only if these two areas are placed at the centre of the work of the Home Office group will it come anywhere near its mission of:

“Reducing the vulnerability of victims”.

With this issue having such a high profile, I am indeed grateful to be given the opportunity for this debate, although in 10 minutes I can but scratch the surface. Good intervention will make all the difference to thousands of children, for the numbers, despite the progress that we have made, remain disturbing.

A recent NSPCC report looking at the disclosure of childhood abuse shows that one in 20 children being abused equates, in 2012-13, to 18,195 sexual crimes against children under l6 being recorded in England and Wales. It also says that, despite the recent high-profile celebrity cases, 90% of children are being abused by someone they know. This often happens in their own home, and that is something that we should not lose sight of. Around one-third of offences are perpetrated by other children and young people, as I have just mentioned.

The present system still leaves too much responsibility on the child victim when ultimately it is for adults to protect children from abuse. One of those adults who made a step change was Lucy Faithfull, and I declare an interest as a vice-chair of the Lucy Faithfull Foundation. As a Conservative Peer of some standing, she caused consternation to her Whips by leading mini-revolts on children’s issues. She was committed to her party but she was just more committed to children. As a children’s officer, she understood the issues around child sexual abuse well before many of her colleagues. Therefore, when asked to help the Gracewell Clinic, which later became the Lucy Faithfull Foundation, she took it to her heart. She deserves that the present Government support her legacy.

This year is the 20th anniversary of the foundation but the work has not been without its difficulties. Despite the skilled staff leading in the field of understanding the treatment of abusers and the highly successful clinic at Epsom, it was closed when the hospital was redeveloped. The then Government promised to fund an alternative site—indeed, to develop a range of similar facilities based on the knowledge and success of the clinic, but they never materialised. I am afraid that we had placards outside some of the facilities held by children saying, “Not on our doorstep”. One understands this, but during our whole time at Epsom we never had one incident when a man stepped outside the boundaries that he had been set in his programme. I wonder how much further we might be in the work had the clinic continued, and I ask the Minister what plans the Government have to give community residential programmes to men discharged from prison at a time when these men are most vulnerable to reoffending.

Before I move on, I acknowledge and commend the work of Circles of Support, a scheme developed by the Quakers, where volunteers provide a safe place for men who have offended and returned home. Most people shun these men for what they have done, which is understandable. It takes a very special volunteer to befriend them, but in doing so they are an essential part of protecting children, as well as giving these men new hope. We have to remember that whatever they have done they have to continue their lives, and unless they are helped they remain a danger to children.

When I collaborated with Lucy in the days before the foundation, I was chief executive of ChildLine. It was even more difficult then than now for children to be listened to and believed, and I congratulate all who have worked to shorten the time before children come forward. The changes in court procedures and safeguarding programmes have helped but there remains room for improvement. What work continues to ensure that courts are child-friendly while still quite properly ensuring a fair hearing for the defendant? We still hear of children being intimidated in court even when they are placed behind screens, and there should be more room for them to have advocates.

During the collaboration between ChildLine and the Lucy Faithfull Foundation in the early 2000s, it became apparent that there was a need for a helpline to give advice to adults concerned about their own thoughts and feelings towards children. ChildLine volunteers were trained to focus on children, so in 2003 the Stop it Now! confidential freephone service was launched by the foundation. It has grown from taking 1,000 calls in 2003 to just under 6,000 calls in 2012. The demand has grown despite limited publicity and no advertising. Calls are taken from adult abusers and those at risk of abusing. Time does not allow me to give too many examples, but they tell the story. The group for whom there is most concern if they fail to get help consists of abusers and those at risk of abuse. Paul, a window cleaner, was having sexual thoughts about children. He went to the police for help, but was told they could deal with him only if he committed an offence. They suggested that he talk to the probation service, which said that it could offer treatment only if he had been convicted of an offence, so he went to his GP who told him that everyone had these thoughts occasionally. Finally, he found the helpline and received advice on how to manage these thoughts and the terrible things that he felt tempted to do. Other groups calling for help include parents and young men accessing indecent images of children online.

Core funding for the helpline comes from a grant from the Ministry of Justice without which the service could not continue, so the foundation would like to acknowledge the wisdom of this support in difficult times. It is topped up by donations. Your Lordships can understand how difficult it is to raise money to help in this area, and demand has grown to a level which cannot be met. The helpline takes an average of 550 calls a month from 300 callers but has between 1,500 and 2,000 missed calls—missed opportunities to intervene in possible abuse. The work undertaken via a callback service that can provide vital face-to-face meetings is no longer funded, and men can receive that only if they are prepared to pay for it themselves.

We are of course all familiar with recent developments on the internet and the strong political drive to make the internet safer for children and to reduce the occurrence of online offending involving viewing, downloading, making and/or distributing indecent images of children. I recognise the outstanding work of the Internet Watch Foundation. No doubt this is a topic other noble Lords will cover as it needs more time, but I hope that the Government will continue to press the internet industry to play its part.

Parents and carers use the line. They are often ill equipped to prevent child sexual abuse of their own children. Research conducted as part of the work of the Lucy Faithfull Foundation with these groups showed that 59% of those questioned were not as confident as they would like to be when it came to protecting their own children. With 7.7 million families in the UK having dependent children, this could mean that 4.5 million families are lacking this confidence. Yet the foundation’s hugely successful Parents Plus programme, part of the Stop it Now! campaign ceased. Not only the groups but other parts of the programme will be closed down. Stop it Now! is fully supported by the Governments in Scotland and Wales but sadly not in England. I wonder whether the Minister can explain why the Government have removed their commitment to this programme.

Children also need the tools to protect themselves, and as part of this have the right to high quality sex and relationship education. The ChildLine Schools Service is an example of how one charity is trying to protect children from abuse by using preventive education in schools, and I am sure that the Minister is aware of the wide support given by professionals to the Daily Telegraph’s call to update the sex and relationship guidance to schools. Does the Department of Education have plans to update this guidance? What steps are being taken to complete the task?

I have spent a lifetime in this work and know that we could do more, and do it smarter, to prevent the continuing terrible scourge of child sexual abuse. Of course, the work is multifaceted and we should remind ourselves that some abusers are so dangerous that they must never return to the community. My experience has not made me soft but, like Lucy Faithfull, I know that the problem has to be dealt with at every level. I hope that the Government will listen to those calling for a public health model of prevention. This means deterrence, treatment and taking steps to prevent abuse ever taking place through community awareness and education programmes. The impact on victims is long-term and devastating. It costs money in repercussions on the mental health and penal services. We can and should do more to prevent it ever happening to any child in our society.

20:05

[Baroness Eaton (Con)]

My Lords, I thank the noble Baroness, Lady Howarth, for initiating this debate, and I regret that in five minutes it is not possible to cover many of the points that I would like to make. I shall concentrate particularly on local government activity in this field.

In the Bradford district, where I declare an interest as an elected member of the council, the Leeds strategic body for the development and implementation of the district’s response to CSE is the Bradford Safeguarding Children Board. The BSC board is required to ensure that the needs of children and young people who have been or may be sexually exploited, and their families, are considered as it plans and commissions services, develops policies and procedures, ensures that appropriate training is in place, communicates and raises awareness and monitors and evaluates the work that is being done. BSCB and individual agencies, working with children and families, are continuously developing procedures, guidance and information about resources for preventive work and direct work to support children and families during and after victimisation through CSE. Social workers and all agencies recognise that CSE is a dynamic and changing phenomenon. All those involved need to be vigilant in response and there is a need to learn from emerging evidence. Data and research need to be utilised to inform the response to CSE.

Bradford has a seven-point plan of response. First, the safeguarding children’s board has a multiagency location team, and there is now considerable evidence that search co-location is effective in securing evidence to prosecute offenders. Secondly, a bespoke training plan for schools exists, enabling teachers to be able to recognise the signs of grooming and, crucially, to have absolute clarity in relation to the referral pathways. Thirdly, there is a plan for all faith and community leaders to support communities through the damage that is caused by CSE. There is considerable potential for damage to community relations when research data show disproportionate numbers of perpetrators from specific communities.

Fourthly, there is a supportive network focusing on women and mothers, so that they understand the signs of both perpetrators and victims of CSE. Fifthly, specific work is aimed at boys between the ages of 14 and 17 to tackle the unacceptable attitudes regarding the sexual abuse of any person. A specific product for the Pakistani-origin community exists, which addresses child sexual exploitation and the harm that it has on individuals and communities. Seventhly, it is looking at reducing opportunities for perpetrators to abuse children and young people in hotels and bed and breakfast, licensed and commercial premises. A local campaign has commenced to raise awareness among hoteliers and landlords about the misuse of relevant premises.

I am the chairman of a charity, Near Neighbours, which works to develop a deepening association between people of different cultures and faiths. There is a need for re-neighbouring neighbourhoods if communities are to have a culture of vigilance to the dangers of abuse. The example this week of a young eastern European woman sold as a sex slave in West Yorkshire shows us that we have a very long way to go.

20:10

[Baroness Doocey (LD)]

My Lords, I, too, thank the noble Baroness, Lady Howarth, for providing this opportunity to debate such an important issue. In the short time available, I would like to concentrate on the issue of child trafficking. Most of the children trafficked into, within and from the UK are trafficked for the purpose of abuse. The UK Human Trafficking Centre’s annual assessment identified more than 2,000 potential victims of human trafficking in 2012. Of these, 549 were children—a 12% increase from 2011. Some 152 children were believed to have been trafficked solely for sexual exploitation. The other 397 children were trafficked for criminal exploitation, such as benefit fraud and cannabis cultivation. They may also have been victims of sexual abuse, a tactic often used to control victims. These figures represent only the tip of the iceberg. The true scale of the problem is not recognised because many front-line practitioners do not understand the concept of trafficking and do not identify children who are showing signs of being trafficked. Unless and until these professionals and their managers receive the necessary training, trafficked children will continue to go under the radar and be put at risk of significant harm.

One of the great success stories in the battle against trafficking was Operation Paladin Child at Heathrow Airport, which did some superb work. Despite this, though, it was merged in 2010 with the Child Protection Unit. The Child Protection Unit has now been merged into the Met’s rape command, and the Paladin team now operates only part-time. These mergers risk a loss of focus and, more importantly, a loss of specialist skills. We need clear assurances that protective measures are not being weakened.

We should welcome the Director of Public Prosecution’s guidelines for prosecutors on how to tackle cases involving child sexual abuse. They are intended to improve the criminal justice system process for children, both as witnesses and as victims. However, this guidance should be extended to cover all forms of exploitation, including all child victims of trafficking.

The report from the Refugee Council and the Children’s Society, Still at Risk, presents a sober analysis of what has gone wrong. What stands out is the failure of professionals to act on indicators of abuse when the child has no documentation to prove their age, leading many children to be pushed into the adult immigration system without protection. Giving children the benefit of the doubt, an obligation already embedded in various conventions and directives, could so easily rectify this. I would be grateful if the Minister could let the House know if and how the Government are planning to implement the report’s recommendations.

It might surprise some Peers and members of the public that at present there is no specific offence of child trafficking in law. Instead, it is an aggravating factor in various pieces of legislation that apply to adults and children. This is just not good enough. The Government should therefore consider including separate child-specific offences before introducing the forthcoming modern slavery Bill.

Tackling the problem of child trafficking will not create huge costs. It is mostly about raising awareness and using existing resources and powers more effectively. The present approach clearly is not working, and there is neither a moral or financial case for leaving things as they are.

20:14

[Baroness Howe of Idlicote (CB)]

My Lords, I, too, congratulate the noble Baroness, Lady Howarth, on securing this important debate. One of the challenges presented by the horror of child sex abuse pertains to the way in which it is growing, not just in its extent but also in its definition. There was a time when one thought of child sex abuse narrowly in terms of physical acts committed by an adult in relation to a child. While child sex abuse of that kind continues, it is also manifest in other ways, and in the brief time available to me this evening I will look at the public policy challenge of how best to address these more novel forms of child sex abuse.

New means of communication, principally the internet and mobile phones, play a key role. In recent years children and young people have started to use their mobile phones to take pictures of themselves or others naked and then to text those images to others or distribute them through new social media. This practice, called “sexting”, is hugely damaging. One can gain some appreciation of the problem by examining the Children’s Commissioner’s recent literature review on the subject, Basically... porn is everywhere, which is a deeply disturbing document.

Among other things, the report highlights studies demonstrating that between 4% and 17% of young people have sent or received “sexts” or have posted self-generated images online. I have references to them in my notes. Crucially, the report makes it very plain that such images can be taken and/or disseminated as part of bullying, or their discovery may lead to bullying. This may also lead to threats or blackmail, or may be posted to or shared by paedophile chat sites. Also, according to one of my sources, Wolf, online distribution of material generated via sexting has the potential to lead to self-harm and/or suicide.

Just because sexting and associated cyberbullying do not necessarily involve physical contact and may be committed by children on children as well as by adults on children, it does not follow that these practices, when they involve people under 18, are anything other than a new form of child sex abuse. If we are to have an adequate public policy response to child sex abuse, we must engage with sexting and associated cyberbullying. The truth is that these behavioral abuses of the otherwise wonderful potential that the internet has to offer can only be addressed through challenging and educating.

This is one of the two central provisions of my Online Safety Bill which is currently awaiting its Second Reading in your Lordships’ House. Clause 4 places an obligation on internet service providers and mobile phone operators to make customers aware of internet and mobile safety issues, which include the online behavioural challenges of sexting and cyberbullying. Clause 5, meanwhile, places an obligation on the Secretary of State to provide parents with education materials about online safety, including sexting and cyberbullying, to help them speak to and teach their children about such challenges. I would like to know what the Government plan to do to help parents engaging with this key educational challenge, and I hope that the Minister will enlighten us when he replies.

We then turn to another crucial issue: to what extent are we prepared to do what we can to help ensure that children do not stumble on legal but entirely inappropriate adult sexual content online? Knowing what we do about the development of the brains of children with respect to sexual images, I firmly believe that there is a real sense in which a culture that chooses not to invest appropriate resources on preventing children from accessing such material is itself guilty of a form of child sex abuse. While we may not yet have the public policy tools to provide complete safety for children online, I believe that at any given time we should do everything that it is technologically possible to do to protect children from stumbling upon such images.

If we pass on this opportunity, we ourselves are guilty of allowing a form of abuse. That is why Clause 1 of my Bill requires internet service providers and mobile phone operators to provide service users with an internet service that is free from inappropriate adult sexual and violent content at the point of purchase but with the option for anyone to access such material, subject to their opting in and going through a verification process demonstrating that they are 18 or over.

I warmly congratulate the Prime Minister on taking on this issue and, in particular, on his 22 July NSPCC speech in which he addressed both the availability of illegal child sex abuse images online and the current ease with which children can access legal but inappropriate adult content online. He has shown real leadership on the issue and for this I thank him. However, I gently suggest that his phrase, “Nothing is more important than this”, with which I completely agree, sits rather oddly alongside his refusal to introduce legislation in deference to the industry's desire for self-regulation. Self-regulation may sound very fine but it is worth remembering that it was tried before when seeking to engage with the great child rights challenges of the past. In 1847 any aspiration for self-regulation of the factories had to be abandoned in favour of a statute, and no one questions the wisdom of that now. I suspect that we will come, sooner or later, to the realisation that we require legislation—

[Lord Ahmad of Wimbledon (Con)]

I am sorry to interrupt the noble Baroness but I remind her—

[Baroness Howe of Idlicote (CB)]

I am just finishing. We will come to the realisation that we require legislation to address the problems that I have outlined and that in the future those looking back would be incredulous that we ever dared think otherwise.

20:21

[Lord Giddens (Lab)]

My Lords, I, too, congratulate the noble Baroness, Lady Howarth, on securing this debate and on her effective introduction to it.

To understand debates about child sex abuse now we absolutely have to have some historical context. I started working on this issue some 30 or so years ago now. That was a time of denial, both here and in the United States, let alone elsewhere. Cases of widespread abuse were coming to light in churches, in orphanages, in hospitals and in the family, but a veritable smokescreen was thrown up to try to block off the implications of all this. For example, people spoke of false memory syndrome, casting doubt on the testimony of many children who did at that time speak up. In a way, that is not surprising because we are dealing here with some of the most cherished institutions in our society. A substantial proportion of the cases of sexual abuse that came to light were against small boys. It is important to recognise this and not concentrate only on sexual abuse against girls.

I used to teach at the University of California at Santa Barbara—one of the most beautiful towns you could possibly live in. The jewel in the crown in Santa Barbara was the mission, which stood on the hill above the town—a really wonderful building. In that building, it was discovered that there was a long-term history of sexual abuse on a mass scale. A local newspaper referred to those involved, who were priests and friars in the institution, as sacred monsters. Over the period 1964 to 1987, fully one-quarter of the friars regularly abused the boys in the institution.

Noble Lords may have seen in the papers a couple of days ago that high-profile cases are even now coming to the fore in the Catholic Church in Poland involving some very high-ranking dignitaries. What we are talking about here is, as it were, the secret sexual history of our civilisation. We are talking about something deep-rooted, not a transient phenomenon; it has a very long history. The term “grooming”, for example, has been widely used recently. It is a fairly novel term, but I can assure noble Lords that it is a term for a very traditional practice. Grooming went on at the mission in Santa Barbara as in so many other institutions. Many questions are raised, therefore, by what has been called our Jimmy Savile moment. In some part, it is our moment of institutional discovery and the consequences will take a long time to assimilate.

I have three brief points on which I would like the Minister, if he has time, to comment. First, I hope the Government will accept that we are in this for the long haul; that we are at the beginning of a process that will go on for a long time. Operation Yewtree, after all, found 450 people who came forward to speak out. None of them had spoken out before. This is part of a much larger hidden history; it is not an individual case in any way at all. Therefore, a long-term strategy is needed.

Secondly, would the Minister agree that we need to focus on boys as much as girls? Boys on the whole are much more reluctant than girls to speak up, for well known reasons. Jimmy Savile’s victims included quite a number of boys under the age of 10, so it will not do to concentrate only on one sex when discussing this issue.

Thirdly, we need to hammer home the point made by Keir Starmer, the Director of Public Prosecutions, that this is not just a problem for the CPS and the police. That is precisely because it is essentially an institutional problem—an issue, in other words, for all of those in charge of the diversity of organisations within which such practices have been carried on.

20:27

[Lord Storey (LD)]

My Lords, I, too, thank the noble Baroness, Lady Howarth, for facilitating this debate. I think the figures are frightening; let me remind you of them. One in 10 children experience sexual abuse before their 18th birthday. Youth are the victims of 66% of all sexual offences reported to law enforcement agencies; they are two-and-a-half times more likely to be raped than adults. Forty per cent of victims are 11 years old or younger and 9% of 10 to 17 year-olds receive a sexual request while on the internet. Of course, sexually abused children are at greater risk of psychological, emotional, social and physical problems, often lasting into adulthood.

What are the steps that we should take? First of all, there are some simple thoughts that we should always have in our minds. We should eliminate or reduce isolated one-to-one situations in order to decrease risk. More than 80% of cases happen in isolated one-to-one situations. We should be prepared to have open conversations with children about our bodies, sex and boundaries. The best protection is our relationship with children and that is why sex education in schools is so important. We should know the signs of abuse to protect children from harm and understand how to respond to risky behaviours and suspicions or reports of abuse.

The greatest risk to children comes not from strangers but from people we know and trust. Ninety per cent of children know their abuser; 60% are people whom the family trusts; 40% are abused by older or larger youths—that is, babysitters or cousins.

In May 2012, I asked a Question about the definition of neglect of children and young persons. I just reminded myself of the reply that the Parliamentary Under-Secretary of State for Schools at the time, the noble Lord, Lord Hill, gave me:

“The Government's vision is for a child-centred system that includes providing effective help when a problem arises at any stage in a child’s life. This is one reason why we asked Professor Munro to carry out an independent review of child protection. She identified that services are often too reactive, and we are now helping children’s services, the police and the NHS to work together and focus on early identification before problems escalate”.—[Official Report, 23/5/12; col. WA 59.]

I am very tempted to say: tell that to, or consider it for, poor Daniel Pelka. As we remember, Daniel Pelka was starved to death and beaten for months by his serial criminal stepfather and drug addict prostitute mother—mind-bogglingly, beyond the help of onlooking teachers, health staff and social workers. There are the ghosts of Victoria Climbié and baby Peter, two other lovely kids who should be alive today. There was a boy resembling a concentration camp victim scavenging in bins and reduced to finding scraps to survive. There was another inquiry, another set of recommendations and then, sadly, we all sit back to wait for it to happen again.

Social workers carry out a fantastic job. There has been a huge step change in schools and teachers, with child protection officers and safeguarding and child protection policies, but the answer is not constantly to have inquiries—it is actually to do something. We know what we need to do. If at any time any of the agencies suspect that something is wrong, they need to act. They need to be prepared to open the door and go into the house to see for themselves. Do we seriously believe that there were not adults around in those very serious cases who did not see a change in those particular children? No child deserves to be treated by way of sexual abuse.

20:32

[Baroness Hughes of Stretford (Lab)]

My Lords, I, too, thank the noble Baroness, Lady Howarth, particularly for the focus that she has brought this evening on prevention. She set out clearly for us the incidence and prevalence of child sexual abuse and made a compelling case for more to be done to support prevention—something which, as she rightly said, is the weak link in current plans and, I would say, in policy and professional practice.

Despite some very high-profile cases lately, as the noble Lord, Lord Storey, said, most children who are sexually abused are still abused within their families, although I think that the explosive influence of the internet may change that over time. Even now, child sexual abuse is not a homogenous phenomenon. There are many contexts for it, and they are all distinctive. A victim can be abused by a single relative. I have come across families in which children are passed around among relatives in a culture of abuse. An individual victim can be abused opportunistically by a stranger or by a person in trust in certain contexts—schools, churches, residential homes, music lessons and so on. Children may be targeted by men acting in pairs or gangs, abused by other young people, groomed online for abuse, used to make pornography and, as the noble Baroness, Lady Doocey, reminded us specifically, trafficked in from abroad for the purpose of abuse.

The internet and social media are modern phenomena that have exponentially increased the capacity of predatory abusers to seek out and connect with children, as the noble Baroness, Lady Howe, pointed out. The case was reported earlier this week, as Members may have seen, of Anthony Marsh, a married man, and Lee Davies who, acting together, contacted more than 2,700 children right across the country. So far, from the images in their computers, police have identified only 17 victims, of whom the men admit to abusing 10, four boys being abused by both of them. They operated for at least eight years, and for the whole of that time Marsh was HIV positive. They have been charged with 69 offences, and pleaded guilty to 55.

There are so many different forms of abuse—and they may be changing with the use of the internet—that there can be no single method of prevention. However, I believe that there are some fundamental approaches which really ought to underpin everything that we can do in terms of prevention. One is to increase the knowledge, the awareness and the resilience of children themselves. The second is to improve the ability of adults to recognise possible abuse, to be open to children disclosing it, and to be able to respond appropriately. The third is that we need a special approach to young people who abuse.

I will make a few comments on these three points, and hope that when the Minister replies he may be able to say what the Government are doing in these areas. First, there is the issue of increasing the knowledge, awareness and resilience of children. Here I agree with the noble Lord, Lord Storey, and others who argue that there is now an unassailable case for better sex and relationship education within schools as part of a broader PSHE curriculum.

We need to deter children from the kind of risky behaviour with mobile phones, for instance, that was illustrated by the noble Baroness, Lady Howe, who also mentioned the dangers of the internet. Education should include talking about positive relationships and avoiding exploitative or coercive ones, and respect for others. I say to the Minister that it is now urgent for the Government to update the guidance for sex and relationship education. This was last revised in 2000, well before a range of relevant legislation that has since been enacted.

The Government could ensure that Ofsted examined the practice of schools in this area much more closely, to raise the standard of preventative education and improve consistency of practice across schools. Schools are the only universal service, and they have a crucial role to play in helping children stand up to behaviour that might turn out to be abusive, and have the confidence to tell trusted adults if this is happening.

Secondly, I turn to improving the ability of parents and adults to recognise and respond. It is clearly essential for teachers, health workers and others, particularly parents, to know where to go to get help if they are worried. I am concerned that these kinds of programmes for parents have diminished. Could the Minister say what the Government are doing to support this? As my noble friend Lord Giddens said, we still see vestiges of that historic denial, as we did in some of the cases of sexual abuse of vulnerable girls by gangs of men.

Lastly but by no means least, there is the significant proportion of abuse committed by children and young people themselves. When a young person is displaying risky behaviour of that type, potentially criminal behaviour, there is more chance of changing that behaviour. That is why prevention by developing special programmes for young people at risk of committing sexual abuse is very important indeed. There are a number of very good programmes, and I wonder what the Government are doing to support them.

00:00

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, I conclude this debate by thanking the noble Baroness, Lady Howarth of Breckland, for securing it. I also thank the many noble Lords who have participated in the debate for their very valuable contributions. We have all been time-limited, and I am time-limited too. To the noble Baroness, Lady Hughes, I say let us see whether we can arrange a debate with a little bit more time and space to develop these arguments.

While my response will answer some of the questions asked by noble Lords, I hope the noble Baroness will allow me to reply in the commentary on the debate to all noble Lords who have participated. I will circulate the commentary to all noble Lords who have participated. I will of course also share it with my right honourable friend Damian Green, who is the Minister heading up the national group, and with Edward Timpson, the Children’s Minister. On top of that I will try to make sure that it also goes to all members of the national group. Our speeches in the debate will therefore demonstrably be circulated to a lot of people. I hope that we will be able to benefit from that.

As the noble Lord, Lord Giddens, said, child sexual exploitation is an abhorrent crime, no matter how or when it occurs. Child protection is an absolute priority for this Government from the top down, as the noble Baroness, Lady Howe, said. We are committed to ensuring that children receive the protection they need and deserve. This is not a quick-fix area of policy. The noble Lord, Lord Giddens, graphically displayed the ingrained problems with which Governments and society have to deal. We are committed to learning lessons from the inquiries and investigations that have concluded. That is why the Minister for Policing, Criminal Justice and Victims, Damian Green, is leading a national group to tackle sexual violence against children and vulnerable people. As I said, I will be drawing his attention to what we have said today.

This group, as noble Lords will probably know, is made up of experts from across government, delivery agencies, inspectorates, the police and voluntary and community sectors including the NSPCC, Barnardo’s and Rape Crisis. Its work is also supported by and benefits from the input of the wider expertise of organisations such as the Lucy Faithfull Foundation, through their membership of the strategic consultative group. Perhaps I may add to the tribute made by the noble Baroness to Lady Faithfull. In this area, progress has frequently been made through the inspiration of outstanding individuals. This debate, if I may say so, has been testimony to it. For example, it has been very helpful to have the experience of the noble Baroness, Lady Hughes, on this issue.

Since the group was established in April 2013, it has taken lessons learnt from inquiries and police investigations into historical sexual abuse and current sexual exploitation cases, and identified nine areas for action. Progress has already been made in a number of these priority areas including prevention, policing, criminal justice and online-related issues. We should all be aware that although the point of reporting may be the first time that agencies learn of incidents, the victims have often lived with the horror and impact for many years. This is why the prevention strand of the group’s work has been prioritised and accelerated. It has already seen the delivery of useful early findings on how multi-agency safeguarding approaches work. My noble friend Lord Storey is right to tell us of the role of the education system—and of schools, in particular— in this work.

The noble Baroness, Lady Doocey, asked about human trafficking. Many of us will have been in the Speaker’s great rooms this evening for the APPG on human trafficking, which was extremely well attended. The human trafficking strategy recognises the potential for human trafficking to occur within the confines of the UK. The Government are also clear that child trafficking is an important issue to be considered within the national group. I pay tribute to the noble Baroness, Lady Doocey, for the work she is doing to deal with human trafficking by rail and in other aspects. She has been a hero on that point.

Information sharing and multi-agency working between local services is vital if we are to protect vulnerable people. An excellent example of this new approach is MASH, the multi-agency safeguarding hub, which is a huge improvement in the practical way of protecting children. Multi-agency safeguarding hubs allow real-time conversations to take place about issues including child abuse, domestic violence victims and missing people. We are introducing significant measures to improve the court process for children, and other vulnerable victims of sexual abuse and exploitation, to ensure that all victims of sexual violence are listened to and dealt with appropriately and sensitively, and that they have sufficient confidence in the police and the criminal justice system to report such crimes.

We have consulted on a revised Code of Practice for Victims of Crime, with a bespoke chapter setting out the services and support for child victims. This will be published this autumn, giving victims clearer entitlements from the criminal justice system and tailoring services according to individual needs. Victims under the age of 18 will be automatically entitled to an enhanced service, and we have announced pilot measures for pre-recorded, pre-trial cross-examinations of vulnerable and intimidated witnesses, including children. We are also considering options for ways to reduce the distress that some victims suffer as a result of the trial process, particularly in cases of sexual violence. This will ensure that cross-examination is not protracted and repetitive.

As I have mentioned, tackling this issue requires a multi-agency response with co-ordination across a range of policy areas, operational partners and subject-matter experts. To support this, we have published this year revised statutory guidance in Working Together to Safeguard Children. However, the responsibility, as noble Lords are aware, does not rest just with government. My noble friend Lady Eaton was right to emphasise the local nature of much of this work. We have strengthened local safeguarding children’s boards so that they can hold agencies to account for safeguarding children. The Government are providing funding to the Association of Independent LSCB Chairs, which plays a crucial role in supporting LSCBs to tackle child sexual exploitation.

This is why the Government are investing £1.8 million over the next two years in four new projects trialling new ways of delivering improved support to children and young people specifically at risk of sexual exploitation. In addition, the Government have awarded funding to several other organisations for projects that will contribute to tackling child sexual exploitation in gangs and groups, including £1.2 million over three years, from April 2012 to March 2015, for 13 young people’s advocates to respond to domestic abuse, CSE and gang involvement. The Home Office has also committed £1.72 million per year to part-fund 87 independent sexual violence adviser posts.

This Government have put rape support centres on a secure financial footing for the first time. The Ministry of Justice is providing £4 million over the next year to fund 77 rape support centres across England and Wales, helping rape and sexual assault victims get the expert support that they need. The Government have also provided funding to the NSPCC to provide the ChildLine service and the NSPCC helpline covering the four years, 2011-2015. In total, this grant is £11.2 million over the four years.

In addition, the Government fully recognise the critical and valuable role played by the wide range of charities and the voluntary sector. The have a key role in tackling and preventing this issue. While many agencies and individuals are carrying out fantastic work in the area, we must ensure that we continue to build on and learn the lessons from the past and ensure that children and vulnerable people are getting the protection and the support that they deserve.

I conclude by once again thanking the noble Baroness, Lady Howarth of Breckland, for securing this debate. I hope that noble Lords will consider that it has been a valuable discussion and that we will have an opportunity to return at length to this subject in the future.

20:49

Sitting suspended.

Financial Services (Banking Reform) Bill

Tuesday 15th October 2013 Lords Chamber

Committee (2nd Day) (Continued)

20:54

Amendment 61

Moved by

[Lord Newby]

61: After Clause 12, insert the following new Clause—
“Part 6Special Administration for operators of certain infrastructure systemsFinancial market infrastructure administration
This Part— (a) provides for a procedure to be known as FMI administration, and(b) restricts the powers of persons other than the Bank of England in relation to the insolvency of infrastructure companies.”

[Lord Newby (LD)]

My Lords, these amendments establish a special administration regime that will apply to operators of recognised interbank payment systems, operators of securities settlement systems and crucial service providers to those operators.

The establishment of this new administration regime, to be known as financial market infrastructure—FMI—administration, is the latest in a series of measures that this Government are bringing forward to ensure that the failure of a single financial institution is not allowed to put UK financial stability at risk.

Underpinning the financial sector are a number of critical pieces of infrastructure that, if allowed to fail, could severely disrupt markets and the normal functioning of the wider economy. The need to ensure that some of these systemically important pieces of infrastructure continue to operate in times of crisis has already been addressed in legislation passed by this Government. However, there remain other pieces of systemically important market infrastructure that have not yet benefitted from statutory provision designed to ensure continuity of service in times of crisis. With that in mind, the amendments forming Part 6 have been tabled in order to ensure the continuity of service provision of recognised interbank payment systems, which facilitate or control the transfer of money between banks and building societies, and securities settlement systems, which enable the title to units of securities to be transferred electronically. These systems are integral to the efficient operation of the financial system, processing transactions worth hundreds of billions of pounds a day. As things stand, in the event that the operator of an interbank payment system or securities settlement system was to become insolvent, it would be likely to enter the normal administration procedure. In such cases, the administrator would be under a duty to look after the interests of the company’s creditors, without concern for implications for the wider economy. In these circumstances, the continued operation of crucial payment and settlement services could be threatened.

Part 6 introduces a special administration regime, known as FMI administration, which prioritises continuity of critical service provision during administration. The key features of this administration are the appointment of a special administrator, who will have an overarching objective to continue critical services during administration; the Bank of England’s ability to apply to a court to place a relevant company into FMI administration with the court appointing the FMI administrator—no one else will be able to institute insolvency proceedings against one of these firms without giving the Bank prior notice; the Bank of England’s power of direction over the FMI administrator; the availability of powers allowing for the property, rights and liabilities of the relevant company to be transferred; and restrictions on early termination of third party contracts.

In addition to operators of relevant systems, FMI administration will also be available in respect of companies that the Treasury designates as crucial service providers to the operators of the relevant systems. Service providers will be designated if the Treasury is satisfied that an interruption in the provision of services would have a serious adverse effect on the effective operation of the relevant system. Insolvency rules made under the powers in Part 6 will be made in due course. These will prescribe certain procedural details relating to the conduct of FMI administration. Different rules will be made in respect of England and Wales, Scotland and Northern Ireland. Any rules made under this power that apply to England and Wales will need to be cleared by the Insolvency Rules Committee before the Lord Chancellor may proceed to make them.

We believe that the likelihood of these powers ever being needed is extremely small. However, if an interbank payment system did get into financial difficulty, it would clearly be in the interests of financial stability that it was able to continue in operation as its financial problems were resolved. The special administration provisions in these amendments would allow this to happen, and I therefore commend them to the House.

[Lord Eatwell (Lab)]

My Lords, I believe that these measures are valuable as an ultimate backstop, as the noble Lord has suggested. I just wonder, as I intimated earlier, whether there is some confusion in ultimate authority, as between the discussions of the payments systems regulator, and the role here, involving the Bank of England and the Treasury, given that the payments regulator will lie outwith both.

[Lord Newby]

My Lords, I will write to the noble Lord on that point. My officials do not believe there is such confusion in reality, but we will seek to clarify this before Report.

Amendment 61 agreed.

20:59

Amendments 62 to 78

Moved by

[Lord Newby]

62: After Clause 12, insert the following new Clause—
“Interpretation: infrastructure companies
(1) In this Part “infrastructure company” has the meaning given by this section.
(2) “Infrastructure company” means a company which is—
(a) the operator of a recognised inter-bank payment system, other than an operator excluded by subsection (3),(b) approved under regulations under section 785 of the Companies Act 2006 (provision enabling procedures for evidencing and transferring title) as the operator of a securities settlement system, or(c) a company designated by the Treasury under subsection (4).(3) But a company is not an infrastructure company if it is a recognised central counterparty, as defined by section 285 of FSMA 2000.
(4) The Treasury may by order designate a company for the purposes of subsection (2)(c) if—
(a) the company provides services to a person falling within subsection (2)(a) or (b), and (b) the Treasury are satisfied that an interruption in the provision of those services would have a serious adverse effect on the effective operation of the recognised inter-bank payment system or securities settlement system in question.(5) An order under subsection (4) must specify the recognised inter-bank payment system or securities settlement system in connection with which the company is designated.
(6) Before designating a company under subsection (4), the Treasury must consult—
(a) the company to be designated,(b) the person within subsection (2)(a) or (b) to whom the company provides services,(c) the Bank of England,(d) if the company is a PRA-authorised person, the PRA and the FCA, and(e) if the company is an authorised person other than a PRA-authorised person, the FCA.”

63: After Clause 12, insert the following new Clause—
“Interpretation: other expressions
(1) In this Part—
“company” means a company registered under the Companies Act 2006;
“operator”, in relation to a recognised inter-bank payment system, is to be read in accordance with section 183 of the Banking Act 2009;
“recognised inter-bank payment system” means an inter-bank payment system, as defined by section 182 of the Banking Act 2009, in respect of which a recognition order under section 184 of that Act is in force;
“the relevant system” means—
(a) in relation to an infrastructure company falling within subsection (2)(a) of section (Interpretation: infrastructure companies), the recognised inter-bank payment system, (b) in relation to an infrastructure company falling within subsection (2)(b) of that section, the securities settlement system,(c) in relation to a company designated under subsection (4) of that section, the recognised inter-bank payment system or securities settlement system falling within paragraph (b) of that subsection;“securities settlement system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument, and which facilitate supplementary and incidental matters.
(2) Expressions used in the definition of “securities settlement system” in subsection (1) are to be read in accordance with section 783 of the Companies Act 2006.”

64: After Clause 12, insert the following new Clause—
“FMI administration orders
(1) In this Part “FMI administration order” means an order which—
(a) is made by the court in relation to an infrastructure company, and(b) directs that, while the order is in force, the affairs, business and property of the company are to be managed by a person appointed by the court.(2) A person appointed as mentioned in subsection (1)(b) is referred to in this Part as an FMI administrator.
(3) The FMI administrator of a company must manage its affairs, business and property, and exercise and perform the FMI administrator’s functions, so as to achieve the objective in section (Objective of FMI administration).”

65: After Clause 12, insert the following new Clause—
“Objective of FMI administration
(1) Where an FMI administrator is appointed in relation to the operator of a recognised inter-bank payment system or a securities settlement system, the objective of the FMI administration is—
(a) to ensure that the system is and continues to be maintained and operated as an efficient and effective system,(b) where the operator of the system is also a clearing house falling within section 285(1)(b)(ii) of FSMA 2000 (recognised clearing house that is not a recognised central counterparty), to ensure that the protected activities continue to be carried on, and(c) to ensure by one or both of the specified means that it becomes unnecessary for the FMI administration order to remain in force for that purpose or those purposes.(2) Where an FMI administrator is appointed in relation to a company designated under subsection (4) of section (Interpretation: infrastructure companies), the objective of the FMI administration is—
(a) to ensure that services falling within that subsection continue to be provided, and(b) to ensure by one or both of the specified means that it becomes unnecessary for the FMI administration order to remain in force for that purpose.(3) The protected activities referred to in subsection (1)(b) are such activities as the Bank of England may from time to time direct, which must be—
(a) regulated activities falling within section 285(3)(a) or (b) of FSMA 2000, or(b) related activities which are necessary for the efficient carrying on of any of those regulated activities.(4) The specified means are—
(a) the rescue as a going concern of the company subject to the FMI administration order, and(b) transfers falling within subsection (5).(5) A transfer falls within this subsection if it is a transfer as a going concern—
(a) to another company, or(b) as respects different parts of the undertaking of the company subject to the FMI administration order, to two or more different companies,of so much of that undertaking as it is appropriate to transfer for the purpose of achieving the objective of the FMI administration.(a)The administrator must obtain the approval of the Bank of England to any proposals under sub-para. (1).(b)Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to the objective in section (Objective of FMI administration) of this Act.(c)Ignore sub-para. (3)(b).(a)Before making an application in reliance on this paragraph the FMI administrator must give notice to the Bank of England, which is to be entitled to participate in the proceedings.(b)In making directions the court must have regard to the objective in section (Objective of FMI administration) of this Act.(a)Ignore sub-paras. (1) and (3).(b)The Bank of England may apply to the court for the variation or revocation of any directions given by the court.()“(2) Where a company is in FMI administration, a creditor or member of the company may apply to the court claiming that the FMI administrator is conducting himself or herself in a manner preventing the achievement of the objective of the FMI administration as quickly and efficiently as is reasonably practicable.”()“(1) On an application made by a person mentioned in sub-paragraph (2), the court may provide for the appointment of an FMI administrator of a company to cease to have effect from a specified time.()(2) The persons who may apply to the court under sub-paragraph (1) are—()(a) the Bank of England;()(b) with the consent of the Bank, the FMI administrator.”(a)Para. 91(1) applies as if the only person who could make an application were the Bank of England.(b)Ignore para. 91(2).(a)in accordance with directions of the Bank of England, and(b)if the Bank is satisfied that they will not prejudice the objective in section (Objective of FMI administration) of this Act.(a)In considering making an order in reliance on section 241 the court must have regard to the objective in section (Objective of FMI administration) of this Act.(b)Ignore subsections (2A)(a) and (3) to (3C).(6) The means by which transfers falling within subsection (5) may be effected include, in particular—
(a) a transfer of the undertaking of the company subject to the FMI administration order, or of part of its undertaking, to a wholly-owned subsidiary of that company, and(b) the transfer to a company of securities of a wholly-owned subsidiary to which there has been a transfer falling within paragraph (a).(7) The objective of the FMI administration may be achieved by transfers falling within subsection (5) only to the extent that—
(a) the rescue as a going concern of the company subject to the FMI administration order is not reasonably practicable or is not reasonably practicable without such transfers,(b) the rescue of that company as a going concern will not achieve that objective or will not do so without such transfers, or(c) such transfers would produce a result for the company’s creditors as a whole that is better than the result that would be produced without them.”

66: After Clause 12, insert the following new Clause—
“Application for FMI administration order
(1) An application for an FMI administration order may be made to the court by the Bank of England.
(2) An application must nominate a person to be appointed as the FMI administrator.
(3) The infrastructure company must be given notice of an application, in accordance with rules under section 411 of the 1986 Act (as applied in relation to FMI administration).”

67: After Clause 12, insert the following new Clause—
“Powers of court
(1) The court may make an FMI administration order in relation to an infrastructure company if satisfied—
(a) that the company is unable to pay its debts,(b) that the company is likely to be unable to pay its debts, or(c) that, on a petition presented by the Secretary of State under section 124A of the 1986 Act (petition for winding up on grounds of public interest), it would be just and equitable (disregarding the objective of the FMI administration) to wind up the company. (2) The court may not make an FMI administration order on the ground set out in subsection (1)(c) unless the Secretary of State has certified to the court that the case is one in which the Secretary of State considers (disregarding the objective of the FMI administration) that it would be appropriate to petition under section 124A of the 1986 Act.
(3) On an application for an FMI administration order, the court may—
(a) grant the application;(b) dismiss the application;(c) adjourn the application (generally or to a specified date);(d) make an interim order;(e) treat the application as a winding-up petition and make any order which the court could make under section 125 of the 1986 Act;(f) make any other order which the court thinks appropriate.(4) An interim order under subsection (3)(d) may, in particular—
(a) restrict the exercise of a power of the company or of its directors;(b) make provision conferring a discretion on the court or on a person qualified to act as an insolvency practitioner in relation to the company.(5) For the purposes of this section a company is unable to pay its debts if it is treated as being so unable under section 123 of the 1986 Act (definition of inability to pay debts).”

68: After Clause 12, insert the following new Clause—
“FMI administrators
(1) The FMI administrator of a company—
(a) is an officer of the court, and(b) in exercising and performing powers and duties in relation to the company, is the company’s agent.(2) The management by the FMI administrator of a company of any of its affairs, business or property must be carried out for the purpose of achieving the objective of the FMI administration as quickly and efficiently as is reasonably practicable.
(3) The FMI administrator of a company must exercise and perform powers and duties in the way which, so far as it is consistent with the objective of the FMI administration to do so, best protects—
(a) the interests of the company’s creditors as a whole, and(b) subject to those interests, the interests of the company’s members as a whole.”

69: After Clause 12, insert the following new Clause—
“Continuity of supply
(1) This section applies where, before the commencement of FMI administration, the infrastructure company had entered into arrangements with a supplier for the provision of a supply to the infrastructure company.
(2) After the commencement of FMI administration, the supplier—
(a) must not terminate a supply unless—(i) any charges in respect of the supply which relate to a supply given after the commencement of FMI administration remain unpaid for more than 28 days,(ii) the FMI administrator consents to the termination, or(iii) the supplier has the permission of the court, which may be given if the supplier can show that the continued provision of the supply would cause the supplier to suffer hardship, (b) must not make it a condition of a supply that any charges in respect of the supply which relate to a supply given before the commencement of FMI administration are paid, and (c) must not do anything which has the effect of making it a condition of the giving of a supply that any charges within paragraph (b) are paid.(3) Where, before the commencement of FMI administration, a contractual right to terminate a supply has arisen but has not been exercised, then, for the purposes of this section, the commencement of FMI administration causes that right to lapse and the supply is only to be terminated if a ground in subsection (2)(a) applies.
(4) Any provision in a contract between the infrastructure company and the supplier that purports to terminate the agreement if any action is taken to put the infrastructure company in FMI administration is void.
(5) Any expenses incurred by the infrastructure company on the provision of a supply after the commencement of FMI administration are to be treated as necessary disbursements in the course of the FMI administration.
(6) In this section—
“commencement of FMI administration” means the making of the FMI administration order;
“supplier” means the person controlling the provision of a supply to the infrastructure company, and includes a company that is a group undertaking (as defined by section 1161(5) of the Companies Act 2006) in respect of the infrastructure company;
“supply” means a supply of any of the following—
(a) computer hardware or software used by the infrastructure company in connection with the operation of the relevant system;(b) financial data; (c) infrastructure permitting electronic communication services;(d) data processing;(e) access to secure data networks used by the infrastructure company in connection with the operation of the relevant system.”

70: After Clause 12, insert the following new Clause—
“Power to direct FMI administrator
(1) If the Bank of England considers it necessary to do so for the purpose of achieving the objective of an FMI administration, the Bank may direct the FMI administrator to take, or refrain from taking, specified action.
(2) In deciding whether to give a direction under this section, the Bank of England must have regard to the public interest in—
(a) the protection and enhancement of the stability of the financial system of the United Kingdom, and(b) the maintenance of public confidence in that system.(3) A direction under this section must not be incompatible with a direction of the court that is in force under Schedule B1 to the 1986 Act.
(4) The Bank of England must, within a reasonable time of giving the direction, give the FMI administrator a statement of its reasons for giving the direction.
(5) A person listed in subsection (6) has immunity from liability in damages in respect of action or inaction in accordance with a direction under this section.
(6) Those persons are—
(a) the FMI administrator;(b) the company in FMI administration;(c) the officers or staff of the company.(7) Immunity conferred by this section does not extend to action or inaction—
(a) in bad faith, or(b) in contravention of section 6(1) of the Human Rights Act 1998.(8) This section does not limit the powers conferred on the Bank of England by section 191 of the Banking Act 2009 (directions) in relation to a recognised inter-bank payment system.”

71: After Clause 12, insert the following new Clause—
“Conduct of administration, transfer schemes etc.
(1) Schedule (Conduct of FMI administration) (which applies the provisions of Schedule B1 to the 1986 Act about ordinary administration orders and certain other enactments to FMI administration orders) has effect.
(2) Schedule (Financial market infrastructure transfer schemes) (which makes provision for transfer schemes to achieve the objective of an FMI administration) has effect.
(3) The power to make rules conferred by section 411(1B) of the 1986 Act (rules relating to bank administration) is to apply for the purpose of giving effect to this Part as it applies for the purposes of giving effect to Part 3 of the Banking Act 2009 (and, accordingly, as if the reference in section 411(1B) to that Part included a reference to this Part).”

72: After Clause 12, insert the following new Clause—
“Restriction on winding-up orders and voluntary winding up
(1) A petition by a person other than the Bank of England for a winding up order in respect of an infrastructure company may not be determined unless—
(a) the petitioner has notified the Bank of England that the petition has been presented, and(b) the period of 14 days beginning with the day on which the notice is received by the Bank has ended.(2) A resolution for the voluntary winding up of an infrastructure company may not be made unless—
(a) the infrastructure company has applied to the court under this section,(b) the company has notified the Bank of England that the application has been made, and(c) after the end of the period of 14 days beginning with the day on which the notice is received by the Bank, the court gives permission for the resolution to be made.”

73: After Clause 12, insert the following new Clause—
“Restriction on making of ordinary administration orders
(1) This section applies where an ordinary administration application is made in relation to an infrastructure company by a person other than the Bank of England.
(2) The court must dismiss the application if—
(a) an FMI administration order is in force in relation to the company, or(b) an FMI administration order has been made in relation to the company but is not yet in force.(3) Where subsection (2) does not apply, the court, on hearing the application, must not exercise its powers under paragraph 13 of Schedule B1 to the 1986 Act (other than its power of adjournment) unless—
(a) the applicant has notified the Bank of England that the application has been made, and(b) the period of 14 days beginning with the day on which the notice is received by the Bank has ended.(4) On the making of an FMI administration order in relation to an infrastructure company, the court must dismiss any ordinary administration application made in relation to the company which is outstanding.
(5) “Ordinary administration application” means an application under paragraph 12 of Schedule B1 to the 1986 Act.”

74: After Clause 12, insert the following new Clause—
“Restriction on enforcement of security
A person may not take any step to enforce a security over property of an infrastructure company unless—(a) notice of the intention to do so has been given to the Bank of England, and(b) the period of 14 days beginning with the day on which the notice was received by the Bank has ended.”

75: After Clause 12, insert the following new Clause—
“Loans
(1) This section applies where an FMI administration order has been made in relation to an infrastructure company.
(2) The Treasury may, out of money provided by Parliament, make loans to the company for achieving the objective in section (Objective of FMI administration).
(3) A loan under this section may be made on such terms as the Treasury think fit.
(4) The Treasury must pay into the Consolidated Fund sums received by them as a result of this section.”

76: After Clause 12, insert the following new Clause—
“Indemnities
(1) This section applies where an FMI administration order has been made in relation to an infrastructure company.
(2) The Treasury may agree to indemnify persons in respect of one or both of the following—
(a) liabilities incurred in connection with the exercise of powers and duties by the FMI administrator;(b) loss or damage sustained in that connection.(3) The agreement may be made in whatever manner, and on whatever terms, the Treasury think fit.
(4) As soon as practicable after agreeing to indemnify persons under this section, the Treasury must lay before Parliament a statement of the agreement.
(5) If sums are paid by the Treasury in consequence of an indemnity agreed to under this section, the infrastructure company must pay the Treasury—
(a) such amounts in or towards the repayment to them of those sums as the Treasury may direct, and(b) interest, at such rates as they may direct, on amounts outstanding under this subsection.(6) Subsection (5) does not apply in the case of a sum paid by the Treasury for indemnifying a person in respect of a liability to the infrastructure company.
(7) Where a sum has been paid out by the Treasury in consequence of an indemnity agreed to under this section, the Treasury must lay a statement relating to that sum before Parliament—
(a) as soon as practicable after the end of the financial year in which that sum is paid out, and?(b) (except where subsection (5) does not apply in the case of the sum) as soon as practicable after the end of each subsequent relevant financial year.(8) In relation to a sum paid out in consequence of an indemnity, a financial year is a relevant financial year for the purposes of subsection (7) unless—
(a) before the beginning of that year, the whole of that sum has been repaid to the Treasury under subsection (5), and(b) the infrastructure company is not at any time during that year subject to liability to pay interest on amounts that became due under that subsection in respect of that sum.(9) The power of the Treasury to agree to indemnify persons—
(a) is confined to a power to agree to indemnify persons in respect of liabilities, loss and damage incurred or sustained by them as relevant persons, but(b) includes power to agree to indemnify persons (whether or not they are identified or identifiable at the time of the agreement) who subsequently become relevant persons.(10) For the purposes of this section each of the following is a relevant person—
(a) the FMI administrator;(b) an employee of the FMI administrator;(c) a member or employee of a firm of which the FMI administrator is a member; (d) a member or employee of a firm of which the FMI administrator is an employee;(e) a member or employee of a firm of which the FMI administrator was an employee or member at a time when the order was in force;(f) a body corporate which is the employer of the FMI administrator;(g) an officer, employee or member of such a body corporate.(11) For the purposes of subsection (10)—
(a) the references to the FMI administrator are to be read, where two or more persons are appointed to act as the FMI administrator, as references to any one or more of them, and(b) the references to a firm of which a person was a member or employee at a particular time include references to a firm which holds itself out to be the successor of a firm of which the person was a member or employee at that time.(12) The Treasury must pay into the Consolidated Fund sums received by them as a result of subsection (5).”

77: After Clause 12, insert the following new Clause—
“Interpretation: general
(1) In this Part—
“the 1986 Act” means the Insolvency Act 1986;
“business”, “member”, “property” and “security” have the same meaning as in the 1986 Act;
“company” has the meaning given by section (Interpretation: other expressions);
“the court” means—
(a) in England and Wales and Northern Ireland, the High Court;(b) in Scotland, the Court of Session;“FMI administration order” and “FMI administrator” are to be read in accordance with section (FMI administration orders);
“infrastructure company” has the meaning given by section (Interpretation: infrastructure companies);
“operator”, in relation to a recognised inter-bank payment system, has the meaning given by section (Interpretation: other expressions);
“recognised inter-bank payment system” has the meaning given by section (Interpretation: other expressions);
“regulated activity” has the same meaning as in FSMA 2000;
“the relevant system” has the meaning given by section (Interpretation: other expressions);
“securities settlement system” has the meaning given by section (Interpretation: other expressions).
(2) In this Part references to the FMI administrator of a company include a person appointed under paragraph 91 or 103 of Schedule B1 to the 1986 Act, as applied by Schedule (Conduct of FMI administration) to this Act, to be the FMI administrator of a company.
(3) In this Part references to a person qualified to act as an insolvency practitioner in relation to a company are to be read in accordance with Part 13 of the 1986 Act, but as if references in that Part to a company included a company registered under the Companies Act 2006 in Northern Ireland.”

78: After Clause 12, insert the following new Clause—
“Northern Ireland
(1) This section makes provision about this Part in its application to Northern Ireland.
(2) Any reference to any provision of the 1986 Act is to have effect as a reference to the corresponding provision of the Insolvency (Northern Ireland) Order 1989.
(3) Section (Interpretation: general)(3) is to have effect as if the reference to Northern Ireland were a reference to England and Wales or Scotland.”

Amendments 62 to 78 agreed.

Amendment 79

Moved by

[Lord Newby]

79: Before Clause 13, insert the following new Clause—
“Part 7MiscellaneousFunctions of FCA under competition legislation
Schedule (Functions of FCA under competition legislation) (which contains provision conferring on the FCA functions under competition legislation) has effect.”

[Lord Newby]

My Lords, the Government want to see a competitive banking sector that delivers good outcomes for consumers and are taking steps to make that happen. Much has happened already.

We worked with the banking industry to secure from it a new seven-day current account switching service. This service, which launched last month, has made it easier, simpler, safer and faster to switch accounts, and will help to stimulate competition between providers. We also asked the regulators to undertake a review of barriers to entry and expansion in the banking sector. The review, published in March, introduced a range of changes to capital and liquidity requirements and to the authorisations process to make it easier for new banks to enter the market and for smaller banks to compete.

In addition to this, as noble Lords will be aware, we are introducing a ring-fence to remove the competitive advantage that big banks have received, we are creating a new independent payments regulator, and we have already put competition at the centre of the Financial Conduct Authority’s responsibilities by making competition one of its three objectives and giving it a separate competition duty.

However, we believe that more can be done. In addition to giving the PRA a secondary competition objective, we will provide the FCA with new competition powers. These new powers include Competition Act 1998 enforcement powers that are used to address restrictive practices which are engaged in by companies operating in the UK that distort, restrict or prevent competition—for example, ordering that offending agreements or conduct be stopped. They also include power under the Enterprise Act 2002 to carry out market studies and make references to the Competition and Markets Authority for a decision on whether action should be taken.

The FCA wrote to the Chancellor to request those powers. Since being given a competition objective last year, the FCA has worked hard to increase its technical, legal and economic skills and expertise on competition, building its capacity to identify and address competition issues in the financial services markets. The Government are therefore confident that such powers will strengthen the FCA’s ability to ensure competitive banking markets that deliver good consumer outcomes. These changes, which bring the FCA in line with other sector regulators, will enhance the credibility of the FCA and make it easier for it to persuade firms to alter their behaviour voluntarily.

Finally, the changes will enable the FCA to become a member of the European Competition Network, leaving it much better placed to engage with regulatory issues at a European level. In short, giving the FCA these powers is another step taken by this Government that is good for competition. I beg to move.

[Lord Eatwell]

My Lords, I am grateful to the Minister for introducing these amendments. However, can we reflect a little on the rush towards competition? A competitive system, if it is working effectively, is likely to result in the elimination of institutions from time to time, a process that was famously described as “creative destruction”. That sort of process can be seen quite clearly in countries that have large numbers of relatively small banks. Banks fail regularly in the United States—it is quite a common process. The process is, of course, managed effectively because these banks are relatively small. Has some thought been given to the relationship between the size of banking institutions in Britain and the effectiveness of competition? If competition were truly enhanced, one bank managed to eliminate another and both were relatively large, that could be extremely disruptive. This is not to argue against a competitive process but simply to say that it should not be regarded as an exclusive guideline with respect to what are desirable policies. Has the FPC been consulted on these clauses, and what is its view?

[Lord Phillips of Sudbury (LD)]

My Lords, there is an assumption that competition is essentially and necessarily good and that more competition is better. We have had manifest evidence in the past six years in the City—and indeed much longer than that— that there is a point at which competition turns in on itself. Indeed, the values of out-and-out aggressive competition are inimical to the values of integrity and honesty. I want to strike a note of caution, because this word is overdone in terms of its necessary public benefit.

[Lord Newby]

My Lords, we spent the first part of the afternoon talking about how we get more diversity and competition into the sector. Obviously there is a danger that this can go too far. It is important, however, to realise what these powers do. There are two principal powers. First, Competition Act enforcement powers deal with restrictive practices. Most people would agree that, almost by definition, restrictive practices are not a good thing. The second power is the ability to carry out market studies and make references to the Competition and Markets Authority for a decision on whether action should be taken. Earlier we were discussing the need for the Competition and Markets Authority potentially to do just that. These are not powers that are going to force the FCA to put competition at all costs, at any price, ahead of everything else. They are relatively limited and I think we will find that they are beneficial.

Amendment 79 agreed.

Amendment 80

Moved by

[Lord Newby]

80: Before Clause 13, insert the following new Clause—
“Competition as a secondary objective of the PRA
(1) For section 2H of FSMA 2000 substitute—
“2H Secondary competition objective and duty to have regard to regulatory principles
(1) When discharging its general functions in a way that advances its objectives (see section 2F), the PRA must so far as is reasonably possible act in a way which, as a secondary objective, facilitates effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities.
(2) In discharging its general functions, the PRA must also have regard to the regulatory principles in section 3B.”
(2) In section 3B (regulatory principles to be applied by both regulators), in subsection (1), for “2H(1)(a)” substitute “2H(2)”.
(3) In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority)—
(a) in paragraph 19 (annual report), in sub-paragraph (1)—(i) after paragraph (b) insert—“(ba) how it has complied with section 2H(1),”, and(ii) in paragraph (c), omit the words from “and of” onwards, and(b) in paragraph 20 (consultation about annual report), in sub-paragraph (1)(c), for the words from “and the PRA” onwards substitute “and the PRA has facilitated effective competition in accordance with section 2H and has considered the regulatory principles in section 3B”.”

[Lord Newby]

My Lords, this group of amendments proposes changes to the statutory objectives of the PRA and FCA, following the recommendations of the PCBS. The Government recognise the importance of getting the objectives of the regulators right. They have carefully considered the PCBS recommendations. We agree with the PCBS on the need for competition in banking and have made changes to the PRA’s objectives to reflect the important role it can play in this regard. We did not agree, however, with the conclusion to drop the FCA’s strategic objective and so I will start by explaining that.

During the progress through Parliament of the previous Financial Services Bill we listened to concerns expressed as part of the consultation process and made quite substantial changes to the FCA’s objectives as a result. On the strategic objective, the Government took note of calls by the ICB and others that the objective proposed in the draft Bill which was,

“protecting and enhancing confidence in the UK’s financial system”,

needed to be changed. So the FCA was given the strategic objective of,

“ensuring that the relevant markets function well”.

This change has been broadly welcomed by the ICB and by consumer and industry stakeholders alike.

Of course, the FCA is now up and running and the strategic objective does what it was meant to do by acting as a high level mission statement that brings together the diverse aspects of the FCA’s work in to a single focus. We have considered the arguments that the strategic objective makes the FCA’s remit too complex and risks diverting the FCA from its operational objective.

The three operational objectives of consumer protection, effective competition and market integrity are the matters which the FCA must seek to advance, and in doing so it must bear it in mind that ultimately this should be done in a way that ensures that markets function well, rather than being damaged or undermined. This seems straightforward and there are no reports of the strategic objective causing confusion or problems in practice.

There is also a concern, previously raised by the Treasury Select Committee, that because the FCA’s actions have to be compatible with the strategic objective, this objective can trump the other objectives. The structural requirement to pay heed to the strategic objective would only really create a problem if the content of the strategic objective were in conflict with the operational objective. However, the strategic objective of ensuring markets function well reflects the values in the operational objectives and does not undermine them. That is quite deliberate. So the Government do not agree that the FCA’s strategic objective creates a genuine problem.

It is absolutely appropriate that the mission statement of the FCA should be enshrined in statute. And we agree with the ICB and others that it is equally important that the FCA has an overarching aim of making markets work well. So, on balance, we propose that the FCA’s strategic objective should not be removed.

I turn to the second amendment. Strong competition in financial markets is essential for getting good outcomes for consumers. One impact of the financial crisis has been an increase in concentration in core banking markets to levels where they are almost certainly harming competition. The Government are doing a lot to address this. The account switching service, the payment systems regulator and the existing regulators have a role to pay in ensuring a competitive banking market. That is why we have given the FCA a competition objective and duty, and are giving it strong competition powers so that it has the right tools to get the job done.

The PRA’s main responsibility is towards a safe and stable financial sector, and this is right; but prudential regulation, while vital, can run the risk of securing the position of dominant incumbents in the market, deterring new entrants, and hampering innovation. Therefore, it is crucial that the PRA gives close consideration to competition when going about its duties. We believe that the PRA can take a more active role in facilitating competition in banking markets than under the current requirement to have regard to adverse effects on competition. This would build on the important changes made to capital and liquidity requirements and to the authorisation process as a result of the barriers to entry and expansion review in March this year. The Parliamentary Commission on Banking Standards was also of this view; it suggested the PRA be given a secondary competition objective, and the Government have accepted this recommendation.

I therefore welcome the intention behind the amendment tabled by noble Lords, but I regret that I am unable to accept the amendment as drafted, preferring instead the amendment which stands in my name. I suspect that this will come as no surprise to the noble Lord. However, I assure him that the objective behind the two amendments is a shared one. The noble Lord’s amendment is intended to make the competition objective subject to safety and soundness, but I am not convinced that it has this effect in all contexts, and it does not make competition subordinate to policyholder protection when the insurance objective is in play.

There are various functions of the PRA that are exercisable for the purposes of advancing any of its objectives. By including competition in the definition of objectives in Section 2F, the PRA would be able, for example, to impose a requirement on a firm under Section 55M of FSMA solely for competition reasons, and it might be seen as required to do so. That is not, I think, what the PCBS intended by its recommendation for a secondary objective. To require the PRA to create rules and codes solely to advance competition, as I think the noble Lord’s amendment does, would mean the PRA becoming a competition regulator and would risk distracting it from its primary role as a prudential regulator, which is to ensure the safety and soundness of firms.

The Government amendment ensures that the PRA, in the exercise of its general functions such as making rules, must facilitate effective competition while not compromising its vital role in ensuring the safety and soundness of firms. The PRA will remain the watchdog for stability. It requires the PRA to facilitate effective competition, while maintaining the integrity of the two regulators’ clearly defined roles. Our expectation is that this secondary objective will see the PRA staffing up with greater competition knowledge and expertise and embedding a pro-competition mentality throughout the organisation. The PRA will need to ensure that competition will always be a fundamental consideration when making new rules, or determining its policies and procedures, and the PRA will need to use this expertise to keep its prudential rules and regulations under review to see whether changes can be made to provide a better environment for competition.

Finally, the PRA will need to work with the FCA, which has a strong focus on competition, to ensure a cohesive strategy for competition in financial services. I beg to move.

21:15

[Lord Turnbull (CB)]

I speak to Amendments 89 and 90 in my name. A recurrent theme in the reforms to which we have come back several times this afternoon and this evening has been to increase competition in the banking system. This should engage not just the banks but their regulators too. We tabled these two amendments, Amendment 89 relating to the FCA and Amendment 90 relating to the PRA.

The proposal for the PRA is to add an additional objective to promote competition in a way that is as far as possible consistent with its main duty of providing financial stability. The difference between the amendment tabled by the Government and my amendment is sufficiently small that I think we can accept their measure as taking us forward on that front. However, the parliamentary commission also believed that a change was needed to the architecture of the FCA’s objectives. I wish to put the other side of the case. A fear, which many in the financial world share, is that the FCA will give too much emphasis to bringing about change through enforcement, will wait until something goes wrong and then intervene heavily. However, the FCA, when properly directed, can be a very powerful force for improving competition.

As the Minister has set out, the present architecture has the overall strategic objective of ensuring that relevant markets function well, and has three operational objectives below that: namely, the appropriate degree of protection for consumers; enhancing the integrity of the UK financial system; and promoting competition in the interests of consumers. We queried whether the strategic objective did anything or even whether it could be unhelpful and could be used to trump or confuse the clarity of the operational objectives. Our preferred solution was to drop the strategic objective and promote the other three to primary objectives by deleting the word “operational”, thus ensuring that the competition objective comes into the front rank along with the other two. I am rather surprised that the Government have not supported this, particularly as they accepted the pro-competition logic in the PRA case. I was not convinced by the Government’s response with regard to providing a mission statement. My riposte to that is that the chief executive of the FCA thought the strategic objective,

“added little or nothing to the three operational objectives”.

He continued:

“You could argue that promoting effective competition in the interest of consumers and the market, enhancing the integrity of the system and ensuring an appropriate degree of protection encompass everything that is in the phrase ‘ensuring markets work well’”.

Therefore, if you can achieve something in fewer words and with fewer objectives, and the other one is largely redundant, I would dispose of it.

In my view the aspect of FCA culture that most people feel needs to be bolstered is competition. The current architecture is weaker in that respect than the proposed amendment. We have heard the opposing view from the Minister, but that is the logic behind the position which the commission took.

[Lord Eatwell]

My Lords, I remember discussing this at length during the passage of the previous Financial Services Bill. At that time, I commented that one could often detect whether a proposition made any sense by proposing a negative outcome. If we suppose that the duty is to make the markets work badly, that does not make any sense at all. Therefore, it seems to me that the strategic objective is entirely redundant and serves no useful purpose. Indeed, the idea of changing what were previously operational objectives into prime objectives places competition at that prime level and achieves the objectives which the Government themselves have argued are necessary. For some reason, this issue was never satisfactorily explained previously and has not been satisfactorily explained now. We should apply Occam’s razor and take it out.

[Lord Newby]

My Lords, I am sorry that the noble Lord does not think that the matter has been satisfactorily explained. All I can say is that it has been explained and was debated at great length when we took the Financial Services Bill through the House. Martin Wheatley made it clear that the operational objectives are the key drivers for the FCA’s actions. After taking legal advice, the FCA has subsequently written and confirmed that it is happy with the strategic objective. On that basis, we are happy that the FCA is happy and wish to retain it.

Amendment 80 agreed.

Amendment 81

Moved by

[Lord Newby]

81: Before Clause 13, insert the following new Clause—
“Power of FCA and PRA to make rules applying to parent undertakings
(1) After section 192J of FSMA 2000 insert—
“Rules applying to parent undertakings of ring-fenced bodies192JA Rules applying to parent undertakings of ring-fenced bodies
(1) The appropriate regulator may make such rules applying to bodies corporate falling within subsection (2) as appear to the regulator to be necessary or expedient for the group ring-fencing purposes.
(2) A body corporate falls within this subsection if—
(a) it is incorporated in the United Kingdom or has a place of business in the United Kingdom, (b) it is a parent undertaking of a ring-fenced body, and(c) it is not itself an authorised person.(3) The “group ring-fencing purposes” are the purposes set out in section 142H(4).
(4) “The appropriate regulator” means—
(a) in relation to the parent undertaking of a ring-fenced body that is a PRA-authorised person, the PRA;(b) in any other case, the FCA.Rules requiring parent undertakings to facilitate resolution192JB Rules requiring parent undertakings to facilitate resolution
(1) The appropriate regulator may make rules requiring a qualifying parent undertaking to make arrangements that would in the opinion of the regulator allow or facilitate the exercise of the resolution powers in relation to the qualifying parent undertaking or any of its subsidiary undertakings in the event of a situation arising where all or part of the business of the parent undertaking or the subsidiary undertaking encounters or is likely to encounter financial difficulties.
(2) The “resolution powers” are—
(a) the powers conferred on the Treasury and the Bank of England by or under Parts 1 to 3 of the Banking Act 2009, and(b) any similar powers exercisable by an authority outside the United Kingdom.(3) The arrangements that may be required include arrangements relating to—
(a) the issue of debt instruments by the parent undertaking;(b) the provision to a subsidiary undertaking (“S”) or a transferee by the parent undertaking, or by any other subsidiary undertaking of the parent undertaking, of such services and facilities as would be required to enable S or the transferee to operate the business, or part of the business, effectively.(4) In subsection (3)(b) “transferee” means a person to whom all or part of the business of the parent undertaking or the subsidiary undertaking could be transferred as a result of the exercise of the resolution powers.
(5) “Debt instrument” has the same meaning as in section 142Y.
(6) “The appropriate regulator” means—
(a) where the subsidiary undertakings of the qualifying parent undertaking include a ring-fenced body that is a PRA-authorised person, the PRA;(b) where the subsidiary undertakings of the qualifying parent undertaking include one or more PRA-authorised persons but do not include any authorised person that is not a PRA-authorised person, the PRA;(c) where the subsidiary undertakings of the qualifying parent undertaking do not include any PRA-authorised person, the FCA;(d) in any other case, the PRA or the FCA.”(2) In section 192K of FSMA 2000 (power to impose penalty or issue censure)—
(a) in subsection (1), after “section 192J” insert “or 192JB”, and(b) after that subsection insert—“(1A) This section also applies if a regulator is satisfied that a person (“P”) who is or has been a parent undertaking of a ring-fenced body has contravened a provision of rules made by that regulator under section 192JA.””

Amendment 81 agreed.

Clause 13 agreed.

Clause 14: Amendments of section 429 of FSMA 2000

Amendment 82

Moved by

[Lord Newby]

82: Clause 14, page 27, line 11, at end insert “and
(b) after “213(1A),” insert “234I(2),”.”

Amendment 82 agreed.

Clause 14, as amended, agreed.

Amendment 83

Moved by

[Lord Turnbull]

83: Before Clause 15, insert the following new Clause—
“Court of directors to become board of directors
(1) The court of directors of the Bank of England shall become the board of directors of the Bank of England.
(2) Accordingly, in the Bank of England Act 1998—
(a) in sections 1(1), (2) and (4), 2(1), 4(2), (3) and (4), 9A(1), (4) and (5), 9B(1), 9G(2), paragraphs 8 to 12A and 13(1) and (3A) to (6) of Schedule 1 and paragraphs 5 and 14 of Schedule 3, for “court” substitute “board”,(b) in section 2(2) to (4) for “court’s” substitute “board’s”, and(c) in paragraph 14(2) of Schedule 1, for “court” substitute “board of directors, or former members of the court of directors,”;and any reference to the court in any other enactment or instrument is to be read as (as appropriate) being or including a reference to the board.”

[Lord Turnbull]

I shall speak also to Amendments 84, 85 and 86. I believe that my colleague, the noble Lord, Lord Lawson, may speak to Amendment 87.

For those who took part in proceedings on the Financial Services Bill in 2012 these clauses will be Groundhog Day—fighting old battles all over again. The arguments about accountability are familiar, were set out in great detail in the Treasury Committee’s report Accountability of the Bank of England, and rehearsed again in the report of the banking commission. This is not surprising, given the overlap in membership of the two groups.

The dispute can be briefly summarised. The Bank of England’s responsibilities have been hugely enhanced, and its accountability has changed—one has to concede that—but not kept pace. Not only has the scope of the Bank’s responsibilities grown but so has its nature. It is now not just responsible for generic policies such as monetary policy or financial stability; it also has powers over the lives and livelihoods of individual citizens and individual businesses. It is therefore important that its accountability keeps pace with those changes.

Just as important as the Bank of England’s accountability to Parliament is its ability to be self-critical. This is the key feature about which people were dissatisfied. The Bank should be ready to review what it has done, consider how successful it has been and draw lessons from that. One can see that at some time in the not-too-distant future, the Bank will need to review the whole exercise of QE, which involves the spending of billions and billions of pounds, and be able to review the policy candidly, even when the results may not be entirely satisfactory or the Bank thinks that it can make improvements.

Amendment 84 would abolish the Court of the Bank of England and replace it with a board of directors. This is the most eye-catching measure—after all, the court has existed for 319 years—but not the most important. In a sense, it is what you would do last, having made the other changes to signify that the Bank’s governance had conclusively changed. The court has some desirable features, which were noted in earlier discussions. It is a unitary board and is no longer chaired by the governor. When I worked for the Treasury, I had to recommend appointments to the court. However, it has come a long way from the old 16-member court, which was like an in-house focus group on which every region or interest imaginable was represented. It has been replaced by a 14-member court with five executives and nine non-executives.

The Financial Services Act 2012 genuflected in the direction of improving internal review by creating an oversight committee of non-executives. I would contend that that still does not go far enough. The central recommendation in Amendment 86 is not about whether the court should be a supervisory board or a board of directors; it concerns the abolition of the oversight committee and the transfer of its responsibilities from a committee of non-executives to the whole board—as I will call it—of the Bank.

We are seeking this change because we believe that the responsibility to be self-critical should not reside solely with the non-executive directors but should be fully embraced by the whole board, including the governor and deputy governors. Looking critically at one’s own work should be something that the governors embrace enthusiastically and not have imposed on them. It is illogical to praise the court for being a unitary board but with regard to this particular function —the function of review—to assign self-examination to the non-executive directors.

I should make it clear that, as with the oversight committee, it is not implied that the commissioning of a review is to be done internally. The board should determine in each case how best to conduct it—whether it is to be done internally with help or to be done externally.

The next important element of the amendments relates to expertise. The chairman of the Bank has hitherto been a highly experienced, highly respected, all-purpose FTSE chairman with an industrial rather than a financial background. Amendment 84 requires that whoever is appointed should have experience in financial matters and financial markets. However, looking at the advertisement that has just been issued for the new chair, I wonder whether it has really caught up with the change in the nature of the work that the Bank is now involved in. The words “prudential” and “macro” do not appear in the advertisement; nor do the words “central bank” or “knowledge of central bank work” or “knowledge of international financial policy”—for example, familiarity with the work of the Financial Stability Board. It still looks pretty old fashioned. Therefore, we are trying to change the nature of the people who are appointed to this organisation to reflect the new, wider role that it is taking on.

With regard to the new arrangements, this proposal is not meant to trample over current operations. The review work would always take place at a time when the operation was no longer critical, so there would be a clear difference between reviewing performance in the past and day-to-day operations.

Finally, the Treasury Committee and the parliamentary commission recommended that the board, or whatever it is called, should be smaller than the current one of 14 members. It was recommended that there should be a board of eight, including three internal members—the governor and two deputy governors—and four external members. Although the governance of the Bank has moved somewhat, my contention is that it still does not fully reflect the change in the nature of the work that it has to do.

[Lord Eatwell]

My Lords, we had a considerable discussion about the creation of the rather unfortunately named oversight committee, given the dual meaning of the word “oversight”, during the passage of the Financial Services Bill, now an Act. I am broadly in sympathy with the argument that the noble Lord, Lord Turnbull, has made, which carries through the logic from the ICB or the Treasury Committee—I cannot remember which had the initial discussions—through the banking commission, looking at the overall problem of Bank of England governance in the 21st century, particularly now, given its greater responsibilities.

I should like to make only one major point, which the noble Lord, Lord Turnbull, and his colleagues, including the noble Lord, Lord Lawson, might like to consider, and that is the business of expertise. I entirely agree that the chairman should be a non-executive with considerable experience of prudential or financial matters. That is fine. However, Amendment 84 then says:

“The persons appointed to be non-executive members of the Bank must have—

(a) experience in the running of large organisations and financial institutions”.

That would exclude a lot of people who would be highly desirable. It would exclude Sir John Vickers, for example, and that seems to me to be undesirable. I am very much in favour of academics being in these organisations, such as Sir John Vickers, and I would not like that area of expertise to be ruled out.

21:30

Similarly, other distinguished people who have worked for the Bank for International Settlements, or other central banks without actually running them would be appropriate in this case. While the notion of having financial expertise and expertise in prudential regulation is entirely appropriate, the issue of running large organisations as an exclusive characteristic of those non-executive members is probably undesirable.

[Baroness Noakes (Con)]

My Lords, I shall not take much of the Committee’s time. Most of these amendments are pretty marginal to this Bill, and, as the noble Lord, Lord Turnbull, said, it feels as if we are refighting the battles that we so much enjoyed on the previous Financial Services Bill.

I should like to make a small contribution on the expertise point. I believe that it is a matter of principle; it is not good to specify in legislation the characteristics that holders of particular offices should have. Things change over time and rapidly become out of date. They are useful things to debate but not in the context of writing legislation. In particular, the non-executive community should be a balance of skills and expertise. To follow the formula here, they have all to be this impossible person in having experience of running large organisations and financial institutions, and expertise in prudential policy. The gene pool is pretty limited on those, and to write that into legislation is a recipe for not being able to fill the posts as they come vacant. I am sure that it is really enjoyable to go back over all those debates that we had and to relive the points that have been raised by the Treasury Select Committee in another place, but for my purposes they are not necessary for this Bill.

[Lord Newby]

My Lords, as noble Lords have said, the governance of the Bank of England was debated at great length just a year ago during the passage of the Financial Services Act. As a result of those debates, the Government accepted that the additional responsibilities for financial stability transferred to the Bank would put strain on its governance structures, and as a result we provided for a powerful new oversight committee, which has been established as a sub-committee of the Bank’s court.

These changes were introduced as recently as April this year and should be allowed time to develop. Making further changes now would serve only to introduce uncertainty into the Bank’s governance at a time of significant change in its senior management. It would also prevent the new system having time to prove itself. Moreover, it is the Government’s view that the amendments would weaken rather than strengthen the Bank’s governance structures.

I shall deal with the amendments in turn. Amendment 83 proposes that the name of the governing body should change from the court to the board of directors. Our view is simple: changing the name of the court would make no difference to how it operates in practice. Indeed, in substance the court now operates along the same lines as a modern plc board. It has a clear division between the role of the chief executive and non-executive chair; it is made up of a majority of independent non-executive directors; and there are formal, transparent appointment procedures for executive and non-executive directors alike.

Amendment 84 proposes that the number of non-executive directors should be reduced from nine to four and would require the appointment of a non-executive chairman. The reduction in the number of non-executive directors would drastically alter the balance of membership of the Bank’s governing body, resulting in an equal number of executive and non-executive members. It is our view that this would significantly reduce the level of independent advice and challenge available to the governors and increase the risk of decision-making becoming dominated by a small group. The court already has a non-executive chair, so we believe this proposal is unnecessary.

Amendments 85 and 86 propose abolishing the new oversight committee and rolling its powers into the proposed new board of directors. This would be a backward step for the accountability of the Bank. The oversight committee, which is made up exclusively of non-executives, was established to provide stronger challenge to the Bank’s executive. It has a clear remit to monitor the Bank’s performance against its objectives and strategy, including the Bank’s monetary and financial policy objectives. In order to deliver these responsibilities, the committee has the power to appoint any person to review any matter. These powers cover not only the Bank’s operational performance but also its policy decisions. These responsibilities are very important to the accountability of the Bank, and the Government believe they must continue to be carried out by a non-executive body independent from the policy-making process. These amendments would transfer the powers of the oversight committee to a board of directors whose membership included the governor and three deputy governors of the Bank. It cannot be right for the governors to have a role in scrutinising the policy processes that they themselves are responsible for administering, especially when the processes in question are of such vital national importance.

These amendments also seek to introduce more specific legislation to govern how the performance of the Bank’s policy functions are monitored. This is unnecessary. The oversight committee already has wide-ranging powers to review the Bank’s performance in relation to any matter, including specific provision to review the procedures of the MPC and Financial Policy Committee. The Government also believe that it is unnecessary to introduce legislation covering requests for information. The current arrangements are effective, and historically the Bank has been very co-operative with both the Treasury and Parliament. Moreover, Parliament already has wide-ranging powers to hold public authorities to account, including the power to call any witnesses to appear in front of any of its committees, as the governors of the Bank of England know only too well.

Amendment 87 would require the Chancellor to appoint an additional external member to the FPC with experience of financial crises. The FPC’s objectives—

[Lord Lawson of Blaby (Con)]

It has not been moved yet.

[Lord Newby]

I believe it is in this group. I hope that noble Lords will not mind if I deal very briefly with it, and we will come back to it if that is the wish of the House. Amendment 87 would require the Chancellor to appoint an additional external member with experience of financial crises. The FPC’s objectives are to exercise its functions with a view to contributing to the achievement of the Bank of England’s financial stability objective and, subject to that, support the economic policy of Her Majesty’s Government, including their objectives for growth and employment. The Government agree with the commission on the importance of ensuring that the FPC has the necessary expertise and experience to understand and draw lessons from history. The current membership of the FPC equips it to do so. In the Government’s response to the PCBS we will take this into account, alongside other relevant factors, when making future appointments to the FPC. However, I do not think it is either necessary or desirable to include a provision of this nature in legislation. It risks constraining the Government’s flexibility, as the noble Baroness, Lady Noakes said, to appoint the best candidates by placing particular emphasis on only one of a number of criteria relevant to the appointment process.

I am also not persuaded that the balance of the FPC should be changed by the addition of a fifth external member. The current composition strikes the right balance between ensuring that there is sufficient input from the Bank, as executive, and internal Bank of England expertise, while supporting the role of the external non-executives in providing a challenge to members’ thinking. Furthermore, the oversight committee, a sub-committee of the Court of Directors consisting of the non-executive directors of the Bank, is able to undertake or commission reviews of the FPC’s performance, ensuring that it is held to account for its decisions. The oversight committee also monitors the processes of the FPC to ensure that all members have the required information and to tackle any emergence of groupthink. In view of these arguments, I hope the noble Lord will withdraw his amendment.

[Lord Lawson of Blaby]

My Lords, my noble friend the Minister has just pathetically addressed Amendment 87. None of his arguments stack up. We are saying here that it would be desirable—I cannot understand why the Government are opposing this—that there should be an additional external member who would have great knowledge and he might even be an academic, which would enormously please the noble Lord, Lord Eatwell. However, he need not be an academic; he could be someone who had a great knowledge of past financial and banking crises.

I think it was the philosopher Immanuel Kant who first observed that the only lesson of history is that no one ever learns the lessons of history. Financial crises are not unique; there have been a series of them over the years, both in this country and in the western world more generally. We commissioned a study of past financial crises. It was conducted by an excellent man, Mr John Sutherland of the Bank of England. It is remarkable how the same mistakes were made time and again. Everyone knows now about the crisis of 2008, but the time will come when that generation will have learnt the lessons of their own lifetime but not of the past, and it would be extremely useful to have someone on the Financial Policy Committee with such knowledge and expertise. It may not prevent a further substantial crisis but it will, at trivial cost, reduce the risk significantly. I cannot understand why the Government object to this.

My noble friend the Minister said that there should not be this guidance; that the Government should be able to appoint the best people. In other words, they should be able to appoint people who have no knowledge of past financial crises. Why do they want to do that? Why on earth is the reason they should want to do that when they have been given this opportunity to buttress all the other excellent measures in the Bill with someone on the FPC who has some knowledge and understanding of previous financial crises? Such knowledge is not widespread among the great majority of people. I have known this neck of the woods for a long time and there is very little knowledge of previous financial crises, yet there is a lot to be learned from them. It seems to me that the Government could easily accept having someone on the FPC who has this knowledge and I cannot understand why they do not do so.

[Lord McFall of Alcluith (Lab)]

My Lords, I support the noble Lord, Lord Lawson, on that point. The historical issue is extremely important. If all MPC members had a copy of Adam Smith’s The Wealth of Nations—Adam Smith was a professor of moral philosophy in Glasgow University 250 years ago—we would not be in this crisis. If we could give them something from the 20th century, it would be John Kenneth Galbraith’s treatise. As he said, all financial crises have leverage at their core. In many ways, as the City historian David Kynaston said, the banking community has to come into the rest of society; it has been an island apart from it.

I remember when I was chairman of the Treasury Select Committee and Sir Richard Lambert was appointed to the Monetary Policy Committee. All flutters were let loose because he was not an economist and therefore could not know about or have an intelligent opinion on the MPC. He proved that he was efficient and in fact the banking community is now calling on him to chair a committee so that it can re-engage with the rest of society.

I remember when Professor Danny Blanchflower was appointed to the Monetary Policy Committee. He was resident professor of economics at Dartmouth College but those with the closed-shop mentality did not want such an individual because he was in America. However, we were in the jet age and he came across every couple of months for the MPC. He gave us an insight into the US labour market and US housing.

My plea to the Minister is to get rid of the mentality that it is only economists and those who are in the system who understand it. This crisis has had a hugely detrimental effect on society. If the economists again do not engage with society, then that is where problems will arise.

Professor Larry Summers, who was a contender for the Treasury Secretary’s job and is the Charles W Eliot Professor at Harvard, said:

“The financial crisis has made me rethink everything about economics”.

That is what he has done. The link between economics and society is so important. Let us get rid of the elitism; let us get rid of the closed shop; let us let in people with experience who understand society and can impart to people who have the great gift of economics the knowledge that they are part of society and that the consequences to society will be dire if they do not have a wide perspective on the implications of their actions.

[Lord Higgins (Con)]

My Lords, we are clearly getting a proliferation of Bank of England committees. We have both the Monetary Policy Committee and the Financial Policy Committee. Can the Minister say briefly precisely what the responsibilities will be of the Financial Policy Committee?

[Lord Newby]

My Lords, I will answer that question. The principal role of the Financial Policy Committee and its principal area of responsibility is to maintain the stability of the financial system. That is very different from any of the other committees established by the Bank. As for people on the FPC who have any understanding of financial crises, at the moment, Dr Donald Kohn, for example, clearly falls into the category of people with that ability. The former governor believed that he had extensive knowledge of financial history, and therefore there was and is no lack of it on the relevant committees, even without the provision on the face of the Bill.

[Lord Turnbull]

I listened to the responses to my intervention and divide them into two categories. One is points made by the noble Lord, Lord Eatwell, the Minister and the noble Baroness, Lady Noakes, on specifying expertise and skill. I can see some force in those points. If we are going to have the opportunity, I will try to improve on it. My main area of disagreement is that I just do not agree with the idea that the oversight committee—the repository of who is responsible for reviewing what the Bank has done—should be hived off to a committee of non-executive directors. It should be built into the DNA of the whole organisation. However, I can see I am not going to be able to persuade noble Lords of that, so—

[Lord Lawson of Blaby]

Before the noble Lord withdraws the amendment, I would like to correct the Minister on what he said before about the noble Lord, Lord King—the former Sir Mervyn King. He is a very old friend of mine, and I can assure the House that in advance of this crisis, he had no knowledge whatever: it was not his interest. He was interested in two things: monetary policy and microeconomics. He was very good at microeconomics, but he had no knowledge or interest in past financial crises at all. He mugged it up later, of course, after the crisis broke. Of course he mugged it up: he is a clever man and able to do so, but I am afraid that the Minister was briefed by his officials to say something totally false and misleading.

[Lord McFall of Alcluith]

The noble Lord, Lord King, whom I know as well and for whom I have tremendous respect, told me on many occasions that he attended MIT for his PhD. He shared an office with Ben Bernanke, who was an historian of financial crises in the 1930s. He assured me that he learned quite a lot in those three years.

[Lord Turnbull]

I beg leave to withdraw the amendment.

Amendment 83 withdrawn.

Amendments 84 to 87 not moved.

Clause 15 agreed.

Amendment 88

Moved by

[Lord Newby]

88: After Clause 15, insert the following new Clause—
“Building societies
Schedule (Building societies) (which contains provision about building societies) has effect.”

[Lord Newby]

My Lords, this amendment modernises building societies legislation and enables them to compete on more of a level footing with banks.

In the Government’s founding document, the coalition agreement, we set out our commitment to,

“promote mutuals and foster diversity in financial services”.

This commitment underscores the importance that we attach to the contribution that mutuals make to the economy and shows our determination to support them.

Building societies play a central role in the mutual sector. They provide vital services for their members, taking savings deposits and providing mortgages. Indeed, the sector has come through the financial crisis in good health, and has been responsible for much of the new mortgage lending and lending to first-time buyers in the UK in recent years. Building societies also regularly outperform the other retail banks in terms of customer satisfaction.

The Government are keen to ensure that the sector continues to play an integral role in our financial services sector. That is why, in last year’s consultation The Future of Building Societies, the Government asked the building society sector whether there were any changes to the Building Societies Act which would remove unnecessary limitations or barriers to growth, while preserving the distinctive and traditional building society model. Following that consultation, the Government now propose to make several amendments to the Building Societies Act.

The amendments will, first, make it easier for building societies to communicate with their members electronically rather than by paper. This is obviously in line with what banks can do. Secondly, they will allow societies to create floating charges. At the moment, societies can create fixed charges, but are not permitted to grant security over fluctuating assets. This causes practical difficulties, because floating charges are commonplace in financial services. The ban was originally introduced in 1997 to prevent holders of floating charges taking control of a building society, but due to changes in insolvency law this threat no longer exists.

Thirdly, the amendments will change the classification of small business deposits for the purposes of calculating the proportion of a building society’s funding from wholesale sources. Under the Building Societies Act, no more than 50% of a building society’s funding can be wholesale funding. This amendment will mean that a certain amount of small business deposits will no longer count as wholesale funding. The amendment will give societies greater freedom to source wholesale funding, and creates a bigger incentive for societies to compete for small business deposits.

Fourthly, the amendments will allow owners of deferred shares, which are a type of mutual capital instrument, to be eligible to receive shares or cash payment on a demutualisation, irrespective of how long they have held the shares. This will provide an exception to the existing rule that shareholders must have held shares in the society for at least two years. This exception is necessary to remove the risk that deferred shares which are categorised as tier 1 capital would be degraded to tier 2 capital on a demutualisation, because the holder was not able to be given shares. Fifthly, I should add that our new provision makes it clear that the restriction applies to any right to acquire shares by members, and not just rights to acquire shares in priority to others, as is currently the case. The existing provision has not worked as intended and the amendments also correct that.

Sixthly, the amendments will allow building societies to change their financial year to any day in the year, not just 31 December. That is in line with banks. Seventhly, they will remove the requirement for building societies to provide new members with a copy of the latest summary financial statement. There is no equivalent requirement for banks, and this will have cost benefits. Eighthly, they will remove the requirement for societies to disclose information in their annual business statement about officers who are not directors. Such disclosure is excessive, time-consuming and costly, and there is no equivalent requirement for banks.

Taken together, these amendments provide significant modernisations to the legislative framework for building societies, and I commend them to the House.

[Lord Eatwell]

My Lords, in general these are desirable and beneficial changes, although they do not really represent the great boost to the growth of the mutual sector which we might have expected. However, I want to raise just two major issues. The increase in the use of electronic communication, particularly given the typical customer profile of building societies, raises the possibility that certain members will be disadvantaged with respect to the availability of regular information and of course the summary financial statement, which they should be able to receive in order to understand the overall status and security of their building society. Is the noble Lord content, and can he reassure the House, that there are suitable safeguards so that those who do not have ready access to electronic communication receive appropriate paper copies?

Turning to the issue of owners of preferred shares, can the noble Lord reassure me that the definition of ownership is the same as for those who have held shares for two years? The noble Lord may remember that initially when building societies were demutualised this caused problems, because if Mr and Mrs Smith held a joint account, in fact only Mr Smith was deemed to be the owner. If Mr Smith happened to die within the two-year period, Mrs Smith did not then gain mutualisation advantages. In a Private Member’s Bill which I helped take through the House, we changed that regulation so that in that circumstance both Mr and Mrs Smith would have the advantage if one of them was deceased. Even young Jimmy Smith would have the same advantage if his parents were killed in a car accident. Does the definition of ownership in this case have that broad scope that was specifically created for the demutualisation efforts—in other words, the owners are not the first-named person on the account but can include both a spouse or a partner and a first child?

[Lord Higgins]

As I understand it, the Government are proposing to remove the provision that on demutualisation people had to have held the shares for two years beforehand. Is there not some argument in favour of that? Otherwise, if it seems possible that a demutualisation will take place, there will be a sudden rush for people to benefit and obtain a purely short-term gain, as against those who have invested in the mutual for some time.

[Baroness Noakes]

My Lords, I am probably one of the few Members of your Lordships’ House who does not wear rose-tinted spectacles when it comes to the mutual sector. I am usually filled with slight horror when people tell me that they are going to modernise this wonderful sector and I am not particularly interested in the fact that it was in the coalition agreement. That is because we have seen a major failure of the mutual sector in recent years—namely, in relation to the Co-op Bank—and the history of the building society sector is one of failed building societies. However, many of the things in these amendments are not terribly important. Electronic versions of documents and the like may well help to reduce the cost of servicing very large member bases. My only concern is the liberalisation of the amount of funding that building societies can have, which potentially exposes the sector to greater risks. I would want to be assured by my noble friend the Minister that the Prudential Regulation Authority has no intention of relaxing its normal prudential approach to building societies, as there is no evidence that given greater freedoms they will use them wisely.

22:00

[Lord Newby]

My Lords, the noble Lord, Lord Eatwell, asked me two questions. The first one was about electronic communications and the age profile of members of building societies. This is a permissive amendment, and if members wish to be given paper copies of documents then building societies in future will still be required to provide them in paper form. In terms of the owners of preferred shares, I believe that preferred shares are typically owned within the financial services sector, so they are rather different from personal shares. It is obviously a highly technical point, and I will write to the noble Lord about it.

The noble Lord, Lord Higgins, asked whether we were changing the two-year bar in terms of shareholders and votes on demutualisation. No, we are not. For ordinary, individual shareholders in building societies, the rules do not change. There are never more than a very small number of preferred shareholders because they are providing a specific form of financial instrument to building societies. The concern is, as I said, that unless there was an exception to the existing rule, there is a possibility that deferred shares would move from tier 1 to tier 2 if a building society demutualised. There is no prospect of the number of deferred shareholders swaying a result on demutualisation because they are not the same people as the ordinary people who have a retail account at the building society.

As for the point made by the noble Baroness, Lady Noakes, the Co-op Bank is of course not a mutual; it is a straightforward plc. It was originally owned 100% by the Co-operative Group but it is no longer, so to the extent that there may be problems with the Co-op Bank, the mutuality issue is not particularly relevant. However, there is no major relaxation in these provisions regarding the amount of funding. The suggestion that deposits held by small businesses should be treated in the same way as those held by private individuals is just common sense. It does not have a very significant impact on the funding position. I assure the noble Baroness that there is no suggestion that the PRA should reduce the rules around building societies because although many of us are fond of building societies, nobody can claim that they were immune from some of the excesses of the late noughties.

Amendment 88 agreed.

Amendments 89 and 90 not moved.

Amendment 91

Moved by

[Lord McFall of Alcluith]

91: After Clause 15, insert the following new Clause—
“Independent Banking Regulatory Decisions Committee of the FCA
(1) After section 1L of FSMA 2000 insert—
“1LA Independent Banking Regulatory Decisions Committee
(1) There is to be a Banking Regulatory Decisions Committee of the FCA (“the Committee”).
(2) The members of the Committee are to be appointed jointly by the FCA and the PRA and hold office in accordance with the terms of their appointment.
(3) The person appointed to chair the Committee must have experience of acting in a senior judicial capacity.
(4) A majority of the members of the Committee must be persons appearing to the FCA and the PRA to have (and to have had) no professional connection with the provision of financial services.
(5) The remaining members of the Committee must include persons appearing to the FCA and the PRA to have extensive experience in senior roles in banking.
(6) The function of the Committee is to exercise the banking regulatory decisions function of the FCA and the PRA.
(7) “Banking regulatory decisions function” means the function of taking decisions for enforcing compliance with relevant requirements, within the meaning of Part 14, in cases where the authorised person is a bank.
(8) The banking regulatory decisions function of the FCA and the PRA is delegated to the Committee; and references in this Act to the FCA and the PRA in relation to that function are to be construed accordingly.
(9) The FCA shall meet the reasonable costs of the Committee in discharging its function but the Committee—
(a) is not subject to direction by the FCA or the PRA as to the exercise of its function, (b) is not accountable to the FCA or the PRA for the exercise of its function, and(c) may appoint its own officers and staff.(10) At least once a year the Committee must make a report to the Treasury on the discharge of its function.
(11) The Treasury must lay before Parliament a copy of each report received by them under subsection (10).
(12) In this section “bank” has the meaning given by section 2 of the Banking Act 2009.”
(2) The FCA and the PRA must carry out a review of the operation of the Banking Regulatory Decisions Committee of the FCA.
(3) The review must be completed before the end of 2018.
(4) The FCA and the PRA must give the Treasury a report of the review.
(5) The report must include an assessment of whether the function of the Banking Regulatory Decisions Committee would be better discharged by a body that was entirely independent of the FCA and the PRA.
(6) The Treasury must lay a copy of the report before Parliament and publish it in such manner as they think fit.”

[Lord McFall of Alcluith]

My Lords, this amendment is about the regulatory decisions committee that the Parliamentary Commission on Banking Standards proposed, giving responsibility for banking enforcement decisions taken by the FCA and the PRA to a new, statutory autonomous body within the FCA. Unfortunately, to date the Government have rejected that proposal.

In our evidence sessions we took evidence from a number of bodies, such as the medical and legal professions. In these established professions, a number of steps are taken to separate disciplinary functions from the supervision of professional development. In the legal profession, for example, the Solicitors Disciplinary Tribunal is totally separate from the Solicitors Regulation Authority and has a mixture of lay and professional members. The SRA has no say in its composition. It is in effect a prosecutor before a tribunal.

We took evidence from Sir Peter Rubin, who chairs the General Medical Council, who described similar recent developments in the medical profession. He told us that following the Shipman inquiry, it was pointed out to the GMC that its previous arrangements, whereby it was the police, the Crown Prosecution Service, the judge, jury and everything else, in his words, were incompatible with Section 6 of the Human Rights Act. Essentially, no one should adjudge their own cause so last year, as he told us, they hived off the adjudication process under which cases against doctors are heard to a separate body in a separate building. It is still funded by the GMC but, crucially, a judge now runs the adjudication process. It is now petitioning Parliament to give the GMC the power to appeal when it does not agree with one of its findings. In his opinion, that would really get the complete separation going.

In our deliberations the commission noted that an entirely separate statutory body for enforcement could be a solution but we recognised that there were a number of obstacles to that, not least because it would generate a new regulatory body that could be a source of confusion and conflict. An independent enforcement body would still be reliant on supervisors for many referrals that could in effect result in fewer cases if there were any problems co-operating with the FCA and the PRA. The body that we mentioned should be chaired by someone with senior judicial experience.

We also recommended a joint review by the regulators of their enforcement arrangements in 2018 but to date the Government have been silent on that issue. In the debate in the House of Commons, our chairman Andrew Tyrie made the point that the Government have rejected the need to wind up United Kingdom Financial Investments, and that the regulatory reforms to provide statutory autonomy for the decisions committee are especially regrettable. I would like the Government to give us their views on that joint approach by 2018.

We are seeking a body to be appointed by agreement between the boards of the PRA and the FCA with a majority of members with a non-banking or financial services background, containing several members with extensive and senior banking experience. It should be chaired by a person with senior judicial experience. In that way, it could publish a separate annual report of its activities and of the lessons for banks that emerged from its decisions.

When the FCA representatives were giving us evidence, Tracey McDermott, the director of enforcement, told us that the FSA had still not solved the problem of ensuring that senior figures were properly subject to the enforcement process. She said:

“The focus on senior management is something that we have talked about a lot in the FSA but we have found it very difficult to bring home the responsibility, particularly in larger firms, to those who are further up because of confused lines of accountability and because of confused responsibility”.

I would ask the Minister to keep in mind that there is an inherent tension between the role of real-time regulators and the enforcement function that can involve reaching judgments on which matters supervisors were involved in at the time, and that regulators are focused on the big picture, such as maintaining financial stability. Again, from experience I have witnessed the enforcement process being devalued in that area. There were a number of areas where the FSA at the time should have been on to enforcement procedures, particularly in the 2004-06 period of the financial crisis. It avoided those areas.

The proposal that we are making here is quite a modest one. It is for a statutory autonomous body within the FCA, and in 2018 there should be a review. I hope that Government will take those propositions seriously, reflect on them and come back to us. I beg to move.

[Lord Eatwell]

My Lords, I was a member of the first regulatory decisions committee established under the Financial Services Authority. It was established at that time because it was felt that the FSA’s procedures would run counter to the Human Rights Act, in the sense that those procedures were both judge and jury. The role of the committee was to act as an independent assessor of the regulatory and enforcement proposals put forward by the FSA.

It worked reasonably well, at least from the perspective of a member of the committee, but not from the perspective of the FSA; we tended to give it a rather difficult time when we felt that its cases were ill prepared and ill focused. It played a particular role for a short period. Then, after a particular dramatic case was lost by the FSA in the tribunal, the FSA decided that it did not like the RDC being foisted upon it, and the role of the RDC was slowly downgraded. I think that was unfortunate—obviously I do, because I participated in the early days when I thought it was working rather well, but be that as it may.

The role here is slightly different from the challenge role that the RDC played. Will the Minister address the question of whether any effective enforcement role for a regulator is compatible with the Human Rights Act?

[Lord Newby]

My Lords, we have considered extremely carefully all the recommendations from the PCBS. They contain a number of observations about the importance of banking expertise, accountability, clarity of responsibility and consistency of decision-making, which we certainly agree with.

I shall explain how the current arrangements already deliver all those things in a way that is tailored to the regulators’ individual approaches. First, on expertise, the call to create a separate decisions committee solely for the banking sector partly reflects concerns about the level of banking expertise on the RDC. At the FCA, the regulatory decisions committee is responsible for taking enforcement decisions. Its remit extends beyond banking, but that does not mean that it does not contain banking expertise. Indeed, the FCA has recently addressed the balance of expertise on the RDC through the appointment of two new members with banking expertise. At the PRA, of course there is no lack of banking expertise on its decision-making committees.

Secondly, on clarity of roles and responsibility, Section 395 of FiSMA provides for the separation of supervision from disciplinary decision-making. Under the current arrangements, there is also a clear separation of the function of making enforcement decisions from that of judicial consideration of the issue.

I do not accept the argument that the fact that the PRA does not have an RDC gives rise to human rights concerns. We do not believe that there is a problem on that front. The prospect of decisions being appealed to the Upper Tribunal means that the system already provides an independent judicial challenge function to the decision-making process for all financial services cases. The proposed requirement for regulatory decisions to be made by a committee chaired by a person with senior judicial experience, on the other hand, would appear to give this new committee a quasi-judicial role more suitable for an external review tribunal than an internal decision-making body.

On consistency of decision-making, I understand that a key part of the recommendation was to encourage a greater consistency of decision-making across the PRA and the FCA. Unfortunately, I believe that the creation of an additional statutory committee for banks would create only new inconsistency. The new committee relates only to banking, so any enforcement decisions relating to a building society, insurer or investment firm would be made under the existing framework and the FCA would have to maintain the existing RDC. This would mean one body dealing with the breach of a rule by a bank and a different body dealing with the same breach of the same rule by a building society, with potentially different outcomes, which seems undesirable. While I think that the PCBS report contains some useful observations in this area, I believe that the current, flexible arrangements are the right ones. On that basis, I would be grateful if the noble Lord withdrew his amendment.

[Lord McFall of Alcluith]

I beg leave to withdraw the amendment.

Amendment 91 withdrawn.

22:15

Amendment 91A

Moved by

[Lord Lawson of Blaby]

91A: After Clause 15, insert the following new Clause—
“Excessive lobbying by banks
(1) If the Governor thinks that the way in which banks are lobbying about regulation or policy is creating a risk to the stability or effective regulation of the banking sector, the Governor must lay a report before Parliament.
(2) In subsection (1) “lobbying” means activities designed to influence Her Majesty’s Government, the FCA or the Bank of England.
(3) In this section “bank” has the meaning given by section 2 of the Banking Act 2009.”

[Lord Lawson of Blaby]

My Lords, I shall be brief; the hour is getting late. Like the amendment that I spoke to earlier about the desirability of having somebody on the Financial Policy Committee who had some knowledge of past financial crises, which I regret that the Government have not accepted, this amendment is also a proposal of the Parliamentary Commission on Banking Standards. It is about lobbying. The context of this applies to all bank lobbying, but it is particularly important in the context of what we were discussing last week in Committee, namely the ring-fence. We were very concerned, as my noble friend the Minister will recall, that this should be strengthened and kept under review. We had various proposals to that end.

In the United States, the parallel was the separation through the Glass-Steagall Act of 1933. That, as my noble friend the Minister will be aware, was gradually eroded over time. It was eroded in two ways. First, the banks found ways round it to some extent. More importantly, by extensive lobbying, the banks were able to get the Government of the day to do a little amendment here and a little amendment there, which created loopholes which did not previously exist. We know that, following the recommendation for the ring-fence in the Vickers commission and report, the banks only accepted it with gritted teeth. They were not happy; they accepted it very reluctantly. They will clearly be seeking any way they can, including through lobbying, to get a change here and a change there over time which will enable them to undermine the ring-fence. That is natural; they feel it to be in their interest.

Times have changed. When I became Chancellor 30 years ago, the Bank of England had no responsibility for monetary policy, which was my responsibility. It did however have the dual responsibility of the regulation and supervision of the banking sector, and being the sponsoring department for banks, representing the interests of the banks to the Chancellor of the day. If the banks had points to make in those days, they would go first and only to the Governor of the Bank of England. The governor would assess whether he felt there was merit in what they were saying, and if there was he would go and see the Chancellor and put the banks’ points to him. That has all changed. Now, the banks go directly to the Government of the day. Indeed it is no secret that the carpets in Number 10 and Number 11 Downing Street have been worn almost threadbare by the lobbying of the banks. That caused great concern to the previous Governor of the Bank of England, and we had some concern about it in the commission. We felt that the best remedy was encapsulated in this amendment: that if the Governor of the Bank of England of the day feels concerned, he should be able to flag it up in a public way. The hope is that that deterrent will keep the amount of lobbying within reasonable bounds. There is the opportunity to do that, and indeed there is a requirement to do that.

That is what we are suggesting in this amendment. Even though the hour is late, I hope that my noble friend will reflect seriously on this proposal and the merit of accepting it.

[Lord Newby]

My Lords, I agree with my noble friend that the Governor of the Bank of England should never hesitate to speak out should he have concerns about the influence of lobbying by the financial services industry. However, we do not believe that there is a problem. Indeed, I fully expect that the governor would raise the alarm to both the Government and Parliament if he believed that any particular factor or circumstances, including lobbying by a bank, seriously put at risk the Bank’s ability to meet its objectives.

However, the Government do not believe that it is either necessary or desirable for this specific requirement to be placed on the statute book. The Financial Services Act 2012 brought together responsibility for all aspects of financial stability within the Bank of England group. As a result, the Bank has a statutory objective to protect and enhance the stability of the financial system. The Government are confident that the governor will act appropriately if he believes that excessive lobbing is impeding the Bank’s ability to meet that objective, which would obviously be the case if there was lobbying with the intention of undermining the ring-fence. Indeed, the Bank has already committed to raising the alarm in such circumstances in its response to the Commission on Banking Standards.

Therefore, while we fully accept that one of the roles of the governor is to raise the alarm if he believes that bank lobbying or indeed anything else creates a risk of undermining the stability or regulation of the banking sector, it is simply not necessary to have such a requirement in the Bill.

[Lord Lawson of Blaby]

I have heard what my noble friend has said and I am slightly reassured. I hope that the present Governor of the Bank of England will read those words and will realise that, without it being on the statute book, he has been charged by the Government with a duty to raise the alarm if there is any case of excessive lobbying. I am very glad to have that on the record, and I beg leave to withdraw the amendment.

Amendment 91A withdrawn.

Amendment 91B

Moved by

[Lord Phillips of Sudbury]

91B: After Clause 15, insert the following new Clause—
“Review of the exemption of certain business gaming contracts from the Gaming Acts
(1) The Treasury must institute a review of the effects of certain business gaming contracts having been made enforceable by the repeal of certain provisions of the Gaming Acts pursuant to the Financial Services Act 1986 (as amended).
(2) “Effect” shall include the social, cultural and ethical effects.
(3) The Treasury may appoint one or more persons to undertake the review after consultation with the Bank of England, the PRA, the FCA and such others as it decides on such terms as it shall think fit.
(4) The review shall culminate in a report to the Treasury within two years of the coming into force of this Act.
(5) The Treasury must lay the report before Parliament and thereafter publish the same.”

[Lord Phillips of Sudbury]

My Lords, after 10.20 pm and with less than a dozen of us still hanging on, I shall be remarkably brief in moving this amendment, which I hope has the advantage of self-clarity.

My starting point is the Financial Services Act 1986, which, as noble Lords will remember, ushered in big bang. Section 63 of and Schedule 1 to the 1986 Act exempted certain City dealing contracts from the effects of the Gaming Acts 1845 and 1892. Up until that time those contracts—which were purely gaming contracts—were unenforceable. Since then, the exemptions have been extended, first by the Financial Services and Markets Act 2000 and further by the Gambling Act 2005.

It is a matter of considerable debate, within the City in particular, about just what the impact of this extremely fast-growing market has been over the years, because fast-growing it has been. I suppose that among all the types of City dealing that have benefited most from exemption from the Gaming Acts there would be much hedge fund activity, which now runs into trades worth trillions of pounds.

It would be beneficial for all concerned to have a review, simply set up and in the hands of the Treasury. The disadvantages of this type of market may be few; they may be beneficial. Many consider that they are a dangerous element in our economic life, because they exaggerate swings and drive markets to extremes. I am afraid that they are susceptible to corruption, in particular, and the most famous or notorious summation of these markets, depending on your point of view, was when Adair Turner—the noble Lord, Lord Turner of Ecchinswell—described them as “socially useless”. I seem to remember from when I was at Cambridge reading economics, ploughing through John Maynard Keynes’s General Theory, that there was one very striking comment in there. I have not quite got it word for word, but the gist is that when the operation of the markets becomes akin to that of a casino, the job is likely to be ill done.

This amendment carries no pre-judgment, but will allow us a cool and collected—and, some would say, overdue—look at the impact of this particular market, the gambling market as you might call it, and see just how it stands. Noble Lords will note in particular that when saying that the Treasury must institute a review of the effects of these gaming contracts, in proposed new subsection (2) of Amendment 91B “effect” is defined as including the,

“social, cultural and ethical effects”,

of this type of gaming business.

As I say, the framework I have provided is a light one. The Treasury will appoint the members of the review committee and describe its terms of reference within the constraints I have put down. In deciding who is going to be part of the review, the Treasury has to consult the Bank of England, the PRA and the FCA. Then there is simply an obligation for the review committee to report within two years of the Act coming into force, and for the Treasury to lay the report before Parliament and then publish more widely. I hope that this will commend itself to the House. I beg to move.

[Lord Newby]

My Lords, this amendment proposes that the Treasury should be required to undertake a review into the effects, including the social, cultural and ethical effects, of exempting certain gaming contracts from the rule which used to provide that no gaming contract or wager can be enforced in a court of law. That exemption applied to certain categories of financial contracts, such as derivative contracts like contracts for differences, which could be regarded as gaming contracts within the meaning of the Gaming Acts because of their characteristics. Only those transactions which were subject to regulation under Financial Services legislation, such as the Financial Services Act 1986, and more recently the Financial Services and Markets Act 2000, ever benefited from the exemption.

However, the law has changed significantly in this area. Since the Gambling Act 2005 came into force, gaming contracts and wagers are now enforceable through the courts, except in Northern Ireland, and the effect of the exemption is therefore limited to Northern Ireland. In the rest of the United Kingdom, there is no difference in the enforceability of derivative investments and other gaming contracts and wagers. Much of the purpose of the review proposed has therefore, in the Government’s view, gone.

It is also unclear what action could be taken following such a review. Trading in financial instruments is subject to European law, and in particular the markets in financial instruments directive. This limits the extent of the action this country could take in relation to financial instruments falling within the scope of the directive. It is unclear what benefits such a review could bring and we suggest that the noble Lord withdraws his amendment on the basis that it is not proportionate or objectively justified.

[Lord McFall of Alcluith]

My Lords, I am surprised that the Minister is saying that we do not know what benefit this could bring. After all this is a derivatives market. We are talking about a derivatives market globally with $66 trillion or more. Not only is there a complexity in that market but there is a total opaqueness. Warren Buffett called derivatives weapons of mass financial destruction. So there is benefit in looking at this issue. Given that the parliamentary banking standards commission’s remit was to look at culture and standards, I would like the Minister to reflect on that issue with culture. In my opinion, culture is about behaviour and ethics is about conflicts of interest. In an opaque market, there are many conflicts of interest, and therefore it would do the Government good to open up this market and see what benefits could result.

The noble Lord, Lord Phillips, has done the Committee a service in this matter. We know that the market will not change overnight, but we must understand what is in the market, particularly the derivatives market. I would like the Government to take this a bit more seriously than the Minister has taken it in saying that we cannot learn anything at all from this.

22:30

[Lord Newby]

My Lords, I would not want the noble Lord to think that the Government were being complacent at all about this issue. In particular, I would not want him to think that we were being complacent about the issue of culture. Of necessity, today we have been talking about legislative change but, as we said at an earlier stage, and as the most reverend Primate reminded us at an earlier stage in this debate, the whole question of culture is as important as legislation.

What constitutes culture is a broad, almost philosophical question, but one key thing that is already evident is that some of the more senior managers of some of the bigger banks have recognised that, if we are to get the kind of banking system that the population as a whole is looking for, they need to change their ways. The chief executive of Barclays set out his stall when he was appointed. The way in which he has sought to instil a new culture through the organisation is very impressive. But one challenge that he has, no doubt—we see this not just in the banks but across the world, whenever there is any big change in the way things happen—is how to get a cultural change trickling down the organisation. It is not just a matter of the chief executive, for whom making a statement about culture is relatively straightforward, making that statement; that is happening, to a very acceptable degree. But how can we ensure that the culture that we require of everybody in the banks changes?

One way in which that is going to happen is, one hopes, through the new statement of principles of banking practice that we discussed earlier. If everybody knows when they go into a bank that they are expected to behave in a different way than possibly they thought in the past and they know that, unless they follow a whole series of principles there on a piece of paper, they are liable for disciplinary procedure, they are likely to behave in a more acceptable manner. I am sure that that would be welcome across the country.

The other big thing that we believe can help in terms of culture is the promotion of the mutuals sector that we were talking about earlier. The Nationwide Building Society has always been at the top of the list for customer satisfaction levels, and that shows no sign of diminishing. To the extent that the building society movement continues to grow, so will the culture improve across the system as a whole.

I realise that I have strayed slightly from where the noble Lord started out in terms of derivatives contracts. But for most of the population, it is at the retail end that culture affects them.

[The Archbishop of Canterbury]

My Lords, I am slightly surprised that the Minister should be resistant to what seems to me a very reasonable amendment. One of the dangers that we have faced in the markets over many years is that of parallel markets. The derivatives markets are, as we know, opaque, as has already been remarked on, and we examined them in some detail in the banking standards commission. The computer-driven markets are also very opaque. We examined those markets and remarked that they would constitute the next great crash. When you have these gambling markets on the side that no one quite understands or knows who is participating in them, and which often take place offshore, it seems to me that at the very least there are grounds to hold an inquiry into the effect they are having on market prices through their impact on the shadow market—we should also examine the psychology of the dealers—and on those involved directly in the more regulated market.

One of the great lessons learnt from the events of 2008 was the ineffectiveness of the clearing system for over-the-counter derivatives, which there was no means of settling. That has been one of the major problems for the liquidators of Lehmans. The gambling markets have much the same problem. We are setting up mechanisms—they are being set up internationally—to deal with the settlement of derivatives contracts, but nothing is being done in this parallel market. The noble Lord, Lord Phillips, has made a very useful point, albeit that the hour is late and it is almost 10.40 pm, which may enable this issue to become slightly clearer in terms of understanding what can be done.

[Lord Phillips of Sudbury]

My Lords, I am grateful to the most reverend Primate and to the noble Lord, Lord McFall. However, I am not so grateful to my noble friend the Minister, as I thought that he rather missed the point. The fact that Tom, Dick and Harry can go down to the betting shop or the local casino, run up a debt and be sued for it has nothing whatever to do with the amendment that I propose tonight. As noble Lords have commented, and as is obvious, we are dealing here with huge sums of our money which are gambled, often to the excessive benefit of the gamblers. We do not know how they function and have not looked carefully and closely, as we should, at the impact of this. I refer not so much to the economic impact, although it may be found that the destabilising effects of this market are greater than we realise, but to the ethical, cultural and social effects. For the life of me, I cannot see why a liberal-minded Government should want to staunch such an investigation. I see no downside to it; it would not be expensive and would be simple to operate. It would all be within the purview of the Treasury and it might yield some surprising and valuable results. I therefore hope that the Minister will give this a little further thought, as I am very inclined to bring this back on Report.

[Lord Newby]

My Lords, I am extremely grateful to my noble friend for clarifying exactly what lies behind his amendment. I am sorry if I in any way misconstrued it. The issues that he raises about the social and broader consequences of some aspects of the “socially useless” parts of the financial services world are obviously important. I am somewhat less certain about whether the kind of inquiry that he is seeking would produce any decisive results.

I wonder whether he may wish to consider between now and Report whether there is another means of achieving the same result because these issues are very much in the public domain. A dry inquiry might not get us to the answer that he wanted. I wonder whether there might be some broader inquiry, bringing together groups of people with expertise and concern, possibly moderated by a think tank or charity, to look at some these issues. The membership of such an inquiry would be important in determining the result. Too narrow a membership would tend to produce a series of dry, probably useless, recommendations, whereas a broader group operating in a relaxed and unconstrained manner might produce more wide-ranging and socially useful conclusions.

[Lord Phillips of Sudbury]

I am not sure whether I am supposed to say any more to the Minister except, “Thank you”. I thought that at the end he was arguing my case rather better than I was. I will certainly think between now and next time, and talk with him. I beg leave to withdraw the amendment.

Amendment 91B withdrawn.

House resumed.

House adjourned at 10.41 pm.