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Pensions Bill
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The Deputy Chairman of Committees (Lord Brougham and Vaux) (Con)
Good afternoon, my Lords. If there is a Division in the Chamber while we are sitting, the Committee will adjourn for 10 minutes.
Clause 37: Automatic enrolment: powers to create general exceptions
Amendment 62D (in substitution for Amendment 62C)
Baroness Sherlock
“(5) Regulations under this section shall not be made to exempt entire classes of business or businesses, such as small and medium-sized businesses, from automatic enrolment.
(6) Regulations under this section shall be laid before and approved by resolution of both Houses of Parliament.”
Baroness Sherlock (Lab)
My Lords, Clause 37 is headed: “Automatic enrolment: powers to create general exceptions”. I am tempted to rest my case there but I will press on a little. I hope that this will be a relatively uncontroversial amendment that the Minister can accept.
If the Committee looks at Clause 37, it will see immediately that it is drafted very broadly—too broadly, I suggest. In effect, it gives the Government the power by regulation to create exceptions from the employer duties under auto-enrolment in a way or to an extent that could undermine the intention of Parliament in establishing auto-enrolment in the first place.
When this clause was discussed in another place, the Pensions Minister said that the Government needed the powers to make regulations in order to ensure that employers do not automatically have to enrol people whom it will be a waste of time to enrol because they will be immediately removed; for example, people who have resigned, are retiring or have used their lifetime tax allowance. Apparently the clause is broadly worded because, the Minister said in the other place, we cannot predict the future need for exceptions. I suspect that our Minister’s brief contains similar assurances.
Clause 37(2) inserts a provision into the Pensions Act 2008 which enables the Secretary of State by regulation to provide for exceptions to the employer duty that may,
“be framed by reference to a description of worker, particular circumstances or in some other way”.
We accept that there will be circumstances in which it will be inappropriate to auto-enrol someone who is likely to want to be removed immediately, but it is our view that the clause is unnecessarily widely drafted—a view that is shared by others, including the TUC and the CBI.
In Committee in another place, the shadow Pensions Minister, my honourable friend Gregg McClymont, quoted from a letter from the CBI in which it expressed support for the intention of the clause but said it was too broadly drafted because:
“The inclusion of ‘in some other way’ would provide too broad a power to government to change the scope of automatic enrolment at any time it saw fit. For instance, it would provide the Secretary of State with a secondary legislation power to exempt some businesses. This is a move the CBI could not support, as it undermines the consensus that was reached on pensions reform by giving exempted firms a cost advantage”.—[Official Report, Commons, Pensions Bill Committee, 9/7/13; col. 352.]
If the Government want to exempt a category of business, they should come back to the Floors of both Houses and amend their legislation. This is not fanciful. It is not long since the Beecroft report recommended that micro-employers be exempted entirely from auto-enrolment.
This amendment makes it clear that Clause 37 shall not be used to exempt entire classes of business, such as small or medium-sized employers. This will ensure that the Government’s apparent intention for auto-enrolment to apply to all categories of employer and business will be honoured. If the Minister is of the same view as the Pensions Minister on this point—in other words, if it is the Government’s intention that no such general exemption should be made—there can be no reason to resist this amendment. If he does, he has some explaining to do.
Lord McKenzie of Luton (Lab)
My Lords, I support my noble friend’s amendment. Auto-enrolment has, initially, clearly been a success and the Government deserve credit for implementing the policy. But we should recognise that we are just at the beginning: although it has been up and running for 18 months, we are just approaching the point in April this year when smaller and medium-sized employers, those whose largest PAYE scheme covers between 50 and 249 employees, have to commence their duty.
There have already been a range of changes to the process, implemented by regulations, resulting from a review of early live running. Those changes mostly came into force last November, although some are due this coming April. The consultation on the draft regulations also canvassed views on other changes, including the proposition of excluding a certain category of worker from auto-enrolment. It sought more information on three situations, identified that it had a substantive response to the use of an exception, and committed to publish the results, with government proposals and a further consultation. When will the results be published? Will it be before Report? At the very least, can the Minister provide us with a list of the circumstances being considered, if those extend beyond the three identified in the briefing note, which states:
“The initial evidence suggested that there is a case to re-examine the appropriateness of the employer duty in some, very carefully specified, circumstances”?
However, as my noble friend has clearly set out in the amendment, the power taken in Clause 37 is a very wide one.
The circumstances covering someone handing in their notice, where the notice spans the automatic enrolment date, and where an active scheme member gives notice of retirement and stops making contributions could, it is suggested, be the subject of specific amendment. As for those individuals with fixed or enhanced protection for their lifetime allowances, the Minister might tell us how an exclusion might be framed so that the employer could operate without input from the worker. That those circumstances need to be addressed to avoid detriment to workers is clear, but at present the encouragement from HMRC is to do so by opting out. If the system for exemption depends on the worker lodging the existence of enhanced or fixed protection, perhaps with some validation from HMRC, I am not sure that that is a more effective route than the worker simply opting out.
If the rationale for Clause 37 is based on just those three circumstances, I am bound to say that it is not overly convincing. If we are to understand that a range of other circumstances have been identified which justify the clause, we must be entitled to know what they are. The Government must be aware of them from representations that they have already seen. The briefing note sets down some core policy principles against which suggested exclusions are to be tested. One of these is:
“Are the individuals unlikely to benefit from pension saving?”.
This has echoes of some of the challenges to auto-enrolment when the policy was first originated and being developed, particularly around older women just approaching retirement.
It is entirely reasonable that there will be changes to the operation of auto-enrolment arising from practical experience, but we should be cautious of wide powers to remove the employer duty of enrolment. That is the cornerstone of the policy. Of course, we are mindful that the duty has already in practice been narrowed by aligning the starting point with the level of the income tax personal threshold, thereby removing thousands of the low-paid from its benefits. We are also mindful that there is a subtext to the overall Bill about generating savings for the Treasury, so my noble friend is right to be cautious about this clause.
Lord Bates (Con)
My Lords, it is now two years since the rollout of automatic enrolment began and we are seeing how it works in practice. Automatic enrolment is a blunt instrument, since everybody who meets the relevant tests is automatically enrolled. There is emerging evidence that we should consider refining and targeting, but it is impractical to make refinements by amending primary legislation every single time. A degree of flexibility is an integral part of future-proofing the policy. This clause provides that flexibility, with a power to exclude prescribed types of workers from the scope of automatic enrolment.
I should respond to the points made by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie. The inclusion of all employers, whatever their size, is part of the broad consensus that continues to underpin support for automatic enrolment. That is Her Majesty’s Government’s position. I will come back to the specific points, which have rightly been raised, at some point.
We need to take the oddities out of the system and this clause enables us to do just that. Automatic enrolment is not always appropriate. Indeed, in extreme cases, pension saving could lead to an individual incurring a financial penalty. Until now we have relied on opt-out as a solution: an individual can opt out of automatic enrolment if pension saving is not right for them. However, a problem remains: inappropriate enrolments, opt-outs and refunds still cause work for employers and frustration for the individual. We need to consider how we can remove, or at least reduce, the administrative burden in cases where automatic enrolment serves no purpose.
The Government’s consultation on technical changes to automatic enrolment last year shows significant support from employers, pension providers and financial advisers for limited, carefully crafted exclusions which help individuals where automatic enrolment has no benefit or makes no sense. We are currently looking at the evidence from that consultation with a view to publishing proposals when a power is on the statute book. So far, the evidence suggests some clear examples. One straightforward example is that people with enhanced or fixed tax protection status could face a tax surcharge if they make any further contributions into a pension. As well as this, automatic enrolment may be illogical for leavers, since it may make no sense to force an employer to enrol a worker into a company pension scheme if they are serving out their notice.
Any exclusion is likely to be sensible and uncontroversial, which is why the Government suggest that a negative resolution in these circumstances is an appropriate use of Parliament’s time. In terms of the breadth of this power, we have been clear from the outset that the intention of this clause is not to exclude entire employment sectors from automatic enrolment or to carve out a particular size of employer; that is a specific statement in relation to this.
We know that undersaving is most prevalent among low-to-moderate earners, those who work for employers who have not provided an accessible pension scheme or those who do not pay into one. These are the core policy objectives on which the consensus was built and to which we are still committed. We are not considering exclusions to the automatic enrolment duty simply because some employers tell us automatic enrolment is an inconvenience. This is about exceptional situations where it makes sense to take a person outside the scope of the Bill, hence the exemption. Although I can understand the aim of the amendment, it is trying to stop the Government from doing something that we have no intention of doing. As noble Lords will know, it would not ultimately constrain future Governments in any event.
The noble Baroness, Lady Sherlock, mentioned Beecroft. We have already firmly rejected proposals to cut micro-employers out of auto-enrolment. Workers in those firms have as much right to save for their retirement as anyone else; we have been quite clear about that. Measures have been introduced, such as the timetabling for the introduction of auto-enrolment meaning that smaller businesses, with fewer than 50 workers, are not affected by the reforms during the lifetime of this Parliament. This provides an additional breathing space. That is how we are seeking to tackle this and intend to make allowance.
On the words “in some other way” in the clause, which have been the focus of remarks by noble Lords, the power is there to exclude people for whom pension savings make no sense. We want to be sure that we can deal with future situations in which exclusion is clearly justified. The drafting of this power enables us to react to unforeseen circumstances. That is critical, particularly as we are dealing with such a complex and technical area. On what happens next with the power to make exemptions, the Government’s intention is to publish draft regulations for consultation later this year.
The noble Lord, Lord McKenzie, asked whether this was about saving tax, or tax relief. We are looking at the use of this power. Saving money for the Treasury will not be one of the factors we consider. Although, of course, general consideration of the management of fiscal balances is sensible, the primary purpose here is to ensure that employers of all sizes, and employees, take the opportunity to engage with pensions and save for their retirement. Ultimately, in the long-term, that is in the best interests of the Treasury, the Department for Work and Pensions—indeed for all of government—and, chiefly, the people themselves.
I understand the thrust behind the amendment and that it is important to get those remarks on the record, but with those reassurances, I ask the noble Baroness, Lady Sherlock, to consider withdrawing it.
Lord McKenzie of Luton
Nobody disagrees that there could be some limited and carefully targeted exclusions in particular circumstances, but I am trying to understand the circumstances that the Government have currently identified. They have laid out three of them in the briefing document, which suggests that they might have had representations on a whole range of other areas. I reiterate my question: can we know what circumstances, other than the three identified, the Government are focusing on that warrant an exclusion from the provisions?
In particular, one of those that has been identified deals with enhanced or fixed-protection provisions. I accept that there is a financial detriment for people who get auto-enrolment in those circumstances, but HMRC has advised them pretty clearly to opt out in that case. How, specifically, would the Government draft an exclusion to encompass that group of people? The enhanced or fixed-protection status of individuals would not be readily known to employers. Would an employee have to report it to an employer? How is that a better arrangement than the employee simply opting out?
Fundamentally, I am trying to understand how many circumstances the Government have identified where they think there might need to be an exceptional exclusion from auto-enrolment. I accept the Government’s good faith on that remaining the cornerstone of the policy, but how many other circumstances, given all that has gone on and all the representations and discussions to date, have been identified which warrant this power?
Baroness Sherlock
I have a question to add to that. I am grateful for the Minister’s explanation as to why the Government feel they need to have some flexibility to deal with circumstances as yet unknown, but I do not think that the Minister addressed what the problem is with the specific amendment I moved. After all, the amendment does not seek to prevent the Government from having those powers; it simply says that the Government may not make regulations in such a way as to exclude categories of business such as small and medium-sized businesses from auto-enrolment. What is the Government’s particular problem with this amendment?
Lord Bates
I will come to the noble Lord, Lord McKenzie, in the first instance. We have said that there are three categories, which he rightly referred to: tax protection, leavers and retirees. Those are the issues that we have identified. We are, of course, having a consultation. One of the challenges we invariably have is that we phrase a piece of legislation and make certain statements on the record in terms of the progress of that legislation through the House. We give certain assurances and then put something in to say, “This is to cover for unforeseen circumstances”, to which the legitimate question is: “What are those circumstances?”. The legitimate response to that has to be that they are unforeseen at present.
Responses to the consultation are currently being processed. They will be dealt with and published later this year and could reveal examples that we have not actually identified at present. This is a new policy and a new area and we therefore need to look at this. As I made my remarks about unforeseen circumstances, I gave examples of areas where it would be unacceptable to exclude people from the terms. We have rejected these exemptions and certainly would not want to introduce them. We have identified casual staff and teachers with second jobs, for instance, as being examples of people for whom we would not want this provision to apply. However, there will be further consultation on this issue and I ask noble Lords, if not quite to trust the Government, at least to accept that sufficient assurances have been put on the record. We recognise that there is broad consensus, but this needs to apply to everybody. However, this is a young policy in general terms and therefore flexibility is still required.
Lord McKenzie of Luton
I do not want to labour this for too long but it is important that it is clear. As regards the range of circumstances under consideration—in addition to the three of which we have already had notification—will we get any details, or at least the headlines of those circumstances, before we get to Report? On the three that have been identified, does the Minister accept that you could deal with those—particularly two of them—through specific legislation rather than giving a power to the Secretary of State? I come back to my point about the enhanced and fixed protection provisions for the lifetime allowance. Do the Government have it in mind to craft an exclusion for those circumstances? How does the Minister see that working?
Lord Bates
The short answer is that it is not easy. As the noble Lord will well know, given his experience as a distinguished Minister in the previous Government, it is not easy precisely to craft provision in those areas. We will seek to produce further examples by Report, following the responses received to the consultation. However, I can certainly assure the noble Lord that none of the responses has suggested that small employers should be excluded from the scheme. I know that is at the heart of the concern and, I hope, is at the heart of the reassurances which I have sought to give.
Baroness Sherlock
My Lords, I thank the Minister for that response, but confess that I am still a little uncertain about what the Government’s position is. I understood him to say that it is the Government’s policy that all categories of employer should be included and that the Government are still consulting and categories of person may emerge who they do not yet know about who they may wish to exclude in the future, and therefore they need to keep this open. So the question I am left with is: are the Government open to the possibility that somebody may make a compelling case for excluding a category of employer by size? If they are not, there is no reason for them not to accept this amendment. If they are, then, frankly, their assurances are not worth the time that they have been given today. I am disappointed that the Minister has failed to address the specific amendment. However, as we are in the Moses Room, and I do not have the option to do anything other than withdraw the amendment, I beg leave to withdraw it.
Lord Bates
“Alternative quality requirements for UK defined benefits schemes
(1) The Pensions Act 2008 is amended as follows.
(2) After section 23 insert—
“23A Alternative quality requirements for UK defined benefits schemes
(1) The Secretary of State may by regulations provide that a defined benefits scheme that has its main administration in the United Kingdom satisfies the quality requirement in relation to a jobholder if any one or more of the following is satisfied—
(a) the scheme is of a prescribed description and satisfies the quality requirement under section 20 in relation to that jobholder;(b) the cost of providing the benefits accruing for or in respect of the relevant members over a relevant period would require contributions to be made of a total amount equal to at least a prescribed percentage of the members’ total relevant earnings over that period; (c) in the case of each of at least 90% of the relevant members, the cost of providing the benefits accruing for or in respect of the member over a relevant period would require contributions to be made of a total amount equal to at least a prescribed percentage of the member’s total relevant earnings over that period.(2) For this purpose—
“contributions” means contributions to the scheme by, or on behalf or in respect of, a relevant member;
“relevant earnings” means earnings of a prescribed description;
“relevant members” means members of the scheme of a prescribed description;
“relevant period” means a period specified in or determined in accordance with the regulations.
(3) A percentage prescribed under subsection (1)(b) or (c) must be at least 8%.
(4) Regulations under subsection (1)(b) or (c) may make provision—
(a) about how to calculate whether the requirement is satisfied, including provision requiring the calculation to be made in accordance with prescribed methods or assumptions;(b) requiring benefits of a prescribed description to be disregarded in determining whether the requirement is satisfied;(c) that a scheme only satisfies the requirement if the scheme actuary certifies that it does; and for this purpose “scheme actuary” has the prescribed meaning.(5) Section 13(3) (meaning of “earnings”) applies for the purposes of this section as it applies for the purposes of that section.
(6) The Secretary of State must from time to time review any regulations in force under subsection (1).
(7) A review must be carried out—
(a) during 2017, and(b) after that, no more than three years after the completion of the previous review.”(3) In section 24 (quality requirement: UK hybrid schemes), in subsection (1)(b), for “23” substitute “23A”.
(4) In section 28 (certification that quality requirement or alternative requirement is satisfied)—
(a) after subsection (3A) insert—“(3B) This section also applies to a defined benefits scheme that has its main administration in the United Kingdom and is of a description prescribed under section 23A(1)(a).”;
(b) in subsection (4), after paragraph (d) insert—“(e) for a scheme within subsection (3B), means the quality requirement under section 23A(1)(a).”(5) In section 29 (transitional periods for money purchase and personal pension schemes), in subsections (1) and (3) omit “for money purchase and personal pension schemes”.
(6) Section 30 (transitional period for defined benefits and hybrid schemes) is amended as follows.
(7) In subsection (3), at the end of the substituted subsection (2) insert—
“A reference in this subsection to a scheme does not include a scheme to which section 30(11)(a) or (b) applies.”(8) In subsection (5), in the substituted subsection (2)—
(a) in paragraph (a), after “defined benefits scheme” insert “other than a scheme to which section 30(11)(a) applies”; (b) in paragraph (aa) (inserted by section 38 of this Act), after “a hybrid scheme” insert “other than a scheme to which section 30(11)(b) applies”; after paragraph (c) (inserted by section 38 of this Act), insert—“(d) becomes an active member, with effect from the automatic enrolment date, of an automatic enrolment scheme which is a defined benefits scheme to which section 30(11)(a) applies, or(e) becomes a defined benefits member , with effect from the automatic enrolment date, of an automatic enrolment scheme which is a hybrid scheme to which section 30(11)(b) applies.”(9) After subsection (10) (inserted by section 38 of this Act) insert—
“(11) In subsection (2) references to a scheme do not include—
(a) a defined benefits scheme that satisfies the quality requirement in relation to the jobholder by reason only of section 23A(1)(a), or(b) a hybrid scheme if—(i) the appropriate paragraph of section 24(1) for any provisions of the scheme is paragraph (b) (those provisions are referred to below as “the defined benefits section”),(ii) the defined benefits section satisfies section 23A(1)(a) as applied by section 24(1)(b), and(iii) the defined benefits section does not satisfy any of the other requirements mentioned in section 24(1)(b).””
Lord Bates
My Lords, this introduces alternative quality requirements for defined benefits schemes being used for automatic enrolment. It will simplify the task of determining whether a defined benefits scheme is good enough to provide both increased flexibility for employers and protection for members’ benefits.
By way of context, I should first explain that currently, if an employer wishes to use a defined benefits scheme for automatic enrolment, the scheme must either be contracted-out, and provide benefits broadly equivalent to the state second pension, or provide benefits broadly equivalent to, or better than, a hypothetical “test scheme”. There is a separate test for money-purchase schemes based on minimum contributions, set at 8% of qualifying earnings.
These amendments add to these arrangements in two ways. First, they make it possible for certain schemes that are defined benefit in legal terms, but actually have a defined contribution structure, to be assessed against the money-purchase scheme requirement.
The Government will define the schemes to which this could apply in regulations but an example might be one where contributions are set out in the scheme rules—as with a money-purchase scheme—but there is a guarantee over investment performance that means it does not meet the strict legal definition of a money-purchase scheme. Such a scheme might well meet the money-purchase quality requirements but it would be difficult to show how it satisfies the test scheme standard. That is because the benefits are not defined in a way that is comparable with the test scheme benefits.
These amendments also—
Lord Bates
My Lords, these amendments allow for two simpler alternative tests for a scheme to demonstrate that it is of sufficient quality. These were developed following last year’s consultation on technical changes to automatic enrolment, asking for views on whether there is a simpler way to determine whether a defined benefit scheme is good enough for automatic enrolment.
As well as calling for a general simplification in these rules, responses to the consultation highlighted that once the contracting-out period ends in April 2016, all those schemes that are currently contracted out, and so considered good enough, must satisfy the test scheme standard. This is considered unnecessarily complex and burdensome, particularly as, until the end of the contracting-out period, the schemes will have satisfied the higher standard of the reference scheme test. The alternative tests provide for a scheme to be used for automatic enrolment if the cost to the scheme of the future accrual of benefits for active members would require contributions that are at least equivalent to one of two prescribed percentages of relevant earnings. The first will apply at the aggregate level, looking at the scheme as a whole, and the second will apply at the individual level and must be satisfied for at least 90% of relevant members. Moreover, in order to provide assurances about the quality of schemes satisfying this alternative test, the amendment ensures that the prescribed amounts will not be lower than 8% of relevant earnings, in line with the minimum level for total contributions into a qualifying money-purchase scheme.
We are mindful of the need to strike the right balance between increasing simplicity and flexibility and ensuring adequate member benefits across all qualifying schemes. This balance will be one of the key issues to explore as we consult stakeholders on the detail of the alternative tests, and will also be reviewed in 2017 to ensure that the legislation is working as intended. I beg to move.
Baroness Sherlock
My Lords, I thank the Minister for his explanation of these amendments. I have two questions. He may have answered them but, although I listened hard, it is hard to be sure. First, will he confirm whether the Bill, with these amendments, will qualify the existing accrued rights protections in any way? Secondly, will he assure us that, given the variations in definitions of pensionable pay, the new defined benefit scheme qualifying tests will be of no lesser standard than the certification alternative requirements used at the moment for employers using money-purchase schemes but using an alternative definition?
Lord Bates
I certainly give the noble Baroness the assurance that she rightly seeks with her second question: there will be that minimum standard. In answer to her question as to whether the amendments will qualify in any way the existing accrued rights protections, nothing that we are doing in this clause or in the regulations that we plan to make under it will have any impact on accrued rights.
Lord Freud
“(4) In subsection (5), in the substituted subsection (2)—
(a) in paragraph (a), for “or a hybrid scheme, or” substitute—“(aa) becomes a defined benefits member, with effect from the closure date, of an automatic enrolment scheme which is a hybrid scheme,”;(b) after paragraph (b) insert—“(c) becomes a money purchase member, with effect from the automatic enrolment date, of an automatic enrolment scheme which is a hybrid scheme.””
Lord Browne of Ladyton
“(2) In this section—
(a) “charges”; and(b) “transaction costs”,shall be defined in regulations by the Secretary of State.(3) Before making regulations under subsection (2), the Secretary of State must undertake a public consultation, which must include the views of—
(a) the Financial Conduct Authority; and(b) the Pensions Regulator.(4) With reference to subsection (2)(a), any public consultation must consider the different elements which comprise charges and not just the annual management charge.
(5) Such charges, together with any transaction costs incurred by the funds in which qualifying schemes are invested, shall be declared on an annual basis to the Pensions Regulator, which shall maintain a public register thereof.
(6) The Secretary of State shall by regulations set the standards by which pension schemes must declare charges and transaction costs for the purposes of the register and for declaration to their members and their members’ employers.
(7) The standards set out in regulations under subsection (6) shall be reviewed every three years.
(8) The Secretary of State shall have power to make regulations ordering other disclosure arrangements on administration charges.
(9) Regulations under this section may not be made unless a draft has been laid before and approved by resolution of both Houses of Parliament.”.
Lord Browne of Ladyton (Lab)
My Lords, I will also speak to Amendment 62H, which is again in my name and that of my noble friend Lady Sherlock. Amendment 62G would amend Clause 41, which is the statutory basis for the Secretary of State to make regulations to restrict charges or impose requirements on work-based pension schemes. The amendment would amend that clause to enable the Secretary of State, following a public consultation, to set the standard by which pension schemes must declare charges and transaction costs to their members and the members’ employers.
Amendment 62H would give effect to a DPRRC recommendation and prevent the Secretary of State from amending legislation “whenever made” and imposing requirements on certain work-based pension schemes by secondary legislation, thus bypassing full parliamentary scrutiny. The DPRRC made this recommendation because it was not persuaded adequately by the Government’s justification for granting themselves this power. We agree with the DPRRC. That is the simple basis for Amendment 62H.
While I am dealing with this group, the noble Lord, Lord Lawson, has two amendments in it. Amendment 63 would create a power to require disclosures at least annually of certain management and transaction charges incurred by administration and management of investment portfolios. Amendment 67 would create a power for regulations to be made requiring work-based pension schemes to disclose periodically certain costs and information relating to charges for management of investment portfolios. I shall return to these amendments later. However, by proposing them the noble Lord has made a powerful intervention into this debate and one I hope that his noble friends will treat with the respect it deserves.
Finally, there is government Amendment 70, which would give effect to a DPRRC recommendation that the first set of regulations under paragraph 1 of Schedule 17 should be subject to affirmative procedure. We support that.
In my noble friend Lady Sherlock’s excellent speech at Second Reading on 3 December 2013, in considering this part of the Bill she made the compelling point that the state owes a serious duty of care to the large numbers coming into auto-enrolment. It is crucial that every one of the 10 million auto-enrolled between 2012 and 2017 can be sure of getting value for money from that pension scheme. That necessity for value for money drives all the Labour amendments to Part 5 of the Bill, on private pensions.
In my noble friend’s Second Reading speech, she said:
“This is a huge industry in the UK. About £180 billion is invested in trust schemes and £275 billion of assets is invested for DC schemes. Some 180,000 people with assets worth £2.65 billion have money in pension pots with annual management charges of over 1%, and 400,000 people a year buy an annuity. The numbers are eye-watering but the principles are pretty simple: the pension industry has to deliver value for money. However, the OFT study published this year made it clear that there are some serious issues in this industry which need addressing”.—[Official Report, 3/12/13; col. 147.]
Her amendments are designed to address those issues. Amendment 62G argues for the full disclosure of all costs and charges, including the costs extracted by fund managers.
I am sure that all Members of your Lordships’ Committee agree that pension charges must be reasonable for people to have the necessary confidence to invest their hard-earned money in pension schemes. From the evidence available now, it is difficult to exaggerate how obscure the charging structure on pensions is. Pensions are pretty complicated to begin with because, in an occupational pension scheme, the employer—not the employee—is the person buying the pension. That pension schemes are then invested in asset classes by fund managers further complicates the challenge of understanding what is charged.
For reasons we have debated repeatedly in this Bill, the market cannot address this challenge. I regret that the Government have been slow to understand the depth of the problem in the pensions market. My right honourable friend Ed Miliband first raised this issue in July 2012. He identified pensions as the next big scandal, warned that savers must be protected from the scandal of hidden pension fees that can see people stripped of huge percentages of their savings, and called for a new regime imposing a clear charging structure on pension funds. He warned that fees need to be capped. He was accused by the Pensions Minister of being irresponsible. Regretfully, the Minister joined industry voices who were making accusations of scaremongering. The next day, the RSA published Seeing Through the British Pension System, which found that 21 out of 23 providers denied that there were any additional charges other than the annual management charge and administration costs. They failed to reveal what is charged for items such as audit, custodial costs and other costs such as taxes, lending fees and broking commissions.
Lord Lawson of Blaby (Con)
My Lords, I will speak to Amendments 63 and 67 in my name, which are linked. I am glad that some time after I tabled these amendments the Official Opposition tabled their amendments, which are very much on the same point. I hope that what I did may have been some kind of a stimulus to them, because we are to a considerable extent on the same point.
There is a difference between the approach that the noble Lord, Lord Browne, takes and that which I take. However, before I explain the difference, I wish to articulate what the problem is. This problem is not confined to the pension area but is well known to those who have studied any economics at all. It is known in the trade as the principal agent problem, where a principal cannot achieve his or her economic objectives without giving an agent responsibility for dealing with it. The incentive for the agent may be very different from the incentive with which the principal originally entrusted the agent to carry out what is needed. Here the principal is essentially the pension fund beneficiary, via the pension fund itself, and the agent is the investment manager. How is this of interest? I would hope that my noble friend the Minister, even if he does not accept either the Labour amendment or my amendments, will agree that there is a problem here that has to be addressed. I hope that he will say how the Government propose to address it.
There are two differences between the approach adopted in the amendment of the noble Lord, Lord Browne, and that adopted in mine. He seeks primarily to regulate various charges made for the carrying out of the investment. He mentioned disclosure, but the issue is mainly the cap on charges and other forms of regulatory charges. There are problems with that approach, which I shall not spell out because I do not want to detain the Committee.
What I have gone for is compulsory disclosure. In a competitive market, compulsory disclosure will go a very long way towards removing the mischief. If there is proper disclosure, there is no need for a cap or the regulation of charges in the first instance. We can then see how it works out. Events may subsequently suggest that there may be some need for regulation but initially the remedy must be to require disclosure. I have mentioned seven types of cost that I believe should be disclosed. The noble Lord, Lord Browne, said that the sector might very inventively find some other form of charge that does not fall within these headings. I think that is highly unlikely. If noble Lords look at the headings, it is difficult to see how any charge could not fall under one or other of them.
The important thing is the principle. The funds are inclined to say, “You don’t need to worry about costs; all that matters is the investment performance of the fund net of costs”. That is not acceptable. The costs are massive in this area. Of course, the investment performance may differ according to what period of time you look at. One fund may have a very good performance during one period and a bad performance during another. One has to look at the costs. Some costs are not revealed at all; some are. Even with the costs that are revealed, there is such a lack of consistency that it is difficult to compare them and to see whether or not they are remotely fair.
There are also other defects in the system. One is, I have to say, one of the many defects of the accountancy profession in this country. According to the accountancy profession, the Investment Management Association is responsible for writing the statement of recommended practice on cost disclosure for fund managers. This is ludicrous. You are asking the foxes to regulate the hen coop, as it were. If my noble friend the Minister looks at this, I am sure that he will find that it needs a remedy.
There is another relevant point. At the end of the day it is not merely the pension fund beneficiaries who are being cheated by these excessive costs—and many of these costs are grossly excessive—but there is also the problem of pension fund deficits. The more costs are ramped up unnecessarily by the pension funds, the worse that will make the problem of deficits. Of course, there is no incentive for investment managers to expose the costs that they are incurring in their recommendations to the funds if they are not obliged to do so. It will only make most of them look rather expensive.
There have been some studies in this area, both here and in the United States. Among the findings of these studies is that there is absolutely no correlation between investment management fees and performance. There is also no correlation between portfolio churn, which creates a lot of income for various people, and performance. There is some evidence, although it is not conclusive, that portfolios are deliberately churned in order to generate commissions. In the United States, a study has been done that shows that most foreign exchange currency pairs are not monitored but that, when they are, the foreign exchange costs paid by funds are halved. There are problems across the board, such as the fact that custodian banks pay lower rates on cash than money market funds or that financial intermediaries can collect excessive rewards.
The FRC has some of these problems in its sights, but it is totally inadequate. I believe that the FCA is pressing fund managers to manage their research procurement, another area of costs that I have identified, in a more defensible and transparent way. However, it is no accident that typically pension funds meet in Manchester and fund managers meet in Monte Carlo. I hope that my noble friends, who have done such an excellent job on this Bill, will take on board that this is a serious problem—the principal agent problem, as it affects pensions—and must be addressed one way or another.
The Lord Bishop of Chester
My Lords, I warmly support both these approaches. Although they are contrasting—the noble Lord, Lord Lawson, emphasises transparency while the other approach offers appropriate consumer protection through some degree of regulation—I do not think that they are incompatible with each other.
In approaching this matter I follow what the noble Lord, Lord Bates, said in response to an earlier amendment: the overall aim is to engage people so that they save for their retirement. As I said earlier in the passage of the Bill, the lack of provision in retirement for future generations is a time bomb. The Bill, which in general I warmly support, attempts to address that.
The sheer complexity of this area is a problem, as we have discovered in this Committee. If we find this issue complex, how does a member of the public find it when they are making a decision about whether to put additional contributions into their scheme? The money-purchase schemes that are now predominant will work only if people add contributions of their own and do not just rely on the employer contribution. I think that we need transparency in this area—not only the details set out by the noble Lord, Lord Lawson, but an overall figure of costs bringing together all the different costs discovered by the Which? report. Transparency over overall costs is necessary or people will feel disengaged.
One of the problems in our society is disengagement with politics in general, partly caused by the sheer amount of legislation turned out by Parliament. No one really understands what is going on and so people disengage from it. With all the jargon in the investment industry, not least in relation to pensions—terms such as “bid/offer”, “revenue splits” and so on—the average person in the street simply would not know what is being referred to. We need an overall figure that helps people to understand how much of the money that they are investing is actually invested, and investment returns, in a way that is transparent and where the consumer is generally protected. A few years ago, stakeholder pensions were an attempt to achieve this, but I am not sure what happened to them. As far as I can see, these amendments are entirely consonant with the broad push of Schedule 17. I conclude my remarks.
The Lord Bishop of Chester
I am not used to being interrupted in my perorations, but I was coming to an end. Schedule 17 says that the Government,
“may impose duties on the trustees or managers of a relevant scheme”.
These amendments spell out what those duties might be, in the interests of transparency, with a view to try to encourage people to invest in these products with some certainty as to how much of their money is going to be invested. I hope that the Government will look sympathetically on the issues that have been raised.
Lord German (LD)
My Lords, I am grateful to the noble Lords, Lord Browne and Lord Lawson, for raising these issues, because they allow us to examine the approaches which might be taken in the regulations which may follow and to ask the Government to describe which of these approaches, or what combination of these approaches, they might take. It is quite clear, in my view, that there are two separate approaches: one based on regulation and the other based on openness, transparency and disclosure. There is no reason why you cannot have some of one and some of the other; where the balance is drawn is a matter for debate and discussion. Ultimately, this matter goes to the heart of the success of our pensions industry for savers. The saver must have trust in a system which has a long tail behind it to understand that his or her money is being invested wisely and will return on that investment to provide a pension.
Auto-enrolment will, in the long run, be a success only if the schemes into which people are enrolled are well run and invest people’s savings responsibly. This is particularly important in DC schemes because, in the end in those schemes, the saver bears the investment risk of that complex decision process, which is more often than not made entirely without the saver’s knowledge or input. I was very interested in the chain described by the noble Lord, Lord Lawson, which stretched from Manchester to Monte Carlo. I dare say that if you started to plan these chains out around the world, you would probably find that these decisions were taken in all sorts of places and the connections very wide. That helps demonstrate the length of the chain in investment decisions, particularly if you start with the saver.
Of course, auto-enrolled savers do not choose their own pension provider. Poor pension companies might not become immediately evident to the saver. The best governance of the system would ensure robust oversight of savers’ interests and, most importantly, open communication with savers. It is not always obvious that those in the investment chain place the obligation to protect the best interests of savers at the heart of their decisions, particularly if they are in Monte Carlo. Fundamentally, that means improving transparency and promoting the disclosure of clear and relevant information to savers, as well as ways in which savers can easily find out information about their own savings.
I hope that the Government will tell us a little bit today about how they propose to deal with these very important issues and which approaches they intend to take that might guide the legislation that is to follow in regulations. Could my noble friend say something about how they intend to make the application of the UK stewardship code applicable to all pension schemes into which people are auto-enrolled?
Baroness Donaghy (Lab)
I just want to say a few words about the culture within the financial services companies and how difficult it is, given that culture, to have any compliance rules that staff will obey if their jobs depend on selling products. I think it was the whistleblower Dave Penny, who worked for Lloyds TSB, who gave a long list of tricks of the trade that he had tried to warn against. We all know the fines that that company had to pay for using those tricks in both PPI and bond selling. Mr Penny said:
“A supposedly strict compliance regime is meaningless if the management style is putting immense pressure on staff to sell, sell, sell. To keep their jobs, staff will always find ways around compliance”.
That has not gone away just because of the massive fines and compensation that these companies have paid. Only a couple of months ago, a woman in her 60s received a cheque from her son for £35,000. She planned to put that into a stock market investment. That same day that the money arrived in her current account, she was called by a Lloyds employee, who told her that the money could be at risk—an extraordinary claim to make about funds left in the care of a clearing bank. The Lloyds customer said, “The woman at the other end of the line said that my money might not be safe in my current account over the weekend and recommended that I transfer it to a savings account where it would be less easy to steal. I was naturally very worried about this and the bank did not really explain why my money would not be safe in my current account. The whole thing caused me a great deal of distress and eventually my husband intervened, and called the bank to say I did not want to transfer my money to a savings account and went ahead with my original investment plans”.
Of course, there is a financial incentive to place money in an investment account in a bank, no matter how low the interest rates compared with a current account, which is the sole reason why that employee made the effort to contact that person. I realise that that is not of direct relevance to these amendments, except to say that compliance will not work unless you deal with the issue of the culture in these companies. We will see all these tricks of the trade happening again, particularly as the Government are going on the pot-follows-member formula. This will give many more opportunities for companies to salami-slice their charges as each of these small pots is transferred.
Lord Bates
My Lords, this has been a useful debate with lots of high-quality and thoughtful interventions. I will try to follow that standard by putting some remarks on the noble Lord’s amendments on the record, and also on my noble friend Lord Freud’s Amendment 70.
As your Lordships will be aware, we launched our recent consultation on charging in October 2013, following on from the Office of Fair Trading’s September 2013 market study into defined contribution workplace pensions. That study raised concerns, which the Government share, about the weakness in the buyer side of the market—a point made powerfully by the noble Baroness, Lady Donaghy, in recounting those examples—the complexity of the product and a lack of transparency, which hinders consumers’ abilities to compare schemes. My noble friend Lord Lawson, a distinguished economist, mentioned the principal agent problem, which has at its heart, in an economic context, asymmetry of information. Transparency must therefore be part of the play which somehow levels the playing field between one side and the other.
Our consultation sought views on how the total cost of scheme membership, including transaction costs, might be captured, reported and managed. My noble friend Lord German rightly said that perhaps it was not an “either/or” solution, but more of an “and” solution. That was reflected in the consultation’s remit, which presented not just one idea but alternative measures to improve the transparency and disclosure charges, as referred to by my noble friend Lord Lawson with regard to his proposed new schedule: a cap on charges on default funds of defined contribution workplace pension schemes, a point made powerfully by the noble Lord, Lord Browne; a ban on active-member discounts and commission; and an extension of the ban on consultancy charges to all schemes used for automatic enrolment. Quite a wide-ranging consultation was launched.
By November last year we had 160 written responses from the evidence received. We will be publishing our response to this consultation shortly. In fact, Steve Webb, the Minister for Pensions, will be updating the other place on his response to the issue of a cap on charges on Thursday this week. I know how the machinery of government works; that does not quite deliver what we want before us in Grand Committee as we consider the amendment. But that information will be in the public domain, and I am sure will be a source of debate for others to draw upon on Report. I will offer some reassurances in the interim.
Lord Browne of Ladyton
Before the Minister moves off that point, I am conscious that if the FT report of Friday 17 January was based on information that should not have been in the public domain, the Minister will be constrained in what he can say. Those of us who have been in that position understand that. However, does the expected update from the Pensions Minister, Steve Webb, relate to the very consultation that has been reported in the FT as being postponed—I think it says shelved for at least a year—potentially indefinitely? Is the Minister prepared to address the specific piece of evidence which suggests that officials briefed members of the industry that that was the case—last week, it is said, which presumably was the week before last?
Lord Bates
The noble Lord was a very experienced Minister and a much more senior one than I will ever be.
Lord Bates
The noble Lord will therefore know that our position is that we do not comment on speculation in the press, even when it is in the Financial Times, and that the Minister’s announcement, which will be given to the House later this week, will be delivered first to the other place, and therefore we will have to respond to it.
Lord Lawson of Blaby
I am glad to hear that Steve Webb will make a statement in another place on this range of issues. Will my noble friend go further and say that the statement will accept the problem of the principal agent position as it affects pension funds, as was outlined in the contributions made by the noble Lord, Lord Browne, and myself, in this debate, and that it will put forward a remedy?
Lord Bates
After making deferential remarks to the noble Lord, Lord Browne, I have to make even more deferential ones to the noble Lord, Lord Lawson. The direct response is that I am not privy to the content of that statement, confirmation of which has been received only recently. However, addressing the principal agent problem which he so eloquently outlined for us was at the heart of the consultation process which was launched back in October, and was at the heart of what the OFT was driving at in its review. Therefore, in responding to that consultation, I reassure my noble friend that he will find—I hope—that this offers the reassurances he seeks. If not, he is at liberty to bring this matter back on Report, should he choose not to press his amendment at this stage.
On the definition of charges and transaction costs, Schedule 17 gives the Secretary of State the power to restrict administration charges by regulation. In the consultation we proposed specifying a broad definition of charges to encompass any expense that does not result in the provision of pension benefits for a member. We also asked for views on whether transaction costs should be included within a charge cap. Any charges that are restricted—even those under a possible cap—will have to be defined in regulations. These regulations will, of course, be subject to public consultation and we have accepted the DPRRC’s recommendation that these regulations be subject to the affirmative procedure on first use. Government Amendment 70 will achieve this.
With regard to the noble Baroness’s Amendment 62H on the Henry VIII power in Schedule 17, we have noted the comments and recommendations put forward by the DPRRC. However, we believe that it is vital that the Government’s ability to regulate effectively in this area is not inadvertently undermined by future legislation that could not have been foreseen. We are back to an earlier point.
Lord Browne of Ladyton
My Lords, I thank the Minister for his reply to this short debate and for the answers he has given to questions. I am grateful—and noble Lords will be grateful—for his acceptance that transparency and disclosure are a necessary part of the reform that we are engaged in; for his confirmation that he and the Government share the concerns that have been expressed in this debate; and, in particular, for his assurances, in so far as they are assurances, that the response to the consultation can be expected shortly but that we will receive from the Pensions Minister Steve Webb on Thursday in the House of Commons an update on the Government’s response to the consultation.
I feel that we now have to wait until Thursday to see whether this response is adequate and, in terms of what it allows us to expect or anticipate, whether it puts a timeous set of potential actions in place that will meet the challenges of the continued rollout of auto-enrolment and the increasing numbers of people who are being engaged by default in individual pension schemes. I will come back to that in my peroration.
I thank all noble Lords who have contributed to this debate. First, I thank the noble Lord, Lord Lawson, for his engagement. I can confirm that there was some stimulus from the fact that he tabled Amendments 63 and 67. Of course, the fact that he did so first in your Lordships’ House does not detract from the fact that an almost identical amendment was tabled in the name of the Labour Party in the House of Commons by my honourable friend Gregg McClymont before Committee there. I make this point not to in any sense undermine our common interpretation of this problem or our substantially common approach, but to point out that but for the slight difference of wording between the amendment my honourable friend tabled in the Commons and the one we tabled in your Lordships’ House, our amendment would probably have been tabled about the same time as the noble Lord’s amendment. The question of timing does not detract from the fact that we have been engaged with this issue for some significant time.
I am very grateful to the right reverend Prelate the Bishop of Chester for two things: first, for his identifying that the approach of the Labour Front Bench and that of the noble Lord, Lord Lawson, are much more compatible than others who have commented on this appear to believe. These amendments proceed by way of regulation but the regulation is to define what subsequently should be disclosed. I point out to those who have contributed to this debate that we, too, are about disclosure with this amendment. We have an ambition to cap the charges on the administration of pension funds but this is not the vehicle for that policy. This is about disclosure. It is about defining what ought to be disclosed in a very precise fashion through a process of consultation and regulation, and then about disclosure for all the same reasons that the noble Lords, Lord Lawson and Lord German, the right reverend Prelate, my noble friend Lady Donaghy and indeed the Minister all seem to consistently agree with.
The second reason I am grateful to the right reverend Prelate the Bishop of Chester is that he not only put his finger on the problem for the member, or potential member, of a pension scheme but explained more fully than I did—perhaps I should have done—why value for money is so important to our reforms. It is about confidence. If there is no confidence in the market, as the right reverend Prelate pointed out—and drew the Minister to agree—this whole package of reforms will fail. This will be half a reform, if there is no confidence in the private pensions industry. Our whole thrust is to address the issues that have been successively identified by reports and analysis of the issue in a form that is designed to reform the law and to provide the confidence that will be necessary for this whole reform—which we support—to go forward.
My noble friend Lady Donaghy reminded us of the importance of trying to change the culture more broadly in the financial services industry if we are to instil the confidence in the people of this country in saving and, I suppose, the mature handling of their own resources. That is a challenge we face that goes beyond just pensions, but it is crucial to them and she is wise to remind us of that.
I thank the noble Lord, Lord German, for engaging with the debate and for encouraging the Minister to respond to some of the important questions that needed to be answered. I remind him that although regulation and a more straightforward form of disclosure are the difference between the way our Front Bench here and the noble Lord, Lord Lawson, have approached this issue, we are concerned about disclosure as well.
It comes down to this: the Minister, as his honourable friend the Pensions Minister, Steve Webb, did in the other place, rests his case on the statutory structure which is being created and a process of consultation with a promise of significant regulation following thereafter, which will be engaging and confidence building. His case depends on how his honourable friend the Pensions Minister responds to the consultation thus far, which is so important to that process. We will all listen very carefully to that statement.
I fear that there may be more in the Financial Times report than the Minister is in a position to reveal to your Lordships’ Committee today. If that proves to be correct, he will appreciate that it is almost certain that we will return to this issue on Report. Between now and then, I hope that the noble Lord, Lord Lawson, will take up my offer to have discussions about where we agree and what is the best way for us to proceed on this issue. We share an analysis and a common concern, or remedy, about how to proceed.
However, in the mean time, I thank the Minister for his response and engagement with the debate and beg leave to withdraw my amendment.
Lord Lawson of Blaby
At what point should I contribute to the discussion on this?
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
It will be possible for the noble Lord to speak briefly on his own amendment, Amendment 63. He has already spoken but he can certainly respond then.
Baroness Drake
“(c) may provide for requirements for the identification, avoidance and management of conflicts of duty and interest”
Baroness Drake (Lab)
My Lords, Amendment 62GA is designed to address shortcomings in the governance of pension schemes, particularly contract-based schemes. It would give the Secretary of State the power to set regulations that
“provide for requirements for the identification, avoidance and management of conflicts of duty and interest”.
They would require, in the event of a conflict of interest, for priority to be given to the interests of the saver and to ensure that the duties to the saver are met despite the conflict.
In his review, John Kay criticised FCA rules as falling,
“materially below the standards necessary to establish”,
trust, confidence and respect. He recommended a shift towards fiduciary standards. In an auto-enrolled world, that comment has even more resonance because, increasingly, private sector workers’ pensions will be contract based, where, as the noble Lord, Lord Turner, mentioned in debate last Wednesday, there is a,
“fundamental inefficiency of the market ... It is a system absolutely shot through with market failure where the process of trying to provide in a competitive fashion simply does not work well”.—[Official Report, 15/1/14; col. GC 161.]
My amendment seeks to capture that governance challenge. To achieve an increase in pension savings, workers are auto-enrolled into workplace pensions. There can be no caveat emptor, as the saver does not buy. The system is designed to restrict the saver to one choice—either stay in or opt out and lose the employer contribution. Current regulation of contract-based pensions is at odds with the assumptions underlying auto-enrolment. Contract-based regulation is built on informed consent and consumer choice. Auto-enrolment is designed and built on the principle of inertia, on a population of savers who do not engage with investment choice. A plethora of reports has revealed the conflicts of interest in the industry. The OFT report confirms a dysfunctional pensions market with a weak demand side and concludes that the market could not be expected to self-remedy and that there is a need for intervention.
The introduction of auto-enrolment has been a success and the Government should be pleased. Opt-out rates have been low. The Government must now secure a level of quality and governance that delivers optimal results for savers in terms of building trust so that workers persist with their savings, thereby setting the ground for increasing contributions beyond the current statutory minimum and improving savers’ chances of achieving a reasonable income in retirement. Measures to encourage savers to engage with their pension savings are important but of themselves are not sufficient. The majority of savers will not actively engage. It is that very inertia that can be used by some providers to create or sustain profitable inefficiencies. The legal framework must protect those who do not engage.
The challenge of inertia means that there is a need for efficient defaults over the life cycle of the pension saver. For example, there is a need to get people saving; to determine a minimum they should save; to determine their investment choice at different intervals in the life cycle on, for example, joining a scheme or following a quality review as they get nearer to retirement age; and, by default, to transfer and consolidate their pension pots. Over time, I suspect that we will be considering default arrangements on decumulation when a person retires. The need for defaults raises the bar on governance because someone is using their discretion on behalf of the saver.
Contract pension provision has systemic weaknesses of governance and a particular feature that constrains efficient default arrangements. For example, looking forward, an employer conducting a triennial review that decides that the current scheme is poor value will be unable to switch workers in a contract-based scheme unless they individually consent. However, the very nature of auto-enrolment means that this active consent is unlikely to be granted by many savers. On legacy schemes and pots, I am sure that any OFT-driven audit will reveal poorly performing funds and high charges, but the solutions will not be effective if they require individuals’ consent.
We have a misalignment between what contract-based provision can do and what it is necessary to deliver in the interests of the saver. How does one respond to that challenge? Recent press comments are peppered with references to making it easier to move contract-based scheme members from old to new schemes. Standard Life’s head of workplace pensions, speaking at the NAPF conference, said that contract law acted as a barrier to moving people from poor-quality schemes to good-quality schemes, and added:
“We need to learn the stuff that works in the trust-based world”.
A recent Pensions Institute report found potential for massive improvement in outcomes where poor-quality legacy schemes transferred en masse into better-quality modern schemes with lower charges. The Pensions Institute called on the Government to facilitate changes to contract law to allow such transfers to be made without the individual consent of scheme members where it is clearly in their best interests. However, there is the rub. Who decides where it is clearly in their best interests? How is the primacy of the saver’s interest protected? Governance requirements must be fit for purpose under auto-enrolment and remove a constraint in contract provision, but in a way that ensures that the interests of the saver trump the interests of others when there is a conflict. Putting the legal responsibility for the best interests of the saver on the employer will be problematic, particularly for the long tail of SMEs and micros.
The Government’s use of statutory overrides has a role to play, particularly in placing new quality and governance requirements into future, existing and legacy pension contracts. I ask the Minister to confirm whether this Bill would give the Secretary of State the power to change retrospectively the terms of existing pension contracts to embrace any new quality or governance requirements.
However, the solution must rest in major part in raising the governance in the pensions industry. Like trustees, it should carry a fiduciary responsibility in the management and provision of its pension products and investments. Conflicts of interest must be resolved in the interests of the saver. An efficient private pension system that requires the default transfer of savers’ pots to new schemes and funds simply cannot happen without that.
There is an imbalance in the duties of contract-based pension providers, compared to those placed on trustees, which challenges the success of auto-enrolment. The OFT stressed the need for stronger measures to improve governance but I fear that the independent governance committees that it has agreed with the industry—here there are shades of what the noble Lord, Lord Lawson, referred to as the fox in the hen coop—will fail to achieve the requirement of aligning scheme governance with the interests of savers.
The proposed independent governance committees have many weaknesses. At the very least, such bodies need both a duty to act in members’ best interests and the power to make decisions. The current OFT proposal fails on both points. As the Law Commission commented,
“there are many difficult questions about how these committees will work”.
They,
“will not have the power to change investment strategies or investment managers ... Furthermore, it is not clear whether ... the committees will be under explicit legal duties to act in the interests of”,
the savers. Introducing independent governance committees accountable to the boards of pension providers, without addressing any of the conflicts faced by these providers, or clarifying that decisions must prioritise the interests of policyholders over those of the shareholders, does little to solve the governance deficit.
As a comparator, the governance requirements for the Australian private pension system have been toughened up recently. It is a sad reflection on my character that I spent a significant number of days over the Christmas holidays ploughing through the regulatory requirements under the Australian system—I promised in my new year’s resolutions to get a more exciting life in future. The Australian Prudential Regulatory Authority enforces a range of prudential standards on pension providers, including an unequivocal requirement that conflicts of interest must be resolved in the beneficiaries’ interests and a specific duty to deliver value for money.
The advent of auto-enrolment raises the bar on governance. I welcome the Government’s decision to impose quality and governance requirements on pension schemes, but I think that it is necessary to make it explicit that those requirements should provide for the identification, avoidance and management of conflicts of duty and interest. Conflicts of interest go to the heart of the problems in the private pension system. The regulations, when addressing governance requirements, must address the issue of conflicts of interest. Amendment 62GA, without being prescriptive, seeks to do that. I beg to move.
Lord Browne of Ladyton
My Lords, I speak to Amendments 67ZB and 67ZC in my name and that of my noble friend Lady Sherlock. It is always a pleasure to follow my noble friend Lady Drake on issues such as this. She has once again characteristically set out an informed and persuasive argument in her contribution to the debate. To a degree, I accept that it could be said to undermine Amendment 67ZC in that it approaches the same issue but in a distinctly different fashion, accepting the same principle. From my perspective, however, I am not that concerned how the Minister responds to the nature of the challenge that my noble friend set out. If he chooses to accept her amendment—I venture to suggest to him that he would invariably be wise to do so in such matters—he will find no great cavil from these Benches that our amendment fell by the way as a consequence.
Amendment 67ZB is designed to address the issue of scale by way of a new clause. It would promote good value in scheme sizes and would require trustees to consider whether the scheme had sufficient scale to deliver good value. I note that, in the Government’s consultation on quality standards in workplace defined-contribution schemes, the Government reveal that they are “interested” in the idea that trustees should have a duty, and underline their interest in the Australian approach to imposing duties on trustees.
I am glad that the Government are beginning to catch up with the Labour Party’s policy review on these issues, but I also note that they have not yet progressed sufficiently far in its investigations to recognise that the Australian Government, the policies of which have already been prayed in aid by my noble friend, also deploy the regulator in this respect. It is not clear why the Government think that trustees of very small UK schemes, which we know from the TPR surveys self-identify as not incapable of understanding investment processes, will be able to make a judgment as to whether they have sufficient scale. If these trustees fail to act, what is supposed to happen?
In Australia, those intending to supply a pension scheme have to apply to the regulator for a licence, and one of the licence conditions requires a reasoned attestation as to how the trustees of the scheme will meet best practice in terms of scale at the investment and administration layers. This process has a ratcheting effect, as the attestation must be repeated on an annual basis and, as best practice improves, this forces mergers. Failure to attest would mean a breach of the regulatory licence, and commentators believe that there will only be a sixth of the current number of schemes within 20 years. For trustees to move to scale we would need a ubiquitous requirement for trustees, a duty on them to assist scale and a mechanism to require action where they fail to act or mis-assess. That is what we seek to provide the beginnings of with this amendment.
Amendment 67ZC would provide for regulations to require any pension scheme to appoint a board of trustees which will have fiduciary duties towards the members of the pension scheme. Our view is that a minimum requirement for auto-enrolment schemes is that they must be governed in a way which legally requires the scheme to prioritise the interests of members over all other interests.
The Minister may say that they have consulted on governance for automatic transfer schemes; again, it is a good thing if he is catching up with our policy review. However, his quality standards are intended for automatic transfer schemes only. Under our approach, automatic transfer will be limited to aggregators, as the Minister is well aware. Our requirement for trustees applies to all qualifying schemes, not just to automatic transfer schemes, and, in addition, our definition of qualifying schemes includes closed-book schemes, which his does not.
As a further point, these conditions will apply to schemes that wish to operate as automatic transfer schemes, but an automatic transfer system is years away. The requirement for trustees is immediate, however, as my noble friend has pointed out. Why should we adopt a lesser principle than that adopted by the Australians? Their Cooper review found:
“Superannuation must always be for the benefit of members. The superannuation system does not exist to support intermediaries. Trustees must be relentless in seeking benefits for members”.
Thanks to my noble friend Lady Drake, we now know that that has also been translated into regulation in Australia.
Lord Bates
My Lords, ensuring that schemes deliver good value for, and are run in the best interests of, their members is a primary concern for this Government, so we welcome this discussion, which was set out with great insight and clarity by the noble Baroness, Lady Drake. We agree that the issues highlighted by these amendments—scale, fiduciary duties and conflicts of interest—are important ones to consider. However, we do not agree that simply encouraging the creation of large, trust-based schemes is the right approach to ensuring good value for members.
We are interested in testing how far scale can help schemes to deliver better quality and lower charges for members. Last year we published a call for evidence on defined contribution quality standards, in which we sought evidence about how a scheme’s size can influence outcomes for members. As noble Lords are no doubt aware, the issue of scale is not straightforward, and most responses to our call for evidence saw benefits to members in both large and small schemes. We are currently considering the responses to the call for evidence alongside the recommendations of the Office of Fair Trading, and will respond in due course.
We would have concerns about compelling schemes to merge in the way that this amendment suggests. Determining what is in all members’ best interests would be extremely challenging for the Pensions Regulator, which simply would not have the capacity or information needed to scrutinise every small scheme and consider whether it should close or merge. There could also be European Court of Human Rights issues in relation to property rights because to force a scheme merger could lead to some members losing out.
Turning to the idea that all schemes should be trust-based, in our call for evidence we set out the importance of ensuring that schemes are governed in members’ interests; of course, we recognise the vital role that trustees play in achieving this. However, we disagree that simply imposing a trust-based structure on all schemes is the way forward. Neither the presence of trustees nor fiduciary duties are a panacea for poor governance. This is shown in the findings of the OFT, which identified governance weaknesses in trust-based schemes of different sizes. The Law Commission’s current consultation on fiduciary duties notes that legal duties are,
“insufficient to ensure good outcomes for members”.
In addition, the amendment suggests that in scheme governance, trustees’ decisions should take precedence over an employer’s decisions in any circumstances. This does not provide any opportunity to balance interests, and would apply even if the trustees’ decisions are unreasonable. Such a broad requirement could lead to significant financial difficulties for employers, which would not be in anyone’s interests.
The amendment moved by the noble Baroness, Lady Drake, highlights the importance of identifying and avoiding conflicts of interest. The Government agree that this is an important area; in our call for evidence we suggested that all schemes should have a governance body that must be able to act freely in members’ interests. The noble Baroness referred to the Australian scheme, as did the noble Lord, Lord Browne. She was very dutiful in reading it over Christmas. I suggest that she would find the Australian pension code less onerous to read if she was reading it in Australia, but she was probably shivering here with the rest of us.
The Australian regulator’s new power is interesting but it is not translatable to the UK pension system. Following the Cooper review, which has been referred to, the Australian pensions regulator—APRA—has been given new powers to drive schemes to merge.
We are interested in this approach and will monitor how it is used and how effective it is, but it should be remembered that the Australian pensions landscape is significantly different from our own. It is our understanding that the APRA does not intend to use the power to target all small schemes but to focus, for example, on cases where there is a link between underperformance and an absence of scale.
The noble Lord, Lord Browne, argued that you need to drive up scale in order to increase consolidation, which has an effect on charges and therefore brings a benefit to members. Scale is not necessarily a determinant of value: bigger schemes are not always better. Consolidation is already happening. For example, in 2012 around half the active members of private occupational defined contribution schemes were in schemes with 10,000 or more members; in 2000 this figure was one in eight. The number of active members in small and medium-sized private occupational defined contribution schemes decreased from 0.3 million to 0.1 million between 2000 and 2012—a reflection of the greater regulatory requirements and burdens that are placed upon scheme managers, as well as the challenge of finding trustees who will undertake the work.
Finally, turning to the comment made by the noble Baroness, Lady Drake, about independent governance committees and whether they would have a fiduciary duty to members, the OFT has recommended a model of independent governance committees to address a number of problems that stem from weaknesses in the buyer side of the market. As part of the consultation on fiduciary duties, the Law Commission has asked about the duties that should apply to members of independent governance committees. Its tentative view is that members should be subject to legal duties to act in the interests of members. We are working with regulators and stakeholders on requirements for independent governance committees, and will respond in due course.
This has been a helpful discussion but I hope that my responses will enable the noble Baroness, Lady Drake, to consider withdrawing her amendment.
Lord Browne of Ladyton
Perhaps I might engage with the Minister on the issue of whether or not larger pension schemes provide better returns to their members. I do not intend to delay the Committee long on this issue but I have before me a page and a half of significant research that challenges the assertion made by the Minister. I will say only this: recent NAPF research shows that a person in a larger scheme will get a 28% larger pension pot than a person in a smaller scheme. Indeed, research from Australia supports the assertion that fund size has a positive impact on the performance of not-for-profit superannuation funds there. I shall arrange for the Minister to have access to this research but I could not let that assertion remain unchallenged.
Baroness Drake
I thank my noble friend Lord Browne for his supporting contributions in this debate. I thank the Minister for his response but he has not actually answered my question—I did listen; perhaps I missed it but I do not think so—which was: can the Minister confirm that this Bill will give the Secretary of State the power to retrospectively change the terms of existing pension contracts to embrace any new quality or governance requirement? It is a pretty key point because it goes to the heart of what the Government can or cannot do unless they take those powers to themselves. A lot of people are quite interested in whether the Government are taking those powers so that when they decide what the quality and governance requirements are, they have the power to retrospectively apply them to existing pension contracts.
Lord Bates
Perhaps I can seek some clarification from the noble Baroness on the nature of her question; I apologise for not responding to it directly. The whole point of what we are introducing is that we are seeking to tackle the issue of the quality of schemes. Therefore it would stand to reason that if one is seeking to improve the quality of schemes, it would be wrong to disbar those who were in previous schemes from getting the benefits of those improved quality standards. That provision is therefore there: it will be necessary to enhance the quality of schemes. I might be missing something; I am sorry if I am.
Baroness Drake
The Minister has got the sentiment of my point. I was looking for firm clarification that the Bill gives the Secretary of State the power to put in place those quality and governance standards, once they are decided, to existing pension contracts, because they are contracts.
Lord Bates
The noble Baroness has a high degree of expertise in this area, which is respected on all sides of the Committee. I wonder if I could write to her on the specific point on which she is pressing me, with a response on the record. If she wishes to press it further, she can of course come back to the issue on Report.
Baroness Drake
I thank the noble Lord for his offer to write to me on the matter. Maybe having it in writing will be better, because the efficiency or ability of any requirements under the Bill will be heavily influenced by the extent to which they can retrospectively apply to existing pension contacts. However, if the noble Lord is going to write to me on that point, I will also deal with other matters.
We need to get a sense of perspective on this. Auto-enrolment potentially affects 20 million people in this country. The whole of the private sector workforce, when it is engaged in employment above a certain income level, is a huge community of people; it is a great statement of trust between the working population and the Government. People are saying that they accept the argument that the people must take responsibility for providing for our income in old age, but they have the right of a reciprocal entitlement to know that the Government are doing what is necessary to ensure that those who have discretion over their savings and are managing them do so in a way which is in their interests and to high standards of governance.
I am afraid that I do not buy “balance of interests” at all on this issue. If you come into the market to provide a pension product under auto-enrolment, you cannot sell or manage a product that does not meet the needs of the savers. You would not say, “Well, I will leave the brakes off a car in the interests of not making the employees redundant”. You have to sell a product that meets the interests of the members and is designed and managed with the interests of the saver at heart.
The independent governance bodies, or committees, are very weak as they are proposed. There are lots of people commentating to that effect. As proposed, they have fewer new powers—or no powers—for resources, for information, or for appointment of members to the board. It is in the gift of the companies themselves. As currently advised, they have no powers or capacity to address conflicts of interest. I know that this issue of governance is a work in progress. The Government are considering the matter and are due to report further. The OFT says that it has more work to do on its recommendations. The Law Commission is looking into this.
What cannot be dodged at all, in my view, is that any governance structure, requirements or arrangements for a private pension system that does not put the identification and resolution of conflicts of interests in the interests of the saver at its heart will be flawed. Successive Governments will keep picking up the consequences of that. There must be some—cross-party or whatever—biting on the principle that if you give the market a huge demand side that it could never have created itself under a voluntary system, that carries with it the requirement for a high standard of governance. The Government must say that those who enter the market under auto-enrolment to provide pension products must operate on the basis that any conflicts of interest are resolved in favour of the beneficiary or saver.
The Deputy Chairman of Committees
We come to Amendment 63. Lord Lawson of Blaby?
Amendment 63
Lord Lawson of Blaby
ScheduleWork-based schemes: requirements for disclosure of charges and other informationThe Secretary of State shall by regulations make provision to require disclosure at least annually of the following management and transaction charges incurred by the administration and management of each investment portfolio managed by or on behalf of a work-based scheme—
(a) fees and performance fees paid to investment managers,(b) commissions and bid-offer spreads paid to brokers,(c) bid-offer spreads paid to foreign exchange counterparties,(d) fees, revenue splits and bid-offer spreads paid to custodian banks,(e) fees paid to in-house or third party scheme administrators,(f) fees paid to professional advisors (e.g. actuaries, legal advisers, auditors, investment consultants etc.),(g) initial charges, bid-offer spreads, exit charges, other fees and rebates charged on investments in pooled funds.”
Lord Lawson of Blaby
Thank you, Lord Chairman. You advised me that I need to move this amendment, which I am happy to do even though we have already had the debate on it. I will just say one or two things briefly. First, I thought the debate was very useful and I am particularly grateful to my noble friend the Minister for indicating that the Government accept that there is an issue here that needs to be addressed and that the Minister in the Commons, Steve Webb, will make an announcement about it later this week. Presumably, he will set out what he considers to be the remedy for the problem identified. It would certainly be churlish to persist with my amendment in the light of that. I will wait to see what Steve Webb and the Government have to say and then decide whether that is adequate or that it is necessary to pursue the matter further on Report.
I have two other quick points. First, the Minister said that the degree of specification for costs to be disclosed, as I have in my amendment, was not suitable for primary legislation. He is probably right but I interpret the meaning of that to be that he thinks it is suitable for secondary legislation. This is certainly a matter where legislation is needed and I am perfectly happy to accept his advice that there is a need for secondary legislation.
The other point is that the noble Lord, Lord Browne, suggested that between Mr Webb’s announcement and Report, he and I might discuss the matter to see what we feel about this. I am very happy to do that. This is not a party-political point, but if we think that the Government’s remedy is inadequate—I hope that will not be the case—it may be that he and I can agree an amendment to jointly move on Report in the best bipartisan traditions of this House.
Having said that, unless any Member of the Committee objects, I beg leave to—
The Deputy Chairman of Committees
The noble Lord should move the amendment first.
Lord Lawson of Blaby
The silence is eloquent and, in the light of it, I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty (Lab)
My Lords, in a Bill of extreme complexity, with a large number of amendments that are equally complex, this must be the simplest amendment on the Marshalled List before the Committee. Therefore, I assume it is one which the Government could easily accept or, alternatively, make a slightly different proposition in respect of. Most of my interventions in Committee have been on behalf of the interests of beneficiaries of pension schemes, which I think is right, but this amendment is on behalf of a subset of employers; namely charities, although it would extend more broadly to the non-commercial private sector.
Charities are providers of occupational pensions—in fact, the top 50 charities have pensions liabilities of more than £5 billion. Clause 45 provides some degree of protection for all employers engaged with the Pensions Regulator in restoring the affordability of pension schemes, long-term deficit reduction plans and related matters. It requires the Pensions Regulator to take into account the effect on the employer’s “sustainable growth”. That is obviously a very important issue for commercial private sector employers, but the aim of charities, and of certain other organisations that provide pensions, is not growth. The aim is to work on the object of the charity and, in some cases—for example, with the alleviation of poverty or the eradication of disease—the charity’s aim is to reduce that object and therefore to run down its actual activities in the long run.
“Sustainable growth” is not the appropriate term to give the equivalent protection to private sector employers and to charities and other bodies for which growth is not the objective. I am therefore suggesting that the broader term of “sustainability” should be substituted for “sustainable growth”. Alternatively, if the Government are not prepared to go along with that entirely, I suggest “sustained growth or sustainability”. Otherwise, charities which face equal and, in some ways, greater financial pressures than private sector commercial employers, because of the legal and trustee-type restrictions on how they can use their own money, will have difficulty running pension schemes in many respects. They need this protection, but appealing to this clause, which amends the Pensions Act, would not automatically give them that protection.
I hope that the Government can consider this amendment and accept it, or at least make it clear, in an amendment of their own, that the broader objectives of organisations are also covered by this otherwise very valuable clause. I beg to move.
Baroness Sherlock
My Lords, as my noble friend Lord Whitty has explained, the purpose of this amendment is to ensure that the objectives of the Pensions Regulator, as set out in the Pensions Act 2004 and as to be amended by Clause 45 of this Bill, can be applied appropriately to charities.
We on these Benches are sympathetic to the aims of Clause 45 and recognise that there is a balance to be struck between the requirement on the Pensions Regulator to ensure that there is enough money in pension funds to meet their liabilities and the need to ensure that burdens are not placed on employers, with requirements so tough that they are effectively forced out of business and thus rendered unable to make any future contributions to said pension funds. However, as my noble friend pointed out, there are real concerns among those responsible for managing the finances of charities and other non-profit organisations over whether the clause, as drafted, is fit for purpose.
Charities have charitable objects that effectively circumscribe their purpose and activities. I declare an interest as the chair of some charities now and having been formerly chief executive of three different charities. I also remind noble Lords of the interest I declared previously as a non-executive director of the Financial Ombudsman Service.
As my noble friend has pointed out, charities do not necessarily aspire to grow as companies do. They may happen to grow, if demand is there and money is available to fund their activities. They may aspire to grow, to increase the number of people that they work with in line with their charitable objectives. However, they may not. In my time, I have presided over charities that grew but I have also taken decisions that effectively reduced charities by refocusing them on core objectives and ensuring that they were sustainable. While charities generally do grow, they also need to be sustainable, and that is what my noble friend is addressing here.
This is not a negligible issue. Registered charities employ around 850,000 people. The voluntary sector, according to the Charity Finance Group, contributes £11.6 billion to UK gross value added, compared, for example, to the contribution made by agriculture, which is just £8.3 billion. As my noble friend pointed out, there is a significant issue with charity pension funds. The Charity Finance Group estimates that the top 50 charities are carrying almost £5 billion in liabilities. I am advised that those liabilities, and the actions that have been required to flow from them, are driving a significant number of charity mergers. This is having an effect on the architecture of the sector, not just on the individual charities and their employees. Those charities are understandably nervous about any shift in direction or emphasis that is not appropriate to their circumstances.
I have personal experience of the fact that charities have often suffered at the hands of legislation or public policy that was based on the assumption that most organisations were either public or private and did not take into account the often quite different structure and funding arrangements of charities. The noble Lord has had significant involvement with charities and will understand that point.
If the Government are not minded to accept this amendment, can the Minister tell the Committee how the Government envisage “sustainable growth” being applied by the regulator to charities? What reassurance can he give to worried finance directors of charities? Can the Minister remind the Committee of what relationship, if any, there is between his department and the regulator when it comes to deciding how best to interpret their objectives as set out in statute?
Lord Bates
My Lords, this amendment relates to the proposed new objective for the Pensions Regulator. The Pensions Regulator oversees the scheme funding regime for defined benefit pension schemes. This regime requires, among other things, the regular evaluation of a scheme’s funding position and a formal recovery plan to plug any deficit identified.
In undertaking this evaluation, the Pensions Regulator is guided by a number of objectives set out in the Pensions Act. It is therefore important, in reference to the remarks of the noble Lord, Lord Whitty, and the noble Baroness, Lady Sherlock, that when we talk about this new requirement, it is placed in the context of the six or seven different measures that the Pensions Regulator will take into account in determining the funding rate that is necessary for the scheme to make up any deficit. While some consideration of sponsoring employers is implicit in these objectives, the new objective will make it explicit that the regulator must consider them, alongside members and the Pension Protection Fund, in deciding upon the suitability of deficit recovery plans and other decisions related to scheme funding.
The new objective responds to concerns expressed by sponsoring employers which felt that they needed to be recognised in the regulator’s statutory objectives, given their importance to defined benefit schemes. The current wording of the objective refers to sustainable growth, as the Government believe that the best protection for scheme members is a strong, healthy employer standing behind its scheme now and in the future. Whether that is a charitable organisation or a commercial organisation, its health must be the first objective in order to keep a sustainable body behind the scheme. Sustainable growth can benefit both the organisation and pension scheme members via a potentially stronger employer covenant underpinning the pension promises made.
Lord Whitty
My Lords, I am grateful to the Minister, at least for his quote from the consultation of the Pensions Regulator, which recognises that growth may well not be considered in the same way by certain non-profit organisations, including charities. However, I find the Minister’s conclusion from that to be slightly illogical. If he is correct and pension fund administrators in the not-for-profit sectors look at this apparent protection and do not interpret growth or have it as an aspiration in the same way that commercially driven organisations do—the strength of not-for-profit organisations will relate to their objectives, not to a growth objective—I do not really see a problem for the Government in extending the phrase in the Bill, thereby ensuring that the position of not-for-profit organisations is covered.
The somewhat convoluted way in which the Pensions Regulator’s consultation is spelt out does not convey that. I ask the Minister to take this issue away and consider whether it would not be easier to make this minor amendment rather than to have a convoluted explanation that belied the text of the Act, or perhaps retain both “sustainability” and “sustainable growth”. It is a fairly simple point but it would make clearer the position of a lot of charities and other not-for-profit organisations. However, I will leave that with the Minister and, in the mean time, beg leave to withdraw the amendment.
Lord Bates
“Pension Protection Fund: compensation cap to apply separately to certain benefits
(1) Paragraph 26 of Schedule 7 to the Pensions Act 2004 (Pension Protection Fund: compensation cap) is amended as follows.
(2) In sub-paragraph (1)(b), for “sub-paragraph (2)(a) or (b)” substitute “sub-paragraph (2)(a), (b) or (c)”.
(3) In sub-paragraph (2)(a)(ii), for “paragraph (b)(i) does not apply” substitute “neither of paragraphs (b) and (c) applies”.
(4) In sub-paragraph (2)(b)—
(a) before paragraph (i) insert—“(zi) benefit A is attributable to the person’s pensionable service,”;(b) in paragraph (i), after “one or more other benefits” insert “that are attributable to his pensionable service”.(5) In sub-paragraph (2), after paragraph (b) insert “, and
(c) this paragraph applies if—(i) benefit A is attributable to a pension credit from a transferor,(ii) at the same time as the person becomes entitled to relevant compensation in respect of benefit A he also becomes entitled to relevant compensation in respect of one or more other benefits that are—(iia) under the scheme or a connected occupational pension scheme, and(iib) attributable to a pension credit from the same transferor,(“benefit or benefits B”), and(iii) the aggregate of the annual values of benefit A and benefit or benefits B exceeds the compensation cap.” (6) In sub-paragraph (5), after “sub-paragraph (2)(b)” insert “or (c)”.
(7) The amendments made by this section are to be treated as always having had effect.”
Lord Bates
My Lords, the four amendments I will speak to fall into two groups of two. The first two, Amendments 64A and 72A, relate to the application of the PPF compensation cap to individuals who have entitlement to both an occupational pension and a pension credit arising from a divorce or civil partnership dissolution settlement. It has come to light during the drafting of the Bill that the way in which the PPF currently applies the compensation cap to this group, while in line with the policy intent, does not comply with legislation. When compensation is calculated, these two entitlements are kept separate. It was the intention that the compensation cap would also be applied separately and this is what the PPF is currently doing. However, the legislation, as currently worded, requires the two amounts to be added together and the total capped, leading to a significantly lower payment. These amendments simply bring the existing legislation into line with the policy intent and the actual practice of applying the cap separately. They also allow the change to be applied retrospectively to cover past calculations and for them to come into effect from Royal Assent to reduce the period in which the practice and the legislation are out of alignment.
The second set of amendments—Amendments 67A and 67B—relates to the provisions in the Bill that establish a long-service compensation cap in the PPF. Those provisions in Clause 47 already make provision for how the long-service cap will apply in the calculation of PPF compensation for individuals in the PPF when the long-service cap legislation is commenced. The amendments deal with how the long-service cap should be applied when a scheme is either undergoing assessment by the PPF or winding up when the long-service cap is introduced. When the legislation commences, a scheme could be in the PPF assessment period—that is, being considered for entry to the PPF, or the scheme could be in wind-up.
Members of schemes in the assessment period will see their payments increased to reflect the long-service cap. However, any valuation of the scheme’s liabilities as part of the assessment period will continue to be based on the current cap structure. Any scheme that winds up outside the PPF, after being in assessment or not, will allocate its assets against the current cap structure. I hope that is absolutely clear. I beg to move.
Baroness Sherlock
My Lords, I thank the Minister for that very helpful explanation of these amendments. He may have answered the question that I am about to ask in his final sentence but I did not quite catch it, and I apologise for asking him to repeat it. In relation to the cap, for schemes currently in assessment, do the current PPF rules and levels of benefits or the more generous rules apply?
Lord Bates
The answer is that the current provision applies if a scheme is wound up outside the PPF. Schemes will increase payments where appropriate to reflect a long-service cap. However, the scheme’s liabilities will continue to be measured against the old cap. This is to prevent the actuary having to recalculate the scheme valuation, leading to delays and extra costs. I hope that that is helpful to the noble Baroness and thank her for raising the point.
Lord Bates
“Public service pension schemes: transitional arrangements
(1) Section 18 of the Public Service Pensions Act 2013 (restriction of existing pension schemes) is amended as follows.
(2) After subsection (5) insert—
“(5A) Scheme regulations may also provide for exceptions to subsection (1) in the case of—
(a) persons who were members of a public body pension scheme specified in the regulations, or who were eligible to be members of such a scheme, immediately before 1 April 2012, and(b) such other persons as the regulations may specify, being persons who before that date had ceased to be members of a scheme referred to in paragraph (a) or to be eligible for membership of such a scheme.”(3) In each of subsections (6) and (8), after “(5)” insert “or (5A)”.”
Lord Bates
My Lords, this group of amendments makes a small change to the Public Service Pensions Act 2013 and a number of consequential amendments to this Bill so that members of public body pension schemes can benefit from the transitional protection provided for by the 2013 Act as it was intended, but in a way that delivers much greater administrative savings.
The Public Service Pensions Act delivers the commitments made in another place by the Chief Secretary to the Treasury, Danny Alexander, that those members of the larger public service pension schemes who are less than 10 years from their normal retirement age in April 2012 should not be impacted by the Government’s reform programme. He was clear that this transitional protection should also extend to members of the smaller public body pension schemes; for example, those administered by the UK Atomic Energy Authority, the various research councils, or the Homes and Communities Agency. The larger schemes are those that cover the major public sector workforces: the Civil Service, judiciary, local government, teachers, the NHS, firefighters, the police and the Armed Forces.
As part of the Government’s reform programme, the intention is for the smaller schemes to be consolidated into the larger schemes wherever possible to allow for savings to be made from reduced administration and management costs, without affecting the value of members’ benefits. However, the current phrasing of the Public Service Pensions Act limits those eligible for transitional protection in the larger schemes to,
“persons who were members of an existing scheme, or who were eligible to be members of such a scheme, immediately before 1 April 2012”.
This means that moving transitionally protected individuals who do not meet this criterion from smaller schemes into the larger schemes would cause them to lose their protection, and the Act currently provides for them to remain in these smaller schemes.
This amendment removes the necessity to leave the smaller schemes in place to provide for transitionally protected members who do not meet this criterion, leading to unnecessary administration and management costs. It will have no impact on the value of members’ benefits and they will continue to receive the transitional protection as set out in the Public Service Pensions Act. Amendments 71, 72 and 73 are consequential amendments to allow the Treasury to commence the provision by order. I beg to move.
“Railways pension scheme
(1) The Railways Act 1993 is amended as follows.
(2) In Schedule 11 (pensions), after paragraph 11 insert—
“11A (1) This paragraph applies if an insolvency event occurs in relation to the employer or former employer of a protected person.
(2) Where this paragraph applies, the Secretary of State shall become liable to discharge any liabilities in respect of relevant pension rights, to the extent that they are not discharged by the trustees of a new scheme in which the employer was a participating employer.
(3) For the purposes of this paragraph—
(a) “insolvency event” has the meaning set out in section 121 of the Pensions Act 2004;(b) “relevant pension rights” means the relevant pension rights referred to in paragraph 6(3) above.11B The duty referred to in paragraph 11A also applies if an insolvency event has occurred in relation to the employer or former employer of a protected person on or after 1 October 1994.””
Lord Dubs (Lab)
My Lords, Amendment 65A is concerned with persons who worked for a company called Jarvis, which went into administration. Jarvis was one of the private companies that had subcontracts for renewal work with Network Rail; essentially this was the replacement of worn-out track and signals. This company was one of the main firms working on behalf of Network Rail—all well and good.
In March 2010, Jarvis went bankrupt and 1,200 skilled rail workers across Britain were thrown on to the dole. I believe that the situation could have been avoided, and I will come back to that in a minute. Jarvis’s work was transferred to new companies but the 1,200 workers were not transferred. Jarvis was forced into administration because Network Rail deferred renewals work to comply with the Office of Rail Regulation’s decree that Network Rail needed to make 21% efficiency savings over the next five years. Therefore, Jarvis going into administration was not the result of the recession and is separate from the general question of railway funding. It is ironic that Network Rail has recently been criticised for delays caused by its decision to scale back renewals work in 2009.
Jarvis had cash-flow problems but its rail business had an order book of up to £100 million. However, Network Rail and the previous Government refused a £19 million rescue plan from the administrator for the Jarvis rail division for running costs and wages over the next month or so, which would have bought time in order to ensure an orderly transfer of Jarvis employees to new contractors. Representations were made by the unions to the Government, who refused to allow their legal powers under the Railways Act to treat Jarvis as an essential railway activity, which would have allowed them to step in and protect the work of the members of the union. Instead, these 1,200 were thrown on to the dole. This is despite the fact that the Government, according to information provided in response to an FOI request, knew quite a long time in advance that Jarvis was in imminent danger of collapse. Had Jarvis remained in business, the pension entitlements of the workers, past and future, would have been protected.
Lord Bates
My Lords, we have discussed protected persons status previously in relation to the statutory override provisions, but it might be helpful in the context of this debate briefly to restate the position.
The status of “protected persons” was created when rail and other public sector industries were privatised, and new pension schemes were created to ensure that ongoing pension provision was made. Protected persons status gave members of certain schemes protection against their new employers providing pension benefits that were less favourable than those offered prior to privatisation.
However, there was never any intention by the Government for protected persons status to protect pension benefits already accrued in the event of a future employer insolvency. The amendment would oblige the Government to provide the full pension of those members of the railway pension scheme who have “protected persons” status in the event of their employer becoming insolvent. This would also apply to benefits accrued after privatisation.
There is, of course, a need to protect members of schemes where the sponsoring employer is insolvent. Since the Railways Act 1993, successive Governments have created a stronger pension-protection regime. This regime crucially includes measures that increase the security of members when their occupational scheme is underfunded and the sponsoring employer of the scheme becomes insolvent. It is that regime which is intended to provide protection to members of defined-benefit schemes. The status given to protected persons, on the other hand, was focused on ensuring that their pension benefits after privatisation were at least as favourable as those before. When it comes to protection in the case of employer insolvency, it is right that members of the railways pension scheme are treated the same as other members of occupational schemes in a similar position.
The railways pension scheme is a multi-employer sectionalised scheme. The different sections of the scheme are covered by the full provisions of the pension protection regime. The sections have to meet the funding requirements, debt requirements and compensation arrangements. They are covered by the Pension Protection Fund and pay the pension protection levy. This means that the scheme has been making specific payments to provide its members with protection in the event of any of the sponsoring employers becoming insolvent.
I am aware of the situation of the members of the Jarvis sections in the scheme. Of course, we have enormous sympathy for them and for any individual who is placed in the stressful and depressing situation not only of losing their job but of potentially seeing a limitation on their benefit entitlements. It is right that the full range of protection requirement rules should apply to the sponsoring employers of the railways pension scheme.
If this amendment were made, the Government would be responsible for covering a scheme’s liabilities if the employer became insolvent. Sponsoring employers would therefore not have to worry about the liabilities of certain members. The noble Lord, Lord Dubs, rightly referred to moral sensibilities, which of course we have, but there is also the danger of moral hazard if the Government were to stand in that way. Finally, the amendment is retrospective, which would mean that insolvencies that have already occurred would have to be unpicked and arrangements that had already been made would have to be revisited.
This seems like a fairly negative response but of course legislation has been passed in the intervening period. I pay tribute to the then Government for introducing the statutory system of protection for scheme members and the levy, which Jarvis contributed to prior to its insolvency. In that sense, Jarvis members enjoy a higher level of protection even now as a result of the Pension Protection Fund. I understand the sensitivity of the issue and I do not underestimate the distress that has been felt by those members and their families, but this is not something that the Government feel able to accept and I ask the noble Lord to consider withdrawing his amendment.
Lord Dubs
My Lords, I am not totally surprised by the answer but, as I understand it, whatever the Minister said, these former Jarvis workers have lost out through no fault of their own and, because an earlier Government decided to privatise the railways, they are the victims of a process that began with rail privatisation. At the time, they had pretty secure jobs—nobody should have a secure job in the face of any eventuality but they were given assurances at the time. I agree that those assurances did not cover the prospect that the firm might become insolvent; nobody anticipated that and none of the safeguards covered this particular situation. But in moral terms, assurances were given and those assurances should transcend the other points that the Minister made.
It was a very disappointing answer and I will consider coming back to this on Report. In the mean time, I beg leave to withdraw the amendment.
Lord Browne of Ladyton
“Decumulation
(1) Any qualifying money purchase scheme must direct its savers to an independent annuity brokerage service or offer such a brokerage service itself.
(2) Pension schemes shall ensure that any brokerage service selected or provided meets best practice in terms of providing members with—
(a) an assisted path through the annuity process;(b) ensuring access to most annuity providers;(c) minimising costs; and(d) ensuring that information and support is available on alternative at-retirement products.(3) The standards meeting best practice on decumulation shall be defined by the Pensions Regulator after public consultation.
(4) The standards set out in subsection (3) shall be reviewed every three years and, if required, updated.”
Lord Browne of Ladyton
My Lords, Amendment 67ZA is in my name and that of my noble friend Lady Sherlock. It proposes the addition of a simple clause to the Bill which would require the provision of an independent annuity brokerage service or the offer of such a service to all members pending retirement. Later provisions set out how best practice should be defined and maintained in the brokerage service offered to the retiring member or to which he or she is directed; in other words, it calls for an independent brokerage service to assist people to annuitise at the point of retirement.
This is hardly a radical proposal. It is best practice. It is what many employers with DC pension schemes already offer. The ABI code of practice says that providers should tell people who are decumulating that they can shop around and transfer their funds to another provider and that they should seek advice before so doing. But that is not enough. As Dan Hyde, in an article in the Telegraph on 10 December last year, wrote:
“The process starts with a ‘wake-up’ pack sent to savers … in which pages of often unintelligible information, packaged in unhelpful ways, baffle even the well-informed”.
Of course, people can purchase their own independent financial advice but the majority do not retain or use independent financial advisers or accountants. Even a one-off appointment would be expensive, equivalent to a week’s take-home pay for workers on the average wage, even if they knew where to go.
The scandal of annuities is well known and widespread. When this amendment was debated in the House of Commons, Steve Webb, the Pensions Minister, used the same diversionary tactic as did the Minister, Mark Hoban, who responded to the later Westminster Hall debate on annuities. It is all very well to suggest that those reaching retirement age can do many things other than plan for an annuity, but it is insufficient to say that people should have many different opportunities and lots of different advice. The fact is that the variety in the kinds of annuity that are offered and the variety of deals available is considerable and an annuity is invariably the default position of most of those retiring. They need independent support at that time.
The need for that independent support at this point may be obvious but the reasons for it are worth repeating. The first is the complexity of choosing the right annuity option. Annuities are complex products and decumulation is a complex process. Comparison between providers is very difficult. I saw a recent quote for an annuity pot of only £30,000. In one short e-mail the following terms were contained: single life; level escalation; anticipated bonus rates and required smooth return rates, all without explanation. It offered four alternatives to a conventional lifetime quotation, annuity was described as income choice annuity or with-profit annuity, and out of nine total options the rates varied between £700 and £1,400, with most about £1,200. With this complexity no one should exercise a choice without independent support, so no wonder more than 50% of people—according to the Telegraph—go with their existing provider.
I understand that the first comparator website has been launched, and I suppose that is a step in the right direction, but Ros Altmann, the independent pensions consultant who gave evidence to the Commons committee, did not think that it was particularly simple. She said that it was disappointing and not easy to use. Annuities are complex products with multiple options and it may be that there never can be a simple comparison website. Does the Minister accept that annuities are complex and people need independent brokerage support at the point of decision-making? Does he accept that obtaining that support is beyond the grasp of most people, particularly those with no knowledge of investments? If he does accept that, how does he suggest that those who need that support can be guaranteed to get it?
The variety in the kinds of annuity that are offered and the deals that people can get is just bewildering. The NAPF and others have said that annuitising with some pensions scheme providers pays on average 20% less than shopping around. Ros Altmann said on “Newsnight” that if you had an annuity with the worst performers you would have to live until you were 100 to get back the money that you paid in. In effect, inertia or, alternatively, being overwhelmed by the complexity of making a choice, is exploited by pensions providers. Insurers are making excessive profits from purchasers failing to shop around. Inertia is a powerful force that results in excess profits for insurers. They penalise, not reward you, for loyalty. Perhaps it was that which drove the Pensions Minister, Steve Webb, to make his announcement on portable annuities last week—a Statement, by the way, that went down like a lead balloon in the industry. Well, it would, wouldn’t it?
The current system is a lovely little earner, as they say in my new adopted home in the East End of London. The FSCP report published in December made many points. To assist my analysis of it, I have drawn the following points from the report which states that the tactics used by insurance companies and brokers are “tantamount to burglary” of old age pensioners, and that it is nearly impossible for pensioners to know whether they are getting a good deal. Pensioners are hit by excessive profits and exploitative pricing. Insurance companies make 20 times more profits on annuities than on any other financial product. There are poor returns: on a pot of £100,000, Clerical Medical offered £4,664 per annum, while Reliance Mutual offered £6,111. Over their expected lifetime, the pensioners would have been just over £36,000 worse off with one rather than the other.
Lord Bates
My Lords, this Government recognise the importance of supporting individuals in making decisions about their retirement income choices. These choices can be bewildering and the implications of choosing an unsuitable product can be devastating, as the noble Lord has very clearly set out for us in moving this amendment. That is why the Government continue to lead on and to support a whole range of initiatives aimed at driving up standards among providers, providing guidance to trustees and education to members. As well as the ABI code of conduct, we welcome the new Pensions Regulator guidance setting out expectations for what trustees should provide for their members. In addition, the Money Advice Service is further developing its support for those approaching retirement to help them engage with how their personal situation relates to products and services which might be appropriate to their needs.
However, we need to understand whether this activity is making a significant difference in terms of value to the consumer. The Government will therefore be assessing the ABI evaluation of the code of conduct planned for later this year, and the Pensions Regulator will be assessing the impact of the new guidance this summer. We will also be looking at other indicators to assess the extent of change in the market.
Wider regulatory activity includes the Financial Conduct Authority’s thematic review of annuities and consideration of a market study. The review will assess the extent of detriment to consumers of not shopping around—the numbers presented this afternoon have been quite startling and stark—and will consider other indicators of risk, such as insurers’ retention rates and whether profits in the market are high or unreasonably high. The FCA will report later this quarter. In addition, Her Majesty’s Treasury and the Department for Work and Pensions are currently reviewing the broad range of available research and statistics on decumulation to explore the impacts and interactions between market and consumer behaviour and government policy.
Our concern about the noble Lord’s amendment is that, while rightly highlighting a key issue, it would increase the risks for consumers and place additional burdens on employers. I will deal first with the risk for consumers. By sending all members to an annuity broker, we would effectively be pushing them away from regulated advice routes, as brokers, unless they are also FCA-regulated advisers, are not required to ensure that the product is suitable for the consumer. At this point, it is worth saying that the range of options available to somebody facing retirement are bewildering but are also many: there is not just the open market option but whether they should be retiring at all or whether they should be using the flexibility that is available, whether they should be drawing down on a pension pot rather than actually purchasing a new version of it, and what type of annuity—
Baroness Hollis of Heigham (Lab)
That is very helpful from the Minister but, if he is going to do that, he is going to have to look at the artificially high base of alternative income—the £20,000 a year you have to have before you are allowed to enter into these arrangements, which was based on not being a charge to public funds but which is unreasonably high. I fully support the Minister’s argument but it follows that he must actually look at his minimum alternative income requirement.
Lord Bates
Those points about alternative income requirement are correct but there are a number of reasons, not just those, as to why annuity rates are historically low, to do with interest rate levels.
Baroness Hollis of Heigham
The Minister may not have understood my point. He was, quite sensibly, making the point—I entirely agree with it—that people should be able to consider alternatives to annuity arrangements, such as draw-down and the like. All I am saying is that to do that, and not to have to cash in, you have to have, under Treasury rules, a minimum of £20,000 in alternative regular income. That is on the grounds that you need to protect people against falling into a charge on public funds if they exhaust their private savings. That figure seems to be artificially high and the Minister will need to look at that again.
Lord Bates
Okay, I have the right answer now: £20,000 is needed for flexible draw-down but not for capped draw-down or trivial commutation of benefits. There are different elements of it. My point, from which I have probably strayed into a trap—I should have stuck to the script—was that there is a range of choices, not simply the annuity rate which people face. That is why it is vital that all members engage early. That is the reason for the wake-up programme which is now being organised, to encourage people to engage with what they should be considering later on.
Also, making brokers the first port of call for all would create a captive market for one part of the industry, without effectively adding to consumer protections. Another risk to consumers is that they could fail to engage with options other than annuities that are more appropriate to them.
The noble Lord’s amendment suggests that a brokerage service would have to provide information on alternative at-retirement services, but it has to be recognised that brokers are not impartial. They make their money if the member buys an annuity, but not if they choose to draw down or defer, or to commute. While it is right that schemes should play a central role in informing consumers of their options, we would be wary of making this part of the qualifying criteria for automatic enrolment. The duty to enrol into a qualifying scheme does, of course, fall on the employer, and so to require them to take this step would be an unwelcome, additional burden.
I make it clear that we are committed to ensuring that consumers have the information they need to make good choices and that the annuities market works effectively for consumers and so, in this respect, we welcome the debate. The noble Lord, Lord Browne, has perhaps chided my honourable friend Steve Webb for raising this matter on annuities but, in many ways, he was doing just what the noble Lord is doing: saying that this is an area which needs to be discussed and debated. In many ways, this debate enables us to do that, but so do the reviews which are taking place and to which I have alluded in my response. I trust that, as part of that, the noble Lord will feel able to withdraw his amendment.
The Lord Bishop of Chester
My Lords, briefly, I listened to the Minister with great interest. I regard the amendment as important because, in a sense, the proof of the pudding is in the eating; it is when you are taking the benefits of the saving.
The Minister’s reply, it seems to me, says that in addition to all the complexities which the noble Lord, Lord Browne, set out, there is actually a whole load of other complexities about whether you should be having an annuity at all. My question is simply as follows. Until now, when we have often had final-salary schemes around, these decisions have been largely managed. However, we are increasingly moving into a position where most people will be on money-purchase schemes, and this will become normal; we will have to engage with these issues. Given the complexities which the Minister has so helpfully set out, is the Government’s view that the obligation to work this out is on the consumer—the person taking the pension—with some information provided somewhere, or is the obligation on the pension provider to provide information which covers all these options? Where does the responsibility primarily lie to advise the person at the point of retirement? I thought it was not quite clear enough as to where that lies in what the Minister said.
Baroness Hollis of Heigham
I will ask another question associated directly with that. To what extent does the Minister expect the Money Advice Service to take on some of this responsibility, given the slightly bumpy ride it has had so far? Or do the Government—and here I declare an interest—expect an organisation like the Pensions Advisory Service to take on some of this responsibility? It has to be free, independent, impartial and professional. Those are the only two organisations of which I am aware which might fit that role at the moment.
Lord Bates
I am grateful for the interventions of the right reverend Prelate and the noble Baroness. The Money Advice Service and the Pensions Advisory Service are, of course, important. However, the argument we are having at present is about saying that individuals need to focus on this issue. It is their responsibility. It is vital to them. That is what the debates about transfers and auto-enrolment are trying to do.
However, we are wary of putting the responsibility for providing information to members solely in the hands of annuity brokers. It is better to drive up standards by ensuring that all the players in the annuity market—providers, schemes, trustees and consumers—are engaged. That is why the Government have led in support of a number of different initiatives to address this important issue and will continue to challenge the industry if there is no significant improvement.
Lord Browne of Ladyton
My Lords, I am grateful to the Minister for his response. I am disappointed, although not surprised, that his speaking notes sought to deploy what I would call a diversionary tactic in addressing the issue that this amendment seeks to address, and that clearly concerns a number of Members of this Committee. I am grateful to my noble friend Lady Hollis for her intervention and for the detail that she extracted from the Minister. I am also grateful for the intervention of the right reverend Prelate the Bishop of Chester, who encapsulated in a couple of sentences the fact that the Minister had compounded the complexity and the difficulty of the challenge facing those approaching retirement in such pension schemes, rather than giving them any comfort.
Of course, we must all accept what the Minister says about the variety of choices facing those who reach this point before or at the same time as they engage with the issue of annuity. However, the fact is that the level of understanding of the vast majority of those retiring is such that significant numbers—400,000 a year—are entering into annuities. They are taking out these complex insurance policies at the point of retirement and the results that they are achieving, even within the annuities themselves, suggest that they are not making the best choices for their own futures. This amendment seeks, within the confines of this Bill and in the context of other work that must be done in relation to annuities, to provide at least a step in the right direction now, demonstrating that Parliament understands and engages with this issue and wishes to prevent it from becoming the next mis-selling scandal of the financial services industry.
With respect to the Minister, it is no answer to say that, of course, the answers can be bewildering but that these same people should engage with a whole other set of bewildering choices in order to avoid the bewildering nature of the choices in relation to annuities. That is hardly a way to move forward. This is a relatively simple initiative. It is not perfect but it seeks, within the body of the clause as drafted, to address the very issue that was the target of the Minister’s principal criticism. It seeks to establish a method of ensuring that best practice is adopted by those brokerage services and gives the regulator a role in defining what best practice is. Surely this is acceptable, if only as a place marker while we go on to deal with the much more difficult issues that have been revealed, through the reports and the information that I have shared, and that the Minister knows exist in the annuities market. There is something fundamentally wrong with the market and it is driven by exactly the same motives as we have engaged with in other parts of the private pensions industry and in our debates in this Committee.
I understand why the Minister gives this disappointing reply to this amendment. I understand why his Government are reluctant at this point to engage with this initiative. However, I am determined that, at some stage, your Lordships’ House will have an opportunity to consider whether or not this is something that it wishes to engage with. I predict with some confidence that this matter will come back on Report but, given where we are in these proceedings, I will look forward to the debate on this issue in the Chamber and to discovering how much those who hear that debate will be reassured when the Minister or others put forward the arguments that we have heard this afternoon. At this stage, I beg leave to withdraw the amendment.
Baroness Sherlock
“National Employment Savings Trust transfers
(1) In relation to NEST, the Government must by 30 August 2014 notify the European Commission that it wishes to lift the ban on transfers and the contribution cap.
(2) The Secretary of State must make a statement to Parliament within 14 days of the Government notifying the European Commission in accordance with subsection (1).”
Baroness Sherlock
My Lords, the amendment in my name and that of my noble friend Lord Browne would require the Government to lift the restrictions on the National Employment Savings Trust, or NEST, on transfers made before 30 August 2014, and to notify the European Commission that they wish to lift the ban on the transfers and the contribution cap. Following this, and within 14 days of the notification, the Government would be required to make a Statement to Parliament.
The Government’s decision to legislate now but not to lift the restrictions on NEST until 2017, and to refuse to lift the ban on transfers in and out until pot follows member commences, is cause for real concern. Crucially, it cannot be in the public interest for the Government to proceed in such a way. Incidentally, I am sure that the Minister has noted the recommendation from the Work and Pensions Select Committee that the restrictions be lifted without delay.
I agree that there was a good case for having restrictions before it was clear how the market would progress, but these restrictions are no longer justified. The auto-enrolment market is now well under way and NEST has not taken all the business, which had once been a concern among some. Indeed, the restrictions have meant that NEST has been able to get less of that low and medium-earning segment than it otherwise would have done, which will contribute to the increase in the number of small dormant pots.
While the contribution limit will be lifted from 2017 by legislation, the restriction on individual transfers in and out of NEST will be left to coincide with the beginning of pot follows member. Whether the income cap is such a problem up to 2017, the continuing ban on transfers in and out will be. The DWP’s own research found that more than 80% of employers want one provider. However, the ban means that any employer who is thinking about using NEST but currently has a pension scheme of any type will be discouraged from using NEST because they cannot transfer in the pension assets in their current scheme. The Government are encouraging employers to use NEST but, by refusing to lift the ban on transfers in and out right away, they are discouraging those employers who currently have a scheme elsewhere. In this way, NEST is being disadvantaged against many of its market competitors.
Our amendment would enable employers who currently have an existing pension scheme to take their employees with their existing savings into NEST. While there remains a ban on transfers in and out, those employers cannot use NEST, or can use it only by leaving any existing pension pots in a stranded place, with a different scheme. Has the Minister considered that aspect of the Government’s decision?
It appears that what the Government are actually doing is ensuring that the restrictions on NEST remain until every employer has staged. By the time the NEST restrictions are lifted, auto-enrolment will be complete. There are a number of significant problems with the Government’s position. First, as the pensions industry acknowledges, NEST provides best-practice standards, which has obliged the insurance companies to improve their standards. Yet NEST is disadvantaged in competing for many of the low and medium-earning savers for whom it is designed. That may well result in customer detriment for many of those workers. Secondly, the Government’s proposals fail the public interest test. If large numbers of low and medium-earning employees cannot use NEST, it is thereby being prevented from delivering its public interest obligation. Thirdly, restricting NEST impacts on its financial position and makes it harder to pay back the state aid earlier and thereby allow it to reduce its charges even further. This again undermines NEST’s public interest obligation and its mission to deliver a low-charge, high-governance pension proposition. Finally, the rest of the industry is reported in the pensions press as increasingly not having the capacity or, possibly, desire to cope with all the employers who are still to stage in. Having had, it is said, the advantage of the NEST restrictions in place while larger employers move in, the rest of the industry is perhaps less interested in the smaller end of the market.
I trust that the Minister will be able to explain why the Government have so far refused to lift the restrictions. However, whatever has been said in the past, I urge the Minister to accept this amendment; but if he cannot do so today, I hope that he will take it away and reconsider before Report the strong case for these restrictions to be lifted—not in a few years’ time but now, before auto- enrolment is complete. I beg to move.
Lord Bates
My Lords, I thank the noble Baroness, Lady Sherlock, for giving me the opportunity to update the Committee on all things NEST.
As noble Lords know, the National Employment Savings Trust was established to support automatic enrolment, providing access to a quality, low-cost scheme for a target market of low-to-moderate earners and smaller employers. We are now just over one year into automatic enrolment and NEST has around 800,000 members and 2,500 participating employers. Opt-out rates are low, with only 8% of individuals enrolled into NEST choosing not to save for their retirement. NEST is already very successfully doing what it is there for—supporting automatic enrolment.
However, we are approaching a peak in the staging profile. Between April and July this year, 27,000 medium-sized employers will start to enrol their workers, and from April 2015 more than 1 million small employers will do the same. We anticipate around 65% of these small and medium employers will use NEST. By the end of staging we expect NEST to have admitted around 750,000 employers and to be providing a pension saving vehicle for between 2 million and 4 million members.
This implementation challenge is what we need NEST to focus on. We need to ensure that the millions of people currently not saving sufficiently for retirement are provided with an opportunity to do so, and that NEST plays its part in starting to make pension saving the norm rather than the exception. For this reason, during the implementation of automatic enrolment, it is critical that NEST focuses on the key task of getting employers and workers on board without distraction. That is why we announced that we will be lifting the annual contribution limit and transfer restrictions currently placed on NEST by April 2017, when implementation for all existing employers is complete.
I am pleased to advise the Committee that, following an invitation from the European Commission, the Government submitted a formal notification earlier this month of their plans to lift these two constraints. The Commission will provide its response in due course. Once this has been received, the Government intend to consult on draft regulations and bring forward secondary legislation later this year to lift the constraints in 2017.
These regulations will provide certainty that beyond 2017 NEST will be on a similar footing to other providers and its members in the wider pensions market. It will enable NEST to support the successful implementation of automatic enrolment but will send a clear message to employers that these constraints will not have any bearing on them in the longer term, helping them to make an informed decision about automatic enrolment scheme choice for their members.
The Government are committed to ensuring that the introduction of automatic enrolment is a success. Effective implementation is important for building and maintaining consumer confidence in the reforms. Removing the annual contribution limit and transfer restrictions by April 2017 is the right approach.
The noble Baroness asked if the ban on transfers stopped employers from choosing NEST. NEST already has 800,000 members and 2,500 participating employers. Given that the overwhelming majority of employers that have staged so far are large employers, the evidence suggests that the constraints have not unduly deterred employers from choosing NEST.
This is an operational capacity issue for NEST. The restrictions on transfers in and out of NEST were designed to enable NEST to focus on its primary objective of supporting the introduction of automatic enrolment. Between April and July this year, an anticipated 10,000 to 15,000 medium-sized employers will start to use NEST to meet their automatic enrolment duty. It will not stop there, with more than 1 million small employers starting to enrol their workers from 2015.
I hope that those comments and updates, and the responses to the questions that the noble Baroness rightly raised, will enable the noble Lord to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I was not going to intervene in this debate but I must challenge something the Minister said. It is as though the ban on transfers and the contribution cap were originally put in place because otherwise there would be a distraction from the fundamental purpose of NEST. That was absolutely not the position. There was a lot of detailed discussion. My noble friend Lady Drake would have been involved in that.
When the legislation was introduced, the imperative was to try to get a consensus of employers, trade unions and the providers, to make them feel comfortable with auto-enrolment. That certainly means that the Government of the day conceded things to get that consensus, so that the thing could move forward. However, those restrictions were not put in place because NEST would be distracted from the very important task that it was given without them.
Baroness Hollis of Heigham
I support my noble friend, as that is precisely my recollection too. During a series of meetings with the organisations, the temporary cap came up because of the fear among pension providers that they would lose significant sums of money they had under management and the associated fees. The sole reason for doing it at the time was to get consensus to get it off the ground. Distraction was not a word that was ever uttered, and I must have been in about three years’ worth of those negotiations.
Lord Bates
These recollections will be there. I take it that it was in the mind of the Government that NEST had a huge task to focus on in actually attracting people who had never saved for their retirement before to start saving. That was a major responsibility, and issues were debated around that time relating to the effect that NEST’s creation would have on the market. Certain things were considered. It would be wrong to say that it was the only thing that was considered in terms of restrictions and the need to focus, but it was certainly one of the things which should have been focused on.
Baroness Hollis of Heigham
Does the Minister have any evidence that NEST—its chair, chief executive or board members—wanted this limit?
Lord Bates
I do not have any information to hand on that. However, we have got the point that I was perhaps overegging this by saying it was the only thing, and I need to recognise that other factors were perhaps considered when it came to putting this restriction in place. There was no sinister purpose, it was simply to say that there was a huge task to be undertaken and to ensure that NEST’s systems and operations could actually handle this. We do not want to put excessive burdens on NEST so that it fails when so many are dependent on its success.
Baroness Drake
Will the Minister also accept that volumes are critical to the success of NEST and to its charges, and that there is a fine balance between accommodating the concerns of other operators in the industry and not maintaining constraints so long that it undermines the efficiency of the NEST project as a whole?
Lord Bates
The noble Baroness makes a important point in relation to this and I would not dissent from it. NEST has a vital role to play and we want it to be a success. However, it is new, and a new system is coming online, so this ought to be done through learning from experience in a gradual and incremental way rather than as a big bang, of the sort which has had its problems in the past.
Baroness Sherlock
My Lords, I thank all my noble friends who have contributed to the debate and am grateful to the Minister for his graciousness in revising his position. It is quite possible that my noble friends are in a better position to decide what the Labour Government intended by these measures than he perhaps is, despite his knowledge and his current position, since they were involved in shaping it.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, I think confusion may have arisen between the discussions that the previous Labour Government had on this and the discussions that we had in Committee on the previous Pensions Bill, which introduced NEST, or at least some revisions to it. I shall check the Hansard record but I distinctly remember discussing this point with the noble Lord, Lord McKenzie, and making an astonishingly similar argument about the importance of making sure that NEST got its primary role right before we moved on to other aspects and transfers. I shall look forward to writing him a letter—I hope—pointing him to the exchange that we had three years ago.
Lord McKenzie of Luton
I look forward to the letter and its contents in due course. We were relaying the origins of NEST in the first place. These issues—the restrictions—were not intended by the then Government that introduced it to avoid NEST being distracted.
Baroness Sherlock
I thank my noble friend for that. First, I am disappointed that the Government decided to go ahead and stick with their current position. I would have liked the House to have the opportunity to discuss this further, as I do not think the Minister took on seriously the arguments made from this side. There was no reference at all to the question of scale. If the reports one hears from the industry are correct, it is possible that some of the big players may, this year or next, shut their doors to new members. We should do everything possible to enable NEST to build an appropriate level of scale and to enable it—far from distracting itself—to do precisely what it was set up for: to fulfil its public service obligation by delivering a high-governance, low-charge offer to those who can benefit from it.
The Minister made reference to employer choice but of course, by definition, the constraints actually reduce employer choice. Employers who want to go into it are unable to because the restrictions remain in place. I am disappointed that, despite the pressure from this side of the House, the Government have not revised their position. However, given that we are in Grand Committee and I can do nothing else, I beg leave to withdraw the amendment.
Lord Bates
“Part 4Transitional provision: schemes undergoing assessment or winding up on the commencement dateSchemes undergoing assessment on the commencement date15 (1) This paragraph applies in relation to an eligible scheme that is undergoing assessment on the commencement date.
Continue to use the old cap as the basis of assessment(2) For the purposes of sections 127(2)(a) and 128(2)(a) of the Pensions Act 2004, ignore any effect that this Schedule has on the compensation which would be payable if the Board assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 of that Act.Going forwards, pay pensions on the basis of the new cap
(3) For the purposes of section 138(2) of the Pensions Act 2004 take into account any effect that this Schedule has on the compensation which would be payable if the Board assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 of that Act on the assessment date.
Schemes that begin winding up before the commencement date16 (1) This paragraph applies in relation to an eligible scheme that is being wound up if the winding up began (or is treated as having begun) before the commencement date.
(2) For the purposes of section 73 and 73A of the Pensions Act 1995, ignore any effect that this Schedule has on the compensation which would be payable if the Board assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 of the Pensions Act 2004.Going forwards, pay pensions on the basis of the new cap during assessment
(3) If for any period the scheme is being wound up and is also undergoing assessment (“the overlap period”), sub-paragraph (4) applies.
(4) For the purposes of section 73A of the Pensions Act 1995 as it applies in relation to the overlap period, take into account any effect that this Schedule has on the compensation which would be payable if the Board assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 of the Pensions Act 2004.
Meaning of “undergoing assessment”17 For the purposes of this Part of this Schedule an eligible scheme is “undergoing assessment” if an assessment period has begun in relation to the scheme but has not yet ended.
Meaning of “eligible scheme”18 Section 126(4) of the Pensions Act 2004 (list of provisions in relation to which regulations may provide that a scheme remains an “eligible scheme”) is to be treated as including a reference to this Part of this Schedule.
“Part 5GeneralInterpretation19 In this Schedule “the commencement date” means the date on which it comes fully into force.
20 Other expressions used in this Schedule have the same meaning as in Part 2 of the Pensions Act 2004.
Further transitional provision may be made by order21 The inclusion of Parts 3 and 4 of this Schedule does not prevent transitional provision being made by order under section 51(7).”
Lord Bates
“(a) regulations under section 3, 17, 18(3) or (5), 19, 20, 29, 31 or 33,”
Lord Bates
My Lords, in moving Amendment 68, I will also speak to the other amendments in this group. Government Amendments 68 and 69 respond to recommendations of the Delegated Powers and Regulatory Reform Committee. They provide that regulations made under certain powers in the Bill would be subject to the affirmative resolution procedure. I am grateful to the Committee for its consideration of the powers in the Bill and subsequent report.
As I do not wish to detain noble Lords for too long, I thought it would be helpful to briefly outline the regulation-making powers affected by the government amendments. They would provide that the regulations made under the following clauses would be affirmative: Clause 17, which provides for regulations to prescribe the rate at which deferral increments will be calculated for the single-tier pension; Clause 18(3), which provides for regulations to modify the amount of state pension to be used when calculating the deferral increase due where a person has been resident overseas during their period of deferral; Clauses 19 and 31, which provide that regulations may be made to disqualify a prisoner from being paid a single-tier pension or bereavement support payment; Clause 20, which provides for regulations to exclude people who are not ordinarily resident in Great Britain or a specified territory from entitlement to the annual uprates of the single-tier pension; and Clause 33, which provides for regulations to prohibit the offering of incentives with the intention of inducing a member of a defined benefit pension scheme to agree to a transfer of their rights to another pension scheme or arrangement.
Turning now to the other amendments in this group, Amendment 68ZA would make regulations under Clause 17(5) affirmative. As I have already said, Amendment 68 provides for regulations under Clause 17 to be affirmative so this amendment is not necessary. Amendment 68B would make regulations under Clause 42 affirmative. Clause 42 provides for regulations to be made to enable the recovery of Pension Protection Fund levies for past periods. This is a technical area relating to ensuring compliance with EU law on state aid, following a decision by the European Commission and a subsequent ruling of the General Court in respect of the BT pension scheme. This found that partial exemption from the PPF levies due to the existence of a Crown guarantee constituted unlawful state aid. The Government understand that BT has appealed the ruling of the General Court to the European Court of Justice.
Regulations were made in 2010, following the Commission’s decision, to ensure payment of the levies going forward. Clause 42 simply provides for regulations to allow recovery of outstanding levies relating to the period from 2005-06 until 2010, when the regulations took effect. In agreement with the Commission, an escrow account was set up pending the final legal outcome and already holds the maximum amount of risk-based pension protection levy that could be due, plus applicable recovery interest. The Government are not aware of any other scheme in the same position as BT, so any regulations would have limited application.
Given the limited scope of this power and the opportunity to scrutinise the Government’s intentions during the passage of the Bill, we consider the negative procedure appropriate in this instance. Any regulations made under this power would simply ensure that the prompt payment to the PPF of the levies for past periods is possible should BT’s final legal challenge not succeed. This will ensure that the UK is in compliance with state aid law and so avoid possible fines. I therefore ask noble Lords not to press their amendments. I beg to move.
The Deputy Chairman of Committees (Baroness Harris of Richmond) (LD)
My Lords, if Amendment 68 is agreed to, I cannot call Amendment 68ZA by reason of pre-emption.
Lord Browne of Ladyton
My Lords, I speak to government Amendments 68 and 69, and to Amendment 68ZA, for what that is now worth, and Amendment 68ZB in the name of my noble friend Lady Sherlock and myself. As the Minister pointed out, Amendment 68ZA is now unnecessary in the light of government Amendment 68.
We welcome the government amendments in this group. As the Minister explained, they have been tabled in response to some of the recommendations made by the DPRRC. I am pleased to see that the Government have come to accept the DPRRC’s recommendation that Clause 17 powers relating to the effect of pensioners postponing or suspending state pensions should be affirmative; that was the purpose of our Amendment 68ZA.
Amendment 68ZB is purely a probing amendment, and has been remarkably successful in drawing from the Minister an extensive explanation of the regulation-making power under Clause 42, and why the Government felt that it was appropriate that it should proceed by the negative resolution procedure. I am extremely grateful to the Minister for that detailed explanation and, in the light of his full explanation, which is now on the record, I will not press that amendment.
Lord Bates
Lord Bates
“(3) The following come into force on the day on which this Act is passed—
(a) section 28;(b) section (Pension Protection Fund: compensation cap to apply separately to certain benefits);(c) this Part.”
“(6A) Section (Public service pension schemes: transitional arrangements) comes into force on such day or days as the Treasury may by order appoint.
(6B) An order under subsection (1) or (6A) may appoint different days for different purposes.”
House of Lords
Girls’ Education Challenge
(10 years, 10 months ago)
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Baroness Hodgson of Abinger
To ask Her Majesty’s Government what responses they have received to the Girls’ Education Challenge, to expand education opportunities to marginalised girls, from non-governmental organisations, charities and the private sector.
Baroness Northover (LD)
My Lords, in 2011, DfID established the Girls’ Education Challenge, the world’s largest global fund dedicated to girls’ education. This will reach up to 1 million of the world’s poorest girls to ensure that they receive a good quality education in order to transform their future. The initiative has been enthusiastically received by NGOs, charities and the private sector alike.
Baroness Hodgson of Abinger (Con)
My Lords, I congratulate Her Majesty’s Government on all that they are achieving with the Girls’ Education Challenge. I know that the Government recognise how critical it is to keep girls at school. Will the Minister tell us what progress has been made to retain girls in secondary schools so that they can go on to complete their education? How does the Girls’ Education Challenge particularly address the obstacles of keeping girls safe on their way to and from school, as sexual violence and forced child marriage both cause girls to fall out of education?
Baroness Northover
I congratulate my noble friend on her first Question in the House. She is absolutely right: educating girls is one of the best investments to reduce poverty. As many noble Lords know, educating beyond primary level, which is what she is flagging here, improves a girl’s life chances and delays early motherhood so that she is more likely to have healthy, better nourished children. In fact, ensuring that girls have between seven and 10 years’ education has a decisive influence over whether they can choose whom they marry. The Girls’ Education Challenge is concentrating particularly on supporting girls to progress through secondary school. My noble friend is absolutely right: ensuring that girls are safe on their way to school and at school is extremely important, but this is being addressed.
Baroness Kinnock of Holyhead (Lab)
My Lords, does the Minister share my concern that DfID’s business case for the Girls’ Education Challenge fund actually fails to list tackling violence against girls as one of its critical success criteria? Given that millions of girls are sexually assaulted at or on their way to school, does she agree that tackling gender-based violence and the need for social norm change should be priorities and should surely be included in the interventions currently taking place under the GEC fund?
Baroness Northover
The noble Baroness is right that combating violence against girls, as I have just addressed, is extremely important. It is no use trying to encourage girls to come to school if, on the way, they are attacked or will be attacked within the school. As the noble Baroness knows, dealing with this is a high priority right across DfID’s work, including in its education programmes.
Baroness Hussein-Ece (LD)
My Lords, my noble friend will be aware of the particular challenges in Afghanistan, which is part of this programme. After the withdrawal planned for later this year, what steps will be taken to ensure that education for girls is maintained at the level it is currently at and to ensure that it continues?
Baroness Northover
When troops are drawn back from Afghanistan, as my noble friend will know, DfID’s commitment will be maintained because we are well aware that a more peaceful future is likely to be secured through the development of Afghanistan. Engaging girls and women is absolutely vital to that, and education is all part of it.
Baroness Howarth of Breckland (CB)
My Lords, education for disabled young people is even more difficult in areas of extreme poverty. Is there any focus in this programme on disabled girls? I declare an interest as a trustee of Livability, which works in Asia with disabled young girls.
Baroness Northover
The noble Baroness may like to know that my honourable friend Lynne Featherstone has a particular focus on assisting those with disabilities in developing countries. The projects being taken forward at the moment are in Somalia, Ethiopia, Kenya, Uganda, Afghanistan and Sierra Leone. There is great determination to make sure that schooling is inclusive, whether it is for able-bodied or disabled children.
Baroness Armstrong of Hill Top (Lab)
My Lords, I am sure the Minister recognises that even at primary level it is frequently difficult to keep young girls in school, partly because poverty means that they are needed at home. What will the Government be doing to make sure that this issue is really addressed in the post-2015 agenda and that we do not assume that, because it has been part of a millennium development goal so far, everything is okay? The reality is that, unless the quality of the education is really good, the family loses faith in the worth of continuing to send a young girl to school.
Baroness Northover
The noble Baroness is right, and that is one of the lessons from the MDGs. Looking forward beyond 2015, it is not just a case of getting children into school but of making sure that they stay in school. DfID built into its programmes consideration of the results—that is, ensuring that children stay in education and that they learn while they are there, and that teachers and educational programmes are in place. One reason for there being a focus on secondary education is that children are required to have gone through primary education.
Baroness Jenkin of Kennington (Con)
My Lords, will my noble friend join me in welcoming to this House, for its First Reading today, the International Development (Gender Equality) Bill and in wishing it a safe and speedy passage?
Baroness Northover
My noble friend’s timing is extremely good because, as she says, the Bill has its First Reading here today, and I welcome its arrival. As she and noble Lords will know, DfID already puts girls and women front and centre, and this Bill, which I am sure will have all-party support, will ensure that that continues to happen. It will ensure, for example, that the 2006 international development Act is amended so that that commitment is duly reported to Parliament. I think that this Bill has more cross-party support than some.
Lord Collins of Highbury (Lab)
My Lords, I also congratulate Ministers, but how is DfID monitoring these research phases of the projects and when are they likely to be completed?
Baroness Northover
DfID constantly monitors its programmes, including these. As I mentioned before, it is looking for results to be secured, which, as I said, means making sure that there is high-quality education and that children attend all the way through so that they reach the next stage.
Baroness Nicholson of Winterbourne (LD)
My Lords, is the noble Baroness aware that in Afghanistan girls are not allowed to know their father—their basic heritage? Given that deliberate depth of ignorance in the female sex in Afghanistan, and since the UK will have no locus following our withdrawal, how does the noble Baroness feel that we can influence such a tragic and miserable situation through educational means?
Baroness Northover
My noble friend is right that there are many challenges in Afghanistan; but one of the encouraging things over the past few years has been the extension of the education of girls and women and their absolute determination that that is going to continue. That will help to underpin what DfID is doing in this area.
Gibraltar
(10 years, 10 months ago)
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Lord Hoyle
To ask Her Majesty’s Government what response they have received from the Government of Spain about incursions by Spanish vessels into Gibraltar’s territorial waters and delays at the frontier.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, we have raised our concerns about incursions with the Spanish Government. Their response is that the waters were not ceded to the UK in the Treaty of Utrecht. We remain confident that the waters are British, as sovereignty flows from land. We have also raised concerns about the additional border checks. Spain maintains that the checks are necessary to prevent smuggling, while HMG considers them to be disproportionate, politically motivated and therefore unlawful under EU law.
Lord Hoyle (Lab)
First, I must declare an interest as a freeman of Gibraltar, a title of which I am very proud. When did we last see the Spanish ambassador, what assurances did we get—from the Minister’s reply, it sounds as though they were negative—and, as we are members of the European Union, can we ask it for help and assistance in requesting Spain to stop the incursion into British territorial waters and to stop the unnecessary hold-ups at the frontier?
Baroness Warsi
In terms of contact, the Spanish ambassador was summoned back in August, the Minister for Europe spoke to the Spanish Minister for Europe, the Foreign Secretary spoke to the Spanish Foreign Minister and the Deputy Prime Minister spoke to the Spanish Deputy Prime Minister. In September, the Prime Minister spoke to the Spanish Prime Minister at the G20 summit. In November, the Spanish ambassador was resummoned to the FCO. The Prime Minister also spoke to President Barroso in the margins of the December European Council.
Lord Howe of Aberavon (Con)
My Lords, the Question put by the noble Lord, Lord Hoyle, is entirely the most important in this context. Is the Minister aware of the observations by the UK Overseas Territories Conservation Forum—a body with which I have not been very familiar—which has come to the conclusion that policy issues relating to Gibraltar are relevant, but not strongly relevant, to numerous UK Government ministries and departments, ranging from two sections of the Foreign Office to the Department for Environment, Food and Rural Affairs? The forum’s conclusion is that,
“it seems likely that it is Gibraltar’s misfortune to”,
run the risk of falling “between the slats”.
Baroness Warsi
My Lords, there are a number of issues that are of course competences for the Government of Gibraltar; it is important that the United Kingdom Government ensures that they become involved only in those issues that are competences as far as the United Kingdom Government are concerned. I was not entirely clear as to the specific question that my noble and learned friend asked, but it may well be that I can go back through Hansard and then write to him in detail. However, our strategy at this stage is very clear: to de-escalate the situation and to try to resolve these matters through diplomatic and political routes.
Lord Anderson of Swansea (Lab)
My Lords, the sea incursions are clearly very reckless—
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)
My Lords, as the noble Lord, Lord Anderson, is on his feet, perhaps we can hear briefly from him and then hear from the noble Lord, Lord Pearson.
Lord Anderson of Swansea
I will repeat: the sea incursions are clearly reckless and the border delays are highly damaging to the economy of Gibraltar. In October and November, the peak period, visitors to Gibraltar were down by 44%. Should not we urge the Spanish Government to respond to the recommendations of the European Commission—which we can do as we are now, and will remain, a member of the European Union—and should not the Spanish Government be told that these provocations will not help, because there is overwhelming support among all parties for listening to the Government and people of Gibraltar before there is any change in Gibraltar’s status?
Baroness Warsi
The noble Lord is right that the incursions have been steadily increasing: in 2011, there were about 23 incursions; in 2012, they went up to 228; and in 2013 they went up to 509. The good news is that there has been a welcome reduction since December of last year, so this may mean that there is a slight change in attitude. We have been asking for the ad hoc talks to resume; we have reiterated to the Spanish Government the Foreign Secretary’s proposal of ad hoc talks, which he made in April 2012, involving all the relevant parties.
Lord Pearson of Rannoch
My Lords, is it not Spain’s unfortunate domestic situation, brought about by her membership of the euro, which encourages her to look outwards and behave badly over Gibraltar? Is the result not yet another example of how useless the EU and our membership of it have become?
Baroness Warsi
My Lords, I think that these matters are much more complex than that.
Lord Chidgey (LD)
Is it not the case that there has been not only a 44% reduction in visitors to Gibraltar but a 26% reduction in the number of non-Gibraltarian cars visiting Gibraltar? With 10,000 Spanish workers’ jobs dependent on a growing economy in Gibraltar, is not the use of aggressive tactics at the border to make life more difficult actually damaging the Spanish economy, which is already in a parlous state?
Baroness Warsi
I completely agree with my noble friend. The border delays are impacting on the economies on both sides.
Lord Foulkes of Cumnock (Lab)
My Lords, when these meetings took place—the Minister gave a list of all of them—did our representatives point out to the representatives of the Government of Spain that Spain has two enclaves in Morocco, in Ceuta and Melilla? That therefore shows their hypocrisy on this kind of issue. What kind of replies do they get from the Government of Spain in relation to that?
Baroness Warsi
These discussions are always about trying to resolve matters, not trying to make them worse. It would not be appropriate for me to go into the details of those discussions but, needless to say, we are robust in making the views of the people of Gibraltar known to the Government of Spain.
Lord Bach (Lab)
My Lords, can the noble Baroness confirm that no Foreign and Commonwealth Office Minister has visited Gibraltar since the election of a new Government and Chief Minister in 2011? Is that not slightly surprising and remarkable, given the increased tension in Gibraltar since that time? What plans are there for a visit by an FCO Minister in the near future?
Baroness Warsi
I do not have details of visits in my brief, but I will certainly write to the noble Lord to say whether there have been any and if any are planned.
Housing: Underoccupancy Charge
(10 years, 10 months ago)
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Baroness Hollis of Heigham
To ask Her Majesty’s Government what plans they have to revise their underoccupancy charge so that, as in the private rented sector from 2008, it applies only to new tenants.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, as restrictions on entitlement to housing benefit based on accommodation size have been in place in the private rented sector since 1989, the local housing allowance introduced in April 2008 could be phased in. We have no plans to make similar arrangements for the removal of the spare room subsidy, which has already been applied, as it delivers a consistent approach to the treatment of housing benefit claimants across both the private and social rented sectors.
Baroness Hollis of Heigham (Lab)
My Lords, the sectors are very different. The private rented sector seeks to make profit out of people’s housing benefit. That does not apply to social housing. Social tenants hit by the bedroom tax, through no fault of their own, are now trapped. They are unable to move to smaller social housing as it does not exist. They are unable to move to private housing because private landlords are rejecting or evicting them. They are unable to get discretionary housing payments because most are refused. Debts are mounting and lives are being destroyed. Will the Government please at least apply the bedroom tax only to new tenants who can cope with the new rules, as in 2008, perhaps over a transitional period until we have enough new housing to meet housing need?
Lord Freud
My Lords, the number of transfers into one-bedroom social rented accommodation in the past year is running at 108,000. There are more people in the private rented sector, not fewer, and DHPs are—if anything—underspent. Our indications are that they will be underspent. I am pleased to say that in Norwich, with which I know the noble Baroness is very closely associated, the spend was a little higher: £166,000 in the six months, against the allocation of £288,000. I am puzzled that Norwich has not put in a bid for additional funding. I urge it to do so because it has until 3 February to do it.
Lord Dholakia (LD)
My Lords, will my noble friend indicate what discussions are taking place with local authorities to ensure that they and the public are aware of the discretionary housing payments?
Lord Freud
My Lords, we have a range of meetings and interactions with local authorities. In particular, at the moment we now have a £20 million discretionary fund on which they can bid. I am hoping to get as much of that money to them as possible.
Lord Jenkin of Roding (Con)
My Lords, the House is becoming very well aware that the party opposite does not approve of the removal of the spare bedroom subsidy. Could the Minister confirm that if the policy were reversed, it might cost as much as £1 billion over the next two years? Would the Opposition not be a little more convincing if they could give us some idea of how they would replace that?
Lord Freud
My Lords, this is a substantial saving, as my noble friend says. Our central estimate is that we will save £500 million a year on this programme, which makes it an important contributor to the Government’s deficit plan. If the Opposition maintain their policy, they need to look at how to find that money back. Not only that, they will run the risk of having to have a similar policy in the private rented sector.
Lord Best (CB)
My Lords, has the Minister had a chance to read the report from the Defra Select Committee, chaired by Anne McIntosh MP in the other place? It recommends that rural communities should be exempt from the bedroom tax because it is so difficult for people in rural areas to move down to smaller premises. Staying put means they can be paying £25 a week that they were not paying before, creating a great deal of hardship. Has the Minister had a chance to read that report and react to it?
Lord Freud
My Lords, I have looked very closely at the issue of rural communities. That was why, this year, we put in an extra £5 million a year to handle the subsidy arrangements, which buys out a substantial proportion of the cost of this policy.
The Lord Bishop of Ripon and Leeds
My Lords, what flexibility is there for housing authorities in the implementation of the underoccupancy charge in circumstances such as when a child dies and the house thereby becomes underoccupied?
Lord Freud
The basic principle here is that when a child dies or there is a death, there is a 12-month run-on so that tenants remain entitled to that room for that full year. However, the underpinning support for making sure that these cases of hardship are managed is clearly the discretionary housing fund, which is running at £180 million this year and will be at £165 million next year.
Baroness Sherlock (Lab)
My Lords, the Minister has failed to address the core point made by my noble friend Lady Hollis and the noble Lord, Lord Best: why are the Government penalising people already in social housing, who took out their contracts when the current system was in place and before the bedroom tax came in? Why could they not protect people, as this House asked them to do during the passage of the Welfare Reform Act? If all else fails, will he join us in our costed commitment to abolish the bedroom tax?
Lord Freud
My Lords, the costings of the Labour Party in this area are fairly extreme because it seems to have used the same money many times over. This is a savings measure introduced in the emergency Budget, which applies to the existing case load and gives 33 months’ notice. The comparison is with the LHA changes introduced at the same time, for which there was less notice: 21 to 33 months. We have put in as support the discretionary housing payment system, as opposed to transitional protection.
Taxation: Personal Thresholds
(10 years, 10 months ago)
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Baroness Eaton
To ask Her Majesty’s Government how many people on the lowest incomes have been lifted out of income tax by the rise in personal tax thresholds since 2010.
Lord Newby (LD)
My Lords, by 2013-14, 2.4 million low-income individuals have been taken out of income tax altogether as a result of this Government’s increases to the personal allowance since 2010. This number will increase to 2.7 million once the personal allowance reaches £10,000 in April 2014.
Baroness Eaton (Con)
I thank the Minister for that Answer. The significant changes to the personal allowance mean that someone working full time on the minimum wage has seen their income tax bill more than halved under this Government. Does he agree that this is the most effective way to support those on low and middle incomes because it enables them to keep more of the money they earn?
Lord Newby
My Lords, I do agree. The effect of what we have done is that by 2014-15 there will be a £705 cash benefit to low-income households, which even in real terms is well over £500. This has made a material difference to the income of people in those categories and is much to be welcomed.
Baroness Lister of Burtersett (Lab)
My Lords, the Resolution Foundation has shown that in future the 3 million taxpayers on universal credit will receive only about one-third of what other taxpayers receive from an increase in tax thresholds, and the 5 million low-paid workers below the tax threshold of course receive nothing. Does the Minister agree that this is a singularly ill targeted policy for helping those on the lowest incomes, and will he consider alternative, more progressive policies instead?
Lord Newby
No, I simply do not agree with the noble Baroness. The Government are considering a number of measures which will help people on low incomes, of which a potentially significant increase in the minimum wage is perhaps the most significant.
Lord Sharkey (LD)
My Lords, now that our economy is growing again, can the Minister say what more the Government can do to help those who need it most, in particular the long-term youth unemployed?
Lord Newby
My Lords, the most important thing the Government can do as the economy grows is to ensure that the macroeconomic framework is conducive to greater growth. There has been a 300,000 fall in the claimant count within the past year, so that is the single biggest thing that the Government can do to promote the continued reduction in unemployment and long-term unemployment. Youth unemployment has been falling now for five quarters. It is not falling fast enough but a raft of measures, including improved vocational education and an expansion of the apprenticeship scheme, have been designed specifically to tackle that long-standing issue.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend agree that one of the best ways of helping people on the minimum wage to improve their income would be to raise the threshold for national insurance and consider merging national insurance and income tax? That would help employers and those on the lowest pay.
Lord Newby
My Lords, the Government have looked at merging national insurance and income tax. It is one of those ideas that is perennially discussed but every time the Government look at it they back off because it is extremely difficult to achieve. The problem with what the noble Lord’s suggests is principally the cost. However, I would remind him that the Government are introducing in the National Insurance Contributions Bill a tax-free national insurance allowance of £2,000 which will benefit every firm but particularly small firms. The Federation of Small Businesses has said that the single biggest consequence of that change will be increased employment.
Lord Davies of Oldham (Lab)
My Lords, the noble Lord deserves an easy ride today given his other responsibilities as Liberal Chief Whip, so I will ask him a very straightforward question. Does he agree with Citizens Advice that, for many low-income families in work, any gains they make from this change to the personal allowance are swamped by the Government’s other changes to tax and benefit, and that working families are £1,600 each year worse off since this Government came to power?
Lord Newby
My Lords, we can improve the status and income of poorer families by having a robustly growing economy and an increase in average earnings and household earnings. This is now under way. Our job is to make sure that we continue it.
Lord McKenzie of Luton (Lab)
My Lords, the Minister will be aware that the Government have adopted the policy of raising the qualifying earnings threshold for auto-enrolment in line with the personal income tax threshold rather than changes in the value of earnings. This denies lower-paid workers, mainly women, the benefit of an employer pensions contribution and of course saves the Treasury the cost of tax relief. How many low-paid workers is it estimated will have lost out because of this approach during this Parliament?
Lord Newby
My Lords, I will have to write to the noble Lord with the answer to that question. However, I am sure he will agree that the raft of measures that the Government are taking on pension reform will have as one of their signal benefits that many women who have lost out on pensions in the past will gain from adequate pensions in the future.
Citizenship (Armed Forces) Bill
International Development (Gender Equality) Bill
Baroness Anelay of St Johns (Con)
My Lords, I beg to move that this Bill be now read a first time.
Lord Foulkes of Cumnock (Lab)
I wonder whether the Chief Whip can explain how this Bill is going to be considered in Committee and on Report when every Friday has been hijacked by the Government for the European Union (Referendum) Bill.
Baroness Anelay of St Johns
My Lords, the Companion says that First Readings are not a matter for debate. On the matter that the noble Lord raised, he referred to the hijacking of the Bill. The Government have not hijacked it. It is a Private Member’s Bill. The hijacking has been carried out by those, including the noble Lord, who have tabled an excessive number of amendments.
Anti-social Behaviour, Crime and Policing Bill
(10 years, 10 months ago)
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15:54 - Division on Amendment 92 - Ayes: 179 / Noes: 230 - Amendment 92 disagreed.
16:33 - Division on Amendment 92A - Ayes: 165 / Noes: 241 - Amendment 92A disagreed.
Lord Harris of Haringey)
“Crime and disorder reduction: development control
(1) The Secretary of State shall designate a body representative of chief officers of police for the purposes of this section.
(2) A body designated under this section shall publish guidelines that specify for a particular type of development the measures that should be included in that development to promote—
(a) crime and disorder reduction, and(b) the prevention of anti-social behaviour.(3) Guidelines under this section shall only be produced following consultation with organisations that represent—
(a) local authorities, and(b) persons engaged in the design and construction of developments requiring planning permission.(4) A planning authority may, in respect of any application that it receives for planning permission, specify as a condition for the approval of that planning permission that the development concerned must follow guidelines published under this section.
(5) A planning authority may only specify a condition under subsection (4) if it is satisfied that to do so would promote—
(a) crime and disorder reduction, or(b) the prevention of anti-social behaviour.”
Lord Harris of Haringey (Lab)
My Lords, this is the same amendment I moved at Committee stage. I will therefore rehearse the arguments for it only briefly but also, I hope, respond to the points that were made against it in Committee.
The purpose of the Government’s Bill that we are considering—I am sure the Minister will have told us this many times—is all about reducing crime and anti-social behaviour. Indeed, as we know, overall crime has declined in the past 15 years or so, and the trend in burglary is particularly marked. Yet, unmentioned in the Bill, the Government are seeking to undermine the progress that has been made. During the past two decades, new developments, including homes—both new build and refurbished—schools, play areas, hospitals and many others, have increasingly been informed by and have adopted the principles of Secured by Design.
What has been achieved under this initiative carried out under the auspices of the Association of Chief Police Officers? First, Secured by Design developments— that is, those which use products and materials that it has approved—are half as likely to be burgled, and show a reduction of 25% in criminal damage. Secondly, the additional cost of using Secured by Design standards in the average home has worked out at only £170 per dwelling. In one year alone, some 700,000 burglaries could be thwarted if appropriate security devices were installed, representing an annual saving of more than £1.97 billion. Indeed, the Association of British Insurers has estimated that the Secured by Design standards across the UK would bring more than £3.2 billion-worth of savings to the economy over 20 years. Householders who are not offered security recommendations after a burglary are 69% more likely to suffer a repeat incident than those who are offered advice.
This is a success story that is widely copied internationally. It is the subject of many academic studies testifying to its efficacy and it was the subject of much support from all corners of the House when I raised it in Committee. Why, then, if it ain’t broke, are the Government taking it to pieces anyway? The Department for Communities and Local Government issued a consultation document in the depths of last summer, seeking views on a recent review of building regulations and housing standards. The proposals that it put out to consultation were for a two-tiered standard for security—a basic minimum level that would be generally required and a so-called enhanced standard. The basic standard is demonstrably inadequate and has been shown to have little security benefit. Specifying stronger locks is not much of a deterrent if the door is so flimsy that it could be kicked in with one firm kick.
The requirement for the lock itself, on the basic standard recommended by the Government, is based on a 26 year-old standard. It does not even require the British Standards kitemark lock. Instead, it requires a lock with only 1,000 key variations, vulnerable to the most basic forms of attack. Even the British Standards kitemark standard, which protects against drilling and cutting—I believe that these are the technical terms involved—is having to be revised upwards to allow for two increasingly prevalent forms of attack: lock snapping and lock bumping. For those who are not familiar with these techniques, I am told that there is a handy YouTube video that tells the aspiring burglar how to do it. The Government are therefore recommending a basic standard of security that does not even meet the British Standard, even though the British Standard needs to be revised because of standard attacks that are made on locks in this country.
In Committee, the Minister made much of what a step forward it was that this proposed basic security standard would now be a core requirement. It is not much of useful core requirement if the standard is totally inadequate. In 1999 and 2006, research studies compared burglaries on estates using the security standard for locks contained in the Minister’s core standard with those using Secured by Design locks. The latter suffered 70% less crime. The Government’s core standard is woefully inadequate.
What about the so-called enhanced standard that would be available in certain circumstances? Even this would be lower than the existing Secured by Design standards. However, it could be required by a local authority only where what is described as a “compelling case” exists for this higher standard to be the norm. To make this compelling case, a local authority will have to demonstrate that the development will be subject to an elevated rate of burglary and that there will be a higher than normal impact of burglary on the tenants. It goes without saying that this test is almost impossible to pass in respect of a new development, and the test has to be applied site by site in a way that is likely to produce confusion and added uncertainty for developers, who will not know when they submit a proposal whether the authority will attempt to apply the enhanced standard.
Lord Blair of Boughton (CB)
I support the noble Lord, Lord Harris, on the amendment, and declare an interest as one of the patrons of Neighbourhood Watch and Home Watch. I think that most of your Lordships will be aware of Neighbourhood Watch. It is a group of citizens who are concerned enough to have asked their chief executive to contact me to raise this matter. In other words, Neighbourhood Watch thinks that this is a pretty bad idea. That is quite important.
As a police chief, I spent a lot of hours standing next to Ministers of both parties supporting Secured by Design, so it seems odd that the Home Office now does not want to support it. I put it to the Minister that this has got caught up in the understandable concern about how ACPO itself set up a company to deliver Secured by Design. The purpose of the noble Lord’s amendment is that it will be a successor body to ACPO that will be involved in this area of policy, so I do not think that that issue arises any longer.
I said in Committee that as I understand it, or, rather, as Neighbourhood Watch understands it, the way in which the decision between ordinary and enhanced protection will be developed by a local authority is by crime mapping. The amendment is about new developments. New developments on brown or green sites will, of course, have no history of crime. Therefore, even if they are in a very difficult area, they will not get enhanced protection.
If ever I have seen a case of spoiling a ship for a ha’porth of tar, this is it. The difference in cost is £170. If noble Lords compare that to the number of burglaries that will happen as a result of the Bill, the House may choose to support the noble Lord’s amendment.
Lord Condon (CB)
My Lords, I declare my registered interest in policing. I support the amendment moved by the noble Lord, Lord Harris of Haringey, broadly for the reasons that he set out, reinforced by my noble friend Lord Blair.
We have 30 years of academic underpinning for this theory. It started with notions of defensible space by Oscar Newman. That was reinforced 10 years later by Wilson and Kelling, with their broken windows theory of maintaining property at the highest standards to prevent crime, and so on.
We have 20 years’ pragmatic experience of how Secured by Design has dramatically helped to reduce crime and in particular burglary and made neighbourhoods safer. In the ongoing environment of economic challenge to policing, I think the Secured by Design mark and all that it stands for as well as all the experience we have built up remain very valuable. Sadly, I fear it would be a step backwards if we are not allowed to bring forward this amendment successfully in the terms that the noble Lord, Lord Harris of Haringey, has set out. I hope the Government will find that they are able to give some way on this, because the Secured by Design legacy is a very important one.
Baroness Howarth of Breckland (CB)
My Lords, I shall speak briefly in support of this amendment and make three points. First, during my life, I have worked in some of London’s most insecure areas and seen insecure estates in the rest of the country. In north Brent and Brixton, crime was rife and burglary, in particular, was at a very high level. On a huge estate—I will not name it, because it has improved so much and I do not want to give it another bad name—I saw design improvements which removed some of the interconnecting corridors and looked at locks, considering the way in which the whole design process was put together so that it reduced crime substantially. If we start with design and local authorities have the option of putting design in place, we will ensure from the beginning that we do not create new estates where problems begin and residents suffer great dismay.
My second point is the localism argument, which has already been made very successfully. The third point is that anything that prevents burglary anywhere must be supported. Like other speakers, I do not understand how it is possible to assess where burglary is going to take place before an estate has gone up. In any case, people should be protected equally. Anyone who knows people who have been victims of burglaries, particularly some of the most vulnerable, will know that we should do everything in our power to prevent the emotional trauma—it is almost like rape—that they feel when they go into their homes and find tremendous damage. It is not just that things have been stolen; it is the feeling of intrusion into their lives.
There are very good reasons to support this amendment. The technical reasons have been put clearly by the noble Lord who moved the amendment and other speakers, and I support it on those grounds.
Baroness Hamwee (LD)
My Lords, I have been enthusiastic about designing in security for as long as I have had any involvement in planning, not just for the protection of property, but for the protection of people.
Two things confuse me about the amendment. One is that the debate, both on the last occasion and to a large extent today, seems to be about products and materials. I have always thought that designing in security starts with things such as defensible space, mentioned by the noble Lord, Lord Condon, and lighting, sight lines and corridors, mentioned by the noble Baroness. I am puzzled why so much of the debate has been about the strength of locks and window locks which, if they are considered anywhere, seem to be more a matter of building control than development control of the planning area.
Like many other noble Lords, I am instinctively against topdown impositions of requirements which should come about bottom up, organically, by local authorities, police and others working in partnership. The noble Lord, Lord Harris, talked about localism and I of course support that, but I would like to ask the Minister some questions relating to this. Perhaps he can explain to the House, and flesh out a little, the extent to which the security issues which we have been discussing can be taken into account in the refusal or imposition of conditions on planning consent currently made by a planning authority. Are there material considerations? I am asking whether the planning authority can currently specify as a condition the sort of security issues that we are all concerned about.
What the amendment proposes is, in a sense, statutory guidelines that would be discretionary in their application. That takes me to the second area where I confess to being a bit puzzled. I am unclear what precludes a local authority drawing up guidelines without having legislation requiring the guidelines to be there and available for the local authority to adopt at its discretion. Do we actually need something in an Act of Parliament which says, “Let’s do some work on something very sensible, but we are not even going to require it to be implemented”?
Lord Rosser (Lab)
My Lords, my noble friend Lord Harris of Haringey raised this issue in Committee, when he said that his amendment was to try to get clarity as to why the Government were seeking to make this change and to do something which was potentially so retrograde. My noble friends Lord Harris of Haringey and Lady Smith of Basildon both gave specific figures on the savings and reductions in burglary offences that had accrued, or were expected to accrue, when appropriate security devices are installed where new developments have been informed by, or have adopted, the principles of Secured by Design. My noble friend Lord Harris repeated some of those statistics today.
In his response, the Minister said that a consultation under the auspices of the Department for Communities and Local Government had taken place, which concluded, if memory serves me right, on 27 October last year, and that the Government were considering their response. The consultation document from the DCLG suggested a two-tier standard of security: a basic minimum level that would be generally required and a so-called enhanced standard. However, as has already been said, even the “enhanced” standard would be lower than the existing Secured by Design standards, and even then it could be required by local authorities only where what is described as a “compelling” case exists for the higher standard to be the norm.
In Committee—perhaps it will be different today—the Minister was unable to say whether we would know the outcome of the consultation by the time the Bill reached Report or Third Reading. Neither was he able to say why local authorities would not even be able to go to the higher, so-called enhanced standard or give an assurance that local authorities would be able to choose their standard, and not be obliged to follow either the basic or “enhanced” standard. Nor was he able to say that the Government would provide an opportunity for Parliament to intervene before any changes in the standards are made.
As my noble friend Lord Harris has said, the Secured by Design initiative is about reducing the incidence of crime. The Government’s proposals, which have been the subject of consultation, appear to go in the opposite direction. We have heard no convincing arguments from the Minister as to why there should be a change and nothing from him to indicate that the Government’s proposals are in any way evidence-based, particularly when it comes to the impact on the level of burglaries. We will certainly support this amendment if it is put to a vote.
The Earl of Lytton (CB)
My Lords, before the noble Lord sits down, would he not agree with me that the amendment would confer a particular status on Secured by Design or whatever body or organisation is in its lieu and that to do so in this particular context would create a quite curious structure? It is almost like an organisation that is operating on a statutory basis.
Secondly, would the noble Lord not agree with me that the police, knowledgeable though they are, are not the sole providers of intelligence on designing out criminal activity? There are many other bodies and professions which might legitimately be considered for this—the British Standards Institution would be one.
Thirdly, would the noble Lord not agree with me that the fact that there may be shortcomings in the specification of security, equipment and methodologies is not necessarily a reason for conferring a monopoly of this sort on this particular body?
Lord Rosser
I simply ask the noble Earl if he would agree with me that what is being proposed appears to put in jeopardy an arrangement, guidelines, and standards—Secured by Design—that on the basis of the figures we have heard, have had a considerable positive impact on the level of burglaries. It appears to me that the noble Earl is prepared to go along with a change that appears to put in jeopardy real progress that has been made through this initiative in bringing down the level of burglaries. That is a question that he should be asking himself rather than the questions that he has chosen to ask me.
The Earl of Lytton
My Lords, I am a victim of burglary myself, so I understand what it is about. It seems to me odd that the noble Lord feels that the proposals in the amendment are the unique and sole means of achieving what is required. With all the product availability and consultancy that there is, I do not believe that it is necessarily the case. I am particularly not sure that it is right that such an organisation should be given a statutory status and elevated position. It is, after all, a commercial operation. Would the noble Lord not agree with that?
Lord Rosser
I am not sure that the noble Earl and I should be having too lengthy a dialogue on this matter. I am not sure whether I got a very clear answer from him as to whether he accepted that what the Government are proposing may well put in jeopardy a very successful initiative, which over a period of years has had a very positive impact on the level of burglaries.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
My Lords, with this amendment, the noble Lord, Lord Harris, has brought back the issue of the important role that design has to play in preventing crime and anti-social behaviour. It is important to stress that the Government recognise the importance of design in crime prevention. Nothing in the current proposals is designed to weaken that. I hope that the noble Baroness, Lady Howarth of Breckland, will accept that.
Before I respond in detail to the noble Lord’s amendment, I should like to emphasise that the housing standards review, which is the project under consultation at the moment and at the centre of the noble Lord’s concerns, was not initiated to cut standards irrespective of impact or to agree to a lowest common denominator approach. I cannot emphasise that enough. Its clear objective was to review a number of the voluntary standards—there are a number of voluntary standards—most frequently called up by local authorities. The aim was to identify opportunities for simplification, clarification and, if appropriate, those standards that are so important that they justify inclusion in a possible national standard or building regulations, which is a situation that may not always exist at present.
We are entirely supportive of the police continuing to advise local planning authorities on the layout of new development. We are all, I think, also in agreement that it is important to ensure that the police can continue to contribute their intelligence on crime to the development and implementation of standards. There will be no diminution of the role of the police in that respect. The new clause that the noble Lord proposes would place a mandatory duty on a body representing chief officers of police to publish guidelines on designing out crime that local planning authorities may then require builders to follow as a condition of granting planning permission.
As the noble Lord will be aware, the Government have spent considerable time tidying up the policing landscape to create a set of bodies with a clearly defined purpose. The Association of Chief Police Officers fulfilled an important role as the professional voice of the police service for many years, but as policing is changing, so too must ACPO. Many former functions of ACPO have transferred to the College of Policing and, in the light of the Association of Police and Crime Commissioners’ review of ACPO, there will be further consideration of the future delivery of some additional national functions. I am not persuaded that it would be right to pre-empt those considerations by designating a new or existing body, as the noble Lord is proposing today.
Many different expert groups have a role to play in the design, building and construction of the places where we live and work. Although I recognise that the noble Lord’s intention is to ensure that guidelines are drawn up in an open and transparent way in discussion with experts, I believe it should be left to the police and others to decide on the most appropriate groups to consult according to subject area. As a matter of good design, technical building standards and standards for the design and layout of the wider built environment are often considered together. That is indeed the approach taken by Secured by Design. However, in regulatory terms, the former are the domain of building regulations while the latter are matters for planning. Of course, the role of planning and building regulations needs to be understood in the broader context of crime overall, and on that matter I should like to offer some points of clarification.
When last we discussed these matters, the noble Lord set out a range of figures to exemplify the importance of security standards in new homes. While I have no wish to extend the debate unnecessarily as these figures have become a matter of public record, I think it is only right that we ensure that they are placed in context. The noble Lord, Lord Harris, suggested that if appropriate measures were installed some 700,000 burglaries could be prevented each year saving nearly £2 billion. According to the latest crime survey estimates, not only is this more than the total number of burglaries in England and Wales in 2012-13, it reflects burglaries in both old and new housing. The housing standards review sets out standards only for new development, not existing homes. Furthermore, the housing standards review does not propose stopping bodies such as Secured by Design bringing their own standards to the market for developers to use on a voluntary basis.
In relation to the question asked by my noble friend Lady Hamwee, local authorities are currently able to impose requirements on new development in relation to security, including adopting the principles of standards such as Secured by Design. Such standards may be delivered as a condition of planning permission, provided that the condition is necessary, relevant to planning and to the development to be permitted, enforceable, precise and reasonable in other respects—in other words, fitting the considerations that planning permission requires.
Lord Harris of Haringey
My Lords, I am grateful to the noble Lords, Lord Blair of Boughton and Lord Condon, and the noble Baroness, Lady Howarth, for their support for this amendment. It is also heartening to hear that neighbourhood watch schemes around the country believe that this approach is the right one. I am also aware that quite a number of senior local authority figures of all parties have expressed support for the principle.
I am also grateful to the noble Baroness, Lady Hamwee, for her support for the principles behind this. Quite properly, she said that Secured by Design guidelines include such issues as defensible space, lighting, sightlines and so on and she asked about the focus on locks. The reason for the focus on locks and such practical, physical measures in the course of this debate is that that is the area where the DCLG consultation, which includes the building regulations, is designed to weaken the autonomy of local authorities to decide what they think are the most appropriate standards in their areas. This is the reverse of being top-down; it is the Government who are imposing these changes top-down and preventing individual local authorities making their choices.
I have to say that I was puzzled by the Minister’s assurance that planning law does allow these things to be included in planning approvals. My understanding, as a local authority member for 26 years, is that planning approvals may include advice but only certain things can be included as mandatory as part of planning approvals. This would not be permitted under planning law to be one of those mandatory guidelines.
The noble Earl, Lord Lytton, seemed to think that this was some back-door way of giving statutory status to a bunch of senior police officers. I have to say that I do not think that is the purpose of it. The formulation,
“The Secretary of State shall designate a body representative of”,
is quite widely used in legislation to permit, without recognising a particular body, the use of a body which is broadly representative as being able to put forward a view. It is a standard approach. He also seemed concerned that the list of the organisations that should be consulted, given in proposed new subsection (3), was not sufficient. I would be happy to accept that it would be possible to amend it further to include that.
The Minister seems to be encouraging me to bring the amendment forward again in a slightly different form. If he is saying that the amendment would be acceptable if, instead of referring to,
“a body representative of chief officers of police”,
it said, “the College of Policing”, I am quite happy to bring this forward on another occasion. Is that what he is suggesting?
Lord Taylor of Holbeach
It is not what I am suggesting. I just pointed out to noble Lords what the noble Lord’s amendment said.
Lord Harris of Haringey
In that case, the points about the College of Policing were clearly rather academic.
The purpose of this amendment is to give local authorities the flexibility to set higher design standards, if that is what they want to do. The Minister has said that nothing the Government are doing is intended to weaken the security standards and that the housing standards review was not intended to bring about the lowest common denominator, but that is what it is doing, in practice. He talked about supporting the police in advising on a layout of a development, but this is not just about the layout of a development—it is about the security measures physically built into the development, which I do not believe can be part of a planning approval at present.
The Minister told us at length about the importance of tidying up the policing landscape, but that, frankly, is irrelevant. There will still be chief officers of police, unless there is some hidden agenda for the Government.
The Earl of Lytton
I apologise to the noble Lord for interrupting his flow. The Minister pointed out the difference in approach between planning and building regulations. We have heard, for instance, that certain things may not apply to social housing providers of one sort or another. Building regulations do not necessarily fall automatically within the purview of a local authority; they can be outsourced. Therefore, you can have any number of commercial companies who can provide the building control facility. The NHBC, for instance, is actually a certification process set up by—
Lord Ahmad of Wimbledon (Con)
I remind the noble Earl that we are at Report, and it is normal convention after the Minister just to hear from the mover of the amendment, unless there was a specific point of elucidation or clarification to be made. I feel that the noble Earl may be going into a more detailed exposition.
Lord Harris of Haringey
My Lords, I am sorry that the noble Earl has had the reprimand from the Front Bench. I was enjoying the to and fro, and would happily have answered him in detail. Of course other bodies are involved, but this enables the local authority, the elected local body, to have choice and impose when appropriate the standards that it thinks are appropriate at local level. That is what will be precluded by the Government’s approach.
The Minister talked about this proposal applying only to new developments. The point is, over time, all developments would be covered by these arrangements. That is how you get to the figures in terms of burglaries that one might be talking about. He said that it does not stop Secured by Design from bringing standards to the marketplace. But the problem is that he would not be able to require something if, at local level, local authorities thought that it was necessary. Planning law simply does not allow this to happen. I am afraid that somewhere, lost between the Department for Communities and Local Government and the Home Office, a very important principle has been destroyed—the principle that local councillors should be able to set a higher standard for security if they think that their local residents need it and crime prevention is necessary in that way.
For that reason, I wish to test the opinion of the House.
“Long-term police authorisation requiring independent approval
(1) The Regulation of Investigatory Powers Act 2000 is amended as follows.
(2) 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 are 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 defined by the Home Secretary in a motion passed by both Houses of Parliament before this section is enacted;
“long-term” must be defined by the Home Secretary in a motion passed by both Houses of Parliament before this section is enacted.””
Baroness Smith of Basildon (Lab)
My Lords, Amendment 92A, in the name of my noble friend Lord Rosser and myself, would make provision on “Long-term police authorisations requiring independent approval”—in other words, police authorisation for covert or undercover operations. The Minister knows of our concerns and interest in this issue, as we flagged it up at Second Reading and my noble friend Lord Rosser proposed a very similar amendment in Committee as well. I know that the Minister agrees with us that meaningful action has to be taken to address how covert police operations are authorised and managed, but it seems to us that the Bill provides the ideal opportunity to address the issue, given that it is the Government’s flagship Bill on crime and policing.
I welcome the Government’s recognition that there is an issue here. In his letter to my noble friend Lord Rosser on 21 December, the Minister outlines the powers that the Government are taking and have taken already, so the Government recognise that changes have to be made. I welcome those changes and do not decry them, but they do not go far enough in addressing the seriousness of the problem to provide the degree of oversight and monitoring that we feel is necessary. I do not think that it is enough to give guarantees or assurances if people are to have confidence that such operations are properly authorised and monitored when they are ongoing. I shall come on to explain the differences that we have.
I reiterate the point made by my noble friend Lord Rosser in Committee that we support undercover policing and recognise that it is essential in dealing with organised crime and terrorism. We recognise the dedication and bravery of those officers who undertake this work, but we can only repeat that such operations must be subject to the highest of ethical and operational standards. That is essential both for their operational effectiveness and for public confidence, which is why we place such store on getting accountability absolutely right in this area.
My noble friend gave two examples in Committee that drive home how those changes must be made and why action must be taken to address the problem that any suspected criminality must be dealt with proportionately and not in excess of what is required. I do not want to repeat what was said in Committee, but I shall outline those two cases briefly.
The first case is that of Mark Kennedy, known in his undercover name as Mark “Flash” Stone, who as a police officer infiltrated left-wing protest groups over a period of seven years. These groups were involved in lawful demonstrations—there is no evidence that they were involved in crime. In that role, he had relationships with women in the protest movement and travelled to eco protests across Europe.
When HMIC reviewed Mark Kennedy’s activities and those of other undercover officers, it stated that his actions led to the collapse of a trial of environmental protestors. The report said that he defied management instructions, but it was never clear what those management instructions were. Indeed, he took the view that his superiors knew what his activities were, so there seems to be a lack of clarification on whether his actions were authorised or whether he just thought that somebody knew about them so it was okay to behave in the way that he did. The HMIC report also suggested that an independent body should be required to authorise such undercover operations, as he had been inadequately supervised and the oversight had to be strengthened.
In such cases, we question not only the ethics of Mr Kennedy and others, but the proportionality of their actions and their cost. I do not know whether there has ever been an assessment of the costs involved in such cases, but clearly neither the costs nor the methods—the ethics—could be justified.
The other case referred to by my noble friend Lord Rosser involved the noble Baroness, Lady Lawrence of Clarendon, who is now a Member of your Lordships’ House. After her son was murdered in a racist attack, Peter Francis, who was then an undercover police officer and a member of the highly controversial special demonstrations squad, was part of an operation—Peter Francis said—to spy on and attempt to smear the Lawrence family. Those actions in all cases are totally unacceptable.
I also refer noble Lords to a book by Rob Evans and Paul Lewis, The True Story of Britain’s Secret Police, which illustrates the extent of the problems. There have been a number of cases in which women were conned by these men—seven police officers, acting under cover—into believing that they were having a genuine relationship. They had sexual relationships that in a number of cases led to children being born. It appears that those men, who had been acting under cover, shed their responsibility to their children as easily and as quickly as they shed their undercover identities.
I know that the Government have brought forward secondary legislation to deal with the issue through an order, which Damian Green in the other place said would enhance oversight. However, I have two concerns. First, I do not think that secondary legislation gives this House the opportunity fully to examine the proposals before it. It would have been helpful to have included any such proposals in the Bill, as we could then have had the opportunity to fully discuss whether the measures were appropriate. I think that the Government’s proposals go a long way towards dealing with the problem, so I welcome them, but they do not go far enough. We are not convinced that the Surveillance Commissioners are really the appropriate body to provide independent oversight.
Lord Condon (CB)
My Lords, I refer your Lordships to my registered interest in policing. I should also add that I was Metropolitan Police Commissioner for seven years and that embraced the time of the allegations the noble Baroness, Lady Smith, has referred to in relation to the noble Baroness, Lady Lawrence.
I have enormous sympathy for the reasons why the noble Baroness, Lady Smith, has moved this amendment. Clearly, change is needed and the balance has to be redrawn between the need for undercover policing to provide protection for the wider community and the avoidance of the abuses that have clearly taken place in the past.
As the noble Baroness, Lady Smith, has raised the issue of the noble Baroness, Lady Lawrence, perhaps I can place on record—fully aware of the consequences if I were to mislead your Lordships’ House—that at no time during my time as commissioner did I approve, authorise, acquiesce or have any knowledge of, or give any encouragement to, any of the actions suggested by Peter Francis in his book. Investigations are currently under way to try to establish the truth of all those matters. If I, as commissioner for seven years, had no knowledge of the sort of allegations that have been made by Peter Francis in his book—assuming that he has made those allegations on, hopefully, the basis of some element of truth—that shows that there is a need for reform and for much closer scrutiny of these operations. I am now in my 15th year of retirement so I am long past knowing what the current environment is like, but I still sense an enormous need and momentum for change, which is shared by the Government and the Opposition.
So, although I have enormous sympathy for the amendment moved by the noble Baroness, Lady Smith, I look to the Minister to say how the Government are responding to these issues. I sense that the Government are well and truly on this case, so I will listen to the Minister’s response before I make a judgment about whether or not I am able to support the amendment.
Lord Hope of Craighead (CB)
My Lords, I wish to raise a point on the wording of the amendment. Three definitions are set out in subsection (5), one of which is “relevant judicial authority”. I have no complaint about the definition itself, but I cannot find anywhere in the proposed new clause where that phrase is used and is in need of definition. I may be wrong. Obviously, this comes after a section where independent approval may be needed, but I would like to be persuaded that the definition in the subsection is relevant to the clause we are being invited to approve.
Baroness Jones of Moulsecoomb (GP)
My Lords, although I have not been involved in these cases, I have been involved in the examination of these kinds of cases when I was a member of a police authority in London for 12 years and I still sit on the police committee at City Hall.
Something like the amendment is absolutely necessary because, putting aside the civil rights, human rights and civil liberties of the women and the people involved in the environmental movement whose lives have been trespassed upon for no information and without subsequent charges against them—these were innocent women who were trespassed against—you have to think about the civil liberties and human rights of the police officers involved. Again and again, officers were embedded within environmental groups for long periods of time. It was not like getting into a drug cartel or organised crime of some kind; this was a quite different kind of policing. The police officers have suffered quite deeply afterwards. It is very easy when you are embedded for three months or six months to get to like the people you are working with and to understand what their motivation is, and many officers have come out of this quite damaged and unable to work any further.
There is also an argument about the cost of the court cases in which some of these police officers were involved—they went to court and were charged as protestors and were either convicted or not convicted—because those cases are now being overturned. Two cases will be coming up in the next two weeks in London on this issue. It is costing us a fortune and justice is not being done. We need an independent way of judging and assessing whether or not this kind of action is necessary. It is time that the Metropolitan Police understood how important this is and I hope that the Government will approve the amendment.
Baroness Hamwee (LD)
My Lords, we had the opportunity to consider the Regulation of Investigatory Powers (Covert Human Intelligence Sources: Relevant Sources) Order 2013, which the Minister sent round after the previous debate and is now in force, as I understand it. Any of us could have prayed against it.
We need to understand as a House that we are not at the point in the development of this—“work” seems to be the wrong term—matter that one might think from looking at the amendment. That is not to say that I do not have sympathy with the amendment. One of the times when I was most shocked at work since becoming a Member of your Lordships’ House was on hearing recordings of the testimonies of women, and their families, who have been affected by activities under CHISRS. I remember the family of one woman saying, “We treated this man as our prospective son-in-law; we welcomed him into our family”. It was very moving.
That causes me to say that what matters more than anything—although I do not know how you deal with it other than by putting formal technical oversight in place—is a change in practice and culture. The police need to take that matter on board but you cannot write that into legislation in that way.
The 12-month period for approval before review is required seems on the long side and I look forward to the Minister explaining it to the House. As I say, we should have questioned some time ago—I am as much at fault as anyone—why 12 months was chosen, rather than six months or even three months.
Lord Taylor of Holbeach
My Lords, this has been a worthwhile debate, although we have discussed this matter before. As the noble Lords know, the statutory instrument has come into effect, so we are in a different regulatory regime from the one we were in when we discussed this in Committee. In no way do the Government endorse activities to which the attention of the House has been drawn in the speeches of noble Lords. I am grateful to the noble Baroness for tabling the amendment. I agree that covert techniques are sometimes necessary to protect the public from harm or to prevent or detect crime. I think all noble Lords will accept that. These techniques need, however, to be closely supervised and constantly reassessed to ensure that they are justified.
Undercover deployments are authorised under the Regulation of Investigatory Powers Act 2000. RIPA provides a strong set of safeguards. As I said in Committee, we have recently brought forward secondary legislation, further enhancing this oversight of undercover deployments by law enforcement agencies. The Regulation of Investigatory Powers (Covert Human Intelligence Sources: Relevant Sources) Order 2013 came into effect on 1 January 2014.
I was a little concerned that, in our debate last time, the noble Lord, Lord Rosser, might not have been aware of this order, so, following the debate in Committee, I wrote on 21 December 2013 to draw it to his attention and to that of the noble Baroness. As a negative instrument, there was the normal opportunity for the Opposition or any noble Lord to pray against the order, perhaps on the ground that its provisions fell short of what was needed. Unfortunately, however, it is a matter of record that no such step was taken. The order, which has now been in force for some three weeks, provides a number of additional safeguards to ensure that the technique is used only when it is just to do so. I will give some examples of what I mean.
First, law enforcement agencies must notify the Office of Surveillance Commissioners, all retired senior judges, of all undercover deployment by law enforcement officers. Secondly, an authorisation can be renewed beyond 12 months only with the prior approval of a surveillance commissioner, who, I remind your Lordships, is someone who has held senior judicial office. It may be that the original deployment is not authorised for 12 months. Thereafter, if it is to be renewed at 12 months, a surveillance commissioner will be required to pre-approve all renewals for long-term deployments every 12 months.
In addition, we have increased the rank of authorising officer. Deployments of undercover law enforcement officers now need to be authorised at assistant chief constable level or equivalent. Any deployments lasting longer than 12 months will be authorised by a chief constable or equivalent as well as by a surveillance commissioner. The seniority of those who are now required to authorise these deployments is an indication of how seriously the Government take proper oversight of undercover law enforcement activity. I hope I can reassure my noble friend Lady Hamwee that all authorisations are notified to the commissioners at the outset. They monitor the cases during their normal inspections. Each case is approved specifically after that 12-month interval. It reflects the existing legislation and implements the HMIC recommendation to increase oversight of long-term deployments. As I have said, deployments can be for shorter terms, but they still have to be notified to surveillance commissioners.
We believe that the new arrangements will create a regime that contains considerable safeguards while not hampering operational effectiveness. We should allow them to bed down and be given a chance to prove themselves. We will of course keep them under review. Given these recent changes, I do not believe that this amendment, well intentioned as it is, is required. I therefore invite the noble Baroness to withdraw it.
Baroness Smith of Basildon
Perhaps I should explain to the noble Baroness and the Minister why we did not pray against the order when it was laid. The order made changes that improved the position and it would have been rather churlish for us to say at that time, “We’re going to pray against this because it doesn’t go far enough”. The order has improved the position, but I have a serious issue with the 12-month period. I know that the Minister said that we should give the new regulations, which came into force on 1 January, the opportunity to bed down, but why not get it right first time? This legislation provides us with the opportunity to do so. I agree entirely with the noble Lord, Lord Condon, that it is about getting the balance right. A 12-month undercover operation is a long undercover operation. If there is no independent monitoring and approval before that 12-month period comes to end, a lot can happen. This amendment is about the integrity of the operation concerned and ensuring that nothing is going wrong. As the noble Baroness, Lady Jones, said, if the integrity of an operation is compromised, it can mean that a court case fails. We have seen that in other cases involving long-term covert operations. That is a very serious matter. Further, those who have been undercover have thought that activities were authorised when they had not been explicitly authorised. It goes back to authorisation by commission or omission—it seems to have been authorisation by omission in the cases of some undercover operators.
I take the point that the order represents an improvement, but the fact that 12 months can elapse before any further oversight or independent monitoring take place represents a serious error. For that reason, I hope that the Minister will understand why I feel the need to test the will of the House on this issue.
Lord Blair of Boughton
Lord Blair of Boughton
My Lords, I rise to speak to Amendment 92B but I will also address a different and very important matter which has arisen in recent correspondence with the Minister about this amendment. I have given notice to the Minister that I believe the matter may need to be discussed on Third Reading, which is why I am raising it now.
I turn first to the amendment. Noble Lords may recall that a longer amendment to this clause, then Clause 126, in the names of the noble Lord, Lord Condon, the noble Baroness, Lady Manningham-Buller, and myself, was discussed on 4 December last year. The noble Lord, Lord Condon, and I now return to the same issue in a much more restricted but still very significant way. The issue needs a certain amount of explanation and, as it is concerned with national security, it is not trivial. It is concerned to ensure that no one can be appointed to the post of Commissioner of Police for the Metropolis without being subjected to developed or equivalent security vetting. Its context is the whole of Clause 128, which, like its predecessor, deals with a complete innovation for British policing—the appointment of suitably qualified police chiefs from abroad to senior posts in policing in England and Wales.
I repeat what I said on the last occasion, that neither the noble Lord, Lord Condon, who will speak later, nor I have any objections in principle to the appointment of senior officers from abroad, notably those from Commonwealth countries, to UK police positions. To object would be hypocritical in that senior UK officers have reasonably often and recently commanded police forces in Commonwealth countries including Australia. However, we are concerned about the Met Commissioner.
Our original amendment arose because, however well meant, the measure appeared to raise a serious concern when it was applied to three very senior Metropolitan Police posts, namely those of the commissioner, the deputy commissioner and the assistant commissioner specialist operations, who are all deeply embedded in the national security structure of the United Kingdom. We therefore sought an explanation from the Minister of how this could occur when these postholders need to be security cleared to a very high level, known as developed vetting, a process difficult to achieve when it involves a foreign national.
I think that the Minister will recall that an interesting and at times somewhat unusual debate followed. The principal development was that in winding up he produced one surprise and one promise. The surprise was that the then Clause 126 referred only to the commissioner and to provincial chief constables but not to other metropolitan ranks, however senior. The promise was about vetting, the subject of today’s amendment. The Minister said:
“I reassure noble Lords that, whatever nationality restrictions are imposed, no appointment would be made by this or any future Home Secretary that would put national security at risk. We would always expect the successful candidate to undergo the appropriate vetting procedures. If an applicant cannot be vetted, they will not be appointed”.—[Official Report, 4/12/14; col. 328.]
The Minister agreed to write to me so I did not press the amendment but reserved the right to return to the matter at Report; and he did indeed write to me on 23 December, copying the letter to a number of other interested Members of your Lordships’ House. The letter absolutely confirmed what he had said in the debate about vetting in these terms:
“Turning to the substance of your concerns, as I indicated in the debate, there is no legal requirement for the Commissioner of the MPS or the chief constables of police forces outside London to be British citizens. However, we would always expect successful candidates to undergo the appropriate vetting procedures. There is no provision in legislation to say when this should be subject to developed vetting. A decision is made … on the type of information an individual will have access to. We would expect the Commissioner and chief constables to undergo developed vetting”.
As that is fairly clear, and given that the Minister indicated both on the Floor of the House and in correspondence that a successful conclusion to the developed vetting process would be required for such an appointment to the post of commissioner, I might be forgiven for hoping that the Minister would accept this amendment today. But no—he wrote to me last Friday to say that he would not. He will speak for himself, but he seems to have given three reasons. First, it would be inappropriate to have developed vetting on the face of the Bill in case the scheme should be renamed or its criteria changed. Secondly, he does not think it appropriate to single out the commissioner’s post alone for such a measure. Thirdly, he does not believe that primary legislation is where a level of vetting should be set out. I hope he will think that that is a fair summary of his position.
I believe that the Minister’s first objection is already covered by the amendment’s being drawn slightly wider to refer to “developed (or equivalent) … vetting”, to take into account a future change in nomenclature or, as I will come to shortly, a reliance on foreign vetting by certain friendly powers.
On the Minister’s second and third objections, this clause as a whole represents an entirely new departure for UK policing. In itself that is fine, but within this legislation sits one position of a different order to the rest, and the noble Lord, Lord Condon, and I believe that that needs to be recognised in the Bill. The commissioner’s responsibilities are of a completely different category to those of other chief constables. He or she sits close to the very heart of the UK’s national security apparatus. Appointed by Her Majesty the Queen, he or she is in overall charge of all national counterterrorism police activity. He or she sits in the Cabinet Office briefing room during national emergencies and has direct personal responsibility for the protection of the Queen, the Royal Family, the Prime Minister, other senior Ministers and some ambassadors to the UK.
When I first raised this matter with the Minister he remarked that no one had previously exposed concern about security issues—which, put another way round, means that the Home Office had not considered the difference between the duties of this postholder and those of other chief constables. I believe that not only consideration but action is necessary. If legislation allowing this post to be held by a foreign national is to be passed then surely the law should require—and it should be firmly in the Bill—that such an appointment should be subject to the very vetting which the Minister says it will.
I turn more briefly to my second point, which refers to something that may have to be addressed at Third Reading. The noble Lord’s same letter of 23 December contained another surprise, albeit one to which he had referred briefly but had not been able to confirm during the previous debate. The letter stated that there is,
“currently no requirement for candidates for appointment as Deputy or Assistant Commissioner to have served as a constable in the UK, so the changes made by clause 126 are not relevant so far as those posts are concerned”.
That was very surprising indeed to the four Members of your Lordships’ House who have been Metropolitan Police Commissioners and who were present at the debate on 4 December, and it is very surprising now. The deputy commissioner, also appointed by Her Majesty the Queen, is—as the phrase has it—a heartbeat away from being the commissioner, and has the same powers and responsibilities in the absence of the commissioner. But it gets worse. I have spoken to the current commissioner, Sir Bernard Hogan-Howe, and it appears that this situation now pertains to all of the 35 or 40 chief officers of the Metropolitan Police, of commander and deputy assistant commissioner rank as well as those more senior. None of them has to have any previous police experience. Both Sir Bernard and the president of the Association of Chief Police Officers, Sir Hugh Orde, regard this situation as totally untenable, as do I.
Senior police positions are not that different from any other significant professional position. If you, like me, would prefer the pilot of your aircraft or the brain surgeon to whom you have been referred to have some relevant experience, then perhaps you will understand why I have written to the Minister to ask him to do three things—to arrange for his officials to discover whether this position exists in law, not only in the Metropolitan Police but also to assistant and deputy chief constables outside London; to consult the Home Secretary and the Mayor of London; and to bring to the House a suitable new clause to rectify this anomaly at Third Reading. I have taken the liberty of suggesting to him a form of wording for a short new clause to address this.
It is not clear when the requirement to have served as a police officer beforehand ceased to be necessary for an appointment as a chief officer, but it has never been so important before. The replacement of police authorities by police and crime commissioners outside London and by the mayor’s office for policing in the capital has placed enormous patronage in the hands of individual politicians and the commanding officer, whom they appoint and can dismiss. I hope that the Minister will agree to the proposal to rectify this at Third Reading when he replies.
Returning now to the amendment, I should point out that this whole proposal is widely regarded within the police service as having been concerned with the desire in some quarters to appoint the widely respected former commissioner of the New York Police Department, Bill Bratton, as the Met Commissioner. Wherever that desire may have come from, it has been frustrated as he has just been reappointed to the NYPD and is no longer available. However, Bill Bratton, as I will make clear, is still relevant.
I said earlier that I would mention foreign vetting. In closing, perhaps I may offer one further piece of advice to the Minister. In his letter to me of 23 December he suggested that foreign vetting might be an alternative to developed vetting. He said:
“There is no bar to foreign citizens undergoing developed vetting, nor is there a requirement to have a British parent, but a 10 year residency is usually required.
The UK Government has a reciprocal agreement with Governments of some EU and NATO countries whereby we would recognise their vetting as being an equivalent to ours. Decisions will need to be made on a case by case basis”.
I am not so sure. If “case by case” includes Bill Bratton, I would advise the Minister not to rely on his example. After he was forced to resign from the NYPD in the 1990s, he was appointed chief of the Los Angeles police department. Shortly after his arrival, Bill Bratton appointed a Mr John Miller as his chief officer in charge of counterterrorism. To say the least, this was an unusual appointment—although only the kind of one that, unless we change things right across the command ranks of the Met, might happen here—in that John Miller’s previous role had been as head of press and public relations for the NYPD. Before that he had been a senior journalist with ABC News and was very well known for being the last American journalist to interview Osama bin Laden in 1998. In his new post in Los Angeles, it was necessary for Mr Miller to be vetted by the US authorities. When I visited John in his office in Los Angeles there was a prominent photograph on his wall of him with Osama bin Laden, taken during that interview. John told me that the photograph had been there when he had been visited by the FBI vetting officers to consider his suitability for such an important counterterrorism post. They had not asked about the photograph. His appointment was, however, approved. The moral of this story is that it may not be wise to rely on foreign vetting as an alternative to this amendment.
I hope the Minister will recognise that the amendment is designed to enshrine in law exactly what he has said on the Floor of this House and in correspondence. I hope he sees how important the issue is and that he will now accept the amendment. I beg to move.
Lord Marlesford (Con)
The noble Lord made an important point about it never having been the practice that somebody could be commissioner or hold a similar post without having been a police constable. Presumably when Lord Trenchard, formerly Marshal of the Royal Air Force, was appointed Commissioner of the Metropolitan Police, he had not had previous police experience.
Lord Blair of Boughton
The noble Lord makes a good point. It was only in the 1970s that the first commissioner who had been a police officer was appointed. Perhaps I should have said that in the past 45 years there has not been one. I certainly accept that the great and the good took those positions in earlier periods.
Lord Condon
My Lords, I added my name to the amendment broadly for the reasons that my noble friend Lord Blair set out. This issue is beginning to feel unnecessarily adversarial, and I do not think it needs to be. I hope that we will move rapidly to agreement. I certainly have no wish to block the appointment of an appropriate man or woman with experience in a foreign police force to the post of commissioner.
My point throughout has been only to draw to attention to the fact that, having been a chief constable and the commissioner, I know that in relation to national security and to the protection of Her Majesty, the line of succession and senior politicians, the posts are of a totally different magnitude. The commissioner holds a unique position at the centre of national security issues and in the protection of the monarch. My desire throughout has been simply to draw attention to that distinction and to ensure that if an overseas officer or someone with overseas police experience is appointed to the commissioner’s post in future, we will have taken due cognisance of the difference, the importance and the significance of the security roles et cetera.
I am sure that the Minister and his ministerial colleagues are well aware of the issue now and are seeking to find a form of words that will bring this matter to a satisfactory conclusion. I hope that it will not be necessary to go to a Division on this issue. If it were, I would probably feel the need to support my noble friend Lord Blair, but I hope that the Minister will say enough to reassure me.
Lord Hope of Craighead (CB)
My Lords, the Minister may recall that on a previous occasion, when this matter came up in relation to Clause 126, I spoke very briefly in support of the amendment that was then being proposed. The reason I spoke was because two Members of this House, who are not present this evening, made speeches which—to put it as gently as I can—cast doubt on the confidence one should have in the police. I got to my feet not because I agreed with them but because it seemed to me that there was an underlying issue that ought to be mentioned. It is public confidence. It may well be that, because of the very high profile of the posts we are talking about, particularly the post of commissioner, public confidence will be of the greatest importance. For that reason, which I hope the Minister will recall was discussed last time, I will make the same point again, this time in relation to this much more focused and, I hope, more helpful amendment.
Baroness Smith of Basildon
My Lords, I am sure that the Minister did not think I would pass up this opportunity. This is an interesting amendment. I was quite surprised to hear the noble Lord, Lord Blair, say that the Minister was going to resist the amendment, because when I read it, especially after our previous debate, I assumed, possibly wrongly, that it reflected what the Minister had said in previous debates and therefore set out the position for clarity in the Bill. Clearly, nobody in your Lordships’ House has criticised in any way the possibility of a police officer from overseas, suitably qualified, becoming a chief constable or the Commissioner of the Metropolitan Police. That is not at issue.
What is at issue is that they should be subject to the same conditions and rules as any member of the UK police force. I am surprised if the Minister does not think that there should be an explanation or guarantee of some form of appropriate security vetting, in the same place as the Bill says that a police officer from an approved overseas police force can be appointed. The change is being made in the Bill; I would have thought, therefore, that any qualification to that change should also be made in the Bill.
I entirely agree with the comments of the noble Lord, Lord Condon, and I hope that the Minister will be able to give some reassurance on this, and will take it away and come back at Third Reading with something that is appropriate and addresses the concerns that have been expressed. I do not think that it is unreasonable. The noble and learned Lord, Lord Hope, made a very strong point about public confidence. It serves public confidence well to understand that if a police officer comes from overseas, particularly in the role of commissioner, which is a counterterrorism role unlike any other chief constable role in the entire country, they will be subject to the same kind and level of vetting as any police officer taking the job from within the UK.
I hope that there has been some misunderstanding or error in the report that the Minister intends to resist the amendment. He has his piece of paper there; I hope it does not say that. I hope he will want to think again and come back. I think that he will have got a sense from your Lordships’ House that there is widespread support for what seems to be a very moderate clarification, and I hope that he can accept it.
Lord Taylor of Holbeach
My Lords, this has been a useful debate. I see this as an area of principle. I somewhat regret that the noble Lord, Lord Blair, addressed the issue ad hominem; I think that that was a little unnecessary. The Government take this matter seriously—and take his amendment seriously, too. As I said when responding to similar concerns in Committee, I agree that it is essential that those who are appointed as police officers undergo vetting appropriate to the role they are undertaking. I reinforce that view today. I am grateful to the noble Lord for reflecting on that debate and, in constructing his new amendment, taking the arguments I presented into consideration.
However, while vetting is vital, I do not believe that primary legislation is the place to set out the level of vetting. It is not the place where the level of vetting should be determined. Nor do I see the case for singling out just one chief officer post—namely that of Metropolitan Police Commissioner. As I said in Committee, no Home Secretary—also an appointee of Her Majesty—would make an appointment to the post of Metropolitan Police Commissioner that would put national security at risk. Furthermore, naming,
“developed (or equivalent) security vetting”,
as the requisite standard in primary legislation could be a hostage to fortune. Were the name or criteria for this type of vetting to change, this requirement could become outdated.
However, I have listened very carefully to the arguments that the noble Lord put forward, and there may be some merit in setting out vetting requirements in regulations. It is right for the College of Policing, as the body that sets the standards for policing, to take the lead role in considering whether to propose such regulations. As noble Lords will recall, Clause 111 makes statutory provision for its formal role in the preparation or approval of regulations. I will undertake to draw this matter to the attention of the college.
The noble Lord also highlighted the possibility that in a few years’ time we could find that all the chief officer equivalent posts in the Metropolitan Police, and indeed in other forces, could be filled by persons who have previously never served as a police officer in the UK. I have to say that such a possibility is, at best, theoretical, and I think that the noble Lord would admit that. Under the existing law, it could already be the case that every officer from commander through to deputy commissioner could be a person with no previous policing experience in the UK. That was not the case when the noble Lord, Lord Blair, was commissioner and, in practice, I see no possibility whatever of that happening in future.
We simply do not need legislation to preclude such a possibility. It has never been a legal requirement for the Deputy Commissioner of the Metropolitan Police or for deputy or assistant chief constables in other forces in England and Wales to have been a constable in the UK or a British national. As I indicated, these are not really matters for primary legislation; they are matters that the College of Policing may wish to advise on as matters for regulations—or they are matters that can be stipulated when a particular appointment is advertised. We remain of the view that an amendment to the Police Act 1996 is not required and, accordingly, I cannot undertake to bring forward a Third Reading amendment.
It will be for the Home Secretary to make decisions on the eligibility of applicants for appointment as Commissioner or Deputy Commissioner of the Metropolitan Police, and for the commissioner and chief constables in every other force to decide in relation to other senior posts. It is right that the Home Secretary and police chiefs should be trusted to decide who is best qualified and most appropriate to fill those roles. I cannot undertake to bring forward a Third Reading amendment on this issue, as I said.
I hope that the noble Lord, Lord Blair, will accept that the issues he has raised are not new. They would have arisen whether or not Clause 128 was in this Bill. He is right to raise these matters, but questions about the appropriate vetting of senior officers and about the relevant previous experience of such officers on appointment should not be a matter for primary legislation. However, I will draw this debate to the attention of the College of Policing. It may be that the college will come forward with regulations in future. Accordingly, I invite the noble Lord to withdraw his amendment.
Lord Blair of Boughton
My Lords, I thank all those who have spoken in this debate. I hope that the Minister did not think that I was being ad hominem about him as I certainly was not. In the circumstances of the Minister deciding to bring this to the attention of the College of Policing and asking it to consider what level of vetting should be required for the post of commissioner—if that is what he is saying—I shall, in a moment, ask leave to withdraw the amendment. However, I suggest to the Minister that the idea that a person could be appointed to a senior police position who has never previously been a police officer is pretty difficult to contemplate. I was never suggesting that all 35 would be like that as I cannot imagine anybody doing that. However, just the possibility that somebody who has never previously been a police officer could be appointed deputy chief constable seems to be a pretty odd state of affairs. Perhaps the Minister and I could talk about that outside the Chamber just to see whether that is not also something about which we could ask him specifically to ask the College of Policing. I beg leave to withdraw the amendment.
Lord Marlesford
“Littering from vehiclesCivil penalty for littering from vehicles
(1) A littering contravention in relation to a vehicle occurs when a person inside the vehicle acts in contravention of section 87 of the Environmental Protection Act 1990 (offence of leaving litter).
(2) A civil enforcement officer may impose a civil penalty if a littering contravention under subsection (1) has taken place.
(3) The registered keeper of the vehicle shall for the purposes of section 87 of the Environmental Protection Act 1990 be treated as knowingly causing the littering contravention whether or not he gave any instruction for this to be done and shall be the recipient for a civil penalty under subsection (2).
(4) A civil penalty is not payable under this section by the owner of a vehicle if that vehicle is—
(a) a public service vehicle, within the meaning of the Public Passenger Vehicles Act 1981;(b) a hackney carriage licensed under the Town Police Clauses Act 1847 or the Metropolitan Public Carriage Act 1869;(c) a vehicle licensed under section 48 of the Local Government (Miscellaneous Provisions) Act 1976 (licensing of private hire vehicles);and the person acting in contravention under this section is a passenger in that vehicle.(5) The amount of a civil penalty under subsection (2) is to be specified in regulations.
(6) The procedure for imposing a civil penalty on a person and for recovery of costs is to be set out in regulations.
(7) The regulations must, in particular, require the responsible authority to give the person written notice specifying—
(a) the amount of the penalty,(b) the reasons for imposing it, and(c) the date by which and manner in which it is to be paid.(8) Regulations may—
(a) give a person on whom a civil penalty is imposed a right to appeal against the decision to an adjudicator;(b) specify the grounds on which a person may request an appeal;(c) specify the time within which a person must request an appeal;(d) make provision for and in connection with the appointment of adjudicators;(e) make further provision about appeals (including provision as to the powers available on an appeal).(9) The registered keeper of the vehicle for the purposes of this section shall be taken to be the person in whose name the vehicle was registered under the Vehicle Excise and Registration Act 1994 at the time of the contravention.
(10) A civil enforcement officer under this section must be—
(a) an individual employed by the responsible authority, or(b) where the authority has made arrangements with any person for the purposes of this section, an individual employed by that person to act as a civil enforcement officer.(11) A vehicle for the purposes of this section is a motor vehicle as defined in section 185(1) of the Road Traffic Act 1988.”
Lord Marlesford (Con)
My Lords, I am bringing back as Amendment 93 on littering from vehicles an amendment that we discussed in Committee. I remind your Lordships of the need for the amendment, which was discussed very fully in Committee. It is a sad fact that Britain is a particularly dirty country in terms of litter. Not only do we compare very unfavourably with most of our peer group in Europe, we sadly compare unfavourably with a number of other countries that are much less privileged than us but make much more effort to see that there is not litter. The contribution to litter by people throwing litter out of vehicles is a serious and significant part of the problem of littering.
The purpose of my amendment is to close a loophole. Although littering from vehicles is a criminal offence, nothing can be done under the present law unless it is possible to identify exactly who threw the litter out of the vehicle. I am trying to supplement that arrangement—not replace it—by saying that if litter is thrown from a vehicle, then the keeper of that vehicle should be subject to a civil penalty on rather the same basis as a keeper of an unwisely parked vehicle is subject to a fine of £80 or so and it is up to them whether they recover it from the person who was driving the vehicle. It is a civil offence intended as a deterrent.
This argument has been put forward for a very long while by CPRE—perhaps I should declare an interest as having once been the national chairman of CPRE for five years—and the Keep Britain Tidy group. They are both very keen on it. I introduced a Private Member’s Bill earlier this year for the same purpose. Both that Bill and my amendment in Committee received widespread support—virtually universal support—in the House from the Back Benches and from the noble Baroness on the Labour Front Bench, whom I would particularly like to thank. It is not a party-political matter in any sense. It is purely a matter of being able to do something that will actually resolve the situation.
Obviously, the amendment has been around a long time, but I know that there have been differing views inside Whitehall as to whether it should happen. There tends to be an inclination by civil servants in one department to take up a position and be reluctant, perhaps, to change their position. This sometimes causes a problem, with Ministers having either to overrule them or to accept their advice. Life is busy and there is often an inclination to have a quiet life. I am afraid that this is too important for Ministers to have a quiet life over it.
I have had very constructive and helpful discussions with the Minister on several occasions since Committee. I had a final and very useful discussion on Thursday last week, at which he advised me that the Government accepted the principle of what I wanted to do, but rather than accept the amendment as such—and I quite understand this, because it is late in the day to accept the amendment or amend the amendment—they wanted to do it by taking powers to make an order to achieve the objective. The Minister has indicated to me that he will be doing that at Third Reading. He will be introducing to the Bill powers to make an order that will enable the issuing of a civil penalty for littering from vehicles where it is not possible for there to be a prosecution.
I do not disagree at all that in general littering should be a criminal offence. There are some very serious examples of littering—for example, fly-tipping and things such as that. Therefore, I am not in any sense divided from the Government by this. All that did divide us, but I think no longer does, is that there should be a supplementary provision for civil penalties, which will provide a deterrent for people who at the moment feel that they can perfectly happily and safely chuck stuff out of vehicles without anybody being able to do anything about it.
I am very aware that having a power to make an order is not of itself enough. What is needed is to make the order. I hope that the Minister will be able to assure me that the Government will be on the lookout to ensure that there is no “Yes Minister” scenario to delay matters. I experienced this once before on an amendment that I put forward to introduce an electronic firearms register. It took a very long time but it went through and worked extremely well, I am glad to say. There are other examples. I remember being involved in the Private Member’s Bill on the Parliament Square issue. Again, an awful lot of arguments were put forward as to why it could not and should not be done, but I think that your Lordships realise how much better Parliament Square is now than it was before without in any way having reduced the facilities for lobbying, which we all support. However, that is a quite different matter. I hope that my noble friend will ensure that the order is in place at the very latest by May 2015, a date of some relevance on the political calendar.
Finally, I was lucky enough at one time to have as a political master someone from whom I learnt an enormous amount—Ernest Marples. He was a brilliant Minister but he always had a great adage: “It is not what you say that matters; it is what you do”. With that, I beg to move.
Lord Sherbourne of Didsbury (Con)
My Lords, I support the motive behind the amendment of my noble friend Lord Marlesford. I think that everyone agrees that litter is a scourge and that it is getting worse. Were it not for the street cleaners, who are the unsung heroes of our local communities, we would realise how terrible is the amount of litter that is thrown and discarded. It is partly a matter of disfiguring the environment but it also poses a potential serious danger to other drivers on roads. Therefore, I hope that the Minister will give a very sympathetic response to my noble friend’s amendment.
Lord Deben (Con)
My Lords, having fought some of the battle with my noble friend and neighbour on this matter, I just wish to commend to your Lordships the constant pressure that my noble friend has brought to bear on this simple issue.
I draw just one thing to the attention of the Minister, who I understand is going to be extremely helpful: this is a symbol of trying to do the things that everybody wants done. The most frustrating thing in life is that there are many things which everybody wants done but which the Government always find impossible to do. I am afraid that the phrase “Better not, Minister” is one of the most dangerous that civil servants tend to use. Often, one should say, “Better to do things, Minister”. It is better to try and better to see whether we can solve this problem rather than have constant debates of this kind.
Therefore, if, as it appears, the Minister is going to be accommodating, I am sure that he will be accommodating quickly. That will show my noble friend Lord Marlesford that his pressure for sensible, moderate and reasonable changes in the law has again been successful, and I hope that your Lordships’ House will congratulate him on it.
Lord Cormack (Con)
My Lords, as one who spoke at the Second Reading of my noble friend’s admirable Bill, I want to say how much we appreciate his persistence in good causes. He did a very splendid job for five years as chairman of the CPRE and when he gave up that particular job he did not give up the interests that went with it: keeping a cleaner, tidier and more beautiful Britain. Having been a constituency MP, I know that when people indiscriminately chuck things out of the windows of their cars, some of the loveliest reaches of the countryside can be truly defaced.
My noble friend had a brief word with me before this debate and I am delighted to hear that the Minister has been—not at all surprisingly—both engaged and helpful in this cause. I hope that at the end of this debate we will have the confirmation in Hansard of that helpfulness and can go forward, make those people who despoil our country guilty of what they do and ensure that they are suitably reprimanded.
Lord Crickhowell (Con)
My Lords, I spoke on the last occasion that my noble friend brought this matter forward and I am delighted at the outcome. I add only one thing. I do not often put down Parliamentary Questions these days, but if I do not see an order appearing, I will put down Parliamentary Questions and will do so, if necessary, with increasing frequency as that memorable date in May 2015 approaches.
Baroness Smith of Basildon
I rise briefly, having supported the noble Lord, Lord Marlesford, when he raised this issue in Committee and at Second Reading. He is wise not to rely on the Private Member’s Bill route at present, since we have a number of Fridays when we are discussing just one Bill, which crowds out every other Bill that noble Lords wish to bring forward. I agree with the noble Lord, Lord Deben, about “Better not, Minister”, or “Better, Minister”. I think that the phrase in the “Yes Minister” series—which I heard myself as a Minister—was, “That’s very courageous, Minister”, which, from civil servants, is not praise. I hope that the Minister has not had to be too courageous in accepting the principle behind this amendment.
I want to raise a couple of thoughts, because this is a big issue. The cost to councils is enormous. I come from a generation that came home from school or from shopping with our hands stuffed full of any litter we had had during the day. Sadly, that is not always the case now. Sometimes the methods used are not entirely appropriate, although the problem has to be dealt with.
I have one concern. As I understand it, the Minister will bring forward an order-making power at Third Reading, but I take the comments from noble Lords opposite that we need assurance that the order will not be delayed and will be fairly swift. We all know how long orders can take. Given that they are unamendable—though they have to be consulted on—it should not take too long. If the Minister can give assurances or any guidelines on the timescale in which he expects to bring the order forward, that would be helpful. Otherwise, I am delighted with the news that the Minister accepts the principle of this amendment.
Lord Taylor of Holbeach
My Lords, I have sat listening to noble Lords’ expectations thinking, “No pressure, then”, so I hope that I do not disappoint noble Lords. I am grateful to my noble friend for bringing forward his amendment. All noble Lords share his concern about littering; indeed, as all who have spoken in this debate have said, it is anti-social, causes a nuisance, is an eyesore for the communities in which we live and can cause harm to the environment and, potentially, other road users. It is unacceptable behaviour and should be treated as such.
My noble friend describes his amendment as a simple measure to “fix” a problem. I have not heard the words quoted by my noble friend Lord Deben—“Better not, Minister”—in all my time, albeit brief, in ministerial office, although he of course had a longer time in office and perhaps had to deal with slightly more weighty matters than I have. When my colleagues who work with me on this Bill talk to me, they demand not “courage” or sensitivity to other considerations that they do not believe to be justified; I find them remarkably supportive and they have been very supportive on this measure.
Lord Crickhowell
In the light of what my noble friend said about the devolved Governments, will he undertake to draw the attention of those Administrations to what has been said in this debate and the action that the Government are now taking so that there is some hope that similar action will effectively be taken in the devolved countries?
Lord Taylor of Holbeach
I recognise the fact that my noble friend lives outside England, so he has an interest in making sure that those of us in this country do not all drive across the border—
Lord Taylor of Holbeach
It is even more pertinent to the issue he raises. I will, indeed, draw to the attention of the devolved authorities what we propose when Parliament has approved the Third Reading amendment that we are tabling.
I shall conclude by saying that I and my ministerial colleagues share my noble friend’s abhorrence of roadside litter and his deep distaste at the behaviour of those who carelessly discard things from their vehicle. We have already discussed at length the kind of problems that can arise if the law on this subject is difficult to interpret or enforce. I am sure that my noble friend agrees that we need to ensure that we get the legal detail right. I hope that my noble friend will withdraw his amendment and allow us to bring forward an alternative that will meet all our aspirations.
Lord Marlesford
My Lords, I am obviously extremely grateful to my noble friend for what he said. I am well aware that it involved the political elite of the country in coming to this conclusion, and I much appreciate the fact that my right honourable friend the Home Secretary is also in support and, indeed, my right honourable friend the Environment Secretary was involved. The answer is that it is wonderful that we are about to make a great step forward. As to where it applies, I will happily buy England only so as not to delay it and, indeed, perhaps it could become a minor or major issue on the future of Scotland. They can discuss what part they will play. In the light of what my noble friend so graciously and kindly said, I have pleasure in withdrawing my amendment.
Lord Ahmad of Wimbledon
Lord Ahmad of Wimbledon
My Lords, I can be brief with the government amendments in this group. The substantive one is Amendment 96AC, which implements a recommendation made by the Delegated Powers and Regulatory Reform Committee in respect of a delegated power in the Bill’s provisions on child sexual exploitation at hotels. The committee recommended that the regulation-making power in Clause 132 should be subject to the affirmative procedure, given that it confers a power for the police to gather information about hotel guests and that there is nothing in the Bill to restrict the use that may be made of information provided to the police.
This power is already limited to the information that can be readily obtained from guests and does not impose a requirement on guests to provide the information. However, we are happy to accept the point made by the committee and place an additional safeguard on this power. The amendment to Clause 167 therefore ensures that regulations specifying additional categories of information should indeed be subject to the affirmative procedure. The other amendments in this group simply transfer these provisions to Part 9 of the Bill, which is a more appropriate home for them than Part 11. I beg to move.
Lord Ahmad of Wimbledon
Lord Ahmad of Wimbledon
Lord Taylor of Holbeach
Lord Taylor of Holbeach
My Lords, Schedule 7 to the Terrorism Act 2000 is an important part of the UK’s counterterrorism strategy. The amendments to that schedule in the Bill were made in line with our ongoing commitment to ensure that respect for individual freedoms is balanced against reducing the threat of terrorism to the public here and to British interests overseas. We understand, even from our recent debates, that there remain aspects where we could go further in reforming the operation of the powers in Schedule 7. Let me set out the basis for the Government’s amendments in this group and I will then respond to the amendments in the names of the noble Lord, Lord Pannick, and my noble friend Lord Avebury when winding up the debate.
Amendments 93F and 93G, which relate to England and Wales and to Scotland respectively, clarify how the right to consult a solicitor as soon as reasonably practicable, privately and at any time, may be exercised by a person detained under Schedule 7 to the 2000 Act. These amendments make clear that a detained person who exercises the right to consult a solicitor may not be questioned until they have consulted a solicitor or no longer wish to do so. This is an important clarification and will put beyond doubt that examining officers must not question a detained person who has requested to consult a solicitor.
In the distinct context of a person detained at a port, an airport or an international rail station, consultation with a solicitor will ordinarily be by telephone, video call, text message or e-mail. The amendments provide that an examining officer may question a detained person who wishes to consult a solicitor if the officer reasonably believes that postponing the questioning would be likely to prejudice determination of whether the detained person appears to be a person concerned with the commission, preparation or instigation of acts of terrorism. That is unlikely, other than in circumstances where a detained person insists on speaking with a particular solicitor who remains unavailable set against the statutory time limit for conducting the examination.
The amendments also clarify that a detained person is entitled to consult a solicitor in person. This is an entitlement, not an absolute right. Where a person is detained at a port, an airport or an international rail station there may not be suitable facilities available for a personal consultation. These places are not police stations. If a detained person wishes to consult a solicitor in person, the examining officer will have to have regard to the facilities available for a private consultation and the time it will take for a solicitor to arrive at the port and to access the secure area where the person is detained. Where escort officers are available, and without detracting from the policing of the port, the examining officer may decide to transfer the detained person to a police station to facilitate a consultation in person, although that will extend the duration of the person’s detention.
Similar provision is made to allow an examining officer to question a detained person who asks to consult a solicitor in person. This might occur where the detained person insists on speaking in person with a particular solicitor and the time it would take for the solicitor to arrive at the port or the police station would consume a substantial portion of the limited time available for the examination. In that instance the officer may require the consultation to take place by telephone.
Lord Pannick (CB)
My Lords, Amendments 93A to 93D are in my name and the names of the noble Lord, Lord Lester of Herne Hill, the noble Baroness, Lady Kennedy of The Shaws, and the noble and learned Lord, Lord Hope of Craighead. They concern the power to detain people at ports and airports and the power to copy and retain their personal electronic data, and propose that these powers should be exercisable only if the officer reasonably suspects that the person concerned is involved or has been involved in acts of terrorism. Your Lordships will know that the application of the existing powers is currently the subject of litigation in the David Miranda case concerning the detention of the partner of a journalist on the Guardian newspaper, but I do not want to address the circumstances of that case. I want to focus on the principles.
I have no quarrel with the Bill recognising that the power to stop, question and search at a port or airport should be exercisable whether or not there is any reasonable suspicion. However, I believe that the more intrusive powers of detention of persons and retention of their electronic data must be subject to greater safeguards. The Joint Committee on Human Rights has so recommended in its very helpful reports, most recently in its ninth report, published on 6 January. The Terrorism Act 2000, which Schedule 8 to this Bill would amend, allows for detention without any need for the officer to have any suspicion, reasonable or otherwise. The Bill would allow for detention for questioning for up to six hours—a very substantial interference, on any view, with individual liberty.
The independent reviewer of terrorism legislation, Mr David Anderson QC, has stated that there should be greater protection for individuals before they are detained or their electronic data are copied. In his evidence to the Joint Committee, at paragraph 28 of the ninth report, Mr Anderson said:
“It is hard to think of any other circumstances in which such a strong power may be exercised on a no-suspicion basis”.
Indeed, the Joint Committee noted that the Government were unable to give any other examples of such intrusive powers being exercisable without a requirement of some kind for suspicion.
Mr Anderson concluded that the threshold should be subjective suspicion on the part of a senior officer. The Government have not brought forward an amendment to introduce even that limited test, but, in any event, I do not think that such a control would be adequate in the context of the detention of persons and the copying and retention of personal electronic data. As the Joint Committee concluded, a subjective suspicion threshold is no safeguard whatever. Simply to require that an officer in fact suspects provides no independent scrutiny of the officer’s reasoning. The development of administrative law over the past 40 years confirms that subjectively worded powers are simply incompatible with effective legal control.
It is true that Mr Anderson was not persuaded that an objective test of reasonable suspicion was appropriate in this context. Mr Anderson’s concern is that this would impose too great an interference with policing powers, especially having regard to the difficulty in identifying wrongdoers and the appalling devastation that terrorists can cause. Despite the genuine respect which I have for Mr Anderson, I think his conclusions on this subject are wrong. The concerns to which Mr Anderson rightly draws attention—the difficulties of detection and appalling consequences of failing to identify wrongdoers—are well understood by the courts. Such factors would inevitably and properly be given great weight by the courts when deciding whether there was reasonable suspicion to justify the detention.
The noble and learned Lord, Lord Hope of Craighead, spoke for the Appellate Committee of this House in addressing what a reasonable suspicion test means in the case of O’Hara v the Chief Constable of the RUC, 1997 Appeal Cases at 286. That was a case concerned with the police power to arrest a person who the officer has reasonable grounds for suspecting to be a terrorist. The noble and learned Lord, Lord Hope, emphasised that such a test required the court only to assess the information in the mind of the arresting officer at the time, whether based on his own observations or what he had been told by others, and whether or not the information he had in his mind at the time later turned out to be false.
If it is truly the case that the detention is not reasonable on the basis of what was known to the officer at the time of the detention, having regard to the difficulties in identifying terrorism and the appalling consequences of letting a terrorist go through, then detention should simply not occur.
When this matter was discussed in Committee, the noble Baroness, Lady Smith of Basildon, speaking from the Opposition Front Bench, referred to the difficulty in finding an appropriate balance in this context. I recognise the difficulty, but the House needs to confront it. Without a reasonable suspicion test the powers conferred by the Bill involve no balance at all. The powers provide inadequate protection for the citizen, inadequate encouragement to officers to maintain high standards and inadequate assurance to the public to promote the support on which effective policing depends, especially when we all know that these powers are used against black and ethnic minority individuals to a disproportionate extent compared with their numbers in the population.
Lord Lester of Herne Hill (LD)
My Lords, when I was young at the Bar, there was a High Court judge who used to make a habit when he was giving judgment of simply saying, “I agree”. Having heard the noble Lord, Lord Pannick, I am tempted just to say, “I agree”. However, I wish to add a few points which he has not made and which it may be appropriate for me to make at this stage.
First, perhaps I may record, as a member of the Joint Committee on Human Rights, our misfortune at having lost the noble Lord, Lord Faulks, as a recent powerful and distinguished member, and the good fortune of the Government in having him—now in a sedentary position, unfortunately—on the Front Bench.
Secondly, the Joint Committee on Human Rights recorded in its earlier report its welcome of the government amendments that the Minister has described. I simply echo our appreciation of the amendments that are before us now.
Thirdly, I do not wish to say anything about the pending Miranda case but I do not see that its outcome will in any way affect the Government’s decision on whether to accept this amendment as it is not the function of the court in that case to decide on a future scheme that better protects liberty.
Fourthly, there is another case pending in the European Court of Human Rights—the case of Malik—to which the Joint Committee referred in paragraph 108 of its fourth report. What we are now saying today will be read by the Strasbourg court in disposing of that case. One of the reasons I am adding to the speech of the noble Lord, Lord Pannick, is that I hope that the way in which the Government and the Official Opposition reply to this will be helpful to the Strasbourg court.
In the Malik case, there is a root and branch attack on the compatibility of the schedule with the European Convention on Human Rights. The Joint Committee on Human Rights has said that it has little doubt that that challenge will fail. There is nothing inherently incompatible between the schedule and the European Convention on Human Rights. However, as many lawyers will remember, there have been a whole series of cases in Strasbourg with names such as Klass against Germany and Malone against the United Kingdom where the Strasbourg court has said that it is necessary that there are adequate safeguards against the abuse of powers, including police powers. This amendment addresses the need for more adequate safeguards.
My view is the same as that of the noble Lord, Lord Pannick—indeed, I look forward to the speeches of the noble Baroness, Lady Kennedy, and the noble and learned Lord, Lord Hope of Craighead—and probably all of us agree that there is a need for more effective safeguards against the possibility of abuse. An objective, reasonable standard seems to be the minimum that is now required. The Joint Committee has considered this twice—once in its original report and once in its most recent report—and came to the firm view that these safeguards are necessary. If the Government were to reject that opinion today, all I can say is that if I were in Strasbourg arguing for the Crown I would find myself in some difficulty because I am convinced that the Strasbourg court will scrutinise the reasons the Minister will give in deciding whether there are adequate safeguards. In other words, I think Mr Malik will lose but it would be a pyrrhic victory for the Government unless they were able to convince that court that there were adequate safeguards. I would rather avoid that today by putting the adequate safeguards into the Bill instead of waiting for another defeat in Strasbourg, in effect, and having to do it on a further occasion.
Baroness Kennedy of The Shaws (Lab)
My Lords, I, too, support the amendment. I have had reservations about the use of the power to stop and search without having reasonable suspicion. I think it lends itself to a certain amount of abuse and undermines relations with minority communities. I know this because of cases that I have done and I have heard this point expressed frequently by families in those minority communities.
The amendment raises the issue of stopping and searching and then going further. It involves more intrusive powers than simply stopping and searching. Often stopping and searching is used—I think the House should know this—as a way of recruiting informants. It does not very often produce a case against anybody but it provides opportunities for those involved in the security services to have a word with young men and to see whether they are likely to be of assistance and might be recruited as informants.
The concern that we have with this amendment is about the facility that is open to the powers that be at the airports and ports and wherever people are stopped to take computers and clone their contents. That should involve some reasonable suspicion before it is done. We should be able to move to that higher threshold of an officer being able to justify why that is being done. It would be very rare that it would be done without some explanation by an officer as to why they had made the decision to retain the content of mobile phones or whatever it is. This is another of those steps of intruding into the lives of citizens. We should be very anxious that this is not done without officers knowing that they will have to give some account of why they have sought to do this. That is not expecting too much of those who are at the borders and who are providing us with this kind of protection.
That is why the amendment has been put together. We are talking about the next stage. I do not believe officers usually move to that next stage without their having reasonable suspicion and without therefore being able to give an explanation as to why they need the extra powers that are involved in this new legislation.
Lord Hope of Craighead
My Lords, I put down my name in support of this amendment for the purpose of drawing attention to a case decided by the Supreme Court in October 2013. It was not mentioned or discussed in the report of the Joint Committee on Human Rights, but it has a bearing on this issue in connection with the amendment moved by my noble friend Lord Pannick. Before I do that, I should like to express my appreciation of the amendments tabled by the Minister in relation to the protection of people who are detained and also the timetable which is set out in the amendments.
I had occasion to look at this very closely in a case from Scotland following on a decision by the European Court of Human Rights in Strasbourg in a case called Salduz. It is clear that the amendments which the Minister has tabled are necessary in order to meet the requirements of the convention for the protection of people who are detained, in particular the right to consult a solicitor. I appreciate the careful way in which that problem has been addressed.
As for the timetable, it is appropriate that this should be in the Bill. In 1980 a provision was introduced in Scotland to give the police the power to detain somebody prior to arrest. In that provision, the timetable was set out. It had to be amended in the light of recent developments following the case of Salduz, but again the timetable was in the Bill. I believe that, for the protection of the subject, that is where it should be, so I welcome the way in which these amendments have been framed.
In the Supreme Court, the case R v Gul was concerned with the definition of terrorism, which is set out in Section 1 of the relevant Act, and the concerns expressed about the breadth of it. Terrorism, as defined in that, has a succession of various acts. People’s perception of what amounts to terrorism can vary according to what their perception is of what is going on and where these activities are being conducted. It is not necessary to discuss that issue today, but it has a bearing on what may be passing through the mind of the port officer who has the power to detain and on the need for some protection of the subject because of the way in which that power may be exercised.
I should declare an interest as I participated in that judgment and was particularly concerned about this issue in our discussions. At the end of the judgment, in paragraph 64, the Supreme Court noted that,
“under Schedule 7 to the 2000 Act the power to stop, question and detain in port and at borders is left to the examining officer. The power is not subject to any controls. Indeed, the officer is not even required to have grounds for suspecting”,
which is of course the whole point to which the amendment draws attention. Although the court went on to add that it was not concerned with that issue in that appeal, the last sentence of the judgment reads:
“Detention of the kind provided for in the schedule represents the possibility of serious invasions of personal liberty”.
It is worth bearing in mind in support of the point that has been made that that has been a concern expressed by the Supreme Court in addition to others.
The noble Lord, Lord Pannick, was kind enough to mention what I said in the case of O’Hara, which was the first judgment I ever delivered in this House many years ago. The test which I set out, and which has been recognised, is not particularly exacting. It is partly subjective and partly objective. The subjective part is important because it looks only to what the officer says was passing through his mind at the time. The objective part is that somebody else stands back, takes what was passing through the officer’s mind at the time he was exercising his judgment and asks the question “Did that justify what he did?” That was how the power given to the police was expressed. It does not set a particularly high standard, but it is a protection. It is that protection which is absent at the moment and which I respectfully suggest is in need of being written into the Bill to meet the concerns that have been expressed by various people, including the Supreme Court.
Lord Lloyd of Berwick (CB)
My Lords, perhaps I could just have a brief word on Amendments 93A and 93B. There has been much discussion over the years as to whether the right to stop under Schedule 7 should be available only on reasonable suspicion. I am glad that the amendment now before the House does not go that far. The arguments in favour of and against the power to stop without reasonable suspicion are all very well set out in the excellent recent report of David Anderson, the reviewer. Unfortunately, that particular question was not included in the public consultation which took place in 2011. My view has always been in favour of the power to stop without reasonable suspicion. There is no real analogy with the power to stop under Section 44 of the Terrorism Act. But the power to detain—that is, the power to detain under paragraph 6(1)(b)—seems to me altogether different.
By the time that power is exercised, the person in question will have been questioned for up to an hour. All the benefits of the power to stop without suspicion, which I strongly believe in, particularly the deterrent effect of that power, will by then have accrued. Moreover, the examining officer will have had ample time during that hour to explore whether there are grounds for reasonable suspicion. The balance of arguments seems therefore to shift decisively in favour of reasonable suspicion being the test at that stage. For that reason, I support the amendment.
Perhaps I may say in passing how glad I am that the maximum period of detention has been reduced from 24 hours, as it was when I was considering these matters many years ago, to the six hours which is now proposed. That seems to me altogether admirable, as are the other amendments put forward by the Government.
Lord Avebury (LD)
My Lords, I also want to add a word in support of the amendment which was moved so comprehensively and powerfully by the noble Lord, Lord Pannick. I am disappointed that the Minister has not had time to make any observations about the two cases that I cited at an earlier stage. The first was where a distinguished imam was stopped at Heathrow Airport, made to give a DNA sample and fingerprints and detained for some time. It took me 15 months to get the DNA sample removed and his name expunged from the records. The second case was of a gentleman who was stopped three times within the space of months, indicating, to my serious concern, that there must exist a blacklist of people who are to be stopped when they pass through airports or sea ports. That is a very serious development on which I had hoped the Minister would be able to make some observations by now.
Amendment 94ZA in my name would delete the whole of new paragraph 11A from Schedule 7 to the Terrorism Act. That paragraph covers the power to take possession of anything that is found when a person is examined or searched at a port of entry, including not only electronic materials but papers, photographs, videos or audio cassettes, and to keep a copy of that material for as long as it is considered necessary for the purpose of determining whether a person falls within Section 40(1)(b); that is, that he is or has been concerned in the commission, preparation or instigation of acts of terrorism. It is clear that the vast majority of people who are held at the ports of entry have nothing to do with terrorism whatever. When this matter was discussed on 11 December, the Minister quoted the observation of the independent reviewer of terrorism legislation that,
“‘it is of vital importance that the copying and retention of data from mobile phones and other devices should be provided for by a law that is clear, accessible and foreseeable’”.—[Official Report, 11/12/13; col. 813.]
However, that statement was not the whole story, as the Minister knows, and it was a little disingenuous of him to omit the rest of Mr Anderson’s comments in his evidence to the Home Affairs Select Committee on 20 November. He recommended that the power to copy and retain data from electronic devices should be exercisable only if a senior officer was satisfied that there were grounds for suspecting that the person appeared to be concerned in the commission, preparation or instigation of acts of terrorism. Mr Anderson went on to compare the indefinite retention of those data with the period of 48 hours that applies to the retention of documents copied under reasonable suspicion powers such as Section 43 of, and Schedule 5 to, the Terrorism Act 2000. He did say that electronic data can be held for very long periods under the management of police information regime, a practice that had recently been criticised by the courts and which is in marked contrast to the rules and guidance that exist under the Protection of Freedoms Act 2012. There should be some consistency between these different regimes while allowing a margin of appreciation in cases where there is a reasonable suspicion of terrorism.
Baroness Smith of Basildon
My Lords, as always on such issues, these are interesting debates, and I always note that I am one of the few non-lawyers to speak in them. Like the noble and learned Lord, Lord Hope, I put on record my thanks to the Government for their letter of 15 January in which the Minister explained the changes that were being made to the Bill—it should be understood that your Lordships’ House welcomes those. We concur with the Minister’s judgment about the David Miranda case and we, too, await the judicial review and any report from David Anderson. It may be helpful if we have a discussion once we have received that report.
The amendments before us today highlight issues of concern not just in the law but in the way in which the law may be implemented. However, as I said in Committee, we also take note of the comments of David Anderson as independent reviewer and we are not persuaded to support these amendments tonight. We would support further consideration of Amendment 93B if there were any further incidences of improper detention of citizens from Northern Ireland, but that consideration needs to take the form of a proper consultation involving the Department of Justice for Northern Ireland, the Irish Government as well as the Police Service of Northern Ireland. The PSNI has the unique task of policing a land border with the Republic of Ireland and it rightly requires additional powers to enable it to reduce border crime and prevent dissident attacks. We therefore cannot support Amendment 93B.
There is more work to be done on some of these issues. We certainly want to return to the Miranda judgment when it comes out.
Lord Lester of Herne Hill
The noble Baroness has explained that the Opposition are not able to support the amendments, but she has not explained why. Could she tell the House why the Opposition do not consider that a standard of reasonableness, in view of the severity of the sanctions, is appropriate?
Baroness Smith of Basildon
My Lords, we have two reasons. First if the noble reads my comments in Committee, he will see that we gave further information on that. Secondly, we take the view as outlined by David Anderson in his report, and we think that was a reasonable position to take.
Lord Taylor of Holbeach
My Lords, the noble Lord, Lord Pannick, my noble friend Lord Lester, the noble and learned Lord, Lord Hope, and the noble Baroness, Lady Kennedy, have all made very valuable speeches on this issue, addressing the fundamental principle of Schedule 7 to the Terrorism Act 2000 through their amendments: when a person may be detained and when their personal electronic devices may be examined.
I preface my remarks by noting that we continue to await the judgment of the High Court in the judicial review proceedings brought by Mr David Miranda, following his examination under Schedule 7 in August last year. Although the independent reviewer of terrorism legislation, David Anderson QC, who has been referred to several times in the debate, has made some recommendations in relation to Schedule 7, we will not have the benefit of his report on the detention of Mr Miranda and any further recommendations he may make until after the judgment is handed down. Consequently, the debate on Schedule 7 will continue beyond our proceedings today and beyond this Bill. I am certain that we will return to these matters in detail in the future. I am grateful to the noble Baroness, Lady Smith, for agreeing to this approach and I commit to keeping her informed of the Government’s approach to the issue.
Let me address the amendments before the House. I begin with Amendment 93B, which provides that a person “may not be detained” for examination,
“unless the examining officer has reasonable grounds to suspect”,
that the person is concerned with,
“the commission, preparation or instigation of acts of terrorism”.
The powers in Schedule 7 to the 2000 Act are for the purpose of determining whether a person appears to be someone who is or has been concerned with the commission, preparation or instigation of acts of terrorism. This is an examination of whether they appear to be. As I explained in Committee, examinations are not simply about the police talking to people they know, or already suspect, are involved in terrorism. They are about talking to people travelling to and from places where terrorist activity is taking place or emerging, to determine whether those individuals appear to be involved in terrorism—whether that is because they are or have been involved, will become involved or are at risk, either knowingly or unknowingly, of becoming involved.
The Government maintain the view that introducing a reasonable suspicion test for the exercise of powers under Schedule 7, both to detain individuals and to search electronic devices, would undermine the capability of the police to determine whether individuals passing through ports, airports and international rail stations appear to be involved in terrorism. That view is shared, as some noble Lords have commented, by the independent reviewer of terrorism legislation, who explained to the Home Affairs Select Committee:
“My exposure at a variety of ports to the operational constraints under which ports officers operate inclines me, on balance, towards rejecting the reasonable suspicion standard as a condition for detention”.
Mr Anderson highlights:
“Terrorists pose risks on a different scale to most other criminals: they have shown themselves capable of causing death and destruction on a massive scale”.
He adds:
“Active terrorists are not numerous, and not easily identified as such”,
and that a port environment suspicion may be,
“harder to substantiate objectively in the absence of specific intelligence”.
Those are important words, setting the background to the Government’s consideration of these matters.
I note that the Joint Committee on Human Rights accepts that, “the concerns which underpin” the independent reviewer’s,
“rejection of a reasonable suspicion standard are entirely justifiable concerns”.
For his part, the independent reviewer has recommended that detention be permitted only, and continue only, when an officer is satisfied that there are grounds for suspecting that the person appears to be concerned with terrorism. In Mr Anderson’s view, this represents,
“the maximum safeguards consistent with the continued productive operation of these vital powers”.
There have been two or three references to the discriminatory effect of these powers on ethnicity. Perhaps I should tackle this one. As the independent reviewer of terrorism legislation said, if the powers are operated properly, the ethnic breakdown of those examined will correspond not with the ethnic breakdown of the general population or the travelling population, but with the ethnic breakdown of those involved with terrorism. I believe we have to accept that.
The Government welcome the debate to find an appropriate threshold for the exercise of powers to detain individuals, and to make and retain a copy of electronic data under Schedule 7. However, in the specific context of port and border controls to determine whether individuals appear to be concerned with terrorism, reasonable grounds for suspicion is not an appropriate threshold. Ensuring an appropriate threshold that is clear in its meaning and provides an effective safeguard in its distinct context is a matter the Government continue to reconsider. We shall reflect further on the recommendation that the independent reviewer has made. However I am not persuaded that it would be right to introduce a test of reasonable suspicion, as Amendment 93B seeks to do.
The effect of Amendments 93A, 93C and 93D would be to restrict the duty of a person being questioned under Schedule 7 to disclose anything in relation to data stored on a personal electronic device unless they are detained. They also restrict the power of an examining officer to search things in relation to data stored on personal electronic devices unless the person being questioned is detained. I have tried to reassure my noble friend Lord Avebury that the power to search for and examine property, including personal electronic devices, is an essential part of the Schedule 7 powers. The independent reviewer observed—I make no apology for quoting him again—that,
“the Schedule 7 evidence which has assisted in the conviction of terrorists … consists of physical possessions or the contents of mobile phones, laptops and pen drives”.
These amendments are intended to complement Amendment 93B and to require reasonable grounds for suspicion to delay a person and consequently to examine their personal electronic devices. I have set out the Government’s position on the reasonable suspicion threshold.
The independent reviewer has recommended that the power under new paragraph 11A to Schedule 7—to make and retain copies of data from personal electronic devices—be exercised only if a senior officer is satisfied that there are grounds for suspecting that the person is concerned with terrorism. As with the threshold for detention, the Government are considering additional safeguards for examination of personal electronic data. We shall reflect further on this, both on the independent reviewer’s recommendation and alternative enhanced safeguards—for example, to provide for a review officer to approve any decision to examine data.
Lord Pannick (CB)
I am grateful to all noble Lords who spoke in favour of Amendments 93A to 93D. I am disappointed that neither the Minister nor the noble Baroness, Lady Smith of Basildon, accepts that those intrusive powers should be controlled by a reasonable suspicion test. For my part, I see no good reason why other terrorism powers are so constrained but that there would be problems in dealing with the matter in this way for detention at a port or airport.
I should add that, as the noble Lord, Lord Lester of Herne Hill, suggested, for the law to continue to allow for detention without a requirement for reasonable justification will inevitably lead to condemnation in the Strasbourg court. The noble Lord, Lord Faulks, whose elevation to the Front Bench is welcomed on all sides of the House, will no doubt be able to give the Minister confidential legal advice on the matter.
However, as the Minister said, the House will inevitably be returning to these issues in the light of the Miranda judgment and Mr Anderson’s consequent report. I shall therefore, in due course, not move Amendment 93A.
Lord Taylor of Holbeach
“( ) In paragraph 1(5) (definition of examining officer) for “paragraph” there is substituted “Schedule”.
( ) In paragraph 2(2)(d), the words “(within the meaning of that Schedule)” are omitted.”
“( ) After paragraph 7 there is inserted—
“7A (1) This paragraph applies where a person detained under Schedule 7 requests to consult a solicitor.
(2) The examining officer may not question the detained person under paragraph 2 or 3 of Schedule 7 until the person has consulted a solicitor (or no longer wishes to do so).
(3) Sub-paragraph (2) does not apply if the examining officer reasonably believes that postponing the questioning until then would be likely to prejudice determination of the relevant matters.
“(4) The powers given by paragraph 8 of Schedule 7 (search powers where a person is questioned under paragraph 2 of Schedule 7) may be used when questioning is postponed because of sub-paragraph (2).
(5) The detained person is entitled to consult a solicitor in person.
(6) Sub-paragraph (5) does not apply if the examining officer reasonably believes that the time it would take to consult a solicitor in person would be likely to prejudice determination of the relevant matters.
(7) In that case the examining officer may require any consultation to take place in another way.
(8) In this paragraph “the relevant matters” means the matters the examining officer seeks to determine under paragraph 2 or 3 of Schedule 7.””
“( ) After paragraph 16 there is inserted—
“16A (1) This paragraph applies where a person detained under Schedule 7 requests to consult a solicitor.
(2) The examining officer may not question the detained person under paragraph 2 or 3 of Schedule 7 until the person has consulted a solicitor (or no longer wishes to do so).
(3) Sub-paragraph (2) does not apply if the examining officer reasonably believes that postponing the questioning until then would be likely to prejudice determination of the relevant matters.
“(4) The powers given by paragraph 8 of Schedule 7 (search powers where a person is questioned under paragraph 2 of Schedule 7) may be used when questioning is postponed because of sub-paragraph (2).
(5) The detained person is entitled to consult a solicitor in person.
(6) Sub-paragraph (5) does not apply if the examining officer reasonably believes that the time it would take to consult a solicitor in person would be likely to prejudice determination of the relevant matters.
(7) In that case the examining officer may require any consultation to take place in another way.
(8) In this paragraph “the relevant matters” means the matters the examining officer seeks to determine under paragraph 2 or 3 of Schedule 7.””
“( ) in sub-paragraph (1), for “and” there is substituted “to”;”
“General requirements20K (1) A person’s detention under Schedule 7 must be periodically reviewed by a review officer.
(2) The first review must be carried out before the end of the period of one hour beginning with the person’s detention under that Schedule.
(3) Subsequent reviews must be carried out at intervals of not more than two hours.”
“( ) The Secretary of State must under paragraph 6 of Schedule 14 issue a code of practice about reviews under this Part of this Schedule.”
“Representations20L (1) Before determining whether to authorise a person’s continued detention, a review officer must give either of the following persons an opportunity to make representations about the detention—
(a) the detained person, or(b) a solicitor representing the detained person who is available at the time of the review.(2) Representations may be oral or written.
(3) A review officer may refuse to hear oral representations from the detained person if the officer considers that the detained person is unfit to make representations because of the detained person’s condition or behaviour.
Rights20M (1) Where a review officer authorises continued detention the officer must inform the detained person—
(a) of any of the detained person’s rights under paragraphs 6 and 7 which have not yet been exercised, and(b) if the exercise of any of those rights is being delayed in accordance with the provisions of paragraph 8, of the fact that it is being delayed.(2) Where a review of a person’s detention is being carried out at a time when the person’s exercise of a right under paragraph 6 or 7 is being delayed—
(a) the review officer must consider whether the reason or reasons for which the delay was authorised continue to subsist, and(b) if in the review officer’s opinion the reason or reasons have ceased to subsist, the review officer must inform the officer who authorised the delay of that opinion (unless the review officer was that officer).(3) In the application of this paragraph to Scotland, for the references to paragraphs 6, 7 and 8 substitute references to paragraph 16.
Record20N (1) A review officer carrying out a review must make a written record of the outcome of the review and of any of the following which apply—
(a) the fact that the officer is satisfied that continued detention is necessary for the purposes of exercising a power under paragraph 2 or 3 of Schedule 7,(b) the fact that the detained person has been informed as required under paragraph 20M(1),(c) the officer’s conclusion on the matter considered under paragraph 20M(2)(a), and(d) the fact that the officer has taken action under paragraph 20M(2)(b).(2) The review officer must inform the detained person whether the officer is authorising continued detention, and if so that the officer is satisfied that continued detention is necessary for the purposes of exercising a power under paragraph 2 or 3 of Schedule 7.
(3) Sub-paragraph (2) does not apply where the detained person is—
(a) incapable of understanding what is said,(b) violent or likely to become violent, or(c) in urgent need of medical attention.””
“Codes of practice(1) Schedule 14 to the Terrorism Act 2000 (exercise of powers—codes of practice etc) is amended as follows.
(2) In paragraph 1, after ““officer” means” there is inserted “(subject to paragraph 6A)”.
(3) After paragraph 6 there is inserted—
“6A In paragraphs 5 and 6, “officer” includes a constable, immigration officer or customs officer who—
(a) has functions under Schedule 7, or(b) has functions under Schedule 8 in relation to a person detained under Schedule 7,otherwise than as an examining officer.””
Lord Ahmad of Wimbledon
“(3A) This section applies to the Serious Fraud Office as it applies to the Crown Prosecution Service.””
Lord Ahmad of Wimbledon
My Lords, this is simply a drafting amendment to take into account the formal abolition of the Revenue and Customs Prosecution Office, which has already been merged with the Crown Prosecution Service. I beg to move.
Lord Ahmad of Wimbledon
“Jurisdiction of Investigatory Powers Tribunal over Surveillance Commissioners
(1) Section 91 of the Police Act 1997 (Surveillance Commissioners) is amended as follows.
(2) In subsection (10), for “sections 104 and 106” there is substituted “section 104”.
(3) After subsection (10) there is inserted—
“(11) Subsection (10) is not to be read as affecting the jurisdiction of the Tribunal conferred by section 65 of the Regulation of Investigatory Powers Act 2000 or section 23 of the Regulation of Investigatory Powers (Scotland) Act 2000.””
Lord Ahmad of Wimbledon
My Lords, this amendment simply clarifies the role of the Investigatory Powers Tribunal in considering complaints against decisions made against surveillance commissioners. The tribunal was established under the Regulation of Investigatory Powers Act 2000, commonly referred to as RIPA. When RIPA was introduced, Section 91(10) of the Police Act 1997 should have been amended to reflect the role of the Investigatory Powers Tribunal—the IPT—and its ability to consider complaints against the surveillance commissioners’ decision. It is believed that the lack of amendment at the time was an oversight.
The new clause is not intended to change the law in any way, but is rather a clarifying amendment reflecting the current state of the law. Given that the role of the IPT is clearly set out in both RIPA and the equivalent legislation in Scotland, the amendment is tabled solely to put the matter beyond any doubt. I beg to move.
Lord Deben
“Use of amplified noise equipment in vicinity of the Palace of Westminster
(1) The Police Reform and Social Responsibility Act 2011 is amended as follows.
(2) After section 142 there is inserted—
“142A Other controlled areas in vicinity of the Palace of Westminster
(1) For the purposes of this Part, the “Palace of Westminster controlled area” means the area of land in the City of Westminster that is comprised in—
(a) the highways in the postal district SW1 known as—(i) Bridge Street,(ii) St Margaret’s Street, and(iii) Abingdon Street,(b) so much of the highway in the postal district SW1 known as Great College Street as immediately adjoins Abingdon Street Garden, (c) Old Palace Yard,(d) Abingdon Street Garden (and its pathways), and(e) Victoria Tower Gardens.(2) In subsection (1)—
“Abingdon Street Garden” means the garden constructed on the sites of properties formerly known as 18 to 28 (both inclusive) Abingdon Street, London, SW1, together with the garden surrounding the adjoining Jewel Tower and the lawn surrounding the King George V Memorial;
“highway” has the same meaning as in the Highways Act 1980 (see section 328 of that Act);
“Old Palace Yard” includes the King George V Memorial.”
(3) In section 143 (prohibited activities in controlled area of Parliament Square)—
(a) in the title, at the end there is inserted “or in Palace of Westminster controlled area”, and(b) in subsection (2)(a) after “Parliament Square” there is inserted “or in the Palace of Westminster controlled area”.(4) In section 144 (directions under section 143: further provision), in subsection (5) after “Parliament Square” there is inserted “, or the Palace of Westminster controlled area,”.
(5) In section 145 (power to seize property)—
(a) in subsection (1) at the end there is inserted “in that area”,(b) after that subsection there is inserted—“(1A) A constable or authorised officer may seize and retain a prohibited item that is on any land in the Palace of Westminster controlled area if it appears to that constable or officer that the item is being, or has been, used in connection with the commission of an offence under section 143 in that area.”,
(c) in subsection (2) at the end there is inserted “in that area”,(d) after that subsection there is inserted—“(2A) A constable may seize and retain a prohibited item that is on any land outside of the Palace of Westminster controlled area if it appears to the constable that the item has been used in connection with the commission of an offence under section 143 in that area.”, and
(e) in subsection (8), for “subsections (1) and (2)” there is substituted “this section”.(6) In section 146 (power of court on conviction)—
(a) in subsection (1)(b) for “the controlled area of Parliament Square” there is substituted “a relevant area”,(b) in subsection (2) for “the controlled area of Parliament Square” there is substituted “a relevant area”, and(c) after that subsection there is inserted—“(2A) In this section “relevant area” means an area consisting of either or both of the following areas—
(a) the controlled area of Parliament Square, and(b) the Palace of Westminster controlled area.”(7) In section 147 (authorisation for operation of amplified noise equipment), in subsection (1)—
(a) after “Parliament Square” there is inserted “or the Palace of Westminster controlled area”, and(b) after “that land” there is inserted “(or any part of it)”.(8) In section 148 (meaning of “authorised officer” and “responsible authority”)—
(a) in subsection (2) after “Parliament Square” there is inserted “, or in relation to any land in the Palace of Westminster controlled area other than Royal Park land,”, and(b) after subsection (3) there is inserted—“(4) “Responsible authority”, in relation to any land in the Palace of Westminster controlled area, means—
(a) the Secretary of State, for any land comprised in Royal Park land;(b) Westminster City Council, for any other land.(5) In this section “Royal Park land” means any land of a description specified in Schedule 1 to the Royal Parks and Other Open Spaces Regulations 1997 (S.I. 1997/1639), as that Schedule has effect on the day on which the Anti-social Behaviour, Crime and Policing Act 2014 is passed.”
(9) In section 149 (effect of Part on byelaws), in subsection (3), after “Parliament Square” there is inserted “or the Palace of Westminster controlled area”.
(10) In the italic cross-heading before section 142, for “Garden and adjoining pavements” there is substituted “etc”.
(11) In the title of Part 3, for “Garden and surrounding area” there is substituted “etc”.”
Lord Deben (Con)
My Lords, this is an amendment which we discussed and withdrew at an earlier stage. It is what I might call a moderate amendment. It is an attempt to put right a problem of oversight rather than anything else. As was found earlier in the case of littering, your Lordships would be surprised at the complications which arise if you try to do what seemed to be a simple matter, which is to apply the rules that obtain in Parliament Square to the areas outside this House.
The reason for doing that was, first, that there is a real issue about the ability of those who have offices immediately opposite the King George statue when very loud amplification is used. Having raised the matter, I discovered that there was an even greater issue for those who were trying to have a service within Westminster Abbey. The sadness is that most of those who would be demonstrating would be very upset if they realised that their noise meant, for example, that the wedding day of someone who had looked forward to it, either in St Margaret’s or in Westminster Abbey, would be destroyed because it would be impossible to hear. A number of those who demonstrate have strong religious views themselves and would not want that.
Obviously, the best way in which one can avoid that is what might be called pre-notification. Indeed, that is to be encouraged, but we live in a democracy and it is right that people should protest. I would be the last person to seek to restrict protest wherever possible, because it is part of the whole fabric of a society in which human rights matter. Our debates on the Bill have been illuminated by lawyers and non-lawyers insisting that, however tough the threats to this country through terrorism may be, we must always be concerned to protect the rights of the individual.
This proposed new clause does not go very far: it simply extends the area covered by the present legislation, which has worked well. In preparing it we had discussions with various authorities which showed that, until now, the mechanisms by which the existing law has been enforced have been faulty. There have been difficulties in putting together the roles of the Royal Parks, which controls part of the area, and of Westminster City Council, the Metropolitan Police and the London Assembly, all of which have a say in this. It has therefore been very helpful to put the mechanisms on paper as we have before us today. I thank the Minister for the considerable efforts he has made to bring the various authorities together. We have concluded with those bodies that this is a sensible way forward.
There is a slight change from my original amendment in that Amendment 93R does not include putting up tents. This is because legislation already covers the only places where you could reasonably put up a tent; that is, the Acts and byelaws relating to the Royal Parks.
We have tried to make sure that we do not make anything onerous or push the matter any further than it need be. The amendment has the enthusiastic support of the dean of Westminster Abbey, and I think that most Members of this House have said that this is the proportionate way of proceeding. Some have wanted me to go further and have compulsory pre-advice when anyone was going to have a protest. There are temptations to do that, because it is a reasonable thing to ask for in most cases. But it is not always satisfactory and, in the end, I do not think that it is right to exclude the occasions when a gathering of people will grow and people will want to make a statement about something they feel strongly about.
This is the balance we need. It is a balance which has served the House of Commons perfectly well. This amendment merely ensures two things will happen in future. First, there will be every reason to give advice that a protest is to be held. That is good for sensible policing and providing information so that people know the law. There will also be every reason to stop what would otherwise happen, which is a migration of the kind of activity which has caused so much difficulty outside the House of Commons.
Your Lordships will see that a range of people supports this amendment. When we debated it before, it had widespread support. I have not yet been told of anyone who feels unhappy about it. I very much hope that your Lordships will agree that this is a sensible change supported by all those who have to implement the regulations. I beg to move.
Lord Taylor of Holbeach
My Lords, exceptionally, with the leave of the House, it might help if I speak at this early stage in the proceedings. I will explain the background to some of the discussions and reinforce the words of my noble friend Lord Deben in proposing his amendments. I will also set out the Government’s approach to the matter.
Following the debate in Committee, I met my noble friend Lord Deben, the Metropolitan Police, Westminster City Council, the Royal Parks and the receiver general of Westminster Abbey to discuss how we might more effectively address noise issues in the vicinity of the Palace of Westminster. The meeting confirmed the view I expressed in Committee, when we debated my noble friend’s amendments the first time, that there are already sufficient powers, including within existing Westminster City Council and Royal Parks byelaws, for the police, Westminster Council and the Royal Parks to deal with noise issues around the Palace of Westminster. From the Government’s perspective, the issue is not so much an absence powers, but the effective enforcement of the powers that are currently available.
It is true that there are some differences between the provisions that apply to Parliament Square under the Police Reform and Social Responsibility Act 2011, and those that apply to the area we are talking about here. For example, unlike the provisions of the 2011 Act, there is currently no pre-authorisation requirement for the use of amplified noise equipment in areas other than those covered by the Royal Parks Regulation. In addition, the offence under the 2011 Act attracts a higher maximum penalty of a £5,000 fine, compared with the Westminster City Council byelaws where the maximum fine is £500 and the Royal Parks byelaws where it is £200 or £1,000 depending on the offence. Your Lordships may take the view that a single set of harmonised controls in the vicinity of the Palace of Westminster might assist the enforcement agencies to deal with noise disruptions more effectively. However, the need for effective enforcement would remain.
Home Office officials and I would like to pay tribute to the public order team working on this issue. Home Office officials have worked with the Metropolitan Police, Westminster City Council and the Royal Parks to develop a robust enforcement plan for the current legislation. A joint protocol has been developed to deal with noise-related nuisance in the vicinity of Parliament. The key features of this protocol are that it sets out a clear process for dealing with noise issues around the Palace of Westminster; provides a single, adequately resourced contact number for complaints, which will be followed up; sets out a process for the police and Westminster City Council to liaise with protest organisers in advance and inform them of the legal position as regards the use of amplified noise equipment and their responsibilities; and sets out an agreed process for the police and Westminster City Council to work together to deal with noise issues arising from planned potential disruptive demonstrations. The enforcement agencies have also produced leaflets to ensure that people are aware of the legal position and their responsibility to minimise noise to allow others to carry on their normal business without serious disruption.
Earlier today, I met Deputy Assistant Commissioner de Brunner and Commander Dave Martin from the Metropolitan Police. They have assured me that the Palace of Westminster police will provide active support to Members of the House in dealing with noise issues. They have also assured me that the joint agency enforcement plan should effectively deal with noise issues in the vicinity of the House. We have agreed to review the situation in two months’ time to evaluate how the new enforcement plan is working.
As I have indicated, whatever the legislation in place, the key is effective enforcement. Noble Lords may consider that that objective would be better served by the adoption of these amendments. As for the Government, we have concluded that this is properly a matter for the House to determine and as such, if it came to a vote the Government will neither support nor oppose the amendments. My noble friend Lord Deben has made his case and no doubt others will want to contribute to this debate but, for once, I will not seek to be persuading noble Lords one way or the other.
The Lord Bishop of Ripon and Leeds
My Lords, I am very grateful to the noble Lord, Lord Deben, for the way in which he introduced this debate and to the Minister for those comments and his response. My colleague the right reverend Prelate the Bishop of Newcastle has added his name to this amendment, thereby expressing the concern of these Benches, in particular with regard to the work and worship at Westminster Abbey and St Margaret’s parish church. I am sorry that the right reverend Prelate the Bishop of Newcastle is unable to be with us today. However, it is a particular delight to welcome the very reverend Dean of Westminster, as he exercises his constitutional right to sit on the steps of the Throne of this House.
The Abbey has suffered, as the noble Lord, Lord Deben, was saying, as a result of what is often quite unintentional disturbance of its worship, and its role as a place of prayer and the worship of God. It is important to affirm absolutely both the right of protest, with the human rights which are involved in being able to protest, and, at the same time, the right and duty of the Abbey to maintain its pattern of prayer to God, particularly in view of the way in which it stands for the spiritual nature and concerns of this nation, and of our monarch and the Royal Family. Our daily prayers here with your Lordships stress particularly the needs of this realm and of the monarch. Westminster Abbey is a unique testimony to prayer for those needs, and there is a need at this point to ensure that the Abbey is able to fulfil that particular task which it has in the life of both the church and the nation. I support the amendment and am grateful to the Minister for his generous words about it.
Baroness Berridge (Con)
My Lords, I, too, support the amendment. Just hearing the outline of the different authorities involved when there are issues with protests outside the front of Parliament leads me to the view that without this amendment, enforcement has not perhaps been as easy as it could be. I take into account that Westminster Cathedral does not have this issue, merely by virtue of the fact that the Abbey and St Margaret’s are positioned outside Parliament.
We have done much hard work to ensure that the work of the House of Commons is not disturbed; we should afford the same privileges to the Abbey and St Margaret’s, which are in this unique position. Perhaps most persuasively, it is not just that there is worship there and wedding services. I am aware of this because I often cut through the Abbey’s yard. The young people being educated there and the people living there are, I am sure, also disturbed by the protests. This is a reasonable accommodation of the right to protest and the freedom of worship, while allowing people in their residential and educational roles to be uninhibited. I will be supporting the amendment.
Lord Rosser
The Minister has reminded us that when a very similar amendment was considered in Committee he, as the Minister, said that the issue was how the existing by-laws were enforced rather than that the existing powers were inadequate. It was in that context that he proposed holding the meeting to which he referred, and which has now been held. It would be of some interest if the Minister were in a position to tell us, in the light of that meeting, why on the face of it Westminster City Council and the police were not able to enforce the powers that he said were already there and were adequate to deal with the situation that we are addressing.
Presumably, Westminster City Council must have had something to say on that, as did the police, since they were present at the meeting which the Minister held. He said in Committee that he needed to satisfy himself that the existing provisions were not being enforced by the council and the police, so it would be helpful to know what those two bodies had to say when they were asked why the existing provisions were not being enforced.
I appreciate that the Minister has said that there are different penalties. He referred to penalties of £5,000 against the £500, I think, under the powers for Westminster City Council, and to differences over no pre-notification for noise. That does not fully explain why the existing by-laws were apparently not being enforced. It would be helpful if the Minister could comment on that.
Since the Minister said that it is his intention to leave it to the House, I would make just one other point. The Minister said in Committee—I use his own words—that we need to be,
“very careful about taking any action that may impact disproportionately on people’s right to protest and their freedom of speech”.—[Official Report, 25/11/13; col. 1215.]
How is the Minister satisfied that we are being careful about not taking any such action, since I assume that that matter will have been discussed at the meeting which was held and to which he referred?
Lord Taylor of Holbeach
I thank the noble Lord, Lord Rosser, for his general support for the steps that we have taken to try to resolve this issue. As I said, it is a matter for the House. The interests of those demonstrating are, I believe, best served by the facility of pre-booking a demonstration based on availability, which this protocol will provide for. It is not essential and there is no attempt to say that this will be the only way in which people can demonstrate. There is no imposition on people demonstrating, other than that they obey the requirements of the by-laws in respect of the noise made through amplified sound. This provision is made explicit by my noble friend Lord Deben’s amendment. Throughout, the right to demonstrate and to assemble has been seen as a key feature of what we consider to be proper here at this end of Parliament, as it is in respect of Parliament Square.
The noble Lord, Lord Rosser, also asked why the enforcement of noise by-laws has not been effective. The one thing which came out of our first, extremely productive, general meeting with everybody present was that people were in effect operating in their own little silos. If I explain that responsibility for the George V statue and the paved area in front of it lies with Westminster City Council while responsibility for the green part beyond it lies with the Royal Parks, your Lordships might understand that co-ordinating action was also difficult.
It was quite clear, too, that the police did not realise that one of the most frustrating elements was that those police serving the Palace’s interests were not engaged in any enforcement of noise requirements in respect of the area that we are talking about. The police recognised that while they had had a strong focus on provisions in Parliament Square, this area had not been considered by them to be an important priority.
The noble Lord, Lord Deben, was able through tabling his amendment at Committee to bring this to the attention not only of this House but also of the police and other authorities. As a result of that, the protocol, which I am certainly reassured will be an effective mechanism, provides an opportunity for safeguarding democratic rights and, at the same time, ensuring that enforcement can in fact occur. So I hope the noble Lord is satisfied.
Lord Deben
I thank the Minister for those comments. I hope very much that the House will agree that this is a sensible way forward. It has certainly already achieved a much better way of implementation. I hope therefore that we can go forward with this amendment.
Baroness Henig
“Amendments to the licensing regime for private security businesses
(1) Sections 42 and 43 of, and Schedule 1 to, the Crime and Security Act 2010 are repealed.
(2) The Private Security Industry Act 2001 is amended as follows.
(3) After section 4 there is inserted—
“4A Requirement to license businesses undertaking work for or on behalf of public authorities
(1) It shall be an offence for a business to engage in any licensable conduct except under and in accordance with a license.
(2) A business engages in licensable conduct if it—
(a) is contracted with a public authority, or(b) seeks contracts with a public authority,to undertake any of the activities contained in Schedule 2, or acts as a sub-contractor to another business which meets the criteria in paragraph (b) or (c).(3) In this section—
“a business” is defined as any body corporate, Scottish partnership or unincorporated association;
“public authority” is any person certain whose functions are functions of a public nature.
(4) The Authority may publish, under section 7(1), different criteria for businesses as to those it applies to individuals.
(5) The Authority shall—
(a) publish a code of conduct for licensed businesses to which licensed businesses shall be expected to adhere;(b) publish a list of sanctions for non-adherence by a licensed business to the code produced under subsection (5)(a) which may include, but is not limited to, fines, suspension of licence, withdrawal of licence and criminal prosecution;(c) impose sanctions from the list prepared under subsection (5)(b) to any business it deems to have breached or failed to comply with the code produced under subsection (5)(a).” (4) In section 11 (appeals in licensing matters), in subsection (1)—
(a) at the end of paragraph (b), delete “or”, and (b) at the end of paragraph (c), insert “or(d) sanctions are imposed on a licensed business under section 4C(5)(c).”(5) After section 22 there is inserted—
“22A Information relating to license holders
(1) Information held by any person for the purposes of, or for any purpose connected with, the exercise of functions under this Act—
(a) may be supplied to any other person for use for any such purpose, and (b) may be supplied to any person having functions in relation to—for use for the purposes of, or for any purpose connected with, those functions.(i) the enforcement of any other enactment applying to the operations of a licensed person or licensed business,(ii) offences committed by any person in connection with or by reason of their doing work to which this Act applies,for use for the purposes of, or for any purpose connected with, those functions.(2) Information relating to the operations or licensing of a licensed person or licensed business which is held by any person for the purposes of, or for any purpose connected with, such functions as are mentioned in subsection (1)(b) may be supplied to any person having functions under this Act for the purposes of, or for any purpose connected with, the exercise of those functions.
(3) Information supplied under subsection (2) by or on behalf of the Commissioners of Inland Revenue or the Commissioners of Customs and Excise must not be supplied by the recipient to any other person without the consent of the Commissioners concerned.
(4) This section—
(a) has effect notwithstanding any restriction on the disclosure of information imposed by any enactment or rule of law, and(b) does not limit the circumstances in which information may be used or supplied apart from this section.(5) In this section “enactment” means and Act of Parliament, an Act of the Scottish Parliament or any Northern Ireland legislation or any instrument made under or having effect by virtue of an Act of Parliament, an Act of the Scottish Parliament or any Northern Ireland legislation.
(6) References in this section to a person having functions of any description include references to any person providing, or employed in the provision of, services for that person in connection with those functions.””
Baroness Henig (Lab)
My Lords, in moving this amendment, I draw attention to my interests in policing and private security as set out in the Register of Lords’ Interests.
The Minister will no doubt be pleased to hear that this amendment represents my final attempt to introduce business licensing of companies engaged in the private security sector within the framework of the Anti-social Behaviour, Crime and Policing Bill. As he will be aware, the Bill constrains the form in which my amendment can be framed. As I will explain, however, it is still my belief that the goal of business licensing of companies working in the private security sector can be achieved more effectively in this way than by the alternative routes the Government are proposing.
There is almost complete agreement across the industry, and certainly in the Home Office, that the licensing of individuals working in private security has had a beneficial effect in driving up standards and increasing public confidence. Regulation has been a force for good, as the industry has argued, by marginalising criminality and giving confidence to the purchasers of security and to the general public that they will be contracting with properly vetted and properly trained workforces.
This is increasingly important as private security firms take on more and more responsibility for safeguarding public space and looking after sensitive national infrastructure. For three years now the industry has been arguing for business licensing to build on what has been achieved in the past decade and to provide effective regulation of a sector that plays such a vital role—and a rapidly expanding one—working alongside the police, in counterterrorism activities, and with a wide range of public agencies.
The reason that no progress has been made since 2010 is clear. Within the Department for Business, Innovation and Skills and the Cabinet Office there is a determination—one might say almost an ideological fixation—that no new undue burdens should be placed on businesses, regardless of considerations of public safety and public confidence, and of the benefits of combating the criminality that still lurks in the industry. Any regulatory changes, they insist, must be proportionate and targeted; and this part of the Government has yet to be convinced that the benefits of business licensing of private security companies will outweigh the costs and that it is really necessary.
This, I believe, is why the Home Office is proposing two possible alternative routes for progress in this matter; both, in my view, profoundly unsatisfactory. The first suggestion of the Home Office is to introduce business licensing of private security companies through secondary legislation. The disadvantage of this approach is that it cannot be enforced by a range of appropriate and effective sanctions. Regulation without enforcement is worse than the existing situation, because it plays into the hands of the unscrupulous and the downright criminal, and penalises conscientious and law-abiding businesses. The essential feature of regulation is that it must be effective. The industry has legitimate concerns, and has made its view clear, that business licensing introduced through secondary legislation cannot be effectively enforced.
The second Home Office proposal is to find an MP who comes high up in the annual ballot for Private Members’ Bills in 2014 to agree to introduce business licensing by this route. The cynicism of this suggestion takes my breath away. How many Private Members’ Bills ever make it over the many hurdles put in their way to the statute book? Is this the way to engage with an important industry that turns over up to £6 billion annually? The Home Office must know that without government support this route is extremely unlikely to yield any concrete result, yet blithely suggests that this is a credible option owing to its own inability to overcome the objections of the Department for Business, Innovation and Skills and the Cabinet Office and bring in primary legislation.
This is the dilemma that my amendment is aimed at resolving. What it seeks to do is to license, in the first instance, companies with contracts, or that are seeking contracts, to work alongside or with public authorities. That would almost certainly include all approved contractor scheme companies, which covers around 70% of those working in the sector. My amendment backs this up with a full range of enforcement powers and the ability to exchange information about those companies licensed across government and public agencies. The remainder of companies working in the private security sector—almost certainly the smaller companies and the one-man businesses the Government are so concerned to protect—could then be dealt with in a few months’ time by a second set of provisions. Indeed, secondary legislation might well be utilised here. I ask the Minister: would secondary legislation be possible to complete this process? If not, a small targeted Bill in the next Session could easily be taken through to license those companies that did not come into this first tranche of my proposals.
I can see merits in this two-stage approach, but I am aware—and I have to say this—that some industry leaders are worried about it on the grounds that it adds a layer of complexity to an already complex set of industry regulations. But all private security industry leaders want an effective range of sanctions to underpin regulation, and they also all want the effective exchange of information, which will not be secured by the routes the Government currently have in mind. If the Minister could give an assurance that a second stage of business licensing to cover those companies not covered by this amendment will follow relatively quickly, this would achieve the goal of business licensing of the private security sector more effectively than the alternatives the Home Office is proposing. Therefore, I hope the Minister will accept that I am trying to be extremely helpful.
Finally, subsection (1) of the proposed new clause repeals the clauses that have been on the statute book since 2010 and that were brought in to deal with the licensing of wheel-clamping businesses. They were dealt with by the coalition Government in a different way. Since that time the provisions have remained on the statute book, giving the confusing impression that business licensing is already in train. For the sake of clarity, therefore, these provisions need to be repealed. I beg to move.
Baroness Smith of Basildon
My Lords, your Lordships’ House should be grateful to the noble Baroness, Lady Henig, not only for the expertise that she brings to this issue—and she declares her interests in that—but for her commitment in ensuring that we get some proper regulation of the private security industry. It is something that the public want and it is something that the industry itself is looking for. I would hope that the Minister would accept this or bring something back.
I would be surprised if the Government are at all reluctant to have such regulation, given that the groundwork has already been done. Back in 2010, during the public bodies review, the Government announced their intention to have a,
“phased transition to a new regulatory regime”.
The work has been done by many of those bodies involved in this sector. I am told by the International Professional Security Association that despite,
“positive engagements between all parties and three years of hard work on all sides we remain disappointed that there is still no primary legislative vehicle confirmed as the most appropriate means to reform the regulator, introduce a scale of proportionate enforcement sanctions and establish a working gateway for information sharing between the regulator and HMRC”.
As my noble friend Lady Henig explained, there is confusion about the measures taken in the Crime and Security Act, particularly around wheel clamping. People think there is regulation when there is not.
I was quite surprised to receive information from the Security Industry Authority showing how vast the private security industry is. The scale is changing rapidly. The Government have a responsibility, given that the level of state reliance on private security services is very high. The public rightly expect high standards, but they perhaps also expect that, if standards fall below the required standard or if something goes wrong, something can be done and action can be taken to deal with that.
If we look at the scope of the private security industry, most days Members of your Lordships’ House will see members of the private security industry if we go shopping, fly from an airport or use public transport. They also support police activity and guard elements of our national infrastructure. The private security is also involved in magistrates’ courts and prisoner transfers. The Security Industry Authority now licenses more than 330,000 individuals. That does not cover all those working in the industry, but that is still about twice the number of police officers in the UK. It is clearly an area where there has to be efficient and effective regulation.
We are seeing the public increasingly coming into contact with the private security industry. They have a right to expect high standards from the industry, but they also expect government to take some responsibility, particularly when the private security industry is carrying out government functions. I mentioned the transfer of prisoners, and custody is another example. The consequences of a mistake—and mistakes happen in any environment—can be extremely serious and extremely high profile. I urge the Minister to accept this amendment. I think my noble friend has given us an opportunity and a way forward, and the Minister and the Government should perhaps consider the mix of primary legislation followed by secondary legislation in order to give the same effect.
My noble friend is quite right to reject the route of a Private Member’s Bill. I know that practically the only Private Member’s Bill we will be discussing in your Lordships’ House in the next year will be the European Union (Referendum) Bill. There are more Fridays put aside for that than I have ever known in your Lordships’ House. I am an admirer of Private Members’ Bills. I got my own Private Member’s Bill on to the statute book back in 1998 in the other place, but I recognise how unusual that is, and it was not as detailed or as comprehensive as the legislation we need for this.
Clearly, legislation is essential. I think my noble friend Lady Henig has given the Minister an opportunity to take this away, look at it and see what can be done in primary legislation and what can be followed up in secondary legislation, unless the Government can come back with some way of doing this very quickly in primary legislation. I know the work has been done, but I have to say to the Minister that if something were to go wrong because of a failure of regulation, it would be dreadful when we have the opportunity here and now to do something about it.
Lord Taylor of Holbeach
My Lords, I join the noble Baroness, Lady Henig, in her tributes to the security industry and to the Security Industry Authority. As the noble Baroness, Lady Smith, said, the noble Baroness, Lady Henig, brings expertise of this industry, but she also brings enthusiasm for its development, and I pay tribute to her for that.
As I said when we debated this issue in Committee, the Government are committed to reforming how the private security industry is regulated. In the future, the Security Industry Authority will regulate businesses undertaking prescribed activities before they are able to work in the security sector. This is an important measure as it will provide the SIA with a more efficient and effective means for regulating the security sector, improving standards and, most importantly, providing better tools for combating organised and serious criminal behaviour at corporate level.
The Government’s proposals have received strong industry support. Indeed, they have been supported by the noble Baronesses, Lady Henig and Lady Smith, this evening. While significant parts of the reforms can be delivered through secondary legislation, other aspects require primary legislation. The secondary legislation will be introduced as soon as possible, and the remaining proposals will be further refined once that work has been completed.
While I agree with the noble Baroness’s desire to see reform in this area, I do not believe that the amendment she has proposed for debate this evening takes the right approach. The scope of this proposed business regulation would be significantly narrower than either of the current provisions which would be removed by her amendment. This would reduce protection of the public by preventing the regulation of security provided in the private sector and would also remove the potential to extend to businesses providing their own in-house security eligibility for membership of the successful approved contractor scheme, which has around 760 member businesses.
The new business regulation regime that we are developing is designed around the use of Section 17 of the Private Security Industry Act 2001, which was amended by Section 43 of the Policing and Crime Act 2010. Amendment 94 would remove Section 43 of the 2010 Act and, in so doing, prevent the introduction of business regulation as currently envisaged. It is not our intention to undo the work that has been done to date, including during the noble Baroness’s tenure as chair of the SIA, and therefore we intend to retain the ability to establish a mandatory business approval scheme under Section 17.
It is not desirable to have a narrower scheme focused only on those private security firms delivering under contract to the public sector, because the private sector clients of such companies have just as much need for the protection which the Government’s proposals would afford. In addition, the existing individual licensing regime does not exclude the private sector, and it is our intention to reduce burdens and costs on those individuals through the introduction of business regulation across the industry.
The amendment would also insert a new Section 22A into the Private Security Industry Act. As the noble Baroness has explained, the intention is to enable the sharing of information for any purpose connected with the Act. While I agree with the intention of enabling information sharing, this must be considered as part of the overall reforms we are taking forward to ensure any provisions achieve this intention. So while I have some sympathy with this element of the amendment, I do not believe that this is the right way to go about it.
In conclusion, while I fully share the noble Baroness’s desire to make progress with the reforms to the security industry regulatory regime, I hope that, on reflection, she will agree that her scheme is not the most appropriate way forward—it is only a partial scheme—and that, accordingly, she will be prepared to withdraw her amendment.
Baroness Henig
My Lords, I have listened carefully to what the Minister has said. The first point I want to make is that, clearly, the Minister and those of us who are arguing for this are not divided on the end. We share the same goals; we are divided on the means to achieve those goals. The thing that has worried me particularly is the speed, or rather the lack of speed, with which the Government are moving forward on this. We have waited since 2010; we are now into 2014. This was all supposed to have been completed, I remind the Minister, by the end of 2013. I remember that he gave a pledge that it would all be completed by the end of 2013. We are now in January 2014 and the Minister is still using phrases such as, “as soon as possible”, “once completed” and “we aim to do this”. He has to acknowledge that the speed has been somewhat less than he would have liked. We know where the problems lie but it is this lack of speed that motivated me to put the focus on moving with urgency. What is actually happening is that, because of the slowness and what appears to be lack of action by the Government, we are losing the support of the industry.
The Minister will be aware that industry leaders are becoming increasingly frustrated by the lack of progress. Their concern is that if this is introduced through secondary legislation the situation could even be worse for companies than it is at present, because of the difficulty of enforcement under secondary legislation. I am concerned not to lose the support of the industry. It is so unusual to have nearly all the leaders of a big industry such as the private security industry united in wanting business licensing of companies that I do not want to lose that momentum. That is one reason I have brought forward a series of amendments to try to focus attention on this issue, and to explain why the industry is so concerned about it and why we need business licensing. However, I have listened to what the Minister has said and in the light of that, all we can do is wait. If he is not prepared to bring something back at the next stage, all I can do is hope that the primary legislation to which he referred will be with us sooner rather than later. On that note. I beg leave to withdraw my amendment.
Lord Berkeley
Lord Berkeley (Lab)
My Lords, I shall also speak to Amendments 94B, 94C and 94D. These are basically probing amendments. I apologise for not bringing them forward in Committee, but I think that the Bill was changed in the other place to add these amendments. Some of the amendments that were brought in in the other place are very good, but I am concerned about the resulting balance between what PCSOs can do to cyclists and what they can do to motorists. I am sure the Minister will agree that there has to be some balance in what they can do and the way they go about it. I speak as a cyclist. I hope that I am a law-abiding cyclist. I am also secretary of the All-Party Group on Cycling.
In general, I welcome the ability of PCSOs to hand out fixed penalty notices. It is a good idea but if they can do it to cyclists, they should be able to do it to motorists as well. My amendments are, frankly, just examples, because when one digs into the legislation—the various pieces of primary legislation and the regulations—it is a bit of a can of worms, as I am sure the Minister will agree, and it has been like that for many years. I hope that we can, at least, have a little debate about this tonight and maybe see what happens after that.
I was particularly concerned when I discovered that the Metropolitan Police has been targeting cyclists in a really rather unpleasant way. There is a memo that one of my cycling colleagues has seen which gave Metropolitan Police officers a target of putting penalties on 10 cyclists each in London. That is a very bad way of going about it. Was there a similar target of 10 motorists? I do not know, but we can see where that goes. Amendment 94A would make offences under Section 35 of the Road Traffic Act 1988, which concerns failure to comply with a traffic direction, apply to motorists as well as cycle riders. The Bill says it should apply to cycle riders and I am suggesting that, if a PCSO is capable of stopping a cyclist, he should be able to stop the driver of a vehicle.
We must all accept that there are fewer policemen around now than there used to be and that PCSOs add to their presence in the streets and encourage cyclists and motorists to obey the law. This allows PCSOs to stop cyclists and, I hope, vehicles. I think it is mainly to do with a survey, which may be important. I do not think it is the most important thing we are talking about in the Bill but, clearly, if a cyclist needs to take part in a survey, he should stop and do so.
Amendment 94B is very much more important. This is to do with advanced stop lines. I fear that this needs a longer explanation. I thought for many years that the first advanced stop line that you come to is advisory, if there are two with a box in between, the box being for cyclists. I discover that it is not advisory; it has the same force of law for motorists as the second one does. I shall say a little more about that in a minute. There is also a rather odd piece of legislation about the box between the first and second advanced stop lines. There is often an entry for cyclists on the left of the box as they go into it. Apparently examples have come up in London when a cyclist wants to make use of the box—which, after all, is there to provide visibility for cyclists.
It has been the case for many years that visibility is the most important thing and lack of visibility has probably contributed to much of the sharp rise in cycling fatalities in London this year. A lot of good work has been done to try to make cyclists more visible, but one of the most important things is the box, whereby drivers can see the cyclist in the box. However, apparently there is an anomaly if one is at a stop line and a cyclist wants to turn right. Normally, the cyclist might have got into the right hand lane of the traffic before he reached the stop line, would then stop until the lights turned green, and then go forward and turn right when it was safe to do so. Apparently, the only legal way of entering this box is up that little lane on the left, which means that the cyclist has not crossed the full line—he crosses the dotted line to get into the box, then he has to go across one, two or occasionally three lanes of, one hopes, stopped traffic, to get into the right-hand side to turn right. I hope that I am not confusing your Lordships too much. It is a problem when cars do not stop at the first line. Then the cyclist wants to go further ahead to be seen, and then he is crossing the second line, maybe, and he gets stopped by the police and fined—and he will get stopped by the PCSOs in future.
Lord Rosser
The amendments proposed by my noble friend Lord Berkeley, which he says are probing amendments, seek to extend the powers available for designation to PCSOs. We debated the issue of the powers of PCSOs in Committee in the light of a government amendment extending their powers. It is hardly a surprise that we now have an amendment which, on the face of it, wants to go further.
In his response to the debate in Committee on 11 December, the Minister said that it was,
“right that the chief officers should have the freedom to take account of local circumstances and priorities when determining how their PCSOs are deployed”.—[Official Report, 11/12/13; col. 822.]
He also referred to a police and crime commissioner who had indicated a desire to see PCSOs tackling traffic offences. If the Minister accepts that my noble friend’s amendments on PCSOs’ powers go beyond those proposed in the Government’s amendments, agreed on 11 December 2013, but is not going to accept my noble friend’s amendments, can he say why, before Christmas, on 11 December 2013, he felt it right that the chief officers should have the freedom to take account of local circumstances and priorities when determining how their PCSOs are deployed but on 20 January, after Christmas, he does not?
Lord Ahmad of Wimbledon
My Lords, I thank the noble Lord, Lord Berkeley, for his amendments. I suppose there was a general answer when he was talking about dotted lines and straight lines. I was told from a very young age that whenever you crossed the line, it was not the right thing to do. That is something all should keep in perspective when looking at these issues. The noble Lord spoke to the subject in his amendments with a great deal of expertise and insight. I fully acknowledge his work as president of the Road Danger Reduction Forum and as vice-president of the Cycling Touring Club.
The noble Lord’s Amendment 94D would mandate that all PCSOs must undergo a cycle training course before a chief constable designates cycle-related powers. We recognise that, as a result of these changes, additional training will be required to ensure PCSOs have the right knowledge, skills and expertise to exercise these powers. We do not agree that this should be mandated specifically by Whitehall, but we are confident that the police and the College of Policing are best placed to deliver this. I will bring this to their attention. The noble Lord was speaking with insight and I am quite happy to facilitate a meeting with the Roads Minister to see how we could talk about these subjects in terms of their wider application. I think he would agree, from his personal experience as a cyclist—and an avid cyclist at that—that across Britain and in our cities as well we are going through an evolutionary change on cycling. There is a ready acceptance now that cycling is something that is to be encouraged as part of the transport mix. When you go to cities such as Cambridge, for example, you actually see how it operates more effectively than in other parts of Britain. We need to share good practice across the country.
I now turn to Amendment 94C regarding the updating of regulations. The Department for Transport has consulted on the simplification of the current regulations with groups including the police. Revising these will form part of their ongoing work on the red tape challenge. Granting PCSOs the power to enforce regulations on cycling without lights will have a real impact on improving the visibility of cyclists and will help prevent road traffic accidents. The noble Lord acknowledged this himself in speaking to his amendments. That is why we believe that delaying the introduction of this power until after the regulations are updated would not achieve our objective of improving the safety of cyclists and other road users as quickly as we want to. His point about the pedals on cycles is well made. I remember years ago passing the cycling proficiency test and there were certain things which were “dos” and “don’ts”. He is correct in saying that many cycles now in Britain do not have reflectors and there is a need for those regulations to be updated. His point of raising these issues with manufacturers is also well made and noted.
Amendments 94A and 94B seek to grant PCSOs the power to issue motorists with a fixed-penalty notice for failing to comply with traffic directions and for failing to comply with advance stop sign regulations. We recognise that PCSOs have a key part to play in tackling issues around road safety and have consulted with the police and other key stakeholders on this matter as part of our ongoing work to explore the development of the role and powers of PCSOs. I am grateful to the noble Lord for suggesting these further enhancements to PCSO powers and I will certainly take his suggestions away to consider them as part of the wider work on reviewing PCSO powers that is already taking place. However, we want to understand fully the implications for PCSOs, the police and the public and until we have completed that further work I think it would be premature to make these changes at this time. I am aware that there is some concern that our proposals will result in cyclists being picked on by PCSOs. Let me assure the noble Lord that that is clearly not our intention. The powers in the Bill are not new, as a police officer can already exercise them. Just as police officers use their discretion, we expect that PCSOs will also do so.
Perhaps I may pick up on a couple of points made by the noble Lord, Lord Rosser. Of course, the extension of these new powers is very much in the hands of the chief constable. PCSOs have 20 standard powers and another 22 discretionary powers. These changes bring a further 19 discretionary powers. It is really down to the chief constable to make the decision from an operational perspective as to what powers should be extended to PCSOs. We believe that is the right thing to do. We know that the public really value the role PCSOs play in tackling low-level crime and anti-social behaviour and we believe that this package of measures will ensure that they can continue to play a key part in providing the best service to the communities they serve. Given these reasons and, I hope, the assurances I have given to the noble Lord that we will continue to consider the points he has raised and the powers available to PCSOs, I hope the noble Lord will feel able to withdraw his amendment.
Lord Berkeley
I am grateful to my noble friend Lord Rosser for his support and to the Minister for his very helpful reply. I did not really expect the amendments to be accepted as they are today at this comparatively late stage. It is good that the Department for Transport is looking at these things and it would be useful to have a meeting with the Roads Minister. I hope that the Minister has an assurance from the Department for Transport that the amendments which were put in at a previous stage are also part of this integrated policy, because if not, there could be some trouble in the future. But I am sure he has and I am grateful for what he said. I beg leave to withdraw the amendment.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I will speak at the same time to Amendments 94DB to 94DF inclusive. These are all connected to Part 12 of the Bill concerning extradition.
I will briefly summarise what appears to be a slightly technical and arid set of amendments, but which would nevertheless have a very significant impact. They would restore to individuals arrested under an extradition warrant the automatic right of appeal which currently exists—an automatic right which the Government are proposing to remove under the terms of this Bill. Let me make it absolutely clear that these amendments do not somehow let individuals off the hook who are arrested under an extradition warrant. They merely preserve the right that those individuals enjoy at present. Noble Lords will probably be aware from the briefings they have received that these amendments are supported inter alia by Fair Trials International, of which I need to remind the House that I am a trustee, by Liberty and by Justice.
I will now set that summary in context. First, my particular concern is the impact of the Government’s proposal on those arrested under what is known as a Part 1 warrant—more familiarly, the European arrest warrant—because of the very short timetable of EAW proceedings. Secondly, I want to make it clear that this is not an attack on the EAW generally. The EAW has enabled many very nasty criminals—terrorists and the like—to be speedily brought back or sent back to face justice. That is as it should be. Thirdly, and quite understandably, this Government—and, indeed, the previous Government—focus on these very high-profile cases, but the vast majority of cases do not involve matters of high importance.
In the last year for which records are available, there were 1,438 arrests under the EAW and 1,057 surrenders. For the most part, these involve ordinary members of the public for whom this will be an entirely strange and unfamiliar process and one which they are not well equipped to challenge. Some of them will have been arrested for crimes which they did not commit. Therefore, it is on behalf of these people—Edmund Burke’s “little platoons”—that I have tabled these amendments and ask for the House’s support today.
I shall be fair to the Government and my noble friend on the Front Bench. The Government asked Sir Scott Baker to review the operation of this country’s extradition arrangements and they have implemented a great many of his recommendations. Further, as part of the Lisbon opt-out, opt-back-in procedure, the Government have indicated a number of further changes. For example, they expect much less use in future of the EAW for trivial crimes and that greater efforts will be made to ensure that cases are trial-ready before the surrendering of individuals takes place. Those are indeed welcome changes and I congratulate the Government on making them. However, while increasing these protections, the Government are proposing to remove one great protection—that of the automatic right of appeal.
I hope that the House will forgive me if I remind noble Lords of two particular aspects. The first, as regards the EAW, is just how compressed the process of surrender is. An arrest will be followed by a court hearing at Westminster magistrates’ court within 48 hours. The accused will be represented by a duty solicitor who may or may not know anything about extradition. Edward Grange, a specialist extradition solicitor, has explained:
“At present there are over 400 individual solicitors signed up to the extradition rota at Westminster Magistrates’ Court. The majority of individual solicitors have never had conduct of an extradition case before and yet these are the solicitors that are entrusted to provide appropriate advice and assistance to those arrested on extradition warrants. The Extradition Act 2003 is complex and the case law it has generated is vast”.
A further hearing after that initial hearing will follow within 21 days, so that in as little as 35 days a person can be on his way to another jurisdiction, many of which will be operating with entirely unfamiliar procedures and conducted in a language which the accused probably does not understand at all.
Further, it is worth while remembering that, if the person wishes to appeal, he has in any case to make that appeal within seven days. I ask noble Lords to imagine the case of an unsophisticated person remanded in prison. His first legal representative, it turns out, knows nothing about extradition, so he has to make a change. He has to gather evidence, probably from at least two jurisdictions, perhaps involving many people, and put all that together into a case, and he has to do so within seven days while he is confined to prison. So much for the specifics of the compression of the EAW procedure.
The second point is the catastrophic impact that extradition can have on an individual—on his family, on his home, on his employment and indeed on his whole life. I shall not weary the House today with quotations from people who have been involved in these cases, but the stories of how people’s lives have been turned upside down by mis-arrests and an inability to get the appropriate advice and help are truly horrifying. The step of a state arresting one of its own citizens and handing him or her over to another state to try is a very fundamental one. It needs to have a proper level of safeguards. That is why I have tabled these amendments today and why I think they are so important.
If I could look over the shoulder of my noble friend on the Front Bench and glance at his speaking notes, what do I think I would see there as the Government’s wish behind the policy of removing the automatic right of appeal? I think the first thing would be that they were doing so because Sir Scott Baker recommended its abolition due to what he saw as a large number of unmeritorious appeals. However, the world has moved on since Sit Scott Baker undertook his review. First, the safeguards introduced by the Government, as I referred to earlier, through their amendments to the 2003 Act will now give weight to arguments which may previously have been deemed to be without merit due to the lack of a legislative basis. Therefore, it is likely that these reforms will reduce the number of unmeritorious appeals reaching the High Court. Further, the Government have introduced a requirement in Clause 145 of this Bill for the National Crime Agency to review extradition requests and sift out cases where it is clear that a judge would be required to order a person’s discharge on the basis that extradition would be disproportionate. Taken together, those steps will certainly mean a substantial reduction in the number of EAW cases.
It is important to remember that, while Sir Scott Baker recommended that the automatic right of appeal should be removed, as a compensating factor he also recommended that the time in which an appeal could be launched should increase from seven to 14 days to match the period that exists for a Part 2 warrant. I tabled an amendment to that effect in Committee. Subsequent to that, and after discussions with my noble friend on the Front Bench, I reflected and concluded that the longer the appeal period, the more the well resourced “nasty” case could take advantage of these delays to frustrate the underlying purpose of the EAW. Therefore, I have not retabled that amendment, which we discussed in Committee on 11 December. Instead, I argue for the preservation of the status quo as regards appeal. I shall not try to pretend to the House that I understand the details of how the appeal process works but the groups with which I have consulted over this matter understand the details and have written to me to say:
“Our review of the judgments of the High Court in extradition appeals … demonstrates that judges are able to dispose of appeals based on weak arguments in an efficient manner which prevents significant court time from being spent on unsuccessful appeals”.
In conclusion, while I congratulate the Government on the changes and improvements they have made, I express sorrow and regret at their apparent determination to remove this important protection. I am convinced that British judges are quite capable of sorting the wheat from the chaff in appeal cases. Preserving the automatic right of appeal will undoubtedly help ordinary people inadvertently caught up in the machinations of the EAW. I believe that it is in the interests of justice that the automatic right of appeal should therefore be maintained. I beg to move.
Baroness Hamwee
My Lords, things can go wrong in the best of organisations and the most learned and expert of professions. To me, the right of appeal is fundamental and I support the noble Lord.
Baroness Smith of Basildon
My Lords, I listened carefully to the noble Lord, Lord Hodgson. I think that he has argued a powerful case this evening and I share his concerns. I am not convinced that the Government have made the case for removing the automatic right of appeal. Given the criticisms that the Government themselves have made of the European arrest warrant, I find it particularly surprising that they now seek to remove the automatic right to challenge such a warrant.
I can understand why the Government brought this forward in terms of the Baker review. However, we are talking about British citizens being extradited to face what I would hope would be justice in another country. I have looked at the same information as the noble Lord, Lord Hodgson, and the figure of 12% of appeals being successful is likely to change significantly. The Government have made other, welcome changes to ensure that cases without merit are more easily dismissed, and we would support those. I am not convinced that the information that Baker had to work with can now be viewed as a reliable indicator of the current number of unsuccessful appeals. As the noble Lord, Lord Hodgson, said, the world has moved on and the Government have made changes, and therefore the figures will have changed.
However, the court will still have to make a decision on whether to allow leave to appeal. I do not know whether the noble Lord can help me on that. Would it be a written or an oral process? That is not clarified in the legislation. Whatever the process, it is going to require a degree of judicial and administrative time, and that seems to me to eat into any cost savings. However, the impact assessment says that those savings will in any case be minimal, if there are any at all.
The other point that the noble Lord made was about the court’s discretion. An individual would have to be able to show that they had new evidence or a different legal analysis, or that the evidence that the judge relied on in making the original decision to extradite them was wrong or incorrectly interpreted. We have to accept that there can be mistakes. The noble Lord, Lord Hodgson, outlined the scenario of a duty solicitor. He or she would do their best for their client but they might only just have met the client and may not have all the information. It is a complex area of law and they may not be up to speed or have dealt with such cases before, so it is not impossible, although it is understandable, for mistakes to be made. It seems to me that in the very short time available for seeking permission to appeal, they would have to have almost the same information as they would need for an appeal, and that is quite an amount of detailed information. I wonder how somebody in those circumstances could provide all the information required in the time allowed.
Lord Hope of Craighead
My Lords, before the noble Baroness sits down, it might help if I were to say that my understanding is that applications for leave to appeal have to be in writing. The grounds for seeking leave have to be written out in the application, and usually these things are disposed of on paper, so it is essential for success to have the grounds properly stated on paper. One has to bear in mind—this may be the noble Baroness’s point—that these things will be put together by somebody who is in custody, within a very short time limit, who may find it difficult to get access to legal advice. Without expressing a view one way or the other, I suggest that the practicalities of this measure need to be very carefully considered against the position of the individual who is having to comply with what would be now required.
Lord Taylor of Holbeach
My Lords, I confirm that the process is a written one—the noble Baroness asked that specific question.
Perhaps it is best if I start with the government amendments in this group, which would insert two new clauses into the Bill. First, Amendment 94DG implements an optional provision in the Fourth Additional Protocol to the European Convention on Extradition—the ECE—which the Government intend to ratify shortly. The ECE governs extradition between the UK and members of the Council of Europe—other than EU member states—plus Israel, South Africa and the Republic of Korea. This provision concerns the issue of speciality, which is the bar on a person being proceeded against for offences committed prior to extradition other than those listed in the extradition request.
Among other things, the Fourth Additional Protocol provides an optional mechanism whereby states can restrict the personal freedom of a person while a request to waive the rule of speciality is being considered by the state that originally extradited the person. This is not something that is currently catered for in Sections 150 and 151A of the Extradition Act 2003, which deal with the speciality rule in these cases. Accordingly, Amendment 94DG makes the appropriate changes to the 2003 Act. A person may only be detained under this new provision where both states have made the relevant declaration under the ECE and that declaration is still in force, and certain specified conditions, as set out in the new clause, are met.
Perhaps I may elaborate on that point. Those conditions are as follows. First, the Home Secretary requests the state that extradited the person to waive the speciality rule. Such requests are predicated on the prosecuting authorities being satisfied that there is a case to answer and that prosecution for other offences would be in the public interest. Secondly, the requested state must be notified by the Secretary of State that she would wish the person to be detained while they consider the request to waive specialty. Thirdly, the requested state must explicitly acknowledge the notification. If the requested state objects to the detention request then that person may not be detained; or if detained, must be released. Finally, and assuming these criteria are met, any application to detain the person will be made by the prosecuting authorities to the courts in line with general criminal law procedures. The new provision allows for detention in these circumstances for a maximum period of 90 days.
We believe there will be only rare cases which fall into this category. However, in those rare cases, the ability of the prosecuting authorities to apply for the person to be remanded in custody could be crucial to safeguarding the public and effecting a successful prosecution.
Amendment 94DH replaces Section 142(2A) of the 2003 Act. Section 142 deals with the issue of European arrest warrants in the UK; that is, in cases where the UK is requesting the extradition of a person from another member state. In the case of people who have already been convicted of an offence and whose extradition is requested in order to be sentenced or to serve a sentence, one of the conditions for the issue of an EAW by a UK judge is that the person is “unlawfully at large”. In a recent case a judge refused to issue an EAW in respect of a person who was in prison in another member state on the basis that the person could not be said to be “unlawfully at large”. Following that, we have decided to amend the 2003 Act to make clear that it is no barrier to the issue of an EAW that the person is in prison in the requested state. Amendment 94DH will achieve that.
I turn to the amendments tabled by my noble friend Lord Hodgson of Astley Abbotts. Let me preface my comments on the detail of his amendments by reiterating that we welcome the constructive approach he has taken to the extradition provisions in the Bill, and I am pleased to say that there is a great deal of common ground between us. As my noble friend explained, Amendments 94DA to 94DF would remove the appeal filter introduced by Clause 148.
A key finding of Sir Scott Baker’s review of our extradition arrangements was that the success rate of appeals was extremely low—less than 13% in 2010. In other words, the court system is burdened by unmeritorious appeals which delay hearings for all appellants. The purpose of the appeal filter is to address this problem by making appeals subject to permission from the High Court. I understand the points that my noble friend makes, but I must stress again, as I did in Committee, that these provisions will not prevent anyone applying for permission to appeal. Once an application has been made, the High Court will decide which cases should proceed to a hearing. Each application will be considered by a High Court judge.
Finally, I wish to make two further comments with regard to two of the other extradition clauses in the Bill. The first relates to Clause 144. That clause inserts a new Section 12A into the 2003 Act which provides a bar to extradition in EAW cases—cases where the issuing state has not taken a decision to charge and a decision to try the person. I want to make clear that the purpose of and intention behind this clause is to ensure that the case is sufficiently well advanced in the issuing country. We want to ensure that ordinary mutual legal assistance arrangements are used fully and properly. It is not our intention that a parochial approach to this clause should be taken. As the Court of Appeal has said, the Extradition Act 2003 should be interpreted in a cosmopolitan sense and be mindful of the stages of criminal procedure in other member states which do not use the common law. It is important that there is a clear intention to bring the case to trial. An EAW must, after all, be issued only for the purposes of conducting a criminal prosecution, as Article 1 of the framework decision makes very clear. We want an EAW to be used only for its proper purpose.
Comments have been made about the timescale for appeals. Clause 148 sets out that the High Court must not refuse to entertain an application for leave to appeal by the requested person solely because it has been submitted outside the normal time period if the person did everything reasonably possible to ensure that the notice was given as soon as it could be. That is an important provision. It is also important to note that the seven and 14-day period relates to the notification of the intention to seek leave to appeal. I appreciate the concern that this is an insufficient period. However, it is also important to be clear that the onus should be on the person to ensure that as much as possible of the detail of why they believe they should not be extradited should be before the court as soon as possible. This would surely improve their chances of having the case discharged at an early stage by the district judge.
I would also like to clarify what the Minister for Policing, Criminal Justice and Victims said in the Commons Committee on 16 July last year in relation to dual criminality and Clause 152. He spoke about how this provision would work in practice in relation to an example about the offence of Holocaust denial. I want to ensure that there is absolute clarity on this point. Where an EAW was received for Holocaust denial allegedly committed in the UK, extradition would be barred for that conduct because it is not an offence here. However, extradition would be granted for such conduct committed in the issuing state, provided that the conduct is punishable in the issuing state with imprisonment or another form of detention for a term of three years, or a greater punishment, and of course that none of the bars in the Act apply so as to prevent extradition.
The noble Baroness asked a number of questions and I hope that I have answered some of them. Perhaps I may say particularly that the changes we are making will give people greater protections and improve the overall operation of the EAW, but that they will not impact on the number of unmeritorious appeals. It will be a matter for the courts how they operate the filter and decide whether to grant or refuse admission. On the impact of the NCA filter—proportionality—while the filter will leave the number of low-level cases that the courts will have to consider, we cannot say how it will impact on the number of cases that the court will consider. This will be dependent on the number of requests made by a state. I hope that I have been able to persuade my noble friend that our approach on extradition appeals is the right one and he should not press his amendments. As for the government amendments, I commend them to the House.
Lord Hodgson of Astley Abbotts
As ever, my noble friend is very courteous and extensive in his reply. I thank those who have spoken in support. The noble and learned Lord, Lord Hope of Craighead, made the point perfectly about the practicalities of doing something when you are in prison and doing so in a very limited timescale.
My noble friend, this evening and in our earlier discussions, placed great stress on the use of the word “reasonably”, and it is neither for me nor for various Members of the House to know how the judges will interpret “reasonably” when they come to consider this. I am sure the noble and learned Lord will have some views on that, but I will not take it any further tonight.
I thank my noble friend Lady Hamwee and the noble Baroness, Lady Smith of Basildon. I think the noble Baroness put her finger on it; we are in a changed situation now, and with great respect to my noble friend, he did tend to fall back on the clogging up argument. The reality is that the clogging up argument is yesterday’s argument. The Government have made some terrific changes, which I freely admit are going to make a great difference. It would be helpful if he could at some point let the House know the Home Office estimate of the impact of the new safeguards in reducing the number of EAWs to be issued and also, as the noble Baroness said, of the similar impact of the proportionality test that is going to be carried out the National Crime Agency, because I suspect that within the Home Office the number of EAWs will be reduced and therefore the number of unmeritorious appeals will be reduced greatly.
I conclude by saying that it is easy to think this is all very dry and dusty—but when you hear what people go through, it is not. Mr Andrew Symeou, speaking to the Home Affairs Committee last September, two years after he had been returned after a prolonged time held overseas, said:
“I have stories that you could not imagine. To be the youngest person in a foreign maximum security prison was traumatic. It changed my life in ways that I never thought it could. Even to this day I don’t feel like myself anymore. It should never have happened. I have lost too many years. All my friends are in full time employment and I am still trying to settle back into my life. I was a 19-year old student. I had never been in trouble with the law before. To show a British court this overwhelming evidence of my innocence and then to be extradited is crazy. I think it is quite simple: just don’t extradite people who are able to prove their innocence”.
It is on behalf of people like him that I am raising this issue tonight, but I do not intend to take it any further at this stage. I hope that my noble friend can give us some further and better particulars about the impact of the changes the Government are making. In the mean time I beg leave to withdraw the amendment.
Lord Taylor of Holbeach
“Extradition to the United Kingdom to be sentenced or to serve a sentence
In section 142 of the Extradition Act 2003 (issue of Part 3 warrant), for subsection (2A) there is substituted—“(2A) The condition is that—
(a) the person has been convicted of an extradition offence by a court in the United Kingdom,(b) his extradition is sought for the purpose of his being sentenced for the offence or of his serving a sentence of imprisonment or another form of detention imposed in respect of the offence, and(c) either a domestic warrant has been issued in respect of the person or the person may be arrested without a warrant.””
“Detention of extradited person for trial in England and Wales for other offences
(1) In sections 150 and 151A of the Extradition Act 2003 (dealing with extradited person for other offences), at the end of subsection (2) there is inserted—
“This is subject to section 151B.”
(2) After section 151A of that Act there is inserted—
“151B Detention of person for trial in England and Wales for other offences
(1) Section 150 or 151A does not prevent a person in whose case that section applies from being detained with a view to trial in England and Wales for an offence if the conditions in subsection (2) are satisfied.
(2) The conditions are that—
(a) the United Kingdom and the territory from which the person was extradited have each made a declaration under Article 14(3) of the Extradition Convention, and the declarations are still in force;(b) the Secretary of State makes a request for the consent referred to in section 150(3)(c) or 151A(3)(c) in respect of the offence (“the consent request”);(c) the Secretary of State gives notification, which is explicitly acknowledged on behalf of the territory, of the date on which the detention is to begin (“the notified date”). (3) The Extradition Convention is the European Convention on Extradition done at Paris on 13 December 1957.
(4) This section applies only to detention during the period beginning with the notified date and ending with whichever of the following occurs first—
(a) if a notification of opposition to the detention is given on behalf of the territory, the date on which Secretary of State receives it;(b) the date on which the Secretary of State receives notification given on behalf of the territory as to whether the consent request is granted or refused;(c) the expiry of the period of 90 days beginning with the date on which the consent request is received.””
Syrian Refugees
(10 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
My Lords, in response to an Urgent Notice Question in the House of Commons earlier today, my honourable friend Mr Mark Harper, the Minister, responded as follows:
“More than half the Syrian population of 9.3 million is in need of humanitarian assistance, and 2.3 million have been displaced from Syria into neighbouring countries. This is a crisis of international proportions and needs a commensurate response from the international community. The Government are proud to be playing their full part in that response and share the view of the UN Secretary-General that the priorities must be to, “assist the Syrian parties in ending the violence and achieving a comprehensive agreement for a political settlement”, and ending the suffering of the Syrian people.
No one should underestimate the difficulties ahead, but we are determined to strive for a peaceful settlement through the Geneva II process which starts later this week and is working towards the establishment of a Transitional Governing Body for Syria. We continue to believe that the best way to address the suffering of the Syrian people should be to provide humanitarian assistance to displaced people in partnership with neighbouring countries and UNHCR. Prior to last week the Government had provided £500 million for the Syrian relief effort already, of which £480 million has been allocated to partners in Syria and the region. It has already helped over 1 million people, for example almost 320,000 people are being provided with food assistance each month in Syria and neighbouring countries and over 244,000 people in Syria have been offered medical consultations. The Government are continually pressing for better access and protection for humanitarian convoys inside Syria so that aid can get to the millions in need inside the country. This represents the UK’s largest ever response to a humanitarian crisis.
We are leading the way in helping Syrians suffering from the humanitarian crisis. We contribute in several ways: as the second largest donor helping refugees in the region behind the United States of America and through consideration of Syrian asylum claims under our normal rules. In the year to September we recognised over 1,100 Syrian nationals as refugees. We are very aware that some, including the UNHCR, would like to see a more proactive programme of resettlement of refugees currently hosted by countries neighbouring Syria.
We have considered the options carefully and respect the views of those countries that favour a resettlement programme, but we maintain the view that our top priority should continue to be to provide humanitarian assistance to displaced people in the region in partnership with neighbouring countries, UNHCR and other UN and non-governmental partners. Most of those displaced want to return home as soon as it is safe to do so and protection in the region helps to afford them that hope.
Beyond immediate humanitarian assistance, our priority must be to help neighbouring countries provide sustainable protection in the region. Accordingly, this should be our focus rather than resettlement or providing humanitarian admission to displaced Syrians, initiatives which provide only very limited relief to the neighbouring countries and can only have a token impact on the huge and increasing volume of refugee numbers.
The UK can be proud of its contribution so far but there is still much to do. Last week the Secretary of State for International Development pledged a further £100 million in aid.
I recognise that this is a highly emotive issue and one that continues to require real action through high levels of international co-operation, both in the region and more widely. The UK has a proud tradition of providing protection to those in need and this Government are committed to continuing to play their full part in the international response to the humanitarian crisis in Syria”.
That concludes the Statement.
Baroness Smith of Basildon (Lab)
My Lords, I am grateful to the Minister for repeating the Answer to the Urgent Question. As he said, more than 2 million Syrian refugees, many of them children, have fled to neighbouring countries. Their situation is catastrophic and totally desperate.
We can take pride in the response of the British people, and the UK has rightly led the way in providing aid. However, we have now been asked by the United Nations to join its programme, together with 16 other countries so far, to help the most vulnerable refugees—those who struggle to survive in the camps. I am talking about abandoned children who have no other protection or support; torture victims; those in need of medical help; mothers and young children; and those who have been abused in the camps. We know that many women and young girls are at risk of sexual abuse and rape. So this is not about immigration policy or border control; it is about playing our part to provide sanctuary to the weakest and most vulnerable.
Charities such as Save the Children and Oxfam are calling on us to act alongside the 16 other countries that have offered places to the weakest refugees. So far the Government have refused to join, calling the programme “tokenistic”. Will the Government now urgently reconsider that decision? How many of the refugees at the greatest risk, who are fleeing murderous conflict and are in fear of their lives, will be offered a safe haven in the UK?
Lord Taylor of Holbeach
My Lords, I have made clear by repeating the Answer from my colleague Mark Harper that the Government’s policy is focused on providing aid where the problem exists—that is, within the camps and with displaced persons in the region. We are providing financial support and our aid programme is designed to help the most vulnerable, both in Syria and in neighbouring countries. For example, we are supporting the UNICEF programme providing psycho-social support, services and protection for some 15,000 of the most vulnerable children.
Baroness Falkner of Margravine (LD)
My Lords, does my noble friend agree that the only way to resolve this humanitarian catastrophe is to wish the political process that we are about to embark on success? Unless we conclude with that, it will be just a drop in the ocean.
As to asylum and the 1,100 people that the Minister mentioned—who were also mentioned by the Deputy Prime Minister a few days ago—will he tell the House whether Syrian students who might be resident at universities in the United Kingdom will be granted asylum, should they so apply, and whether family reunion policies would apply to them if they were successful?
Lord Taylor of Holbeach
My Lords, we have already in existence an immigration concession policy which we introduced in October 2012 for Syrian nationals who are already legally present in the UK. The concession was due to expire on 15 March 2013 but, given the continued instability in Syria, it was extended for a further year and is now due to expire on 28 February 2014. We are currently considering options to extend this concession further. We have not sent anyone who is in this country back to Syria.
On the question of reuniting refugees in the UK with their families, in line with our international obligations, family members of those granted refugee humanitarian protection status in the UK, including those from Syria, may apply for family reunion from outside the UK. However, we have no plans to allow Syrian nationals to enter the UK beyond the normal immigration channels at present.
Lord Boateng (Lab)
My Lords, the current regime, with its undoubted failings, at least has protected religious freedom in Syria. Those who seek to replace it seem to have no qualms about persecuting Christians and other religious minorities. What steps does Her Majesty’s Government propose to take in order to protect those who will never be able to return to Syria while those who persecute them exercise authority in that country? How does Her Majesty’s Government propose to ensure that religious freedom is seen as something that is of the utmost priority in the coming talks in Geneva?
Lord Taylor of Holbeach
The noble Lord rightly points to the need for a political solution because that is the long-term solution to all these difficulties. The catastrophic turn of events in Syria points to the need for finding a solution in which freedoms are established and people can enjoy freedom of expression and freedom of worship in ways that we would consider acceptable in this country. It can be achieved only through success at the conference, which I believe is on Wednesday. Let us wish the conference well.
Baroness Berridge (Con)
My Lords, I am grateful to the Minister for clarifying that 1,100 people have been granted refugee status, but I think it would be useful to have further clarification. How many of those people were already in this country when they applied for asylum, and how many have very dangerously made their way to our shores and claimed asylum? It seems that with the latter situation we are enabling some of the most able who can travel to come to our shores to get refugee status and not some of the most vulnerable, who have been processed by the United Nations and who are desperately in need of refugee status, to gain that status. Can the Minister reassure us that, post Geneva II, there will be a reconsideration of the Government’s policy, particularly in relation to our taking orphans from these camps who have no basis to go back to Syria, whatever the political settlement may look like?
Lord Taylor of Holbeach
I make no commitments on the latter point, and I cannot give a breakdown of the location of the asylum seekers—the 1,100 Syrian nationals—who have been successful in their applications. I know that 1,566 Syrians applied for asylum in the year ending September 2013, the latest data we have. The UK is the largest recipient of asylum seekers from Syria behind Germany and Sweden.
Baroness Lister of Burtersett (Lab)
My Lords, I welcome what the Government are doing, but I do not see that it is an either/or situation. I have not heard a clear reason why the Minister is resisting the plea made by a number of voluntary organisations in an open letter to the Prime Minister and the point made by my noble friend. Surely we could be doing something to open our doors to some very vulnerable people.
Lord Taylor of Holbeach
My Lords, we are not doing nothing. We are trying to work as best we can with other agencies. For example, the Home Office operates two resettlement programmes in partnership with the United Nations High Commissioner for Refugees. The main resettlement programme is Gateway. In agreement with UNHCR, refugees are resettled from a small number of targeted locations. Since the first arrivals in 2004, the UK has resettled more than 5,500 refugees under this programme. The programme for each year is agreed in advance with ministers.
Baroness Williams of Crosby (LD)
My Lords, the Syrian crisis is probably the most serious crisis that has confronted us for a very long time. Our allies around Syria—Turkey, Lebanon and other countries—are battling under the strain and beginning to break down under it. There is no doubt that the Government’s policy has been excellent in terms of financial aid and I give full credit to it, but I agree with the noble Baroness who has just spoken that the gesture of having some Syrian children and families here would be an example to the rest of the members of the United Nations. That example would come all the more from a country that has given moral leadership in terms of financial help. The Government need to take one more human step to show that they are willing to have a limited number of Syrian families in this country as an example to the rest of the European Union and the rest of the United Nations.
Lord Taylor of Holbeach
I have got the sentiment of a number of the questions asked here this evening and I know that a number of noble Lords wish that the Government would go further. However, the Government have considered this matter very carefully and respect the views of those who favour a co-ordinated response. We maintain the view that our top priority should continue to be to provide humanitarian assistance to displaced people in the region, in partnership with the neighbouring countries, the UNHRC and other UN and non-governmental partners. That is the focus of our policy commitment. As I have said, £500 million has already been committed and another £100 million was announced only the other day. That is £600 million in total invested in that programme. That is something that this country should be proud of.
Baroness Anelay of St Johns (Con)
With great respect to my noble friend, we have reached the 10-minute limit.
Costs in Criminal Cases (Legal Costs) (Exceptions) Regulations 2013
(10 years, 10 months ago)
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Lord Faulks
That the draft Regulations laid before the House on 25 November 2013 be approved.
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, I shall speak also to the draft Civil Legal Aid (Merits Criteria) (Amendment) (No. 2) Regulations 2013.
The Costs in Criminal Cases (Legal Costs) (Exceptions) Regulations 2013 amend the Prosecution of Offences Act 1985 to provide that acquitted defendants who have been found to be ineligible for legal aid as a result of the new Crown Court financial eligibility threshold of £37,500 or more annual disposable household income can receive a payment from central funds in respect of their private defence costs.
The purpose of the regulations is to introduce an additional exception to Section 16A of the Prosecution of Offences Act 1985 and the general rule that a defendant’s costs order may not require payment out of central funds in respect of the accused’s legal costs. This amendment allows acquitted Crown Court defendants ineligible for legal aid as a result of the new threshold to apply for a defendant’s costs order and to receive a payment from central funds in respect of their private defence costs at legal aid rates. This is in line with the changes made in respect of acquitted defendants in the magistrates’ court which were approved by Parliament during the passage of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
The Prosecution of Offences Act 1985 makes a number of provisions in relation to costs in criminal cases, including in relation to defence costs. Section 16A, in relation to legal costs, provides certain exceptions to the general rule that a defendant’s costs order may not require the payment out of central funds of an amount in respect of the accused’s legal costs.
The draft instrument under consideration makes provision for an additional exception under Section 16A. It allows acquitted Crown Court defendants ineligible for legal aid as a result of the new threshold to receive a payment from central funds in respect of their legal costs. Such defendants would be reimbursed at the rates and scales set out by the Lord Chancellor in guidance, as provided for by Regulation 7(6) of the Costs in Criminal Cases (General) Regulations 1986.
The amendments introduced by this instrument are an important element of the introduction of a financial eligibility threshold in the Crown Court, to ensure that the wealthiest defendants would no longer automatically be provided with legal aid up front at public expense. The threshold has been set at a level where we believe the majority of defendants should be able to pay the defence costs of Crown Court cases privately, as set out in the Transforming Legal Aid: Next Steps response paper. There will, however, be a review mechanism to ensure that those individuals who really cannot pay their defence costs privately can be represented in court. This will be similar to the existing hardship scheme in the magistrates’ courts. As I outlined earlier, acquitted defendants, subject to your Lordships’ approval, will receive a payment from central funds at rates and scales set by the Lord Chancellor.
To conclude our proposals on criminal costs, the Government believe it is right to include an additional exception to allow acquitted Crown Court defendants ineligible for legal aid as a result of the new threshold to receive a payment from central funds in respect of their legal costs. Even though this will cost the public purse at a time of significant pressure on departmental budgets, it is a fair change to make given that such defendants will need to pay privately.
I now turn to the draft Civil Legal Aid (Merits Criteria) (Amendment) (No. 2) Regulations 2013, which amend the Civil Legal Aid (Merits Criteria) Regulations 2013. They amend the merits criteria that apply in applications for civil legal aid to prevent funding for cases assessed as having borderline prospects of success. It is important to note that this affects only certain applications for a specific form of service. The purpose of these regulations is to prevent cases assessed as having borderline prospects of success from receiving civil legal aid in the future.
In order to be funded, civil legal aid cases must pass the applicable merits test, as set out in the 2013 regulations. The aim of the test is to ensure that funding is targeted at the cases that most justify it. The prospects of success test is just one element of the overall merits criteria that civil legal aid cases are subject to, but it is an important element. Not all applications are subject to a prospects of success test. Only applications for full representation, a specific form of civil legal service, are directly subject to a prospects of success test. Therefore applications for legal help—the advice and assistance level of legal aid—and other types of service are not subject to this test. Also, there are certain categories of case, for example certain family and mental health cases, where the test does not apply. It is important to note that these cases are not affected by this instrument.
However, where the prospects of success test applies, its purpose is to ensure that taxpayers’ money is targeted at the cases that most justify it. It also ensures that weak cases are not funded. Currently, certain cases assessed as having borderline prospects of success can be funded in limited circumstances. The regulations that your Lordships are considering today will remove funding for cases assessed as having borderline prospects of success. I am aware that concerns have been raised about our policy on borderline cases. Let me deal with one or two of those. I recognise that there is some unease over the effect these regulations might have on the development of case law and the funding of so-called test cases or those with the potential to advance the common law. Legal aid cases have indeed led to the development of case law in the past, but that alone is not sufficient justification for legal aid to be granted in cases that do not have at least a 50% prospect of success. In addition, I do not think that our proposal will hinder or prevent the development of case law. The arguments are likely to be strong for such a development to be warranted.
Lord Bach (Lab)
My Lords, I speak to my amendment to the second Motion that the Minister has just spoken to. My amendment would add,
“but that this House regrets that the draft Civil Legal Aid (Merits Criteria) (Amendment) (No. 2) Regulations 2013 exclude some people from legal aid where their case turns on a point of law”.
Before setting out my arguments—I hope reasonably briefly—I will start by warmly welcoming the Minister on behalf of the whole House, and congratulating him on his new position as Minister of State in the Ministry of Justice. It is an appointment widely welcomed by noble Lords around the House. He is a widely admired senior lawyer with great experience both in the courts and in this House, where he has taken an important role in our debates on all justice matters, not least the LASPO Act and the orders flowing from it.
He has also served on the Joint Committee on Human Rights and, just over a month ago, we remember his important speech in the debate instigated by the noble Lord, Lord Carlile, on very high-cost cases in criminal trials. I have two final points on that. Our welcome today is more than just the usual good manners of this House. It is a genuine welcome from all around the House to him in his important new responsibilities. Secondly, we wish him good luck and well in his new job.
This brings me, perhaps not before time, to my Motion. Many of us believe that the Minister has rather courageously taken on his new responsibilities at a time when his department, and particularly the Ministers in it, have tended to indulge in a series of attacks on many of the best and most important features of our legal system, in the field of civil and criminal law. The consequence of the removal of legal aid from social welfare law, the over-the-top attack on criminal fees, the proposals on judicial review, or the proposed residence test, has been to lessen the reputation of our legal system in a number of ways. Most importantly—I think this is felt around the House to a greater or lesser degree—these measures attack the overriding principle that all those who live under the rule of law should have at least some access to quality justice when they need it in the course of their lives.
Unfortunately, this order fits that pattern only too well. Since it was proposed in Transforming Legal Aid: Next Steps, it has been criticised almost universally and condemned by a very wide variety of expert opinion, from judges to practitioners to academic lawyers and, of course, by the Joint Committee on Human Rights itself. Alas, in spite of this hostility, the Government have decided to go on regardless, and this order will take effect in one week’s time on 27 January.
Why has there been this criticism? Apart from serious doubts about the Government’s assertion that it will affect 100 cases and save £1 million per year—the doubts are on the basis that the Government have provided no evidence at all for that conclusion—practitioners sensibly argue that both in terms of possible litigants in person and extra adjudication appeals that may be necessary if the order is implemented, the savings may be nonexistent.
The crucial reason that this is such a damaging step can be found in the measured words of this House’s Secondary Legislation Scrutiny Committee in its 21st report of Session 2013-14, which states that,
“the House may wish to consider whether it is appropriate to exclude someone from legal aid where the issue turns on a disputed point of law, circumstances in which the advice of a skilled lawyer is most necessary. The definition of ‘borderline’ has not changed from the previous Regulations but the use to which it is being put has. Previously dispute over law or expert evidence was grounds for including a weaker case in the scope of legal aid and enabling someone to obtain better advice, now such cases are to be excluded from support”.
Or, as the Bar Council put it in its submission:
“Removing funding of cases assessed as having a ‘borderline’ possibility of success will see funding removed for cases critical both to individuals and areas of public policy. Many important cases will have been assessed as borderline but nevertheless have gone on to win. Others will have been lost. That fact does not do any damage to public confidence in legal aid. Such cases will have ensured access to justice where something really important was at stake”.
Practitioners have included examples from many branches of civil law where, without the grant of legal aid, cases that have changed the common law would never even have been before the courts. Not only would injustice have been done to an individual citizen—not an unimportant consideration—but the law as it was thought to be would have remained frozen in time, even though it was decided it was wrong.
Many examples have been given. Bindmans, the leading solicitors, argued in its response to the consultation:
“‘Borderline cases’ often constitute seminal test cases in which the courts have clarified some of the most difficult issues, for example the right to die with dignity, the ban on gay people serving in the army, systemic abuse by armed forces, and whether soldiers serving overseas should be protected by the Human Rights Act”.
It went on:
“In a jurisdiction without a written Constitution or codified laws, and in which law is thus based on and developed through case law, such test cases are an essential part of the legal system”.
There are many examples; housing law is perhaps one of the best. There was a series of three successive cases, all financed by legal aid, which followed the vexed question of the balance and the legal conflicts between human rights, respect for a person’s home and the rights of property. I venture to think that there may be some noble and learned Lords in the Chamber this evening who will remember these cases quite intimately. These cases led in the end to the Supreme Court coming to a view in 2011, in the Manchester City Council v Pinnock case, which effectively changed the law.
This series of cases on a matter of great public importance was possible because of legal aid. I suggest that if these regulations had been in force then, it is unlikely that those cases, which have both clarified and moved the law on, would ever have reached the courts. As the organisation Justice has said, “borderline” does not mean without merit. These are not unclear cases which we are talking about, where further information is necessary before the success criteria of the means test can be determined. These are cases where there is a different legal opinion about issues of importance—and any legal system, I argue, that does not allow them to be determined is surely defective.
Richard Drabble QC, a practitioner of vast experience in this field—and who, significantly, has appeared for successive Administrations on the one side as well as for claimants on the other—argues strongly against this regulation. He points out that in the case of Anufrijeva against the Secretary of State, which was a benefits case, the result of which affected large numbers of claimants, the lower courts and the Department for Work and Pensions had become wedded to a view of law which the majority of the Lords—the Law Lords, he means—ultimately held to be constitutionally improper. He makes the point that not only did the Executive have the freedom to test the law, which they will of course continue to do under these regulations, but that surely so should claimants, too. He warns:
“The system will or may become institutionally ‘pro-executive’”.
In its response to this consultation, the Council of Her Majesty’s Circuit Judges stated its disagreement with the proposal in what I can only describe as broad terms. It stated:
“The regulations which the proposal would amend were made in 2013 after a consultation. We take the view that no compelling case has been made … to alter them now … We must express our great concern that access to justice will be denied to individuals who may well have a completely valid claim”.
It went on:
“The law would become fossilised if ‘borderline’ cases were not supported by public funds. The role of legal aid in past cases in refining and clarifying common law and statute should not be underestimated”.
I end by arguing that the case for this regulation has just not been made by the Government, whether on cost grounds on the one hand or grounds of principle and practicality on the other. The Government should have listened to the many serious and informed voices criticising this measure. Alas, up to now, they have refused; and continue to bring in measures that are gradually, step by step, tending to weaken our legal system. This measure, I believe, is one of them. That is why I thought it right to put down my amendment to the Motion, so that at least a debate can take place before the Government move forward.
Lord Pannick (CB)
My Lords, I add my welcome to the noble Lord, Lord Faulks, to the government team. He brings to this role expert legal knowledge, very considerable practical experience, excellent judgment and a concern to promote the values of the legal system, qualities that have not noticeably been displayed over the past three and half years by those responsible for making decisions in the Ministry of Justice. I hope that the Secretary of State will listen to the noble Lord’s advice and take advantage of the expert legal advice and assistance that he will be providing—indeed will be providing, as I understand it, in the best traditions of the Bar, on a pro bono basis.
I am very grateful to the noble Lord, Lord Bach, for promoting this debate. I share his concerns about the exclusion of borderline cases from the scope of legal aid. The concern I have is that many of the leading cases in which the law has been developed in the public interest over the past few years have involved claims which, because of the disputed legal principles, could not have been said to have a 50% chance of success. The noble Lord, Lord Bach, mentioned examples of such legal aid cases, including one in which I acted for the claimants. That was the case of Debbie Purdy, which was the subject of the last judgment of the Appellate Committee of your Lordships’ House before the creation of the Supreme Court in 2009. This was a case in which judgments were delivered by two noble and learned Lords in their places today: the noble and learned Lords, Lord Brown of Eaton-under-Heywood and Lord Hope of Craighead,
The Appellate Committee held that that the DPP had a duty to publish guidelines about the circumstances in which he would prosecute for assisting a suicide. Those guidelines have made a valuable contribution to justice in a difficult area of the law. It could not have sensibly been said that the claim brought by Debbie Purdy was other than borderline. Legal aid was accordingly granted under the law at the time. When these regulations are implemented, as I think they now are, legal aid will simply be unavailable for such a case.
For legal aid to be able to fund such cases serves the public interest. The Minister told the House today that the removal of borderline cases from the scope of legal aid will save £1 million a year. Such a modest saving cannot begin to justify the damage that this change will do to the ability to develop the common law. The Minister’s other point was that taxpayers’ money should not be spent on cases that a private-paying citizen of reasonable means would not wish to pursue. The defect in that reasoning is that a private-paying citizen may well wish to pursue a case that has only a 30% or 40% chance of success if it raises an issue of enormous importance to them.
There is a further point in answer to this defence of this change. It is a point that was made by Richard Drabble QC in his excellent response to the consultation on this issue. He pointed out that when the Government respond to judicial reviews in cases such as that of Debbie Purdy they do not simply ask themselves whether they have a 50% chance of success and, if not, decline to be represented in the court proceedings; the Government very properly take account of the importance and complexity of the case and often fund a defence even though their legal advisers cannot say that there is a 50% chance of success. These are not the cases mentioned by the noble Lord, Lord Faulks, where further investigation may provide an answer; they are cases where it is inherent in the nature of the case that they are borderline and you cannot say that there is a 50% chance of success.
Why should the legal aid scheme adopt a different and narrower approach to legal aid for claimants than the Government adopt for themselves in deciding when and how to resist judicial review claims? The Government’s reasoning leaves entirely out of account the nature of the cases that will now be excluded from legal aid and the public interest in ensuring that the law is determined and applied only after proper legal argument on both sides. For these reasons, I very much regret these amendment regulations and I hope that the Minister, if he is unable to say so today, will be able to advise the Secretary of State that further thought needs to be given to this important matter.
Lord Carlile of Berriew (LD)
My Lords, I join the noble Lords, Lord Bach and Lord Pannick, on two grounds. The first is the generous but completely justified welcome that has been given to the arrival of my noble friend Lord Faulks on the government Front Bench. Indeed, I am encouraged that he has a record of questioning the reduction of legal aid, particularly in criminal cases. I urge him to do another piece of pro bono work, a tutorial for his ministerial colleague in another place, Mr Shailesh Vara, on understanding simple statistics and understanding something about legal aid.
The second ground on which I agree entirely with those who have already spoken is in my support of the regret Motion introduced very clearly by the noble Lord, Lord Bach, and illustrated with customary cogency by the noble Lord, Lord Pannick. However, I want to turn to the criminal regulation. I do not support a criminal regulation that means that somebody who has perfectly reasonably obtained the advice of a good solicitor and senior counsel can only, without exception, recover costs at legal aid rates if he wins the case. It may be best if I give a real illustration.
A retired butcher of about 70 years old was charged with some very serious sexual offences, including rape, against a young girl of about 12 years old who was the daughter or granddaughter of a neighbour. He instructed a good solicitor. The good solicitor said to him that he could instruct counsel on legal aid but his preference would be to instruct more senior counsel, leading counsel, but that would not be covered by legal aid. Not surprisingly, the 70 year-old retired butcher asked for advice as to his prospects if he took either part of the respective advice. He was advised by the solicitor, perfectly reasonably, that his best prospects were to have the more experienced counsel from the very beginning, so leading counsel was instructed.
As it turned out, in the event, there were a number of complex legal points and some factual issues. After the matter was dealt with with a good deal of care by the solicitor and leading counsel, the case went to the Crown Court where it was dropped at the courtroom door. One of the reasons why it was dropped was that it transpired that he could not have committed one of the most important offences alleged against him because he was out of the country at the time, an issue which involved very complicated inquiry, including issues of the admissibility of evidence obtained from abroad. Thus, he avoided a trial and a potential sentence of upward of 10 years’ imprisonment and he was able to return to his family and home. He had paid for the advice by borrowing money from his grown-up children and by mortgaging his home.
Before your Lordships think about six-figure sums for the fees involved, they were nothing like so high. It was well understood by the solicitor, who drove a hard bargain, and by counsel, who knew perfectly well that their fees were subject to assessment if they were too high, that reasonable fees would have to be charged, and they were. Total costs in the case amounted to a middling five-figure sum. He applied for his costs before the Crown Court judge, before whom the case was dropped—accepting an acquittal, by the way—and the judge thought it entirely reasonable that he had obtained the advice of leading counsel and a good solicitor and he was awarded his costs out of central funds. What is unreasonable or unjust about that? He acted on legal advice, what he did was perfectly reasonable, a good result was obtained and the costs of a trial were avoided, which would probably have been higher than what was paid out of central funds to the solicitor and leading counsel.
What is proposed in criminal cases now is that someone in that position will be able to recover at best only a half, probably a third, of those costs. The retired butcher, therefore, having been acquitted in a prosecution brought unjustly, would have been some tens of thousands out of pocket. Do we really want to countenance a criminal justice system like that? I do not.
Baroness Lister of Burtersett (Lab)
My Lords, as a member of the Joint Committee on Human Rights and, I suspect, the only non-lawyer to take part in this debate, I thank my noble friend for moving the Motion of Regret. I shall make a couple of points based on the JCHR’s report—with which the Minister, as a former colleague on that committee, will of course be very familiar,. The Government’s gain is the JCHR’s loss. I shall spare him any further blushes. As has already been said, the Government estimate that about £1 million will be saved as a result of these changes. Such a small, or as the Minister called it, modest sum in public expenditure terms comes well within the margin of error, and indeed the JCHR questions the accuracy of this estimate. My noble friend suggests that there could be no saving at all.
Whatever the savings actually are, clearly they are very modest and we have to ask whether it is proportionate to put at risk the rights of access to the courts where human rights issues may well be at stake, as underlined by the Bar Council in its evidence to the JCHR. It said that of all the legal aid measures,
“this one is … likely to have the most immediate and adverse effect on human rights”.
It gave as examples the prospect of loss of one’s home or of one’s children being taken into the care system. These are very fundamental issues for ordinary citizens. ILPA has also raised its concerns to your Lordships, particularly with regard to asylum and immigration cases. It raised particular concerns about separated refugee children, and I would welcome an assurance from the Minister that that group will be protected.
Lord Woolf (CB)
My Lords, we have heard powerful arguments advanced, and I shall try to avoid repeating those arguments. I commence by first thanking the noble Lord, Lord Bach, for bringing his Motion of Regret in respect of civil legal aid regulations. I strongly support those arguments. I also echo the support that has been given already to his remarks specifically in welcoming the noble Lord, Lord Faulks, to his new responsibilities. Those members of the judiciary on whose behalf I shall say a few words on this matter, because I think that they are particularly affected, would all welcome the fact that a leading counsel of his distinction is now a member of the government team dealing with justice matters—and they are justice matters that I want to speak about.
Our justice system is of course based on the common law. For many years I was a common law judge, who has a special responsibility that does not apply to the same extent to the civil legal system in clarifying and developing the law from which we all benefit. I differ from the Minister in his approach, which was ably addressed a few minutes ago by the noble Baroness, Lady Lister, in her useful remarks. The law is not there for one section of the community; it is there for us all. We all benefit from the protections that it provides and the setting that it provides for all our activities. The judiciary is concerned that all of the public should have access to justice. That must mean a justice system that is fit for the age in which we live and has developed in accordance with the way in which a common law system can develop, singularly because of the use of precedent, which is such an important part of our system. When the noble Lord, Lord Faulks, opened his case for approving these regulations, I was not clear whether he was saying that there would be any discretion to grant legal aid in the case of an issue which was obviously important for the courts to decide, but which would need the assistance of able counsel in order to decide the case. Sometimes that can be self-evident. The cases we are primarily talking about are dealing with points of law. In the case of points of law, it is particularly important that the courts should have the assistance of appropriate counsel to deal with the type of case before them.
In our system we now have a limited number of judicial assistants to help us in our work of doing justice, but they are very much a limited assistance. Our system does not compare with systems such as that in the United States, or even the system in Canada, because there they hear the appellate judges, who will normally have the responsibility of dealing with the developments in the law to which I have referred and are given much more assistance by very experienced young lawyers than is available in our courts.
Our courts depend on the judges themselves doing the research with the assistance of counsel. If they do not have before them counsel of the necessary ability to deal with this very small number of extremely difficult cases, the quality of those judgments will suffer. It is in that area that the quality of arms, to which reference has already been made, is of singular significance. I wonder, and doubt whether, the Government have appreciated—because of the justification which they have advanced for this change—the importance of the courts having the assistance of advocates of the ability needed to ensure that the arguments on both sides of a case are properly deployed when the case is one of those peculiarly difficult cases, so that it is impossible, perhaps on both sides, to say what the prospects of success are. These are therefore the cases which would very much come within the small group which these regulations could affect.
For that reason I ask the Minister, new to his responsibilities, at least to give the House an assurance that the matter will be considered from the point of view of the judiciary. If ways are not found to assist in this small number of cases, I have fear for the quality of justice in this country.
If a case is one where a lot of money is at stake, where large awards of damages will be available, then it is possible to come to arrangements whereby litigants can be spared the burden of carrying the weight of the costs involved in conducting the litigation themselves. Funders are available now. However, in the small group of cases about which we are talking no such funding is available. There is nothing which the funders would gain because there will be no judgment from which they can benefit at the end of the day.
In that situation, I say that one should look at the matter and ask oneself whether this is a case where the wrong target has been drawn in order to try to achieve noble objectives. If it has, it is very important, even though it is late in the day, that action is taken to ensure that the system of justice in this country does not suffer in consequence.
Lord Phillips of Sudbury (LD)
My Lords, I do not propose to go over the ground that has been so ably ploughed by the speakers thus far. I am afraid that I am not going to lend my noble friend the Minister any solace, because I fear that I, too, am strongly of the view that the measure that deals with borderline cases—the merits criteria statutory instrument—is flawed, and it is flawed in a profound cultural way. As others have rightly said, justice is not like most other forms of government expenditure; it goes to the very heart of our society.
As I said, I shall not replough old ground, although I should like to remind the House that in the consultation, which lasted for only two months, there were 16,000 written submissions, which is quite extraordinary. The vast majority of them were, as the noble Lord, Lord Bach, has already said, against these provisions. I simply want to quote paragraph 234 of the report of the Joint Committee on Human Rights issued on the 13th of last month. It is the seventh report of the Session and it deals with the matters that we are talking about tonight. In referring to the present situation—the status quo—it says:
“We were told by our witnesses that the Legal Aid Agency scrutinises the merits of borderline cases closely, and funds very few borderline cases, in effect exceptional cases”.
That is the point. Only 100 or so cases are involved, and I think that the sum of legal aid estimated to be at stake is around £1 million. Therefore, they are already exceptional cases and we must realise that they reverberate throughout the system. As the noble and learned Lord, Lord Woolf, has just reminded us, under the common law system of precedent, one of these cases can affect thousands of cases, which will not be brought as a result. Therefore, there is that to consider.
My other point is that the Joint Committee report is absolutely unequivocal about these borderline cases. It is worth reading—and I am sure that most noble Lords here tonight have read—the fourth chapter and the three conclusions at paragraphs 43 to 45 of the final recommendations and conclusions. I urge the Minister—perhaps he will refer to this in summing up—to give an undertaking to the House that the Government will not wait the three to five years allowed for under the LASPO Act for a review of the whole of that vital piece of legislation. However, if they persist in pushing forward with these measures—which I hope very much they will not—I hope that they will make a special case of borderline cases and review early the impact of what they are doing, not least in terms of access to justice and the cost of justice.
As the charity Justice, in its report on this matter, rightly pointed out, the cost to the Exchequer of depriving many of these borderline cases of legal support and the resulting wastage could far exceed the £1 million or so of savings that we are talking about here due to the length of cases, because there are so many more litigants in person, and so on. I hope that my noble friend may be able to say to the House tonight that there will be a special review of these borderline cases in the light of the criticisms made here and in the Joint Committee report and the criticisms made by many others.
Lord Brown of Eaton-under-Heywood (Non-Afl)
My Lords, I greatly welcome the noble Lord, Lord Faulks, to his new Front Bench role. I have long been among his many admirers on the Bench and have benefited over many years from his invariably helpful and thoughtful submissions. I have not always been able to accept them, and it is just possible that I will not feel able to accept them tonight in regard to these amendment regulations.
The regulations remove legal aid from borderline cases. Borderline cases are those where there are no further identifiable investigations able to be carried out, yet where it is still not clear that the prospects of success are better than 50:50, but nor is it clear that they are worse than 50:50. The reason that neither is clear is because there is a basic dispute as to the law, which has yet to be clarified or developed in this particular way, or as to the facts or expert evidence.
It is absolutely critical to recognise and bear in mind in the course of this short debate that under the existing funding scheme—the scheme it is now proposed to abolish—borderline cases are funded only if they are either of significant wider public importance or of overwhelming importance to the applicant. In other words, the cases to which it is now intended to deny future funding will be either those with implications for the relationship between the state and a substantial number of individuals, or those that impact on such fundamental interests as an individual’s life, liberty, health, housing or something of that character. Surely, these cases are ones that must therefore justify a broader merits test than the bald test simply of establishing that there is at least a 50:50 chance of success.
I suggest that they justify funding so that the critical, disputed question—whether that be of the law, fact or expert evidence—can be clarified. However, instead of that, under these amendment regulations, those cases are to be condemned, deemed to be cases where the prospects of success are “poor”, or less than 50:50.
When I spoke last July on the Motion moved by the noble Baroness, Lady Deech, to take note of the effect of a whole raft of proposed government cuts in legal aid funding—which included those we are now discussing—I urged the Government to take particular note, among the innumerable responses to consultation, almost all of which were opposed for a variety of reasons, of the consultation response prepared by ALBA, the Constitutional and Administrative Law Bar Association, of which I was once privileged to be president. ALBA’s arguments were and remain cogent and convincing, not least as to the borderline cases. Among the material that ALBA presents is a 2012 study by Doughty Street Chambers—chambers that are prominent and highly respected in the field of public law and from which the just retired Director of Public Prosecutions came—showing that in the three years until then, borderline cases had achieved a substantive benefit for the funded party in between 47% and 56% of those cases, which was an average of just over 50%. I repeat, those cases are by definition important cases that affect either the public at large or the vital interests of an individual. Therefore, they are not cases from which the Government should be withdrawing funding. The suggested savings are uncertain; the price of achieving them is altogether too high.
Lord Hope of Craighead (CB)
My Lords, I join everybody else in welcoming the noble Lord to his position on the Front Bench—a very public-spirited move on his part, I am sure, but immensely encouraging to others who deeply regret the fact that the Lord Chancellor can be chosen in a way that removes his presence from this House and in a way that does not require him to have had legal experience. We have suffered somewhat from the lack of the sort of experience that the noble Lord can fortunately bring. It is a significant step forward and to be immensely welcomed.
I also thank the noble Lord, Lord Bach, for his Motion of Regret, which gives us an opportunity to express our regrets at this measure. I spoke, as did the noble and learned Lord, Lord Brown, in July. One of the things I said was that I hoped we would not have a succession of Motions of Regret because I hoped that these things would come up in the form of public Bills that we could then debate in depth. Unfortunately, that has not happened so I am afraid that we will have a series of Motions of Regret, one after the other.
I shall try not to repeat what others have said but the first point on which I want to comment is the borderline test itself, particularly the use to which it has been put. I have a feeling that it has a sort of arithmetical sense to it. When one talks about a borderline case, people at conferences will ask: is it above or below 50%? That is fair enough; that is what the test really means. If it is 50%, it is on the borderline. However, the problem, as has been explained by so many others, is that these things do not measure themselves arithmetically.
That brings me to a series of questions about how this will work in practice. How will fairness be achieved up and down the country? I understand that decisions are taken by independent funding adjudicators who look at the papers. We are not dealing with a single individual—it is difficult enough for one person—but one can imagine a series of people in different offices applying their minds to this test. Is any guidance to be given on how to approach the question of arriving at the borderline? If there is to be guidance, will it be made public so that we can comment on it and make suggestions, particularly if the system is to be reviewed in the future? There is then the very important point made by the noble and learned Lord, Lord Woolf: will there be any element of discretion or shading in a situation where it is difficult to say that it is exactly at 50%? Can one, for example, have a margin of error in favour of granting legal aid, as against not doing so? It is that kind of guidance, if the Minister could explain it, that would help to flesh out how this will work in practice.
The problem with the test, as has been said already, is that it introduces an unequal playing field. The state on the one hand, with all its resources, is in a position to apply a different test on whether or not it wishes to contest the claim, whereas the individual is caught by this very exacting test. There is the vital point about the development of case law. I recall a series of cases, which have already been mentioned, but because I was involved I dare to mention them again. There was the case of Purdy, but it was preceded by that of Pretty, who is unfortunately no longer alive. That was the original assisted suicide case. It was a very difficult case in which to say that she had a 50% chance of success. In fact, she lost. She went to the Strasbourg court and lost there again, but the advantage of her case was that it helped us to begin to develop jurisprudence in this immensely difficult subject, which all Members of this House will have to discuss again before too long. It cleared a lot of the ground, which made it easier to grapple with the Purdy case when it came along.
Then there were the succession of cases, to which the noble Lord, Lord Bach, has referred, in the field of social housing, which were also very difficult to predict. I bear a personal responsibility for this because I sat with Lord Bingham and the noble and learned Lord, Lord Nicholls, and, I think, the noble and learned Lord, Lord Walker, all of whom took one view. Three judges went one way but I turned the case around. Three others followed me and we were a majority of four to three. Who could have predicted that? Everyone knows—this is a commonplace criticism of the Privy Council jurisdiction in the Caribbean—that you need to know who the judges are and the way cases vary. How can one predict when it depends so much on personalities in cases that are so narrowly balanced, as they so often are in the highest courts?
The last point to which I want to draw attention is one of the difficult areas of our law, which has been repeatedly commented on. What do you do as judges, particularly in the senior courts, when you are applying Section 2 of the Human Rights Act, which refers to having regard to decisions of the Strasbourg court? Some of us have been fairly inclined to follow Strasbourg; others have not, in particular the noble and learned Lord, Lord Judge, who asked the other day in a lecture why we should do that. He said we should take an independent view. Again, one will have to guess what the judges are going to do with that jurisdiction, whether there is to be any change and who will be sitting on the panel. One can predict, looking at the Supreme Court today, who will vote one way or the other. That makes this whole idea of the borderline test extremely difficult to accept unless there is to be some really rigorous guidance, which I hope the noble Lord may be able to comment and guide us on. I would respectfully support the Motion that the noble Lord, Lord Bach, has moved.
Lord Beecham (Lab)
My Lords, it gives me great pleasure to join with others of your Lordships in extending very warm congratulations to the Minister on his first experience at the Dispatch Box. Of course, he demonstrated the reasons for his appointment very fully. The noble Lord is an ornament to the legal profession, just as his brother is an ornament to literature. We look forward on this side to many useful jousts over the next few months before—perhaps—there is a change of Government.
The Minister, as the noble Lord, Lord Pannick, said, has undertaken to do this work without remuneration. That is a notable sacrifice on his part. Of course it is consistent with the Government’s policy of acquiring most lawyers to do legal aid work more or less pro bono. I hope that he does not expect too many to follow his example with enthusiasm. However, that is not what we are discussing tonight.
My Lords, these regulations are yet another example of this Government’s apparently incurable propensity to legislate in haste and amend at leisure. It was, appropriately, only on 1 April last year that the Civil Legal Aid (Merits Criteria) Regulations came into force, and after a period of gestation of almost exactly nine months the present amending regulations were laid.
Why was it, we are entitled to ask, that the Government overlooked the apparent necessity to change the arrangements for borderline cases and make them ineligible for legal aid? How did they fail to spot the tidal wave of such cases, amounting—according to the estimate they now give—to all of 100 cases a year? Or the soaring cost to the taxpayer, which equates to as much as just under 0.5% of the legal aid budget?
After all, the noble Lord reminded us that, in the words of his colleague Mr Vara to the Delegated Legislation Committee,
“the motivation for change concerning borderline cases is not simply to save money. The value of our legal aid system cannot just be calculated in pounds and pence. Legal aid is a vital plank of our justice system”.
What a comfort these sentiments must be to the hundreds of thousands of people a year now denied access to legal aid; to the vast majority of practitioners and expert witnesses who are seeing their modest incomes slashed and are turning to other work; to the law centres that have closed, or, like the one in Newcastle which I visited on Friday—the only law centre between Kirklees in the West Riding and the Scottish border—that no longer provide legal aid. The Newcastle centre, which once employed five solicitors and nine staff, is now reduced to one solicitor, one full-time employee and four part-time staff, offering advice only, and only in two areas of law.
Lord Phillips of Sudbury
Did the noble Lord intend to let the Government off the hook when he said at the beginning of his speech that the cost of these cases was one-half of 1%? Lawyers are not good at maths, but I think I am right in saying that it is not 0.5 of a per cent; it is 0.005 of a per cent. It is a tiny sliver of £2 billion. I just wanted to help the noble Lord, Lord Beecham.
Lord Beecham
At this hour of the night, I am quite prepared to accept any correction of the arithmetic. The Government, of course, are never prepared to accept a correction of their arithmetic.
Lord Faulks
My Lords, I thank all noble Lords and noble and learned Lords for their very generous welcome to me. It is a daunting position to find yourself in. I know that, despite the generosity of the welcome, there will be no lack of rigour in the examination to which I am put as a representative of the Government and I look forward to receiving the many useful contributions characterised by those today, which, I am likely to be advised, will be forthcoming in the next weeks and months.
This debate has ranged far and wide, perhaps rather further than the strict terms of the two Motions envisaged. For example, there have been general laments about the Government’s approach to legal aid from the noble Lord, Lord Bach. There has been reference by the noble and learned Lord, Lord Hope, to the difficult interpretation of Section 2 of the Human Rights Act and by the noble and learned Lord, Lord Woolf, to the need for high-quality judicial assistance. All these are important points, but I hope that the House will forgive me if I do not deal with all those points but try to concentrate more specifically on the issues that concern these regulations.
One of the main themes of the debate was the fear that the lack of legal aid for these borderline cases will result in some form of ossification of the common law—that it will not develop in the absence of legal aid for such borderline cases. It is worth remembering that the common law develops in a number of different ways, sometimes with cases which one would not expect to result in a change in the law. The Government believe that prospect of success—the test that is applied—remains a useful and sound test and that a 50% prospect of success is a reasonable one and should not result in cases not being brought and the law not developing.
Individual cases were mentioned, including Pinnock, Smith v Ministry of Defence, Purdy, Pretty and Anufrijeva, to name but a few, all of which were important cases. Of course, the Government are not in a position to comment on individual cases, or precisely on the funding arrangements that may have existed in those cases. There may be other cases which have not resulted in success or in the development of the law. The Government remain doubtful that the change which these regulations will bring about will prevent cases being brought in areas where the law will develop and has developed. One of the ways in which the law has developed is through the Human Rights Act, and it shows little sign of standing still in that regard.
The noble Lord, Lord Bach, asked particularly about the impact on housing cases. I recognise the serious consequences that can ensue from housing cases—the potential for someone to lose their home. Indeed, there are all sorts of cases where there may be serious consequences. But there always has to be an assessment of the merits of a case—that has been well established in the granting of legal aid—and it has been a fundamental part of the scheme since its inception.
The noble Lord also questioned the accuracy of the savings which are put forward. The Government’s best estimate is £1 million. An impact assessment estimated that 100 fewer cases would be funded. As was made clear in the methodology, those were rounded figures. Further supporting data consisting of a breakdown by category of law have been included in the updated impact assessment published alongside the consultation response. While the estimate is based on 2011-12 data, I can assure the House that it is consistent with more recent data; that is, the data from 2012 and 2013. The noble Lord also made reference to the criticism of the regulation by the Secondary Legislation Scrutiny Committee.
The cases which may be included are those where there is a dispute over law or expert evidence. I mentioned that there may still be legal aid where it is as yet impossible to assess the prospect of success, but the Government have been frank that they consider it reasonable in principle that 50% should be the touchstone. We suggest to the House that it is a very reasonable and rather modest prospect of success when one bears in mind the sort of decisions that somebody paying privately might make in deciding whether to pursue litigation. Indeed, many would say that 50% was rather a modest prospect of success and very few privately paying citizens are much enthused or encouraged by the fact that their case raises an interesting point of law. They may well find that that is a less enticing prospect than the fact that they risk losing the case.
Several noble Lords made reference to the fact that there might be some form of inequality of arms because many of the cases were brought against government, either local government or government in one department or another. The Government’s position regarding litigation is that they take into account a broad range of factors when deciding whether to defend or appeal legal challenges, including the prospects of success and the potential costs versus benefits of that action. However, it would be simplistic to say that the Government simply took advantage, as it were, of their overall position in deciding their approach to litigation. It is already a principle of the current scheme that most cases, even those concerning issues of high importance, must have a reasonable prospect of success in order to warrant public funding, and there has to be an assessment of merits and a decision must be made.
Civil Legal Aid (Merits Criteria) (Amendment) (No. 2) Regulations 2013
(10 years, 10 months ago)
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Lord Faulks
That the draft Regulations laid before the House on 25 November 2013 be approved.
Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 21st Report from the Secondary Legislation Scrutiny Committee, 7th Report from the Joint Committee on Human Rights.
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, I have already spoken to the regulations, and I commend the regulations to the House.
Amendment to the Motion
Lord Bach
My Lords, first, I thank the Minister for his response to the debate tonight. It had the great advantage of being clear, straightforward and answering many of the points that had been made in the debate. It was very refreshing to hear a Minister speaking in those terms. I thank him very much for that. I also thank all other noble and noble and learned Lords for their contributions and support for my Motion on this order. I am very grateful for what they had to say, but even more so for having stayed as late as they have on what is commonly called, as I understand it, Blue Monday, which is that day in the year when, following the Christmas and New Year excess, people are at their lowest and most depressed. So, although I was pleased by what the Minister had to say, it has not really moved me out of my Blue Monday feeling about this particular regulation. When he says that the Government have a consistent policy on legal aid reform, I say to him: I think that that is the problem. To be fair to the Minister, the regulation was brought forward by his department well before he took over his new position—which was, I believe, only a few hours ago. He can hardly be held to be completely at fault for it.
I agree with the noble Lord who said earlier that he did not feel that the Minister’s heart was absolutely in this. I think that that is probably true, in spite of the powerful arguments that he managed to employ in his final speech. On 11 December the Joint Committee made its view quite clear when it stated:
“In view of the significance of the cases likely to be affected by the proposal”—
because, after all, the Government had conceded that many of these cases deal with human rights issues—
“we recommend retaining the Legal Aid Agency’s discretion in these cases, or, if it must be changed, tightening the requirements rather than removing the possibility of such funding altogether”.
The Minister will remember those words. I hope that, even if the regulation cannot be changed, when he gets to his department tomorrow he will at least consider tightening the requirements rather than removing the possibility of such funding altogether.
In more general terms, I very much hope that, from now on, his right honourable friend the Lord Chancellor will have the good sense to listen to his advice on this and other matters that affect so much the course of justice in this country. I shall not move my amendment.