House of Lords
Vehicles: Heavy Goods Vehicles
(10 years, 5 months ago)
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Lord Berkeley
To ask Her Majesty’s Government whether they have plans to strengthen the enforcement of drivers’ hours and construction and use regulations with respect to heavy goods vehicles.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, the Government have plans to strengthen enforcement, including: continued targeting; introducing four new purpose-built Driver and Vehicle Standards Agency check sites; using the joint DVSA and police HGV task force in London set up last year; and a fixed-site automatic number-plate recognition camera network. We are consulting about proposals to use financial penalty deposits for historical drivers’ hours offences, developing plans for some specialised vehicles, and working to get more serial offenders to traffic commissioner inquiries more quickly.
Lord Berkeley (Lab)
I am grateful to the noble Baroness for that comprehensive Answer. I would like to know when some of these things are going to happen, but they sound really good. My reason for asking was that I recently met an HGV driver who had driven on trade plates from the south of England to Edinburgh, and then back to the south of England and back to Edinburgh, within 24 hours. I hope that these regulations will stop that kind of thing. Will the Minister confirm exactly how it could be stopped in the future?
Baroness Kramer
My Lords, the noble Lord raises an important issue about trade plates. Vehicles which have not yet been put into service are exempt from the EU drivers’ hours rules and so do not need to use a tachometer. However, drivers of these vehicles would need to comply with the GB domestic drivers’ hours rules, which restrict driving to 10 hours a day with a duty limit of 11 hours a day. Obviously, for enforcement, without the tachometer we are very much dependent on intelligence. I have passed the noble Lord’s information back to the various authorities to pursue. Intelligence is an important part of enforcement here. We also rely heavily on whistleblowers. Drivers are encouraged to report any breaches of these rules to the DVSA on its helpline, which is 0300 123 9000. All calls will be treated in confidence and driver anonymity is ensured. I will confirm to the noble Lord the various processes that follow on from the receipt of that information.
Lord Mackay of Clashfern (Con)
My Lords, is the explanation of the example given by the noble Lord, Lord Berkeley, the very powerful attraction of Edinburgh?
Baroness Kramer
I cannot deny the attractions of Edinburgh, but I suspect the answer is more nefarious.
Lord Snape (Lab)
Can the Minister tell the House how many people are employed countrywide in the enforcement of these regulations? How many prosecutions have there been under these regulation over the past 12 months? If she does not have that information to hand, I would be happy to read about it in Hansard.
Baroness Kramer
I will be delighted to follow up with any gaps. The noble Lord will be aware that an important task force in London, the new Industrial HGV Task Force, which is made up of eight officers from VOSA and eight from the Metropolitan Police, was launched in September 2013. That has been extremely effective in increasing enforcement. The task force is running a whole series of exercises. Between 1 October and 27 June, it stopped 2,798 vehicles: 764 were compliant—about 27%;—1,232 prohibitions were issued; 724 fixed-penalty notices were issued; and 35 vehicles were seized. Somewhere here, if I can find it, I have more general information; I will write to the noble Lord with that.
Lord Bradshaw (LD)
Can the Minister tell the House whether she has information about how many people have been killed or seriously injured by drivers who were driving outside the limits, and whether for the latest year—if figures are available—she has any evidence of what happens to such drivers?
Baroness Kramer
Accidents that involve HGVs have been falling for the past five years, although slowly. In 2013, there were 6,524 reported accidents, of which 270 were fatal. That has fallen by 8% since 2009. Where evidence exists to show that an HGV driver is at fault, he is reported for prosecution. We do not hold the numbers of those prosecuted and the results of those prosecutions, but we will refer that to the Home Office to see whether it has further detail.
Lord Vinson (Con)
My Lords, 90% of goods in this country are delivered by road most efficiently. That is ever likely to be so because the alternative—to send them by rail—is a three-stage journey that is entirely uneconomic in a small country such as ours. Therefore, will the Minister resist any pressure to raise transport costs, which affect us all, particularly when advocated by members of the rail lobby?
Baroness Kramer
My Lords, I think that the noble Lord’s question is rather out of scope. Safety on the roads is an issue on which we have to be both vigilant and effective.
Lord Davies of Oldham (Lab)
My Lords, the noble Baroness’s answers were rather too long for the House. However, they were not too long for me, because I agreed with them.
Baroness Kramer
I thank the noble Lord, Lord Davies of Oldham, for his support.
Baroness Sharples (Con)
Is my noble friend aware that I had a heavy goods vehicle licence during the war, and that there were no restrictions at that time?
Baroness Kramer
However, I am sure that there were also no accidents or breaking of the rules.
Lord Campbell-Savours (Lab)
My Lords, the Question was about the use of trade plates and in what circumstances truckers would want to use them. Is there not a restriction on the amount of time they can run on trade plates?
Baroness Kramer
I will write to the noble Lord with more detail on that. This is about vehicles that have not yet been put into service, so the various restrictions are around that. I will send him more detail on that.
Earl Attlee (Con)
My Lords, at what point does the Minister think she will be in a position to mandate the use of sensors on HGVs to detect cyclists? It cannot be done immediately, but at some point we should be able to do that. When does she think she will be able to do that?
Baroness Kramer
The noble Earl is quite right that that will be an important safety development. At the moment the sensor equipment we have that reliably detects other vehicles, pedestrians and cyclists is still in development. Unfortunately, some of the systems treat a tree as if it were a cyclist, and of course, once you get wrong information, the driver begins to ignore it. Therefore we are pursuing these issues very rapidly, and the department will welcome any uptake of effective systems by vehicle owners. However, vehicle registration is at the EU level, and mandatory fitment will need to be agreed with the other member states.
Baroness Gardner of Parkes (Con)
My Lords, will the Minister consider amending the construction and use regulations to remove the exemption for skip lorries and cement mixing lorries from the requirement to have a safety bar? These are the vehicles which are killing many bicycle riders now.
Baroness Kramer
My Lords, there are constraints on some of these vehicles, but the noble Baroness is right to say that there are special vehicles which are exempt. We have been looking at reducing those exemptions, and I will be glad to keep her up to date with where that process is going.
Faith Group Relationships
(10 years, 5 months ago)
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Lord Carrington of Fulham
To ask Her Majesty’s Government what measures they plan to take to improve the relationship between the Muslim community and other faith groups in the United Kingdom.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, the Department for Communities and Local Government published its strategy Creating the Conditions for Integration in 2012. This sets out the work of the Government and other organisations in helping to create the right conditions for everybody in society to participate. The Government are supporting projects to break down barriers, encourage community cohesion and celebrate what we have in common.
Lord Carrington of Fulham (Con)
My Lords, I thank my noble friend for that Answer. With some young British Muslims being radicalised, does she agree that it is very important that they are taught at a very young age, either in school or elsewhere, to understand the similarities between all religions, in particular the shared values of the Abrahamic religions, so they can understand that Christianity and Judaism are not the enemies of Islam? Can she suggest the best way to make this come about?
Baroness Warsi
My Lords, it is important that all people, especially young people, have an understanding of the diverse communities in which we live, including different faith communities. My noble friend may be heartened to know from surveys, including a DCLG survey from a few years ago, that 90% of Muslims agreed that people from different backgrounds get on well, as opposed to 87% of the general population; 89% of Muslims agreed that it is possible to fully belong to Britain and maintain a religious identity, compared to 72% of the general population; and 74% of Muslims believe that there should be more mixing between different communities and different ethnic and religious groups, compared to 71% of the general public.
Lord Patel of Bradford (Lab)
My Lords, will the Minister say what plans the Government have to work with the media to encourage them to stop publishing demonising articles about whole communities because of the actions of a handful of terrorists?
Baroness Warsi
As an ex-chairman of the Conservative Party, I wish I could get the media to stop publishing demonising articles. The noble Lord raises an incredibly important point. One of the strands of the work of the cross-government group on anti-Muslim hatred is looking at how we can work with the Society of Editors, among others, to ensure that headlines are, first and foremost, not sensational, but secondly, reflective of facts.
Lord Harries of Pentregarth (CB)
Does the Minister agree that in many parts of the country, relations between Muslims and other faith communities are extremely good? This was true in the diocese of Oxford when I was there and continues to be so. Because of the good relationships between faith leaders, including Muslim leaders, it has been possible to dissipate many potential signs of trouble.
Baroness Warsi
The noble and right reverend Lord makes an incredibly important point. I am incredibly proud of the work that the Government have done in harnessing the power of faith groups to create that understanding. One flagship has been the Near Neighbours programme. The Government have invested £8.5 million since the start of this Government in the Church of England’s Church Urban Fund, using the network of the Church of England to create better understanding between different faith communities.
Lord Hussain (LD)
My Lords, will the Minister tell the House if she thinks that the Government’s approach in dealing with the so-called Trojan horse issue is a help or a hindrance in the fight to tackle extremism in this country?
Baroness Warsi
My Lords, my noble friend makes an important point; everything that we do in tackling extremism must be done in a way that actually resolves extremism. Our language, our policy approach and our conduct must satisfy the end goal rather than the process.
Baroness Uddin (Non-Afl)
My Lords, would the Minister take the opportunity to pay condolences to the family of the student Nahid al-Manea, who was brutally murdered on the streets of England? Does she accept that some of these very brutal attacks and the rise of Islamophobia are real reasons why some young people are resistant to working across different faith groups? I agree that an enormous amount of work has been done in this country. Would the Minister accept that England’s record in the arena of multifaith work is second to none?
Baroness Warsi
My Lords, the issue of anti-Muslim hatred and Islamophobia is something that I have personally championed. One of the first speeches that I gave in government was about Islamophobia. I used the phrase, “Islamophobia has passed the dinner-table test”—and probably still bear the scars of it. It is important that we fight this new form of hate crime and that the Government have, rightly, invested in projects such as Tell MAMA, to record and make sure the data on anti-Muslim hate crime are accurate and credible.
It is important to make another point; we have been here before. There have been moments in our history when we have not been entirely comfortable with a faith community and we have questioned the loyalty of faith communities, whether that was the Jewish or the Catholic community. But our trust in our institutions and values has got us through it—and we will get through it again.
Lord Scott of Foscote (CB)
My Lords, I have an interest on this Question because one of my two sons has become a Muslim and one of my two daughters has become a Muslim. I have 12 lovely grandchildren, seven of whom are little Muslims—or not that little now, because one of them is 21. And, of course, I have a Muslim son-in-law and a Muslim daughter-in-law. Family relationships since those events took place have been as happily familial, as close and as good as any parent or grandparent could wish. If an improvement is needed in relationships between faith groups, one way of promoting that might be to encourage interfaith marriages.
Baroness Warsi
First and foremost, my Lords, it is important that we allow people to marry somebody of their choosing, whatever faith they belong to. That is why I am incredibly proud that the Government have done so much work on the issue of forced marriages, including criminalising a practice that should have been criminalised many years ago.
NHS: Rural General Practitioner Dispensing
(10 years, 5 months ago)
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Lord Lea of Crondall
To ask Her Majesty’s Government whether they will hold talks with NHS England about steps that could be taken to slow down the closure of rural dispensing general practitioner practices, against the background of the operation of the one-mile rule covering new free-standing pharmacies, and the phased withdrawal of the minimum practice income guarantee.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
I and my ministerial colleagues are in regular contact with NHS England. We are not aware of significant closures of rural dispensing practices. The “one-mile rule” is a long-established precept under NHS pharmaceutical services legislation, which determines whether patients in designated rural areas remain eligible to receive dispensing services from their GP. We have no plans to review or amend that precept. NHS England is asking practices that believe they may be adversely affected by the phased withdrawal of the minimum practice income guarantee scheme to contact their local area team to discuss their concerns.
Lord Lea of Crondall (Lab)
I thank the Minister for that reply, but the British Medical Association, at its conference last week, produced a statement citing NHS England as expecting scores of closures of such dispensing practices. I have a supplementary question and a proposal, but I think that the House may find it useful if I give the background.
Lord Lea of Crondall
Given the loss of income from the double whammy of what is called the one-mile rule and the phased withdrawal of the minimum practice income guarantee, many practices will go below the red line of viability. Will the Minister therefore hold talks with NHS England and suggest that, when there is such a double whammy, the one-mile radius rule could be applied to new patients but not to existing patients—so numbers would be reduced through mortality over the years?
Earl Howe
My Lords, the phasing out of the minimum practice income guarantee is being gradually implemented over seven years to give adequate time for GP practices to adjust. In fact, most practices stand to gain under that arrangement. I would encourage any practice to take the matter up with the local area team at NHS England if it has particular concerns. The provisions governing whether a doctor can continue to provide dispensing services to eligible patients when a new pharmacy opens nearby, which is a separate issue, have been in place for a long time and are subject to a long-standing agreement. If an application for a new NHS pharmacy is made to NHS England that would affect, for example, the noble Lord’s dispensing practice, that practice is able to make its views known. There is an appeals process as well. If a new pharmacy were approved that does affect the practice’s dispensing patients, it is open to NHS England to phase in gradually the shift from using the practice’s dispensary to a pharmacy for those patients affected.
The Countess of Mar (CB)
My Lords, does the Minister agree that this agreement arose from the 1911 Act—well over 100 years ago—and that there is extreme unrest among patients who are forced to go to a pharmacy when they have been used to using a dispensing doctor? Does the Minister intend to continue subsidising what are known as essential small pharmacies and not give patients a choice?
Earl Howe
My Lords, I do not think that it is a question of opposing choice against the rules that we have in place. The rules are there as a result of very long-standing agreements between the medical profession and the pharmacists. I do not think that there is an appetite on either side to open those rules up for renegotiation. A balance has to be struck somewhere and the professions are content with the balance that has been struck.
Baroness Brinton (LD)
My Lords, given that half of patients who use dispensing GP services include at least one person over 65 and that one in six is a disabled person, can the Minister tell us whether the one-mile rule makes sense in very rural areas, where public transport may be very sketchy, especially as the one-mile rule is as the crow flies, not via the roads?
Earl Howe
My noble friend makes a good point. That is why the rules contain an exception for those who find it difficult to travel and who may therefore wish to have medicines dispensed from their own dispensing GP practice. Those rules do apply to disabled people and to those whom my noble friend describes.
Lord Hunt of Kings Heath (Lab)
My Lords, does the Minister not regard it as somewhat ironic that yesterday we had the Government trumpeting their Deregulation Bill but today he defends what essentially is an uneasy truce between the BMA and the pharmaceutical interest, in which often the public are the losers? Is it not time for that to be reviewed again?
Viscount Tenby (CB)
My Lords, I am grateful for the assurances that the Minister has given so far in respect of possible closures as a result of the change in the financial arrangements and also, of course, of developments in towns, which inevitably result in the creation of new general practices and new associated pharmacies. On the question of rural practices where a proportion of patients are very old indeed, I ask the Minister to reiterate that great care will be taken that they will not be disadvantaged in any way by the future arrangements.
Earl Howe
Yes¸ my Lords. As I have described, there is a provision in the rules to take account of elderly and infirm people who find it difficult to travel and who may therefore still wish to have their medicines dispensed by their own dispensing GP rather than be forced to travel a longer distance.
South Sudan
(10 years, 5 months ago)
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Baroness Kinnock of Holyhead
To ask Her Majesty’s Government what assessment they have made of the concerns expressed by the Disasters Emergency Committee over the prospect of famine in South Sudan.
Baroness Northover (LD)
My Lords, the humanitarian situation in South Sudan is extremely critical and could get dramatically worse due to existing vulnerabilities and the unpredictability of the current conflict: 4 million people are at immediate risk of food insecurity and up to 7.3 million people are estimated to be at some risk. Should harvests fail, famine in late 2014 is a very real possibility in conflict-affected areas.
Baroness Kinnock of Holyhead (Lab)
My Lords, I thank the noble Baroness for a very comprehensive and encouraging analysis of where we are in South Sudan. However, in view of the grim predictions made by the Disasters Emergency Committee, does she agree that the international community has to do more, provide more funding to ensure that we can make a difference and act very quickly to avert a catastrophic famine? She will know that humanitarian access is a major obstacle facing relief agencies working in South Sudan. What are the Government doing to press for greater humanitarian access to be granted by all parties in the conflict in South Sudan, including cross-border access?
Baroness Northover
The noble Baroness shows great understanding of the situation in South Sudan. As she rightly points out, the key to this is the conflict there. That is at the heart of why there is a problem—and why there is a problem with access. She rightly highlights the difficulty of getting aid in. We are working very hard on logistics with the UN, the ICRC and international NGOs to try to get assistance in through air transport and other means but it is proving extremely difficult. Clearly, the cessation of hostilities would be the key to sorting this out.
Lord Avebury (LD)
My Lords, considering that fewer than half the pledges made at the Oslo conference in May have been honoured, should not the Disasters Emergency Committee write to the defaulters pointing out that, if they paid up, the shortfall of $1 billion needed to avert famine in Sudan would be cut by a third? Why are the BRIC countries and the oil-rich Gulf states missing from the list of 26 contributors to the crisis response plan?
Baroness Northover
First, I am immensely glad to see my noble friend back in his place and, as ever, fighting for the rights of the vulnerable.
Baroness Northover
The Oslo conference, at which my honourable friend Lynne Featherstone worked very hard to secure contributions, did indeed produce firm commitments from international donors. We entirely agree that the pledges should be honoured and we welcome any steps taken in that regard. As regards the one my noble friend has just suggested in relation to the DEC, we would certainly welcome it taking such a move. On his second point, he is right: we constantly seek to expand the number of contributor countries.
Lord Alton of Liverpool (CB)
My Lords, given that the whole of South Sudan is mired in violence and, indeed, corruption, what confidence does the noble Baroness have that the aid will reach the people it is meant to reach and will not be subverted for other purposes? Will she also comment on the reports published yesterday that the situation in the north is also deteriorating, with 5 million people there now suspected of being at risk of famine?
Baroness Northover
The noble Lord is quite right to point to these challenges. He will probably also know that the EU should be bringing forward a sanctions regime shortly, which we support. The United Nations is also looking at that because it is extremely important that problems such as looting are dealt with and that anyone who is getting in the way of the delivery of humanitarian aid is properly challenged and tackled.
The Lord Bishop of St Albans
My Lords, the situation is dire. As well as the 4 million people in need of humanitarian aid, more than 10,000 people have already been killed and 1.4 million people have been displaced. When we are facing such terrible problems it is important not to underestimate the role played by various agencies already on the ground, including many Anglican and ecumenical agencies working with the Anglican Alliance. Indeed, Archbishop Daniel Deng has been a leader in the efforts to bring peace. How can Her Majesty’s Government support the churches working on the ground in their humanitarian and peace efforts and in delivering aid?
Baroness Northover
I too pay tribute to those who are working in these extremely difficult circumstances. The right reverend Prelate will know that the United Kingdom is a leading donor. We are meeting about 7.5% of the total appeal at the moment and working to support all the agencies that are managing to get in. We do not underestimate the difficulties.
Baroness Hayman (CB)
My Lords, I declare an interest as a trustee of the Disasters Emergency Committee. Does the noble Baroness agree that it is essential to flag up and respond to these complex and developing crises, which can be just as devastating if not as instantly newsworthy as the sudden catastrophic natural disaster?
Baroness Northover
The noble Baroness is absolutely right. Of course it is the fact that this is a very fragile state which leads to the problems that we are indentifying here. It is one of the reasons too why it is important to act early and to plan ahead, which the United Kingdom is seeking to do.
The Earl of Sandwich (CB)
Does the noble Baroness agree that the key players in this future operation will be Kenya, Uganda and Ethiopia, which is receiving hundreds of thousands of refugees already? What are Her Majesty’s Government doing to back up those resources on the border?
Baroness Northover
We are concerned about not only those in South Sudan but obviously those who have been displaced into the neighbouring countries, who indeed have a destabilising influence. We are supporting both those within South Sudan and those in the neighbouring countries, and are very concerned about the instability caused by that.
Lord Collins of Highbury (Lab)
My Lords, I pick up a theme that has already been partly covered. People in this country respond generously to disasters when they happen. Here we know that a disaster is going to happen and that millions may die; they have not died yet. Can we have an assurance from the Government that they will act now rather than wait for a disaster to happen?
Baroness Northover
I assure the noble Lord that not only are we acting now but we were one of the leaders in putting into place plans in anticipation of what might happen. We took very seriously the advice that was put forward a year or two ago about being early responders, and are implementing that.
Openness of Local Government Bodies Regulations 2014
Baroness Stowell of Beeston
That the draft regulations and order laid before the House on 3 April and 5 June be approved.
Relevant documents: 1st and 2nd Reports from the Joint Committee on Statutory Instruments (special attention drawn to the instruments). Considered in Grand Committee on 1 July.
Jobseeker’s Allowance (Supervised Jobsearch Pilot Scheme) Regulations 2014
(10 years, 5 months ago)
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Lord Bates
That the draft regulations laid before the House on 4 June be approved.
Relevant documents: 2nd Report from the Joint Committee on Statutory Instruments, 2nd Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 1 July.
Serious Crime Bill [HL]
(10 years, 5 months ago)
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Baroness Hamwee
Baroness Hamwee (LD)
My Lords, this is a tiddler of an amendment, which it is embarrassing to move if there are noble Lords waiting for enlightenment about the philosophy and underlying architecture of the Bill. I have succeeded in imprisoning a number of my noble friends up here, because I was unable to find anywhere closer to the front.
Baroness Anelay of St Johns (Con)
My Lords—while my noble friend takes her seat—we are now in the second day in Committee on this Bill. Admittedly a smallish number of Peers are seeking to take part, but that number take the Bill very seriously. I am sure that, like me, they would like to hear from my noble friend Lady Hamwee as she moves her amendment.
Baroness Hamwee
My Lords, I am grateful to my noble friend. This amendment relates to an interpretation provision. In Clause 35, new subsection (6B) provides for what:
“References to property or a pecuniary advantage”,
mean in the context of the proceeds of crime. It seems to me that in that legislation and in the legislation that we are amending, some references to property or advantage would be to the whole of it—for instance, if the property is to be subject to confiscation—while some would be to the extent of what has been obtained by a criminal act, for instance the amount confiscated. My amendment really amounts to a question to the Minister as to whether to take it that we should read what is appropriate in the context. In other words, is what I have said implicit and am I worrying about something quite unnecessarily? The second of these examples—in other words, a limited extent—seems not to be provided for in the clause. I beg to move.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
Perhaps I may help my noble friend and reassure her because Clause 35 deals with a technical amendment to the Proceeds of Crime Act, which will expand the types of cases that UK authorities can deal with on behalf of their international counterparts. The Proceeds of Crime Act currently enables, among other things, requests and orders made by courts in other jurisdictions to be given effect in the United Kingdom. One such order is that allowing for the recovery of specified property or money where that property or money is believed to have been obtained as a result of, or in connection with, criminal conduct. The scope of the order is therefore restricted solely to the recovery of specific property or money.
Domestic law, by contrast, recognises that the proceeds of crime can include not just specific money or property but a so-called pecuniary advantage, such as not paying a tax that is lawfully due. The reason that pecuniary advantage was not originally included within the assistance that could be provided to other jurisdictions was due to the scope of international agreements at the time when the Proceeds of Crime Act was enacted. In recent years, however, the international approach has broadened but the law has not kept pace. As a result, law enforcement agencies are unable to assist those in other jurisdictions in recovering from a defendant convicted of crimes such as tax evasion amounts held in the United Kingdom.
I am sure that my noble friend agrees that it is right that we should be able to co-operate as widely as possible in such matters; this clause will help us achieve that. The clause does not affect the position with regard to domestic cases. However, it extends our ability to assist foreign jurisdictions with the recovery of any pecuniary advantage obtained as a result of criminal conduct. I hope that, with that explanation, I have satisfied my noble friend and she will be able to withdraw her amendment.
Baroness Hamwee
My Lords, this is one of those occasions when one wants to hold back and read the answer, which is not at all to suggest that I doubt my noble friend. Of course, I share the intention and I am grateful to him for that. I will read the answer but, for the moment, I beg leave to withdraw the amendment.
“( ) In section 97 (confiscation orders by magistrates’ courts), for subsection (1) substitute—
“(1) The Secretary of State shall by order make provision for enabling confiscation orders under Part 2 of the Proceeds of Crime Act 2002 (confiscation: England and Wales) to be made by magistrates’ courts in England and Wales.””
Lord Ponsonby of Shulbrede (Lab)
My Lords, my amendment is concerned with confiscation orders in magistrates’ courts. Under the Proceeds of Crime Act 2002, magistrates’ courts lost their power to make confiscation orders. They had previously had this power for appropriate offences under the Criminal Justice Act 1988. Magistrates continue to this day to have responsibility for the enforcement of confiscation orders.
Section 97 of the Serious Organised Crime and Police Act 2005 gave the Secretary of State power to make provision for magistrates’ courts in England and Wales to impose confiscation fines of up to £10,000. This would have to be done by means of an affirmative instrument. While Section 97 has been brought into force, it only gave the Secretary of State the power to make provision by order. In the intervening nine years, this has not happened. Given that magistrates used to have this power, and continue to play a role in the non-payment of confiscation orders, I can see no reason why this should not be taken forward.
Baroness Hamwee
My Lords, both my Amendments 31A and 31B would delete wording, but they enable me to ask a question. The Secretary of State, and in the case of Northern Ireland, the Department of Justice, have the power to make an order to substitute a different amount for the maximum amount of the confiscation order which can be made by a magistrates’ court. Can the Minister give the Committee an assurance that the Secretary of State will consult before such an order is made? I appreciate that it is not in his gift to give any assurance on behalf of the Department of Justice, but he might be able to make a comment, because I know that the Government have been in touch with the Northern Ireland Assembly.
Baroness Williams of Trafford (Con)
My Lords, as the Proceeds of Crime Act currently operates, a confiscation order may only be made by the Crown Court. As a result, if someone is convicted of an offence in the magistrates’ court and the Bench considers the case is appropriate for a confiscation hearing, the matter must be referred to the Crown Court. This is clearly not the most effective use of resources for handling simple cases. As the noble Lord, Lord Ponsonby, notes, there is already legislation on the statute book that would enable the Home Secretary to modify Part 2 of the Proceeds of Crime Act so as to enable confiscation orders to be made in a magistrates’ court in cases where the criminal benefit did not exceed £10,000. The relevant legislation can be found in Section 97 of the Serious Organised Crime and Police Act 2005.
I can fully understand the frustration of the noble Lord, as a sitting magistrate, in having to refer all confiscation cases to the Crown Court when it would be perfectly possible for straightforward cases to be dealt with in the magistrates’ court, subject to that £10,000 threshold. The noble Lord is all the more frustrated given that the legislation to allow magistrates’ courts to make confiscation orders has been on the statute book for almost 10 years, as he pointed out. The provision in Section 97 of the 2005 Act had, of course, already been on the statute book for five years when this Government came to office. Like the previous Administration, we judged that there were other priorities for improving the asset recovery regime and responding to serious and organised crime, including the setting up of the National Crime Agency. However, we are now working towards enabling magistrates’ courts to make confiscation orders, including putting in place the necessary judicial training from spring 2015.
Given that we are now actively working to implement a scheme empowering magistrates to make confiscation orders, I hope the noble Lord will agree that his amendment, which places a duty rather than a power on the Home Secretary to make such a scheme, is unnecessary. I would be happy to update the noble Lord in the autumn on progress in this area. On that note, I hope that he will be content to withdraw his amendment.
Turning to Amendments 31A and 31B, my noble friend Lady Hamwee indicated that her intention was not to remove the power to vary the £10,000 limit by order but simply to seek an assurance that there would be proper consultation before the order-making power was exercised.
Generally, our approach is that magistrates’ courts should be able to make confiscation orders only in less serious cases. However, there may be situations in which the defendant has been convicted in the magistrates’ court but is potentially liable to an order greater than £10,000. Such a case would still need to be sent to the Crown Court to be dealt with. The order-making power in the clause allows for the £10,000 threshold to be varied if the evidence following implementation shows that the limit is generally too low.
Once we have brought into effect the provisions allowing for confiscation orders to be made in magistrates’ courts, we will keep the arrangements under close review. I assure my noble friend that before any change is made we will consult with the senior judiciary, the Magistrates’ Association and other practitioners as to whether the £10,000 threshold can sensibly be raised.
I also remind my noble friend that this order-making power is subject to the affirmative procedure, so any change would need to be considered and approved by both Houses. I hope that with these comments I have been able to provide my noble friend with the assurance she is seeking.
Lord Ponsonby of Shulbrede
My Lords, I thank the noble Baroness for that answer. I think we got half a step forward. She said that there would be training in 2015 but could not quite go all the way and say when magistrates would actually receive these powers. Nevertheless, as I said, this was a probing amendment. I have got a little bit more information so I beg leave to withdraw the amendment.
Baroness Hamwee
Baroness Hamwee
My Lords, Amendment 31C is a small probing amendment. There is a definition in the clause of “a country or territory”, which provides that references to them include,
“the territorial sea adjacent to a country or territory”.
My amendment would change that to “territorial waters”. I simply ask how extensive is territorial sea that is adjacent? It must be less than territorial waters. The natural meaning of adjacent, I would have thought, is “very close to the land”. Why is there a limit and what is the limit? I would guess that this is relevant in the context of the clause about computer misuse to damage to such things as wind turbines and oil rigs, and perhaps, in a transport context, ferries and maybe fishing. I am sure there is a list of matters. I am fairly unclear as to what the clause means. If my noble friend can help, so much the better. I beg to move.
Baroness Williams of Trafford
My Lords, I hope I can clarify things to my noble friend’s satisfaction. As we know, cybercrime has a global reach; a perpetrator sitting in their bedroom in London could be hacking into a computer system anywhere in the world. The new offence acknowledges this reality and captures serious damage caused in any country. The clause goes on to define a reference to “country” as including a reference to a “territory” and to,
“(i) any place in, or part or region of, a country or territory;
(ii) the territorial sea adjacent to a country or territory”.
It is the last of these three points that my noble friend’s amendment seeks to address, and she raises a very interesting point.
The Territorial Sea Act 1987 specifies that the breadth of the territorial sea adjacent to the UK is 12 nautical miles. I can therefore reassure my noble friend that this form of words does not mean, as one might usually expect, the sea very close to the coastline, but captures the full 12 nautical miles of territorial water surrounding the UK.
However, the position will not be the same for all countries. Although the 1982 United Nations Convention on the Law of the Sea sets 12 nautical miles as a maximum for territorial waters, some states may have chosen a smaller limit. The boundary line for a country’s territorial waters will be governed by its own laws and by international agreements and conventions. The non-specific language in the Bill reflects this variation. Where the damage is caused in the UK the territorial sea adjacent to the country will be the 12 nautical miles around the UK. Where the damage is in another country we would expect the court to take into account the laws of the country in question, together with any relevant international conventions, such as the UN convention, and any other agreements, in determining the territorial sea’s breadth. I hope that my noble friend has found this explanation helpful and that she will agree to withdraw her amendment.
Lord Elton (Con)
Can my noble friend say whether territorial waters and a territorial sea adjacent to a country are normally co-terminous? My noble friend referred to some countries defining a territorial sea as extending less than 12 nautical miles, but she did not say whether it was less than the territorial waters of the country. I hope that is not too arcane.
Baroness Hamwee
My question was very similar—perhaps I will put it in a slightly different way. The explanation as I heard it is that this is about territorial waters. The language used seems to be that which is used to define territorial waters, whichever country one is talking about. However, it seems that there is no difference between the territorial sea adjacent to somewhere and the territorial waters. To give the Minister slightly more breathing space, perhaps I can also ask her to explain what a “territory” is, as distinct from a “country”?
Baroness Williams of Trafford
My Lords, to answer my noble friend’s question last, and hopefully throw light on my other noble friend’s question: a “territory” is a geographical concept, the land and sea over which a state has jurisdiction. A country’s land mass may be divided into several territories, so the state of a country may also have jurisdiction over far-flung territories. For example, the state of the country of the United Kingdom has jurisdiction over various overseas territories, such as the British Virgin Islands. However, it is a matter for each state to determine, subject to the 12-mile limit. I hope I have not further confused the House.
Lord Elystan-Morgan (CB)
My Lords, I hope to make a marginally relevant point. Is it not the case that by now the whole concept of a belt of territorial jurisdiction, 12 miles out from land, has been outdistanced by the realities of time? Grotius, I believe, was the international lawyer, who, many centuries ago, advocated a three-mile limit. Why? Because that was the range of a powerful cannon in those days. Then, ordnance became more and more powerful. Today, 12 miles is nothing in relation to the power of ordnance. Should not the whole question of the 12 miles therefore be eradicated?
Lord Swinfen (Con)
Before my noble friend answers that question, might I ask whether our gas and oil rigs and our large, hideous windmills that are beyond the 12-mile limit are within our territorial waters? If so, do not our territorial waters in some instances stretch very much further, and have we not claimed areas out into the Atlantic within the continental shelf in order to protect our own oil rights? Is the limit not much greater than 12 miles?
Lord Bourne of Aberystwyth (Con)
Perhaps I can help on that. The law of the sea gives a territory an exclusive economic zone of 200 miles, which covers such things as mineral rights, wind farms and so on. Territorial waters are quite different: it is where jurisdiction is exercised over people within territorial waters. The limit is still 12 miles. Occasionally, it may be less if it overlaps with another country’s 12 miles, as it would, for example, in the Channel, where a median line is drawn between the United Kingdom and France.
Lord Swinfen
If my noble friend will forgive me, if we have territorial rights that are limited to only 12 miles, who has jurisdiction over the gas and oil rigs that are further out than 12 miles? Are they outside the jurisdiction of the United Kingdom? If a crime is committed on them, is it not a free-for-all?
Baroness Williams of Trafford
I thank my noble friend Lord Bourne for very helpfully clarifying the issue over mineral rights et cetera. If a crime took place on an oil rig, windmill or anything out to sea, it would be a matter for whichever country had a flag on it. I hope that clarifies the matter in respect of anything that might be in any sea anywhere in the world.
On whether the 12-nautical mile radius should still stand, I do not think that that is a question for today. The fact is that it does stand.
Lord Elton
My Lords, I was hoping to protract the glory of this small question, but I think that I had better sit down in order to wrestle with my machine that is bleeping.
Baroness Hamwee
My Lords, after the tutorial that we have had from the noble Lord, Lord Bourne, I feel that I should just say that I surrender—but, before I do so, I will comment that it would be easier if the Bill were to refer to each country’s territorial waters as that country has determined, rather than using what appears to be general language without making reference to the technicalities. I am grateful to my noble friend the Minister, who no doubt now knows a great deal more about territorial waters than she really ever wanted to. I beg leave to withdraw the amendment.
The Lord Speaker (Baroness D'Souza)
The Question is that Clause 37 stand part of the Bill.
Baroness Smith of Basildon
Should we not be debating whether Clause 37 should stand part?
Lord Swinfen
My Lords, the Lord Speaker put the Question that Clause 37 stand part of the Bill and it was accepted by the Committee. We are now on to the next amendment.
Baroness Hamwee
Baroness Hamwee
My Lords, I will speak also to my Amendment 31H. Perhaps I should speak slowly to give the noble Baroness, Lady Smith, an opportunity to work out how to make her points in the debate on this clause.
In Clause 39, Amendment 31D would omit subsection (4) and Amendment 31H would omit subsection (7), both of which refer to a case in which the accused is in one country and the offence is linked to another jurisdiction, which will very often be the case when there is computer misuse. My amendments are probing; I am asking my noble friend whether there is a risk that a person could be prosecuted for the same act in more than one jurisdiction, and how it should be determined which jurisdiction takes precedence. Obviously, this point arises not only in connection with the Bill and the new offences, so I am not raising a novel point, but it would be very helpful to the House to understand how that conflict might be determined—I use the term “conflict” somewhat hesitantly as, technically, it is not a conflict—when more than one jurisdiction is involved. The first of these two amendments refers to the UK and the second to Scotland. I beg to move.
Baroness Williams of Trafford
I am grateful to my noble friend for the explanation of her amendments. I believe that I can provide the reassurance that she seeks. I know that a number of noble Lords are interested in this issue; indeed, it was raised in the House at Second Reading.
It might help if I briefly explain why we are making the amendments to the Computer Misuse Act in Clause 39 and then set out the safeguards against subjecting a person to double jeopardy. As the Committee is well aware, cybercrime is a serious threat that often crosses international boundaries. The Computer Misuse Act already recognises the transnational nature of cybercrime and provides for the extraterritorial jurisdiction of certain of the offences under the Act where there is a significant link to the United Kingdom.
Clause 37 adds nationality to the categories of significant linkage to the UK. This means that a UK national would be committing a computer misuse offence while outside the UK even where there was no link to the UK other than nationality, provided that the offence was also an offence in the country where it took place. Therefore, in the case of concurrent jurisdiction, a UK national could be prosecuted under the Computer Misuse Act in the UK subject to the usual extradition arrangements or the accused voluntarily returning to the UK.
Decisions about prosecution rest with the Director of Public Prosecutions. It would be for prosecutors in the affected jurisdictions to negotiate where the prosecution should take place. For example, in the EU, Eurojust was established to deal with criminality that extends over borders, and it has guidelines to help prosecutors decide where a case should best be tried. There is a similar protocol agreed by the Attorneys-General of the US and the UK for cases that in theory could be tried by either jurisdiction. The Crown Prosecution Service has domestic guidelines that its prosecutors are expected to follow to help them decide whether to bring a prosecution in the UK or cede jurisdiction to another state with an interest.
My noble friend is rightly concerned to ensure that an individual cannot be prosecuted in both jurisdictions where there is a concurrent jurisdiction. This is a risk that the existing guidance and agreed processes have been designed to manage. Using the UK and Clause 39 as an example, a UK national could commit a number of Computer Misuse Act offences in country B even if the criminality did not impact on the UK. As I described, the way in which we would expect this to work is that the prosecutors in the UK and country B would decide where to pursue the prosecution. In the absence of country B taking forward a prosecution, the UK could take one forward and would need to go through the extradition process to return the subject to the UK. If the case was prosecuted and the sentence served in country B, and the subject returned to the UK, the UK could not then take forward its own proceedings. Double jeopardy would prevent the subject being prosecuted for the same offence in the UK.
It is important to note that the extraterritorial scope of the offences in question does not place any requirements for the offences to be prosecuted here, especially in cases where the offence has taken place outside the UK and the only link to the UK is the nationality of the subject. Similarly, if the subject was outside the UK, the usual extradition procedures would be followed where prosecutors agreed that the prosecution should be pursued in the UK. I trust that that provides the assurance that my noble friend is seeking and that she will be content to withdraw her amendment.
Baroness Hamwee
My Lords, that was very helpful. I may have missed this, in which case I apologise, but I take it that the arrangements to which the Minister referred at the beginning of her reply deal with where the prosecution actually takes place and the decision between two states as to who takes the lead.
“(2A) A sheriff shall have jurisdiction in respect of an offence under section 3ZA above if—
(a) the accused was in the sheriffdom at the time when he did the unauthorised act (or caused it to be done), or (b) the computer in relation to which the unauthorised act was done was in the sheriffdom at that time.”
Baroness Williams of Trafford
My Lords, this is a technical amendment. Clause 39 extends the extraterritorial jurisdiction of certain offences under the Computer Misuse Act 1990. In doing so, the clause amends Section 13 of the 1990 Act, which relates to criminal proceedings in Scotland, to establish the criteria for when a sheriff court has jurisdiction to try certain offences under that Act. Our amendments to Clause 39(6) and (7) extend these provisions so that they also apply to the new Section 3ZA offence—inserted into the 1990 Act by Clause 37—of impairing a computer such as to cause serious damage. I beg to move.
“Annual reports: cyber-crime strategy
(1) The Police Reform and Social Responsibility Act 2011 is amended as follows.
(2) In section 12 (annual reports), after subsection (7) insert—
“(8) A report under this section must include details of the policing body’s strategy to deal with cyber-crime.””
Baroness Smith of Basildon
My Lords, I apologise if there has been some confusion. When the Question was whether Clause 37 should stand part of the Bill, I was loath to say no because, although I gave notice of my intention to oppose the Question, I really have no intention of opposing the clause. As noble Lords will agree, one way to have a general debate on the principle of an issue, rather than its individual parts, is to raise a clause stand part debate.
At the same time as moving Amendment 31K, which would require the annual reports of police authorities and police and crime commissioners to contain a statement on how they are tackling cybercrime, I will make some general comments on cybercrime and computer misuse. This is a probing amendment. The Bill amends the 1990 Act to create a new offence of unauthorised acts that cause serious damage, to implement the EU directive on attacks against information systems and to clarify the savings provisions for law enforcement. We have no difficulties with those provisions, but we wish to have a general debate and promote a discussion on whether the Government are doing enough or whether the Bill could go further and provide better and more effective protection from cybercrime.
Noble Lords may be aware that we also sought to table an amendment to create a new offence of identity theft. We have raised this issue with the Government before because it needs new legislation. We were disappointed that the Government did not take the opportunity to include something along those lines in the Bill. Noble Lords will know that, within cybercrime, identity theft causes a great deal of concern and affects a large number of people. However, it was not included in the Bill and, unfortunately, our amendment to address this was not in scope. I am sure we will return to this issue another time but, when dealing with cybercrime now, it is important to look at and address the loopholes in existing legislation.
There is little doubt that digital technology and the internet have changed our lives and provided us with new opportunities. However, they also create new challenges and provide new opportunities for criminals. Returning to the theme of Al Capone, even his creative criminal mind could not have imagined the opportunities that would be available to his successors in the 21st century. A recent HMIC report says that this could either be,
“where criminals use computers to help them commit crimes that would have been committed previously without the benefit of such technology, for example fraud and theft, or where they commit new crimes that were not possible before”,
or were not even thought of,
“such as an attack on government online services using ‘malicious software’”.
Recorded incidents of fraud have increased by a quarter over the past year but convictions have gone down. However, business crime—which surveys indicate is going up—is not counted in official figures despite online crime exploding.
The consumer watchdog Which? estimates that half of us have been targeted by online scams. Anyone who looks religiously through their spam in the parliamentary e-mail system will see scams offering services which I am sure most of us, particularly the women, would not want to take advantage of. Recorded online fraud is up by 30% but that is just the tip of the iceberg, because most of it is never reported to the police.
The Home Affairs Select Committee concluded in its report last summer that,
“there appears to be a ‘black hole’ where e-crime is committed with impunity. Online criminal activity which defrauds victims of money is not reported to or investigated by law enforcement. Banks simply reimburse the victims with no pursuit of the perpetrators. Criminals who commit a high volume of low level fraud can still make huge profits”.
Many members of the public take out insurance with banks and other organisations to protect themselves against online crime and identity fraud. I have yet to understand how easy that is or how it pays out to a victim. Although they may get their money back, the inconvenience, distress and worry caused by it are tremendous.
Despite that, the Bill does not offer a coherent government plan for tackling online fraud and economic crime, even though it would have been an ideal opportunity to do so. Looking at large-scale cyberincidents, the recent HMIC report has some very worrying findings. Only three police forces, Derbyshire, Lincolnshire and West Midlands, have developed comprehensive cybercrime strategies. The rest of us who live in other areas have to rely on some kind of knowledge within the police force because there is no specific strategy. Only 15 forces have considered cybercrime threats in their strategic threat and risk assessments and, where those assessments exist, the plans focus only on investigating cybercrime and are silent about preventing it and protecting people from the harm that it causes. While the Government and PCCs are increasing their investment in regional organised crime units, those units have not yet developed the necessary cybercapacity to assist the police forces. That indicates that there needs to be a real debate around these issues. There need to be new plans, new strategies and new actions in place to tackle new threats. The police need to do more, not less, to tackle online fraud and crime.
I have outlined that there is no serious strategy and that fragmented forces lack the skills and organisational structure to be effective. The shadow Home Secretary has said previously that that has to involve better skills and that the police need to have the skills in this very specialised area. They need better organisation, and they also need to co-operate with the private sector. That needs to be part of strengthening the law on identity theft. We have seen that there is some good practice within the police, but it is patchy. If it is going to be effective, it needs to be universal. Ensuring that this issue is addressed in the annual report will focus greater attention on it and on the strategies and plans that have to be made. What does not have to be reported can be forgotten or added as an afterthought. If it is central to the PCC report, we will have some way of measuring the actions taken. The scale of the challenge is too great for it to be forgotten or an afterthought.
I am not suggesting that the report itself will effect a marvellous change overnight, but it will help to ensure that the importance of this issue is recognised. As well as the impact on business, there is growing recognition of the implications for national security and our national infrastructure and its resilience. The security services and GCHQ also recognise that they need to do more to tackle the growing number of cyberattacks and the effects they could have. That means building on the work being done with major public and private sector organisations because we have to ensure that they are resilient against hacking and major online onslaughts. We have also said that we want major reform of oversight functions and responsibilities and accountabilities, and we want a major overhaul of the system of independent oversight commissioners, stronger safeguards and a serious review of the legal framework, including a full review of RIPA.
These clauses are welcome. They have our support. The reason for Amendment 31K is evident. It is to try to raise the issue which is of such importance. I seek assurances from the Minister that the Government recognise just how much this is needed. I express some disappointment. We think the Bill is an opportunity to go further, do more and really address the issues of resilience, national infrastructure resilience and national security. We are disappointed that an important issue in this area—identity theft—is out of scope of the Bill so we cannot address it. We support what the Government are doing. We think there could be more. We would like more. We would like to work with the Government to achieve more. I beg to move.
Lord Phillips of Sudbury (LD)
My Lords, I strongly support what the noble Baroness, Lady Smith of Basildon, said. The issue—if you can call it an issue as it is a series of issues—in relation to cybercrime could scarcely be of greater importance to our society. It is not just an economic crime of the greatest potential but a crime in all dimensions.
The only reservation I have about the amendment is whether it goes far enough. Besides having to deal with the strategy in relation to cybercrime, I would hope for something in the report about the extent of the implementation and enforcement of the laws we are passing and the laws we have already passed. It has become a commonplace in this House to remark upon the fact that we pass laws as if there is no tomorrow but fail again and again to implement the laws we pass. I therefore hope that the report will deal with that crucial aspect of the so-called strategy.
I am not clear as to whether we are in this group also now discussing whether Clause 37 shall stand part of the Bill. We are not? Right.
Lord Howarth of Newport (Lab)
My Lords, when I first studied the Bill and saw that there were clauses relating to cybercrime as well as substantial parts focused on the problems of drugs, I thought that the sections on cybercrime would have something to offer on the development of the Government’s strategy to deal with our immense problems with drugs. However, I cannot see that there is any connection between these different parts of the Bill. That is a disappointment.
Will the Minister share with the House some of the thinking of the Home Office as to how it proposes to address the rapidly developing and immense problem of drugs-related cybercrime? As I noted at Second Reading, the internet has transformed the marketing and distribution of drugs, whether they are proscribed or whether they are new psychoactive substances that are not proscribed. It is now far easier for those who produce these substances and those who sell to be linked up with those who are interested in consuming them. Social networking has intensified this ease of communication. For example, I understand that it is not at all uncommon when party invitations are distributed by means of social networking that the message will contain a link to the point at which particular fashionable, newly arrived substances can be obtained.
This problem presents huge challenges to policing in terms of protecting the safety of all people, particularly young people. The Government and law enforcement agencies must be thinking very hard indeed about this. It would be helpful if the Minister would say, were he to accept my noble friend Lady Smith’s amendment, what he would expect to see in these annual reports on the subject of drugs-related cybercrime. We have social networking, which uses relatively familiar and accessible networks of communication, but there is of course the dark web. The Home Office must again be pondering and working very hard indeed to find ways in which it can even know what is going on on the dark web, let alone to police it. These are hugely important issues, and perhaps the noble Lord would share his thoughts on them with us.
Lord Swinfen
I also support the amendment. In doing so, I declare an interest: I run a medical charity that does all its work online, with doctors and nurses in 74 different countries. However, I am not so much worried about that, because I hope that our confidential information is secure. I am thinking of people using cybercrime to find their rivals’ pricing information and new product designs when tendering for various projects; in other words, hacking into other people’s and firms’ computers and getting confidential information for their own pecuniary and business advantage. This is an important amendment and I hope that my noble friend on the Front Bench will consider it sympathetically.
Baroness Hamwee
My Lords, to pick up on the point about drugs, it does not seem to me that they are necessarily excluded. The new section of the Computer Misuse Act deals with an act creating,
“a significant risk of, serious damage of a material kind”,
which includes “damage to human welfare”, which is in turn such as to cause, among other things, “loss to human life” or “human illness or injury”. All that links up very closely with what the noble Lord has been talking about. If what he has described is not covered, we will need to go back to Clause 39—but not today.
Lord Taylor of Holbeach
My Lords, the noble Baroness, Lady Smith of Basildon, has created a new parliamentary device. I had long heard of the paving amendment, but today she has moved a door-stop amendment. It has enabled us to discuss an important aspect of the Bill, and I am pleased that we have the chance at least to consider the clauses that are designed to deal with cybercrime.
The Government’s approach and the scale of the investment that we have made across law enforcement agencies to develop and strengthen the operational response are designed to combat that emerging and complex threat. In 2010, the national security strategy named hostile attacks on UK cyberspace by other states and large-scale cybercrime as a tier-one threat to national security. To put these provisions on computer misuse into context, they are principally aimed at that level. That means that for the Government cyber is regarded as on a par with international terrorism as regards the risks to our national security. The Government have responded to that threat by committing £860 million over five years to the national cybersecurity programme. So far, we have invested over £70 million of that funding to strengthen law enforcement’s ability to tackle cybercrime.
We know that a co-ordinated approach is needed to tackle serious and organised crime, including cybercrime. We set out how we plan to achieve that in the Serious and Organised Crime Strategy, and I think that the noble Baroness will find some of the thoughts of the Home Office in that document, which we launched in October last year. At the same time we launched the National Crime Agency, which leads the UK response to serious and organised crime. The National Cyber Crime Unit in the NCA was established to provide the national crime-fighting response to the most technologically sophisticated cybercrime.
The National Cyber Crime Unit therefore provides the focus for our national response to combating cybercriminals. It is using its increased operational resources to arrest those responsible and to prevent and otherwise disrupt their activities. The National Cyber Crime Unit is also investing in state-of-the-art equipment and specialist expertise, keeping pace with the criminals who threaten the public. It also uses the NCA’s enhanced intelligence picture to proactively pursue criminals, targeting them where they are most vulnerable and signposting the public towards advice on how to protect themselves. Approximately half the NCA’s officers are being trained in digital investigation skills. That shows that we recognise the significance of cybercrime in fighting serious crime in this country.
The National Cyber Crime Unit has already had an impact in pursuing those criminals and disrupting their activity. Examples include the recent operation with its international partners to disrupt the communications used by criminals to connect with computers that are infected with malicious software, or “malware”, such as GameOver Zeus and CryptoLocker.
However, the NCA and the National Cyber Crime Unit cannot tackle that threat alone. The policing response to national threats is set out in The Strategic Policing Requirement, which chief constables and police and crime commissioners must have regard to, and which recognises both cybercrime—as a form of organised crime—and a large-scale cyber incident as national threats that require a policing response. While police forces can draw on the support of the National Cyber Crime Unit, it is also vital to build force capability to tackle the cyberthreat locally. We have therefore also provided funding to support the creation of cybercrime units within eight of the regional organised crime units.
The cyberunits will support the National Cyber Crime Unit and also help local forces prosecute and disrupt cybercriminals. They are also building links with institutions such as this to understand better the threat we face and the best tools to use in response. This year we have offered £25 million to support regional organised crime units. With funding from the national cyber security programme, the College of Policing is investing in new courses to build cybercapabilities in local forces. The training will increase knowledge and understanding of cybercrime and how to investigate it. It includes four e-learning packages and classroom courses to train 5,000 officers by 2015.
Lastly, we are also funding Action Fraud and the “Be Cyber Streetwise” campaign so that the public have a clear single point of reporting if they are victims of cybercrime, in particular financially motivated cybercrime, and know how to protect themselves and so reduce the risk of becoming a victim of cybercrime—the identity theft that the noble Baroness mentioned. Turning to Action Fraud first, we have rationalised the reporting arrangement so that Action Fraud is now the national reporting service for fraud and financially motivated cybercrime. The public and businesses can use it to report online or by phone. All reports go through Action Fraud, which then passes the reports to the National Fraud Intelligence Bureau. Both are now run by the City of London Police, the country’s national lead force for fraud. In January the Government launched a “Be Cyber Streetwise” campaign, delivered in partnership with the private sector, to encourage individuals and small businesses to adopt safer online behaviours to help them better protect themselves.
Although we have included Clause 37 in the Bill, I shall say a little about the new offence therein to capture cyberattacks which cause, or create a significant risk of, serious damage. This was referred to by my noble friend Lady Hamwee. Improvements in technology have brought many benefits and the use of IT systems has increased exponentially since the Computer Misuse Act was passed in 1990. It is surprising that we are building on that Act of 1990—it was a far-seeing piece of legislation. However, as we rely more and more on computer systems, and as they become increasingly interlinked to deliver maximum benefits, the potential for a cyberattack to cause serious damage also increases.
It is now possible that a major cyberattack on essential systems—for example, those controlling power supply, communications or food distribution—could result in loss of life, serious illness or injury, serious damage to the economy, the environment or national security or severe social disruption. However, the existing offence of impairing a computer, currently the most serious of the Computer Misuse Act offences, carries a maximum sentence of only 10 years’ imprisonment. This does not adequately reflect the level of serious economic or personal harm that a serious cyberattack could now cause.
The new offence will apply where an unauthorised act in relation to a computer—that is “hacking”, in common parlance—results, directly or indirectly, in serious damage to human welfare, the environment, the economy or national security, or creates a significant risk of such damage. The offence will carry a maximum life sentence where the attack results in loss of life, serious illness or injury or serious attacks to national security. Where the attack results in serious economic or environmental damage or social disruption, the maximum sentence will be 14 years’ imprisonment. This offence will ensure that, in the event of serious cyberattack, a suitably serious offence will be available to the prosecution and a suitable sentence available to judges.
A number of other issues have been raised, and it may be helpful to noble Lords if I write a summary covering different aspects. Identity theft was raised by the noble Baroness, Lady Smith, and the drugs issue was raised by the noble Lord, Lord Howarth. We recognise concerns about the whole business of legal highs and their availability on the internet. The Minister for Crime Prevention, Norman Baker, is currently reviewing law in this area, and the House will have an opportunity to consider the review’s findings later this year. It would be helpful to use the opportunity of this debate about the particular aspect of cyber misuse that is of serious consequence for me to write to noble Lords, including my noble friends Lord Phillips of Sudbury and Lady Hamwee. I would like to be able to reassure them on that point. Indeed, I think that my noble friend Lord Swinfen also raised a point that I would like to address in that way.
I hope that, given the reply that I have been able to make, and including those points in a more general discussion about this area, the noble Baroness will be in a position to withdraw her amendment. We have clauses in the Bill that address cybercrime and we have taken a significant step in recognising the importance of this to our national well-being.
Lord Howarth of Newport
I thank the Minister for what he said about drugs-related cybercrime. Will he also seek to offer the House some reassurance on a very major issue that he touched on? He emphasised the Government’s very proper concern to protect our critical national infrastructure against cybercrime. I believe that it is the case that a good deal of cybercrime emanates from China. The Government have just completed a negotiation with the Chinese whereby it is agreed that they will build our nuclear power stations. What reassurance can he give to us that we are going to be protected in the event of cybercrime coming from a Chinese source, conceivably in unfortunate diplomatic circumstances authorised by the Government in China? I appreciate that this goes beyond a routinely or merely criminal issue, but it seems exceedingly important to me—and something that the Government must have been thinking about. As he has been advising us on the Government’s measures and strategies to deal with cybercrime, perhaps he could also say something about that.
Lord Taylor of Holbeach
I think that I said in my general speech in response to the noble Baroness’s amendment in addressing this area that we recognise that serious damage to national interests and human well-being can be caused by individuals and also by organisations and states. I do not want to give an answer to the noble Lord’s particular suggestions. All I can say is that, obviously, we are anxious to work with China. It is an important nation in the world’s affairs and its assistance is important economically to the prosperity of the world.
If I can add any more to what I have just briefly said, I will write to the noble Lord, but in any case I will be writing to all those who participated in the particular debate on this issue, because I think that could be useful.
Lord Swinfen
What is the definition of cybercrime? I think it is a very wide one. I ask the question deliberately, because some time ago my charity—which, as I said before, works in 74 different countries—had its website hacked. It was repaired and the following day it was completely destroyed. We suspected that it was destroyed possibly by officials of another nation who did not approve of us giving medical advice to doctors working in that country. I suspect they thought that there might have been some nefarious purpose in it, although in fact it was purely charitable. I would be grateful if my noble friend would give me a definition of cybercrime.
Lord Taylor of Holbeach
Cybercrime is the use of computers—indeed, I may have it here. I have the Serious and Organised Crime Strategy, which uses the term. Cybercrime is the use of computers and electronic systems to commit a crime. Clearly, what happened to the noble Lord’s charity is a crime, committed extraterritorially. One of the aspects of cybercrime is that it is not globally isolated to particular territories or countries—hence the debates that we have been having on this particular issue. That is why we need to tackle it globally and why we need to be globally active in order to deal with it.
I believe that the clauses in this area are designed specifically to bring the Computer Misuse Act, which is what lies at the bottom of it, up to date, to recognise the threat that can exist from computer crime and particularly nowadays, when electronic use is so much greater than it was in 1990, when the Act was first brought in.
Baroness Smith of Basildon
My Lords, I am grateful to the Minister for his explanations and response to the debate and, indeed, grateful to those noble Lords who supported and spoke to my amendment. I am also grateful to the noble Lord for allowing a more wide-ranging discussion, although it may not have been technically correct. I quite like the idea that on the fourth anniversary of my introduction to your Lordships’ House I have created a new form of amendment, as the noble Lord put it.
As the noble Lord said, the question on the definition of cybercrime from the noble Lord, Lord Swinfen, was particularly appropriate. In this debate we have hit the nail on the head of how wide and vast this issue is. At one level we have the very big issues of national security and the resilience of our national infrastructure, which could be attacked by cybercrime. Then there are the issues around business security, with charities and organisations that can be affected by cybercrime. Then we come to the personal, which goes from merely inconvenient to causing misery and tragedy. All those things are encompassed in the term cybercrime.
The noble Lord’s explanation of what the Government are doing was very helpful. I do not see that any of that detracts from my amendment or makes it any less relevant. I remind the noble Lord of the point I made at the beginning: only three police forces—Derbyshire, Lincolnshire and West Midlands—have developed comprehensive cybercrime strategies. Only 15 forces considered cybercrime threats in their strategic threat and risk assessment. I do not doubt that at a national level a lot of work is going on and that it is well funded. However, it seems to me that if the annual report of the police and the police and crime commissioners focused on this issue and identified the work that was being done on it, that would let the public know what is going on and create awareness of this matter. The point made by the noble Lord, Lord Phillips of Sudbury, is absolutely right: this would be a way of monitoring implementation and enforcement. I do not see that anything the Minister said detracts from the usefulness of Amendment 31K.
Lord Taylor of Holbeach
If I felt that it could be useful, I would take a slightly different approach towards it. I hope that the noble Baroness will read what I said about the efforts being made to ensure that police forces take proper account of this issue. The HMIC report was a wake-up call: it made us realise that, for all the progress we have made in the National Crime Agency and the National Cyber Crime Unit, we also need a local presence on the ground and the involvement of local police forces.
Lord Taylor of Holbeach
I would like to finish what I am saying. I should just say that the HMIC report drew on evidence gained last summer and in the early autumn. A lot has happened since that time, so I ask the noble Baroness to read what I said in response to her amendment. I think she will be impressed by the amount of progress that has been made.
Lord Phillips of Sudbury
The noble Lord has referred a second time to the new reporting initiative for police forces and mentioned specifically the City of London police. As it happens, I was with them this very morning, when the initiative to which he referred was discussed. However, resources are a matter of acute concern for every police force in this country. We must go beyond simply saying that the Government have initiated a new plan or a new regime because, as I tried to indicate earlier—the noble Baroness agreed with me—it is absolutely fundamental that we give police forces sufficient resources to enable them to undertake the duties that we lay on them. I hope that my noble friend will take that very much into account.
Baroness Smith of Basildon
My Lords, the point the noble Lord makes about police resources is very appropriate. I know how many police officers have been lost since 2010 in my own county of Essex. I am grateful to the Minister for coming back to this point. He described the wonderful things that are being done and how impressed I will be by that. I will read the report and look forward to being impressed. However, my point is that, if the work being done is impressive, why not tell people about it and include it in the annual report? As I have said before, I have been a Minister, albeit in the other place, and I have received notes telling me to resist amendments. However, it seems to me that Amendment 31K simply asks for a commentary in the annual report of the police and crime commissioners or for the police force to say what they are doing in this regard. I think that it would give people confidence as regards this issue.
As I say, I am grateful to the Minister for explaining this range of actions but, if they are so impressive, I see no reason why they cannot be included in the annual report. We may return to this issue. I will read the Minister’s comments and the documents to which he pointed but, for now, I beg leave to withdraw the amendment.
Baroness Hamwee
Baroness Hamwee
My Lords, I have a number of amendments in this group. The clause deals with a new offence of participating in the activities of an organised crime group. The various amendments in this quite long group seek to unpack, as it were, what all that means.
Amendment 31L would provide that a person participates in the activities of an organised crime group only if he takes an active part in those activities. How involved does somebody really have to be in order to participate, as spelt out in Clause 41(2)? Does he have merely to facilitate an activity or actually enable it? Those are very different matters. The provision concerns helping an organised crime group to carry on the activities in question. One can make it possible for a group to carry on activities or one can make it easier for it to carry on activities. I do not know whether there is a distinction between those in the new offence.
The offence is committed if,
“the person knows or has reasonable cause to suspect”,
that there are criminal activities or that he is helping an organised crime group to carry on those activities. That is not actually suspecting—it is having reasonable cause to suspect.
I am aware of the Government’s range of concerns and the need to create the new offence in order to contain what is within the frame here. The threshold for the offence concerns me. I think we need to hear a defence of such a relatively low threshold. I am aware of course that the noble Baroness would make it even lower; certainly her position is closer to the Government than that in my amendment.
My Amendment 31S questions—perhaps this goes in the other direction—why an organised crime group for this purpose consists of three or more persons. Is there not a crime group that consists of only two people and would not fall within this?
The last of my amendments, before I come back to some general points on the clause, is rather different. Clause 41(8) provides a defence if the,
“person’s participation was necessary for a purpose related to the prevention or detection of crime”.
I wondered, when I read that, whether this was about undercover policing. If it is, are there some distinctions between this offence and other offences? Or is there something particular about this offence that requires a defence to be spelt out specifically in this way? The question of undercover policing is of course a very topical and concerning one.
I raised at Second Reading, as did others, the concerns of the accountancy and legal professions about what their members—I do not mean dodgy accountants and dodgy solicitors, but ones who are perfectly respectable—have to do to ensure that they do not fall foul of these provisions. I think that the Minister has now met both the professional organisations. Perhaps this will be an opportunity for him to report to the Committee what progress has been made. I am picking up that it is good progress but I have not picked up much detail about it yet.
Baroness Smith of Basildon
My Lords, I have three amendments in this group, Amendments 31N, 31R and 31T, and I have given notice of my intention to oppose the Question that Clause 41 stand part of the Bill to enable a wider general discussion around the issue. On the individual amendments, Amendments 31N and 31R concern a point referred to by the noble Baroness, Lady Hamwee, about the regulated professions. Currently, the standard for the new offence is,
“knows or has reasonable cause to suspect”.
That is deemed by organisations to be too high. The small businessman or sole trader may not have had experience of money laundering. This amendment removes that standard for lay persons and replaces it with “suspect” but keeps it for regulated professions with protections equivalent to those of Section 330 of the Proceeds of Crime Act 2002. Amendment 31T inserts protection from prosecutions similar to the consent regime in the Proceeds of Crime Act 2002 to provide a defence from prosecution where the person has sought consent from the Financial Intelligence Unit to continue with their work.
Clause 41 creates a new offence of participating in the activities of an organised crime group. It will be an offence to participate in an organised crime group’s activities knowing, or having reasonable cause to suspect, that those are criminal activities or that their participation will assist the organised crime group to continue with those criminal activities. The criminal activities can be any offence that is punishable by a prison term of seven years or more. The clause seeks to reach all of those who are engaged in criminal operations, including those whose specific role may itself be legitimate and appear legitimate, if they are actively supporting or benefiting from criminal activity.
Many criminal gangs include corrupt and complicit professionals who use their professional expertise and skills to evade the law. At Second Reading, I referred to this as being the “Al Capone” clause. I remind noble Lords that Al Capone was never convicted of crimes related to the worst aspects of his criminal empire. He was convicted of tax evasion. I have since been told that I am getting old and that my reference is dated. I should in fact have referred to a spin-off from the series “Breaking Bad” which stars a dodgy lawyer in the title role. The programme is called “Better Call Saul”. To prove that I am with it and up to date, I use a new reference at which the noble Lord is shaking his head in despair.
Cultural references aside, as I said at Second Reading, the activities of serious and organised crime gangs today are evil. They exploit the weak, the poor and the vulnerable. Whether they engage in drug trafficking, people trafficking into slavery and prostitution, organised illegal immigration, or extreme and violent pornography, the human misery caused by such gangs is limitless. It defies our imagination. They are also engaged in money laundering as a way of hiding the rewards of criminal activity. If we are really serious about tackling such evils, we must agree that the law should be able to reach all those who are involved in and benefit from such criminal activity.
Of course there has to be duty on any individual or organisation to take reasonable steps to assure themselves that their business dealings are legitimate and anyone who knowingly profits from criminal activities should be held legally accountable for their actions. We have given notice of our intention to oppose the clause standing part of the Bill. I stress that it is not because we oppose the clause—we do not—but because we want to seek some assurances from the Minister about the way it will work in practice. Some points are similar to those made by the noble Baroness, Lady Hamwee, and some are points that I raised in general at Second Reading.
We have discussed the clause and received representations and briefings, as have other noble Lords, from professional organisations whose members could be affected. I want to make it clear that in all cases, despite concerns they have raised about the wording of the legislation, they are very clear that any professional engaged in criminal activity brings their profession into disrepute and should face the full legal and professional consequences of their actions. There is no doubt about that. I am clear that they share the same commitment to ensuring that those who break the law should face the consequences. It is worth commenting that in addressing such issues I hope the Minister and his colleagues will want to work with the professional associations of those professions that could be affected to ensure that we get the legislation right. If he is able to say anything about the discussions and meetings he is having with those professions, it would be helpful. We want the legislation to be accurate and watertight. My experience is that no respectable professional organisation wants to see criminals within its ranks and they share the desire of the Government to work with the authorities to root out and deal with rogue professionals.
I now move on to something that is slightly an aside, but it is an issue that we have dealt with before. Like other noble Lords, I was surprised and disappointed not to see it tackled in the Bill. It concerns greater regulation and licensing of the private security industry. I am not going to labour the point. The Minister is smiling at me. He knows of my interest in and concerns about this issue. But this is a sad example of professionals wanting to work with the Government to seek better regulation of their industry and prevent bad behaviour and even criminality, yet the Government have failed to act in that area. The professionals I have met are clear that they share the Government’s objectives but they have concerns about whether the clause is needed and whether there might be unintended consequences. I will put on the record some of the concerns and hope that the Minister will be able to respond.
The Institute of Chartered Accountants in England and Wales does not consider that the clause is necessary. Developing the point made by the noble Baroness, Lady Hamwee, professionals within the regulated sector are required to undergo anti money-laundering—AML—training. They have legal responsibilities already under the Proceeds of Crime Act and the Money Laundering Regulations, including a duty to make suspicious activity reports to the Financial Intelligence Unit upon knowing of or suspecting any money-laundering. But there is currently no such requirement on an enterprising individual who sets up their own business outside the regulated sector and who may have no concept or proper understanding of what due diligence really means when entering into business relationships, despite the best intentions they may have.
The Institute of Chartered Accountants says that the clause as drafted would be too onerous on such individuals and could have the effect of criminalising a negligent or simply naive provider of goods or services when they are doing nothing wrong—just trying to earn a living—but the due diligence would be very onerous on them. The institute has suggested the amendments we have tabled. I cannot claim credit for thinking them up myself, as the noble Baroness, Lady Hamwee, suggested. I am grateful to the institute for its advice. The amendments retain the current objective standard of proof for regulated professionals but replace it for lay persons. It would be helpful if the Minister could respond to that point.
The duty on regulated professionals under the Proceeds of Crime Act to make reports of suspicious activity provides valuable intelligence for law enforcement agencies, giving them information on crime in action as well as past criminal activity. It also provides the person reporting the activity with defence from prosecution where they have sought consent from the Financial Intelligence Unit to continue with the work. Although that defence exists under the Proceeds of Crime Act, it is not present in Clause 41. My concern is that that could deter a professional who, having already started working for a client, realises or suspects that something is suspicious but, in reporting it, may fear being caught by the provisions of this Bill because it does not have the same defence mechanisms as the Proceeds of Crime Act, where reporting it provides a defence from prosecution.
In addition, the concept of assisting an organised criminal gang to carry on criminal activities is potentially problematic. The Law Society has pointed out that it is not clear under the offence,
“how far an individual must go to satisfy themselves that whatever service they are providing is not assisting criminal activities down the line somewhere. Certain criminal activities, such as drug trafficking, are more easily identifiable in some circumstances, e.g. a client may not be able to provide any evidence of legitimate income. Fraud and other financial offending, however, are not as easy to identify. It is not clear from the draft Bill what level of due diligence a solicitor would need to carry out to ensure that they could not be said to have turned a blind eye to criminal activity”.
Amendment 31T extends the application of Section 328 of the Proceeds of Crime Act to offences under this clause.
Returning to the question we raised at Second Reading as to who would be covered by the Bill, the Law Society says in its briefing that although the,
“Home Office wishes to target so-called ‘professional enablers’ with this new offence … the legislation is drafted so widely that it would capture far more people”.
I raised this point at Second Reading; the noble Baroness, Lady Hamwee, has raised it today. I declare an interest as another of the vice-presidents in your Lordships’ House of the Local Government Association.
As Second Reading, my specific question was whether local authorities—I also included social housing providers and private landlords—could be caught by these provisions. The example I used was a drug dealer illegally using a rented property that a local authority, housing association or private landlord had rented in good faith. If that activity is reported to the landlord or the authority and no action is taken to remove the tenant, I asked whether there could be a case for action against the landlord if it could be argued they knew or had reason to suspect that criminality was taking place.
Lord Taylor of Holbeach
My Lords, as the noble Baroness, Lady Smith of Basildon, said, Clause 41 creates a new offence of participating in the activities of an organised crime group. I am pleased that she and my noble friend Lady Hamwee welcomed the general principles that underline this measure.
I think that we would all accept that, for far too long, many of those who take part in organised crime have been able to remain out of the reach of law enforcement. As we set out in the Serious and Organised Crime Strategy in October 2013, we are committed to doing everything we can to pursue them. The new participation offence complements the existing offence of conspiracy, which is central to the majority of law enforcement investigations into organised crime and will remain so. As noble Lords will be aware, conspiracy is used to prosecute two or more individuals who have agreed to commit an offence where the agreement can be evidenced and where the individuals intended the offence to be committed or knew that it would be.
In practice, there are a range of players in many criminal enterprises. “Conspiracy” is used to target the major players who commit the offence or who are fully aware of it and their contribution to it. The participation offence will ensure that there is an appropriate and proportionate sanction for those others who “oil the wheels” of organised crime, who deliberately ask no questions and who then rely on the defence that they were not part of the overarching conspiracy.
The participation offence is therefore complementary to “conspiracy” and can form the second tier of such an investigation. It will be triable only on indictment, with a maximum sentence of five years’ imprisonment. It will ensure that we can prosecute effectively the full spectrum of those engaged in organised crime.
Perhaps I may turn to the anxieties which noble Lords expressed about the way in which we have constructed the clause. Both the noble Baroness, Lady Smith, and my noble friend Lady Hamwee pointed to a number of concerns about the offence that have been raised by both the Law Society and the Institute of Chartered Accountants in England and Wales. As was pointed out, I had said that I hoped to meet those organisations and, since Second Reading, I have been able to meet representatives of both. We had positive and useful discussions about a number of issues. I am pleased to say that those discussions are continuing with officials at the Home Office; we see this as a continuing dialogue.
One of the concerns raised was that the participation offence risks extending the reach of the criminal law too far, and as a result capturing the naive or unwitting; or catching individuals where the “facts” seem more firmly grounded with hindsight than they might have done at the time; or creating anxiety among people that they might inadvertently be captured by the offence. There is a tension between defining an offence that addresses the broad range of activity that sustains organised crime and avoiding inadvertently capturing activities innocently carried out. Noble Lords have pointed to that in their contributions. I believe that Clause 41 gets this balance broadly right.
First, the offence requires a person to have actively participated in or facilitated the criminal activity in some way. To which end, I understand why my noble friend proposed Amendment 31M, which would insert text to emphasise this point. However, it may exclude the possibility that an omission or failure to act would be captured by the offence if it were both deliberate and arose for the purposes of furthering the criminal activities of an organised crime group.
Secondly, an organised crime group must consist of at least three persons. Amendment 31S would seek to remove this stipulation, but I put it to my noble friend that this definition reflects the definition set out in the United Nations Convention Against Transnational Organised Crime. Thirdly, the group must be committing offences carrying a sentence of seven years’ imprisonment or more. This threshold was adopted to catch typical organised crime group activities—for example, blackmail, trafficking in class A or class B drugs, people trafficking, assisting unlawful immigration fraud and theft.
Finally, the effect of subsection (2) of Clause 41 is to define the circumstances in which a person could be considered to be participating in an organised crime group in support of the offence outlined in subsection (1) of the clause. The definition has been drawn so as to capture those persons who know, or have reasonable cause to suspect, that their activities are criminal activities of an organised crime group or will help an organised crime group to carry on such activities. A “reasonable cause to suspect” must be firmly targeted on specific facts, and it will of course have to be proved by the prosecution beyond all reasonable doubt.
My noble friend Lady Hamwee highlighted the concern that local authorities could be unwittingly caught by the same offence. However, it is possible to envisage a number of scenarios where this offence could be of significant benefit to local authorities—or, indeed, banks or other businesses, since it goes beyond the professions. It would provide an appropriate and robust sanction against corrupt insiders: for example, where a bank employee steals customer data and supplies it to organised criminals; or where a local council employee receives corrupt payments to facilitate organised crime.
It is also worth repeating that for the participation offence to be committed, a person must have had reasonable cause to suspect, firmly grounded and targeted on facts, as I have said. If those facts are present, the granting of licences, for example, should not happen. Licences should not be granted if there is reasonable cause to suspect, or knowledge. Any prosecution would also need to prove that the person actively participated in or facilitated the criminal activity in some way. That test may not be met in the letting of contracts for the provision of services to a local authority. As a further safeguard, the Crown Prosecution Service must be satisfied that any prosecution would be in the public interest. I want to take this up further with the Local Government Association because I think that some of its anxieties are unfounded, but I want to be certain that we are reading this correctly in this respect.
Baroness Smith of Basildon
I am grateful to the noble Lord. That is very helpful. I have just two questions. First, may I give him the list that the LGA provided to me and ask him to comment on it in writing to noble Lords? That would be helpful. Secondly, in the case that he mentioned of offences where somebody within an organisation is passing information or money out to an organised crime gang, would they not be offences already; or does this create a new offence, or just greater penalties? I would have thought that those kinds of activities would be offences already, perhaps under conspiracy.
Lord Taylor of Holbeach
Yes, they could be if they were seen as integral to the conspiracy. However, the whole concept of a participatory offence is the arm’s-length connection that there sometimes has been, which has made conspiracy an aspect of the law that is not particularly easy to use. By creating a participatory offence, we would make those connections with criminality that much easier to establish and, indeed, would cut off the support that organised crime groups have frequently had from insiders who have provided them with assistance. As I said, I hope to talk to the Local Government Association about its anxieties. I would be grateful if the noble Baroness let me have a copy of the particular things that she was concerned about and I will do my best to answer them in correspondence. I will make sure that other noble Lords and the Library are made aware of that, too.
Lord Howarth of Newport
Before the Minister sits down, I should say that I did not speak earlier in the debate because my noble friend Lady Smith said everything I wanted to. Could the Minister develop his response a little to one very important point that she made? It was on the question of due diligence. There is a serious anxiety among professional people that it will be very difficult for them to demonstrate that they performed the due diligence that would clear them from any charge that they knew or had reasonable cause to suspect that their clients were engaged in organised crime. It would be helpful if the Minister gave us some illustration of the kind of due diligence that would be satisfactory and pass that test. Obviously, if people do not have cause to suspect, then proceed to provide the professional service to their client and so participate, how can they be confident that they will not be caught under Clause 41 in this regard?
Lord Taylor of Holbeach
I do not want to prolong this. In fact, I still have quite a lot to say on these amendments. I was not about to sit down at all. Indeed, I really ought to carry on or noble Lords will grumble that the Minister is taking too long to reply. However, I think I can address these issues.
The noble Baroness, Lady Smith, asked me if I could elaborate a little on things I already said in correspondence to her, for the benefit of noble Lords, so I will just give some description. A person commits a participation offence if they take part in activities where they know or have reasonable cause to suspect that they are criminal activities of an organised crime group or where it would help an organised crime group. That must be firmly grounded. Although it would be for the jury to decide whether the threshold had been met in the circumstances of a particular case, the prosecution would need to prove that, for example, a landlord’s activity—the noble Baroness asked about this—participated in or facilitated criminality in some way. As a further safeguard, the Crown Prosecution Service must be satisfied that it is in the public interest.
Amendments 31L and 31Q seek to make other modifications to the scope of the offence. I understand my noble friend’s intention with these amendments and hope she will agree with me that these amendments would not materially change the effect of the provision. The main issue lies in the threshold—the mens rea, as lawyers would say—for the offence.
I listened carefully to my noble friend’s arguments and those set out by the noble Baroness, Lady Smith, that further consideration should be given to ensure that the participation offence does not capture the unwitting or naive. I also acknowledge that many situations look different with hindsight. What to a jury considering a case after the event will be a whole series of red warning signs clearly indicating organised criminal activity might have not appeared to be anything of the kind to the defendant at the time the events actually took place.
I understand the problem of definition of mens rea. However, the threshold or mens rea of belief provided for in Amendment 31P may be said to be the state of mind of a person who says to himself, “I cannot say I know for certain that the circumstances exist but there can be no other reasonable conclusion in the light of all that I have heard and seen”. Quite honestly, this is a very high threshold, which would remove much of the utility of the offence, which we are not in a position to accept.
There are some 36,600 members of organised crime groups involved in drug trafficking, human trafficking, organised illegal immigration, firearms offences, fraud, child sexual exploitation and cybercrime, and then there are the professional and non- professional enablers who help organised crime. A threshold of “believe” will set the bar too high and will not change the way these people operate or deter them from helping an organised crime group. However, a balance must be struck and, in the light of this debate, I am persuaded that we should give further consideration to ensuring that the mens rea is such that it does not capture the naive or unwitting.
I also acknowledge the points made in questioning the need for a general defence to the participation offence as well as the desire of the noble Baroness, Lady Smith, to have defences specific to the regulated sector, which is the nub of Amendment 31R. It is important that there is no anxiety among people, including in the regulated sector, that they might be inadvertently captured by the participation offence. It is therefore right to consider, alongside the level of the mens rea, the need for a defence, but bearing in mind that if one is needed it needs to take into account that the participation offence will apply to professionals and non-professionals alike. We need to have this captured within the mens rea and the defence which should be all-embracing for the regulated and non-regulated sectors.
Amendment 31U seeks to remove the defence in Clause 41(8). This defence is required to protect, for example, undercover police officers who are participating in the activities of an organised crime group for the purposes of frustrating those activities or collecting sufficient evidence to bring the perpetrators to justice. The use of undercover officers will still need senior level authorisation and the police and others will have to demonstrate that the use of the officer is necessary and proportionate. There are a number of precedents for such defences in other statutes, including in respect of the offences in the Bribery Act 2010 and the offences in respect of indecent images of children in the Protection of Children Act 1978.
I will make some points on the particular concern, in Amendment 31T, that someone who has received consent in the submission of a suspicious activity report should not be prosecuted for the participation offence. As it stands, the clause would leave the decision to prosecute the participation offence under these circumstances to the discretion of the Crown Prosecution Service. It would be disproportionate to import the suspicious activity reporting regime for the participation offence when it is most unlikely that it would be in the public interest to prosecute someone in these circumstances; such a prosecution might even constitute an abuse of process. There is also the practical reason that the defence under Section 328 of the Proceeds of Crime Act is only in respect of entering into an arrangement which facilitates money-laundering; if there is evidence of actions constituting part of a wider programme of criminality, this should still be investigated and, if appropriate, prosecuted.
The noble Baroness, Lady Smith, also asked to what extent people must satisfy themselves that there is no wrongdoing. This is part of the question of due diligence raised by the noble Lord, Lord Howarth. The offence will address those who have reasonable cause to suspect or know they are assisting organised crime. It does not require people to carry out additional due diligence. It is for this reason that we do not consider that there will be additional costs for business. There is a much closer relationship between people’s actions in a professional, business or commercial occupation carrying out their trade than in some of the more sophisticated checks that have to be undertaken by professionals concerned with other legislation.
Lord Howarth of Newport
On the other hand, the regime that the Government are creating through this legislation must not be too easygoing because we face extensive problems of money laundering and participation in other offences. It must be the case that across the country there are professional people who are facilitating organised criminals to launder their money and transfer the proceeds of their crime out of the illegal economy into the legal economy. The Minister is walking a tightrope. I asked him earlier not to lay unreasonable burdens on professional people to demonstrate their innocence. On the other hand, the system has to be tough enough to make an impact on the problem that we suffer from as things are.
Lord Taylor of Holbeach
Right at the beginning of my speech, I talked about balance. I said that I thought we have got the balance in Clause 41 just about right. We do not want to upset the balance. We want to reassure people, particularly the professional groups that have been to see us and the Local Government Association, that that balance can be made to work for them. If it means that we come back on Report with some ideas on that, I am sure the House will welcome them because generally the House understands exactly where the Government are on this issue. Even though probing questions have been asked by my noble friend and the noble Lord and the noble Baroness, I understand that underlying them is their support for this participation offence and that they want to make it work.
Baroness Smith of Basildon
I want to raise a point on Amendment 31T. The Minister rejected the idea of a defence if a potential offence is suspected and reported. For example, under the Proceeds of Crime Act, a potential offence can be reported to the financial investigation unit. That is a defence, but not a guarantee, against prosecution. My concern is that one of the reasons that that defence is in the legislation is so that those who uncover what they believe may be illegal activity are not deterred from reporting it to the relevant authority. It is very useful information. Has the Minister considered whether it will have a deterrent effect if somebody working for somebody discovers some way down the line that there may be criminal activity? Does he consider that they may fear reporting it if there is no defence for them to be gained by reporting it? When the Minister meets the professional associations concerned, will he discuss the processes by which they will establish due diligence to see whether there are any additional costs involved that they can outline to him?
Lord Taylor of Holbeach
Our discussions went into that area. We discussed how these matters would be considered by them. The noble Baroness will appreciate that as we want to encourage people to report suspicions as soon as they have grounds to suspect, even more so if they know, they should have every incentive to report the matter. However, one would not want to create a general defence that would enable somebody to have, in effect, a “get out of jail free” card so that when things got a bit hot, they were automatically able to create immunity for themselves against prosecution. I am not convinced by the argument that where we are is wrong. We want to talk to professional organisations because we see how important it is to have them on side in the fight against crime. I know from what they have said to us that they are approaching this issue in exactly that way. They want to make sure that their professions are supportive in the fight against crime, and that any within their professions who are not pursuing that objective but are assisting crime are punished.
Baroness Hamwee
My Lords, of course I will reflect, but I think that I will add a couple of things to my noble friend’s list between now and Report. I am of course pleased to hear what he says about the work with the Local Government Association. I think the noble Baroness, Lady Smith, was suggesting that I was a vice-president of the LGA, as she is. Some time ago, I was chucked out on the basis that I had been a vice-president for too long. I do not know quite what that says about anything, but I am not a vice-president. I was, however, practising as a solicitor and am still on the roll; perhaps I should have said that, but I think it has been clear.
My noble friend used a phrase like “giving an incentive to report when one is suspicious”. That has to be seen in the context of a client relationship. That is not easy. My noble friend has talked about balance but it is not a two-way balance; there are a lot of factors in it.
Clause 41(8) provides that it is,
“a defence for a person charged with an offence under this section to prove that the person’s participation was necessary for a purpose related to the prevention or detection of crime”.
It would be helpful if that had been drafted in a way to refer one—with a “subject to”, for instance—to the provisions which make it necessary for authorisation for the undercover policing to take place. I do not know whether I can put that thought into my noble friend’s mind.
Finally, the Minister suggested that the terms “help” and “enable” are synonymous, but I do not think they are. To help means to assist—to make something easier, while to enable means to make it possible. They are not the same, which is one issue within all this that I would like to reflect on further and maybe come back to at the next stage. However, I have no doubt that my noble friend, in his usual generous way, will want to discuss some of that before we get to that stage. It is clearly a matter of considerable concern around the House that we get the clause right. No one is opposing it, but we want to make it workable, and supported by all those who may be affected. I am grateful for the detail of the response, and I beg leave to withdraw the amendment.
(b) in addition to an order discharging the person absolutely.”
Baroness Williams of Trafford
My Lords, these amendments make further amendments to Part 1 of the Serious Crime Act 2007 as a consequence of extending serious crime prevention orders to Scotland.
The most substantive amendment in this group is Amendment 31Z, which inserts proposed new Section 27A into the 2007 Act. Sections 27 to 29 of the 2007 Act already make provision for the winding up of companies, partnerships and other bodies corporate where they have been the subject of a serious crime prevention order and are then convicted of a breach of that order under Section 25 of the 2007 Act. Hitherto, all SCPOs have been made against individuals rather than bodies corporate, but it is important that the legislation continues to provide for the possibility of an SCPO being made against a company or other commercial enterprise.
Proposed new Section 27A of the 2007 Act makes bespoke provision for the winding up of companies or other relevant bodies and dissolution of partnerships in Scotland. As now, the test of the winding up of a company or other relevant body or dissolution of a partnership will be that it has been convicted of the offence of breaching a serious crime prevention order and Scottish Ministers consider that it would be in the public interest for the company—or, as the case may be, relevant body—to be wound up or the partnership to be dissolved. Amendment 31Z effectively completes the provisions in Schedule 1, ensuring that all elements of Part 1 of the 2007 Act are extended to Scotland.
Amendment 31AA is in response to the helpful comments made by the noble and learned Lord, Lord Hope of Craighead, at Second Reading. In his comments, the noble and learned Lord correctly identified that new Section 36A of the 2007 Act, as inserted by paragraph 23 of Schedule 1, went wider than the England and Wales equivalent in Section 36 of the 2007 Act. As drafted, new Section 36A provides that in any proceedings before the High Court of Justiciary or the sheriff in relation to serious crime prevention orders, the civil standard of proof is to apply. Amendment 31AA clarifies that the civil standard of proof applies where the High Court of Justiciary or the sheriff, when sitting in a criminal capacity, are considering the making of an SCPO on conviction, or the variation of an order made on conviction, or the variation or replacement of an order following a conviction for breach. The criminal standard of proof would naturally apply, as now, to criminal proceedings in relation to the offence of breach of an SCPO. I am most grateful to the noble and learned Lord for highlighting the need for this amendment.
The other amendments in this group are minor technical or drafting amendments. I beg to move.
Lord Taylor of Holbeach
(b) in addition to an order discharging the person absolutely.”
(b) in addition to an order discharging the person absolutely.”
“After section 27 insert—
“27A Powers to wind up companies etc: Scotland
(1) The Scottish Ministers may present a petition to the court for the winding up of a company or relevant body, or the dissolution of a partnership, if—
(a) the company, relevant body or partnership has been convicted of an offence under section 25 in relation to a serious crime prevention order; and(b) the Scottish Ministers consider that it would be in the public interest for the company or (as the case may be) relevant body to be wound up or the partnership to be dissolved.(2) The Insolvency Act 1986 applies in relation to—
(a) a petition under this section for the winding up of a company; and(b) the company’s winding up;as it applies in relation to a petition under section 124A of the Act of 1986 for the winding up of a company and the company’s winding up (winding up on grounds of public interest) but subject to the modifications in subsections (3) and (4).(3) Section 124(4)(b) of the Act of 1986 (application for winding up) applies in relation to a petition under this section as if it permits the petition to be presented by the Scottish Ministers.
(4) The court may make an order under section 125 of the Act of 1986 (powers of court on hearing of petition) to wind up the company only if—
(a) the company has been convicted of an offence under section 25 in relation to a serious crime prevention order; and(b) the court considers that it is just and equitable for the company to be wound up.(5) Where a petition is made to the court under this section for the dissolution of a partnership, the court may make an order to dissolve the partnership only if—
(a) the partnership has been convicted of an offence under section 25 in relation to a serious crime prevention order; and(b) the court considers that it is just and equitable for the partnership to be dissolved.(6) Where the court makes an order to dissolve a partnership under this section, the Partnership Act 1890 applies in respect of the dissolution as if it were a dissolution under section 35 of that Act.
(7) The appropriate Minister may by order provide for the Act of 1986 to apply, with such modifications as that person considers appropriate, in relation to a petition under this section for the winding up of a relevant body and the relevant body’s winding up.
(8) An order made by virtue of subsection (7) must ensure that the court may make an order to wind up the relevant body only if—
(a) the relevant body has been convicted of an offence under section 25 in relation to a serious crime prevention order; and(b) the court considers that it is just and equitable for the relevant body to be wound up. (9) No petition may be presented, or order to wind up or dissolve made, by virtue of this section if—
(a) an appeal against conviction for the offence concerned has been made and not finally determined; or(b) the period during which such an appeal may be made has not expired.(10) No petition may be presented, or order to wind up or dissolve made, by virtue of this section if—
(a) the company or relevant body is already being wound up by the court, or(b) the partnership is already being dissolved by the court.(11) In deciding for the purposes of subsection (9) whether an appeal is finally determined or whether the period during which an appeal may be made has expired, any power to appeal out of time is to be ignored.
(12) In this section—
“appropriate Minister” means—(a) in relation to a relevant body falling within paragraphs (a) to (c) of the definition of “relevant body” below, the Treasury; and(b) in relation to any other relevant body, the Scottish Ministers;“company” means—(a) a company registered under the Companies Act 2006 in Scotland, or(b) an unregistered company within the meaning of Part 5 of the Insolvency Act 1986 (see section 220 of that Act),but does not include a relevant body;“the court”, in relation to a company, means a court in Scotland having jurisdiction to wind up the company;“partnership” does not include a relevant body; and“relevant body” means—(a) a building society (within the meaning of the Building Societies Act 1986);(b) an incorporated friendly society (within the meaning of the Friendly Societies Act 1992);(c) a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014;(d) a limited liability partnership; or(e) such other description of person as may be specified by order made by the Scottish Ministers;and the references to sections 124 to 125 of the Insolvency Act 1986 include references to those sections as applied by section 221(1) of that Act (unregistered companies).”(1) Section 29 (powers to wind up: supplementary) is amended as follows.
(2) After subsection (1) insert—
“(1ZA) The Scottish Ministers may by order make such modifications as they consider appropriate to the application of the Insolvency Act 1986 by virtue of section 27A(2).”
(3) In subsection (2)—
(a) after “subsection (1)” insert “, (1ZA)”;(b) after “section 27(3) and (4)” insert “, 27A(3) and (4)”.(4) After subsection (3) insert—
“(3ZA) The Scottish Ministers may by order make such consequential or supplementary provision, applying with or without modifications any provision made by or under an enactment including an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, as they consider appropriate in connection with section 27A(2) to (4).”
(5) In subsection (4)—
(a) after “section 27(5) or (6)” insert “, 27A(7)”;(b) after “subsection (1)” insert “, (1ZA)”;(c) after “enactment” insert “including, in the case of an order made by virtue of section 27A(7) or subsection (1ZA) above, an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament.””
Lord Taylor of Holbeach
“(1) Proceedings before the High Court of Justiciary (the “High Court”) or the sheriff arising by virtue of section 22A, 22B, 22C or 22E are civil proceedings.
(2) One consequence of this is that the standard of proof to be applied by the High Court or (as the case may be) the sheriff in such proceedings is the civil standard of proof.
(3) Two other consequences of this are that the High Court or (as the case may be) the sheriff—
(a) is not restricted to considering evidence that would have been admissible in the criminal proceedings in which the person concerned was convicted; and(b) may adjourn any proceedings in relation to a serious crime prevention order even after sentencing the person concerned.(4) Despite subsection (1), an Act of Adjournal under section 305 of the Criminal Procedure (Scotland) Act 1995 (Acts of Adjournal) may be made in relation to proceedings before the High Court or the sheriff arising by virtue of section 22A, 22B, 22C or 22E.
(5) A serious crime prevention order may be made as mentioned in section 22A(6)(b) in spite of anything in sections 246 and 247 of the Criminal Procedure (Scotland) Act 1995 (which relate to orders discharging a person absolutely and their effect).
(6) A variation of a serious crime prevention order may be made as mentioned in section 22B(4)(b), or (as the case may be) a variation of or a new serious crime prevention order may be made as mentioned in section 22C(4)(b), in spite of anything in sections 246 and 247 of the Criminal Procedure (Scotland) Act 1995.”
“( ) in subsection (6)—(i) for “statutory instrument” substitute “the Secretary of State or the Treasury”;(ii) after “27(6) or (12),” insert “, 27A(7)”;”
Lord Taylor of Holbeach
Baroness Meacher
“Dissuasion Panels to prevent gang-related violence and drug-dealing activity
(1) A police officer may refer a person aged 14 or over to a Dissuasion Panel under this section if the following two conditions are met.
(2) The first condition is that the officer is satisfied on the balance of probabilities that the person has engaged in or has encouraged or assisted—
(a) gang-related violence; or(b) gang-related drug-dealing activity.(3) The second condition is that the officer thinks it is necessary to make the referral for any of the following purposes—
(a) to prevent the person from engaging in, or encouraging or assisting, gang-related violence or gang-related drug-dealing activity;(b) to protect the person from gang-related violence or gang-related drug-dealing activity;(c) to determine whether the person is drug dependent and may benefit from drug treatment.(4) A Dissuasion Panel must be comprised of at least three people from the following backgrounds, with preference given to professionals with prior knowledge of the individual—
(a) medical, including mental health;(b) social work;(c) legal;(d) any other profession that the court believes will be useful and as it directs.(5) The Dissuasion Panel will—
(a) assess the individual’s personal circumstances,(b) consider whether these have impacted on the activities at subsection (2), and(c) determine whether interventions are needed to—(i) prevent the person from engaging in, or encouraging or assisting, gang-related violence or gang-related drug-dealing activity;(ii) protect the person from gang-related violence or gang-related drug-dealing activity;(iii) address drug dependency.(6) Following assessment of a person by a Dissuasion Panel under this section, the Panel may—
(a) make no further intervention; or(b) require the respondent to do something which they reasonably believe will—(i) prevent the person from engaging in, or encouraging or assisting, gang-related violence or gang-related drug-dealing activity;(ii) protect the person from gang-related violence or gang-related drug-dealing activity;(iii) address drug dependency.(7) Requirements may include, but are not limited to—
(a) treatment for those who are drug dependent;(b) counselling;(c) education;(d) training;(e) reporting to the Panel for review.(8) If the person does not agree to the proposed requirements they will be referred to court for alternative action under section 34 of the Policing and Crime Act 2009, as introduced by section 47 of the Serious Crime Act 2014.
(9) At any review by the Dissuasion Panel, the Panel may—
(a) permit the contract to continue with its current terms;(b) vary the contract by—(i) adding a requirement; (ii) removing an existing requirement;(iii) amending an existing requirement;(c) cancel the contract and refer the person to court for alternative action under section 34 of the Policing and Crime Act 2009, as introduced by section 47 of the Serious Crime Act 2014.(10) If the person breaches the contract, he or she will initially be referred back to the Dissuasion Panel who may—
(a) permit the contract to continue with its current terms;(b) vary the contract by—(i) adding a requirement;(ii) remove an existing requirement;(iii) amending an existing requirement;(c) cancel the contract and refer the individual to court for alternative action under section 34 of the Policing and Crime Act 2009 as introduced by section 47 of the Serious Crime Act 2014.(11) For the purposes of this section, something is “gang-related” if it occurs in the course of, or is otherwise related to, the activities of a group that—
(a) consists of at least three people, and(b) has one or more characteristics that enable its members to be identified by others as a group.(12) In this section “violence” includes a threat of violence.
(13) In this Part “drug-dealing activity” means the unlawful production, supply, importation or exportation of a controlled drug.
(14) “Production”, “supply” and “controlled drug” have the meanings given by section 37(1) of the Misuse of Drugs Act 1971.”
Baroness Meacher (CB)
My Lords, I rise to move Amendment 32 and to speak also to Amendments 33 to 39, all of which are probing amendments. I emphasise that we are presenting quite a detailed proposition. The new clause was drafted by a lawyer from Release at my request. Neither she nor I claim that every word will be approved by government lawyers. We ask for your Lordships’ indulgence on that. I am grateful to the Minister for the meeting we had yesterday to discuss these amendments. It was extremely helpful.
I shall deal quickly with Amendments 33 to 39. They are substantially consequential on the new clause and I do not want to take the time of the House to discuss them in any detail. The exception is Amendment 34, which replaces the lower standard of proof with “beyond reasonable doubt” as the basis for injunctions. Any order of a court which could involve penalties should, in our view, be based on the criminal standard of proof. We are simply asserting that and I shall not debate it. Amendments 38 and 39 also relate specifically to injunctions and ensure that the requirements or prohibitions spelled out in an injunction relate specifically, in Amendment 38, to,
“engaging in, or encouraging or assisting, gang-related violence or gang-related drug-dealing activity”
and in Amendment 39, to
“protect the respondent from gang-related violence or gang-related drug-dealing activity”.
I shall be interested in what the Minister has to say about those amendments, but I shall focus my remarks more generally on Clause 47 and specifically on the new clause.
We understand the objective of Clause 47 and are not arguing against the granting of injunctions in a number of situations envisaged by the Government. Our concern is that the injunctions referred to in Clause 47 and in the Policing and Crime Act 2009 require the young person to go to court where the injunction may be issued. We discussed this issue yesterday with the noble Lord. The involvement of the court in our view is an extremely costly and in many cases unnecessary process. It is also a process which criminalises the young person and makes it harder for them to return to normal life and earn a living.
We understand that an injunction may place a range of prohibitions and requirements on the young person, including the requirement to participate in rehabilitative activities. We realise that they are not just blunt instruments. We welcome the requirement in the statutory guidance on the implementation of gang injunctions of 2011 that the body proposing to apply for the injunction must consult the youth offending team and may also consult schools, probation and other bodies. Local authorities also have an obligation under the National Health Service and Community Care Act 1990. If a young person may be suffering from drug, alcohol or mental health problems, local authorities must have regard to that.
Lord Elton
The noble Baroness has put forward a very attractive proposal, at which I hope my noble friend will look carefully. I do not doubt that it will need a lot more work on it before it can be in statute. I hope that the length of the interval between Committee and Report will make that possible.
I have a question for the noble Baroness, having only cursorily looked at the amendment. It seems to me that it depends very much on the quality of the sentence or referral that the panel makes. There should be a requirement that any child or young person who is put into its orbit should not be able to fall out of the system so that they simply have to report at intervals. I would like to see the word “monitor” in there somewhere. A responsible adult or organisation should be required in the statute; otherwise, we will get people fading away, as they have done in the past under probation.
Lord Howarth of Newport
My Lords, I was extremely happy to add my name to the amendments in this group, tabled by my noble friend Lady Meacher, and I pay tribute to the work that she does as chair of the All-Party Parliamentary Group on Drug Policy Reform. She is deeply knowledgeable in this field, and I know that the House will always listen with great care to the proposals that she makes. She is right, of course, to make the point that injunctions on their own will achieve nothing, and that people with a drug dependency or who find themselves in the ambit of drug-related gangs are people who need help. She is right to suggest that the help that they need should very likely be help in terms of their health. It is better with these young people to treat their predicament not as a criminal but as a health issue. That is the model that has been established in Portugal since 2001, as my noble friend said, initially amid some considerable controversy—because Portugal faced an appalling crisis of drug trafficking and addiction and a whole generation of young people in very great danger. It was to many people countercultural primarily as a health-related issue rather than as a criminal issue. But the evidence shows that, over the years, the approach has paid off and results have been very good indeed.
I commend to the noble Lord, Lord Elton, and others the report on the Portuguese experience published by the charity, Transform, and available on its website. It looks very carefully at the evidence of what has happened in Portugal. I add to the highlights that my noble friend Lady Meacher mentioned the facts that drug use has,
“declined among those aged 15-24, the population most at risk of initiating drug use … Rates of past-year and past-month drug use among the general population—which are seen as the best indicators of evolving drug use trends—have decreased”,
and that,
“Rates of continuation of drug use (i.e. the proportion of the population that have ever used an illicit drug and continue to do so) have decreased”.
On all these important indicators, the policy has been vindicated. However, it is also important to say that this Portuguese strategy is one of investing very considerably in support services for the young people who are brought before disuassion commissions. The young people come to an agreement with the disuassion commission about a course of action that they will take. Not only will they seek to co-operate willingly with what is recommended in terms of their health, but there are many other courses that the disuassion commission may recommend for them, including job training and all kinds of activities and processes to help them to integrate successfully with society. This strategy came at a time when Portugal was broadening the range and depth of its welfare state and of its support services for vulnerable and fragile young people. Of course, Portugal has been under very serious fiscal pressure in recent years. It may well be that the quality and extent of these services are not what the authors of the strategy would ideally have wished; none the less, the results have been very good.
It will be necessary, if we are to adopt a constructive, positive, humane strategy of the kind that has been pioneered and demonstrated in Portugal, for the Government of the day in this country to be willing to invest in the resources needed to make a full success of that. We all know how very difficult that is going to be for a Government now or in the foreseeable future to do. That is a kind of caveat; but it would not at all invalidate the adoption of a strategy such as the one my noble friend has commended to the Committee. I very much hope that the Committee will favour what she has suggested.
Baroness Hamwee
My Lords, like my noble friend and other noble Lords, I do not want to comment on the fine detail of the amendment but simply to support the noble Baroness. Her points about avoiding criminalisation and what I might summarise as an active, supportive, constructive response, are immensely important. Under the noble Baroness’s chairmanship, some of us met a number of MPs from Portugal. We were very struck by the agreement across the parties about the benefits of this measure and the lack of contention around it. We actually ran out of questions to ask them on that issue. Clearly, in that country they have succeeded in taking some of the heat out of the drugs issues, which has been a very considerable achievement. I hope that we might learn from that example.
Baroness Smith of Basildon
My Lords, I am grateful to the noble Baroness, Lady Meacher, for giving me a copy of her amendment and a briefing note on it when she tabled it. I was not aware of the Portuguese experience as my noble friend, Lord Howarth described it. It is interesting and bears further consideration. I am not an expert on whether the detail of the amendment is correct. It looks complicated, which might be because it was drafted by a lawyer, but I suspect that it is not so complicated in practice.
These dissuasion panels would sit alongside the injunctions, such as is proposed in the Bill, and a police officer would refer a young person if they were involved in gang-related violence or a drug-related activity. The panel would be tasked with assessing the young person. It would determine whether there was a need to require the young person to undertake some form of action, whether that be treatment or counselling, to prevent them engaging in further activities, to protect them or to address their drug dependency. That seems to be a more holistic approach to tackling the drug culture and drug abuse.
Lord Taylor of Holbeach
My Lords, I am grateful to the noble Baroness, Lady Meacher, for explaining her thinking behind these amendments, and to noble Lords for taking part in this interesting debate. I am also grateful to the noble Baroness, Lady Meacher, for coming to see me yesterday, when we had a good discussion, so that I could understand what she wanted to achieve through her amendments on tackling drug dependency. I know that she takes a strong interest in this issue. We have often discussed drugs policy in this Chamber while wearing other hats. I recognise that her intention is to place a stronger focus on addressing drug dependency and on meeting the needs of vulnerable individuals who may become involved in gang-related violence and drug dealing. Therefore, I welcome this opportunity to discuss these issues.
However, as my noble friend Lord Elton indicated, gang injunctions are a much wider issue than that of just drug abuse. Drug abuse can be an element of gang activity but gang injunctions go much further than drug abuse alone. I hope that I can help noble Lords by talking about what the Government are doing to tackle drug-related offending and reoffending. The Government strongly support local investment in integrated offender management approaches, including identifying drug-using offenders and directing them to treatment. This is going on now. The Government are also: piloting drug recovery wings, focused on abstinence and connecting offenders with community drug recovery services on release; increasing the number of drug-free environments and piloting payment by results for drug and alcohol recovery services; testing a new “through the gate” model for substance misuse services to complement the introduction of transforming rehabilitation proposals; and developing and testing liaison and diversion services in police custody suites and at courts. I mention these initiatives because I do not want it to be assumed that no effort is being made at a local level to try to make drug users’ lives better. A great deal of effort is being expended in this area.
The expansion of activities covered by gang injunctions is not a substitute for seeking the prosecution of someone for a serious crime such as drug dealing. However, there are instances where a gang injunction may help prevent respondents engaging in gang-related drug activity or protect people being further drawn into such activity, which is particularly important for children, girls and young women.
Amendment 32 introduces the concept of dissuasion panels with the purpose of assessing the personal circumstances that could have led a person to engage in gang-related violence or gang-related drug-dealing activity. The panels would be composed of persons from a medical, legal or social work background. The amendment also confers powers on these new panels to impose requirements on an individual to prevent them engaging in the gang-related violence or gang-related drug-dealing activity, to protect the individual from such violence or activity, and to address drug dependency.
Although referrals to a dissuasion panel appear to be discretionary, the tenor of the proposed new clause seems to be to prevent an application for a gang injunction being considered by a court until the case has been referred to the dissuasion panel—I think I heard the noble Baroness aright in that regard—and the person concerned declines to abide by any requirements imposed by the panel. The result of the proposed new clause would be the introduction of a two-stage process. While I have considerable sympathy for the outcome the noble Baroness is seeking to achieve, I believe that interjecting a dissuasion panel into the process applying to a gang injunction is unnecessary.
Baroness Meacher
I should make it clear that the amendment proposes that only if a police officer identifies drugs as a problem for the individual concerned will they be referred to the dissuasion panel. If they have engaged in violence and there is no indication of drugs being involved, then, of course, they will go straight through to the court.
Lord Taylor of Holbeach
I am grateful to the noble Baroness for that explanation but I do not think that it totally weakens the argument I am trying to make for adopting a holistic approach to gang activity, which is contained in the gang injunctions. An individual’s personal circumstances leading to his or her involvement in gangs are already part and parcel of the matters taken into account as part of the gang injunction process. The Policing and Crime Act 2009 includes a consultation requirement. This requires the applicant to consult any local authority, chief police officer and other body or individual that the applicant thinks it is appropriate to consult. The Government’s statutory guidance on gang injunctions—we are considering gang injunctions in the Bill—published in 2010, stresses this point and suggests that the consultation process may include voluntary or support services working with the respondent and/or their family as well as the respondent’s school or housing provider, among others.
I agree that it is essential to take into account mental health or substance misuse issues, as these can be very relevant to someone’s involvement in gangs, together with any other personal circumstances, and this is already the case as part of the application process for a gang injunction. I also agree that it is important to stress this point further. However, I believe that the best place would be in guidance rather than introducing an additional statutory layer to the process. The guidance on gang injunctions is currently being revised and will be reissued in the autumn, as I explained to the noble Baroness yesterday. The revised version will make clear that the consultation process should include medical practitioners where appropriate and any other relevant professional who may assist in determining the individual circumstances of the case, and in particular whether substance misuse or mental health issues are factors that need to be taken into account.
New subsection (7) of the proposed new clause stresses further the point that requirements to prevent or protect a person from gang-related violence or drug dealing may include treatment for drug dependency, counselling, education or training. Gang injunctions are intended to help respondents leave the gang and may already include positive requirements such as the ones highlighted in Amendment 32 that work towards this end. The statutory guidance encourages applicants to be creative about helping respondents to leave the gang and specifically suggests that anger management sessions, coaching, counselling or other behavioural sessions may be appropriate. The revised guidance will stress further the positive requirement element of the gang injunction as a way of helping break away from gang-related violence, which is one of the elements we are seeking to address, and/or drug dealing.
Lord Elton
Before my noble friend concludes, could I ask him two questions? First, we had some impressive figures indicating the change in the percentage of treatments that were completed following the introduction of the system in Portugal. How do those rates compare with existing rates in the United Kingdom?
Secondly, he mentioned anger management as one means of diminishing gang violence and therefore, presumably, gang membership. I hope that he will not overlook the exceedingly powerful inducement of fear maintaining the membership of gangs—not merely internal intimidation but the feeling that nowhere is safe unless you are inside the gang, which is a very common phenomenon among young people certainly in London and I do not doubt in other major cities as well. I went to a conference some time ago in London where children were reported as having said that they felt safer in the gang than they did not only in school but at home. That is a much bigger issue than we are tackling now, but it cannot be ignored. If we are going to get the architecture right, it has to be taken into account.
Lord Taylor of Holbeach
I am not in the position to provide the figures that my noble friend asked for, but certainly when we study the Portuguese system and documentation I will make sure that I write to the noble Lord—and indeed to all noble Lords who have spoken in this debate. It will be useful to share that information.
My noble friend is absolutely right. There are all sorts of reasons why people belong to gangs. Fear is one of them. I have made two visits now to Brixton to see how territory, people and circumstance combine to encourage the existence of gangs. We need to be proactive in the way in which we deal with this problem. It causes abject misery through drug dependency; it causes crime through theft; it causes violence; and it causes unnecessary loss of life, as much of the violence can result in fatalities. All of that needs to be addressed in any policy that deals with gangs.
That is why we need a process. In my view, gang injunction lies at the heart of that process. I would be reluctant to dilute that but it can be informed by processes that can be imported from elsewhere. I hope that I have given some idea of my thinking about the issue and I hope that the noble Baroness, as I have said already, will withdraw her amendment.
Baroness Meacher
I thank the Minister for his very considered reply, and also give a special thank you to the noble Lord, Lord Elton, for his thoughtful intervention. I assure him that one of the key points in the Portuguese system is indeed the monitoring of the observance of the contract by the individual.
Baroness Meacher
Indeed: mentoring. The idea in this system is that the referral to, for example, treatment ensures that the person is then mentored in the environment to which they are referred, whether it is residential or day-based or a number of different things. The idea is a comprehensive package for the individual, monitored—not mentored—by the dissuasion commission panel to make sure that the person really does receive all the elements that they have signed up to in their contract. As I said, it is not a soft option but it is an effective one. That is what we are seeking to at least discuss here. I am truly grateful to the noble Lord, Lord Elton, to my noble friend Lord Howarth for a very considered and important contribution, and to the noble Baronesses, Lady Smith and Lady Hamwee. This has been a helpful debate.
I need to mention in response to the noble Baroness, Lady Smith, that Britain still has one of the highest levels of drug addiction and problems in Europe. We are in the top three countries. The tougher the policies, the worse a country tends to do. That is just a basic rule across many countries and is well understood in the field.
I am very grateful indeed to the Minister for agreeing that the department will look at—and, I hope, undertake a cost-benefit analysis of—dissuasion panels as an option for dealing with people with drug dependence problems. That is the point: it is cost effective and it is worth it. It produces results and it is cheaper. Rather than seeing it as a sort of two-tier system, one should think of it as dissuasion panels taking an awful lot of work away from the courts and dealing with that work more effectively: that is perhaps a better mental set in relation to this problem. With my many thanks to all those who have been involved, we will undoubtedly come back to this and, I hope, have further discussions with the Minister. On that basis, I beg leave to withdraw the amendment.
Lord Howarth of Newport
My Lords, before the Committee approves Clause 47, I suggest that we think very carefully about its construction and its drafting. Broadening out our consideration from the specific issues of drugs on which we were focused while examining the last group of amendments, we should look at some wider issues of principle, particularly those of civil liberties. I do not want to detain the Committee unduly, but this House prides itself on its willingness to apply line-by-line scrutiny to legislation, and where this clause is concerned some close examination will be appropriate.
The clause would substitute for the existing Section 34 of the Policing and Crime Act 2009 a new Section 34. In proposed new Section 34(1), it is made clear that we are considering the question of powers to grant injunctions against people “aged 14 or over”, and therefore against children. We should bear that in mind as we consider what follows in Clause 47 and the new Section 34. Subsection (2) says that the first condition which the court must satisfy is that it thinks,
“on the balance of probabilities that the respondent has engaged in or has encouraged or assisted … gang-related violence, or … gang-related drug-dealing activity”.
We talked a moment ago about the question of the civil level of proof as against the criminal level—the balance of probabilities as against “beyond reasonable doubt”—and I understand the case that the Minister was making. But under Clause 47, if the court is satisfied on the balance of probabilities that these things have happened and that the person,
“has engaged in or has encouraged … drug-dealing activity”,
then we are told later on, in subsection (7), that “drug- dealing activity” means what it does under the terms,
“of the Misuse of Drugs Act 1971”.
So the young person is being drawn into the purview of the criminal justice system, at the age of 14 or over, but without the safeguards that the criminal law provides: the statutory defences and the higher standard of proof required.
I am not clear what representation a young person in these circumstances will be entitled to, or whether legal aid will be available to support a young person to make their case against an injunction. It also ought to be borne in mind that in criminal proceedings and in one of the amendments that the noble Baroness, Lady Meacher, proposed—I always want to call her my noble friend—the individual must agree to a drug rehabilitation order. I do not see any requirement in Clause 47 that the young person should agree to a course of action which would be prescribed in an injunction. There are issues here that we ought to reflect on.
Lord Taylor of Holbeach
I am very happy to assure the noble Lord that our policy is indeed decent and coherent. I did not find his arguments so coherent, because I felt in some ways that he was trying to say that he felt the new provisions within the Bill were going too far, and were affecting civil liberties, and at the same time suggesting that they were not effective at all about dealing with young people who found themselves in gangs. In our last debate I showed there is coherence here. Gang violence is a serious problem. It does need addressing. It needs a legal framework against which you can address it. A great advantage of the injunction is that it provides an opportunity for that to happen.
Gang and youth violence is damaging too many young people in our country and can have a devastating effect not only on those who get caught up in it but also on their families and communities. Gang injunctions are a valuable civil tool that allows the police or a local authority to apply to the county court or the High Court for an injunction against an individual who has been involved in gang-related violence. Gang injunctions are available to help the police and local authorities prevent acts of gang violence, but importantly, the injunctions are also there to protect younger gang members’ behaviour from escalating, including by requiring them to participate in activities which help them leave gangs behind.
Baroness Meacher
I regret that the Minister referred to the speech of the noble Lord, Lord Howarth, as incoherent—or words to that effect. It seemed to me that the noble Lord’s arguments were incredibly powerful with regard to the lack of appropriate skills and training of the people in the courts, and the Howard League case he referred to. Obviously, as I said in my own speech, matters are made a great deal worse by cutting somebody off from their support systems and so on. I have to say that many of the comments made by the noble Lord, Lord Howarth, support strongly the case for having a professional tribunal or dissuasion panel to look at these cases, rather than leaving it to the courts, which do not appear to have the skills needed in these very difficult situations. I absolutely agree with the Minister that these are difficult problems; they have to be dealt with, but they have to be dealt with professionally, and I think that is the point the noble Lord, Lord Howarth, was trying to make.
Baroness Smith of Basildon
I had intended to speak in this debate. The noble Lord was uncharacteristically quick off his feet to respond to my noble friend. This clause requires some clarification and I am sorry that he seems quite upset about the probing questions that have been asked. I will listen to what he has to say. If the issues I intended to ask him about are not addressed, I will come back to him at the end of his comments, but there are some points of clarification that would be helpful in this debate.
Lord Taylor of Holbeach
I am sorry, I just felt that the closing remarks of the noble Lord, Lord Howarth, when he said that government policy lacked coherence in this area, were belied by the contribution that I had made in the previous debate on the amendment moved by the noble Baroness, Lady Meacher.
Lord Howarth of Newport
I did not say that the policy lacked coherence; I said that I thought it was wrong to ask the House to legislate before the Government had demonstrated that these new legislative provisions were part of a coherent and decent policy.
Lord Taylor of Holbeach
In which case, I am in the process of doing just that. Perhaps we can draw a line under our little spat. Indeed, I was going on to talk about the ways in which the people who are responsible for seeking gang injunctions do bring professional expertise to these matters.
As I was saying when the noble Baroness, Lady Meacher, intervened, gang injunctions for adults have been available since January 2011, and gang injunctions for 14 to 17 year-olds have been available since January 2012. I hope it reassures the noble Lord, Lord Howarth, that when applying for injunctions against minors, the applicant must consider their duties towards young people in general, including the general duty to safeguard and promote the welfare of children, together with any child protection issues that arise in a particular case. In doing so, the applicant would be expected to seek the views of any social services or children’s services department that is engaged with the child.
The findings of a review of the operation of gang injunctions, published in January 2014, indicated that the definition of a gang used in the Policing and Crime Act 2009 has some limitations for addressing local gang issues. I am sure that noble Lords would expect the Government, having found those limitations, to come forward with amendments to address them.
Section 34(5) of the 2009 Act specifies the circumstances in which gang injunctions may be made. The court must be satisfied that,
“the respondent has engaged in, or has encouraged or assisted, gang-related violence”—
that is the fundamental requirement. “Gang-related violence” is defined as,
“violence or a threat of violence which occurs in the course of, or is otherwise related to, the activities of a group that … consists of at least 3 people … uses a name, emblem or colour or has any other characteristic that enables its members to be identified by others as a group, and … is associated with a particular area”.
We are not talking about stop and search here; we are talking about collective activity. Following consultation with practitioners, we have concluded that this definition is too restrictive and, more importantly, does not reflect the true nature of how gangs operate in England and Wales.
Gangs do not always have a name, emblem or colour or other characteristic which enables their members to be identified as a group. Instead, individuals may operate as a group and engage in criminality with some degree of organisation without these features. Although gangs are traditionally associated with particular territories, they are now increasingly involved in criminality beyond their own areas and can be less associated with a particular area. Gang structures are now seen to change over time—they are morphing—such that it is possible for gangs to disappear from certain locations and reappear in other locations relatively quickly. Gangs may move to other locations as a result of black market forces or being pushed out by rival gangs.
In order to reflect the changes in the way gangs operate, Clause 47 amends the 2009 Act to revise the definition of gang-related violence. Under the new definition, violence will be gang-related,
“if it occurs in the course of, or is otherwise related to, the activities of a group that … consists of at least three people”—
that remains—
“and has one or more characteristics that enable its members to be identified by others as a group”.
It has been suggested that this definition is too wide and that any group of three or more people identified by others as such could be affected by this legislation. I assure the Committee that this is not the case. Being part of a gang as defined by this clause is the first stage of the process but courts will also need to be satisfied that the defendant has been involved in violence and that any such violence is related to the gang. Of course, only courts can impose a gang injunction, after they are satisfied that it is necessary to do so.
In addition, evidence from police and local authorities shows that urban street gangs often engage in street drug-dealing on behalf of organised criminals, and some gangs aspire to and may become organised crime groups in their own right. That is why we are expanding the activity in relation to which gang injunctions can be imposed to involvement in the drugs market. This will allow gang injunctions to be used to prevent individuals from engaging in drug-dealing and to protect people from being further drawn into illegal drug-dealing, which is particularly important for vulnerable people, in particular teenage children, of whom we spoke earlier.
The noble Lord, Lord Howarth, has raised some wider points about the Government’s overall drugs strategy. The noble Lord’s view is that the strategy is not sufficiently focused on tackling the root causes of demand for illegal drugs which drive this market. I agree with the noble Lord that reducing the demand for drugs is essential to successfully tackling this issue. Indeed, it is one of the three strands of the Government’s strategy, which balances action to reduce demand alongside support for individuals to recover from drug dependency and ensuring that law enforcement effectively protects society by restricting the supply of drugs.
We are confident that this approach is working. Drug usage has fallen to its lowest level since records began in 1996. Figures on the level of overall drug use among young people in 2012 show that 17% of pupils aged 11 to 15 reported ever taking a drug, compared with 29% in 2001. There is a marked fall in the use of drugs among young people.
Lord Howarth of Newport
The Home Office is fond of quoting certain statistics that are, I am sure, correct, and demonstrate declining use of certain drugs. Can the noble Lord, however, tell us whether the use of class A drugs has fallen? What is his view on the consumption of new psychoactive substances, which are also drugs, even if not proscribed under the Misuse of Drugs Act 1971? Surely the overall picture is far less comforting than he seeks to persuade us it is.
Lord Taylor of Holbeach
I accept that. I am not at all complacent about the role of drugs in society and I think the noble Lord knows that. However, I am saying that we have, through our strategy, at least reduced consumption over the past few years. It is an important element—we know that 45% of acquisitive crime, for example, is estimated to be carried out by opiate or crack users. It remains a matter of concern. Nobody is complacent about this—I did not want to create that impression. However, I also wanted to reassure the noble Lord and the noble Baroness that we are driving this policy hard because we recognise the damage that drugs do in society. We continue to do all we can to prevent people using drugs in the first place, and to intervene early with those who start to develop problems, for example by developing an online alcohol and drug education and prevention information service. This work to reduce demand for illegal drugs is crucial, but I am equally clear that we need to provide the police and local authorities with the tools they require to intervene to prevent the harm caused to communities by gangs who are involved in drug dealing and to divert young people on the periphery of this world away from gangs before their involvement becomes serious.
The whole point of this clause is to improve our response to gang-related violence and involvement in illegal drug dealing by redefining and extending the scope of these injunctions to ensure they better reflect the reality of gang culture in England and Wales. Of the 109 gang injunctions issued, 45% have been breached. Interim injunctions were granted on the authority of the court. It needs to act proportionately when it considers these matters. We never expected large numbers of gang injunctions to be used. They are aimed at preventing gang-related violence, and they are a useful tool for local partners to use in the right circumstances for the right individuals. The changes in this Bill will enable more effective targeting of those not directly involved in violence but who could influence violent activity. I say to the noble Lord that legal aid is available for gang injunctions, including costs incurred for a lawyer to represent a person in court. Legal aid also covers breach and variation hearings.
I have tried to cover most of the points raised by the noble Lord in his intervention. I apologise to the noble Baroness—I did not mean to cut her off from this debate, and if she wants to say a few words on this issue I am happy to do my best to reply to them too.
Baroness Smith of Basildon
I am grateful to the noble Lord, as I think the noble Baroness, Lady Meacher, was intending to speak on this. We were looking at each other, and the noble Lord beat us both to the Dispatch Box.
I will be brief, as the Minister has sought to answer some of the questions, although others remain. We accept that the current definition of gangs has not been able to include or address some of the existing problems. The number of injunctions indicates that. Our worry is—this was raised at Second Reading—that in broadening the definition it becomes easier to get the lower-hanging fruit. There are two levels here. There are those gangs which are violent, intimidating—there are serious levels of violence in some cases. There are others who are altogether different: younger people who may appear intimidating to some people close to them and will have signs to indicate that they are gangs, but are of a very different order from those who threaten and terrorise communities. So there are two kinds of gangs under discussion. We want to see the most serious kind—the intimidating and violent— come into the ambit of this measure, but not by widening the definition so that those who are easier to catch and easier to identify, or are on the fringes of gangs, are inadvertently caught up.
I do not know whether the noble Lord, or any other noble Lords, saw the TV programme on Sunday evening called “Common”. I hesitate to address legal issues in the presence of the noble and learned Lord, Lord Hope of Craighead, but this fictional drama examined the law of common purpose or joint enterprise. If I understood right—I am sure I will be corrected if I am wrong—that law dictates that all participants of a criminal enterprise have a responsibility for all the results of that enterprise. This was a case about a young man who was before the courts on a murder charge, even though he was the driver of the car and had no idea what was happening. Nevertheless, he was part of that criminal enterprise.
We have a slightly similar issue before us: could those who may not be part of violent activity, perhaps on the fringe but not involved, be somehow caught up? I am not defending those who are part of a criminal gang, or part of an activity where they should be held responsible: it is the idea of the wider definition catching the lower-hanging fruit, those who are easier to place an injunction on in the courts. Given that the first condition has to be satisfied on the balance of probabilities—the respondent has engaged in, or has encouraged or assisted gang-related violence or drug dealing—it would be helpful if the Minister could say exactly how he defines “engaged in, encouraged or assisted”. I suppose “engaged in” is quite easy. However, will whether someone is “encouraging” or “assisting” be defined in guidance?
I also echo the point made by my noble friend Lord Howarth when he asked for guidance from the Minister on what measures could be expected from the courts—when will that guidance be available? Will it be made available to your Lordships’ House before Report? It would be quite helpful in those discussions. Furthermore, concerns were raised by several noble Lords at Second Reading that the standard of proof here is a civil rather than a criminal one. I do not think the Minister addressed that in his comments in response to my noble friend. It would be helpful if he were able to address that.
I am sorry not to be as quick on my feet as the noble Lord—he is obviously fitter and healthier than I am. I will do better in future.
Lord Elton
My Lords, before my noble friend applies the secateurs again to this budding debate, perhaps I may give notice that I also have points to raise, after he has dealt with this one.
Lord Taylor of Holbeach
I think it would be easier if I dealt with them all. If other noble Lords want to bring something to the party I would be happy to deal with them all in a final wind-up speech. I do apologise for jumping the gun. The two noble Baronesses were obviously far too polite to each other, but if the noble and learned Lord, Lord Hope, and my noble friend Lord Elton would like to speak, I will do my best to respond.
Lord Hope of Craighead (CB)
My Lords, I have been drawn to my feet by the comments of the noble Baroness, Lady Smith of Basildon. I have had experience of prosecuting cases involving gang violence—in a way, this is a point in favour of the injunction system. One of the great difficulties for the prosecutor is proving involvement in these activities beyond reasonable doubt. In Scotland, we used to have an offence called mobbing and rioting—that was one of my first forays into prosecution—where a whole number of people were brought into court and accused of being involved in a mob. The noble Baroness is quite right: if they were so involved, they were liable for everything that the mob did. I found that I lost quite a number of the accused because I could not prove that they were sufficiently connected to be brought into the system. If one was applying the civil standard, it would be reasonably clear that one would be able to say that they were involved in the kind of activity that the injunction is directed at. I therefore see a value in the injunction system.
I may have misunderstood the Minister, but did he say that 45% of such injunctions are breached? That troubles me for a reason that might be worth mentioning. In the cases that I came across, there was great intimidation of individuals to force them into the gang activity. If one has a typical city area where the gang competes with a gang from another place 300 or 400 yards along the road, all youths of a particular age are expected to participate in the activities of the gang. I am a bit troubled by the idea of a person being singled out for an injunction and then turning to their colleagues—or compatriots, it might be—who are saying, “Come along and join us. Get hold of a weapon and attack the other people”. If he says, “Well, I’m sorry, I can’t do that, because I’ve got an injunction against me”, I think that he would be jeered at and drawn along simply out of shame and intimidation. It is that aspect of the system that worries me. I would be interested if the Minister had any information as to why such a high proportion of those injunctions are being breached, because it might suggest that there is something in the system that is in need of improvement.
Broadly speaking, I understand the policy behind this. As a former prosecutor, I think that it has a value in being able to get people into some kind of legal system to deter them from further activity which the criminal law perhaps cannot do.
Lord Elton
My Lords, mine is a much smaller question and reveals my ignorance of POCA. I understand that the applications will be made by the police. How long is it expected that it will take to grant the applications and are the arrangements for the interim in any way influenced by the proposed new section? I imagine that there is a section in the parent Act which applies the standards in the new section to the interim injunction. If not, how do they relate?
Lord Taylor of Holbeach
I am pleased that we have had this little episode at the end of our discussion. I am grateful for the contribution of the noble and learned Lord, Lord Hope. He is right: I did say that 45% of injunctions had been breached. Making civil injunctions work is always a challenge for authorities. We have discussed that sort of issue when considering previous Bills.
I say to my noble friend Lord Elton that it is not POCA, but PACA—it is the Police and Crime Act 2009 that is being amended by this part of the Bill.
I say to the noble Baroness that this is not about criminalising gang members but finding a civil way of dealing with the trouble in which they find themselves. They are members of a gang; we want to get them out of a gang. The gang is no good for them; it is no good for their fellow gang members. This is an important way of being able to deal with this matter.
I expect the guidelines, about which I spoke to the noble Baroness, Lady Meacher, privately yesterday and today in public—I am sorry that I did not address this issue earlier—to be available before we return on Report. I say again to the noble Baroness that the test of “encouraging or assisting” gang-related violence is in the existing legislation; it is not a new illustration. I am not aware that the courts are having any difficulty in interpreting that test.
I hope that I can with confidence propose that Clause 47 stand part of the Bill, having done my best to demonstrate all the things that noble Lord, Lord Howarth of Newport, demanded of me when he addressed the issue at the beginning of this debate.
Lord Marlesford
“UK Passport Office powersForeign passport declaration
(1) Subject to subsection (2), where a person holds, tries to renew or to obtain a British passport, the UK Passport Office may require that person to provide information about any foreign passport or passports they currently hold or have held in the past and may further require that person to notify the UK Passport Office of any subsequently acquired foreign passport.
(2) Such information must be considered by the UK Passport Office to be of use for combatting terrorism or other serious or organised crime.
(3) Any information so obtained by the UK Passport Office may be retained by that Office and used for the purpose of combatting terrorism or serious or organised crime.”
Lord Marlesford (Con)
My Lords, I make no apology for raising again the issue of foreign passports. I say straightaway that I am not proposing, and have never proposed, any restrictions of any sort on people holding foreign passports.
I last raised this matter on 7 April as an amendment to the Immigration Bill. It was of course opposed by the Home Office for the usual NIH reasons. Of all departments, the Home Office more than others rejects ideas that do not originate from its own creative and fertile mind. However, the problem is that the Home Office, especially in recent years, has not always been good at joined-up thinking, so it can be an obstacle to joined-up government. That is why I fear that my noble friend the Minister is probably under riding instructions to say that my proposal for there to a requirement that details of foreign passports held by British passport-holders should be with the Passport Office is unnecessary and irrelevant in the war against terrorism, serious crime or organised crime. There is a second reason. The Passport Office is at present in considerable difficulties and may regard itself as incapable of handling the changes that are needed, however urgent they are. I shall give a little detail of this later.
I bring forward the amendment in the context of the menace of the deep cloud of Islamist terrorism. Tragically, the fundamentally good and admirable purposes of Islam—one of the three great monotheistic religions, which has given the world so much in science, culture and ethics and has historically been a haven for religious tolerance—and the true religious dimension of it as laid out in the Koran, which at its finest level is expressed by the mystical doctrine of Sufi, have been undermined by the medieval intolerance of the Wahabi sect and hijacked by political Islam, with its armed terrorist groups, such as al-Qaeda and now ISIS, which are engaged in the savage and cruel civil war between the Sunnis and the Shias.
Earl Attlee (Con)
My Lords, I am grateful to my noble friend Lord Marlesford for introducing this amendment. It is not the first time that he has raised the issue of foreign passports held by UK passport holders. My noble friend knows very well that success is not normally achieved at the first outing of an amendment, and I admire his persistence. He certainly does not need to apologise for raising this issue again, even if his speech was as wide-ranging as it was interesting.
I query the need for subsections (2) and (3) of the proposed new clause. I do not know why they are there at all. If Parliament agreed them, we would be telling enforcement officials, rather unhelpfully, “We give you this source of information and you are to be grateful and make use of it”. I suspect that my noble friend is far too skilled and experienced to carelessly insert a redundant provision into his amendment. Perhaps it has rather more to do with my noble friend ingeniously making his amendment relevant to the Bill.
The problem is that if we tidy up his amendment by deleting subsections (2) and (3), the amendment will no longer be relevant to the Bill. However, I have another anxiety. I can understand why my noble friend has not provided for any penalties, other than the implied possibility of the withdrawal of the UK passport under prerogative powers. My fear is that an innocent holder of multiple passports may find themselves in difficulties, while at the same time the serious criminal or terrorist has merely made an admin error. I hope that when my noble friend comes to reply to the debate, he will allay my concerns.
Lord Taylor of Holbeach
As noble Lords know, we debated this issue fairly recently when my noble friend moved a similar amendment on Report of last Session’s Immigration Bill on 7 April. Since then, following my recent meeting with my noble friend, I met him again today. We have looked afresh at the issue and I have to advise my noble friend that I have reached the same conclusion as I did before.
As I indicated when we debated this issue in the Immigration Bill, Her Majesty’s Passport Office contributes directly to the Home Secretary’s key aims of securing borders, tackling terrorism and reducing crime. It achieves this through its public protection strategy and by sharing data and intelligence with other parts of the Home Office and other agencies. I thank the senior officials from Her Majesty’s Passport Office for providing me with briefings in this area. They have been extremely busy recently, as noble Lords will know.
My noble friend raised a number of points concerning his amendment. I start by responding directly to the issues he raised. There is an existing requirement for holders of any uncancelled passport to provide that document when applying for a British passport. I will expand on that point later. HMPO issues around 5.5 million passports each year. Data are not held centrally on the number of applicants who hold a second passport under another nationality. Of the passports issued each year, around 1 million applications are from first-time applicants and the remaining 4.5 million are for passport renewals and replacements. About 95% of applications are made in the UK, with the remaining 5% from British citizens resident overseas.
There is no requirement for a British passport holder to notify HMPO of a change of address. This is because the address of the passport holder is not relevant to the ability to travel and cross borders. The HMPO database is for those issued with or refused a British passport. It is not intended to be a record of the individual’s changing personal circumstances unless that impacts on their identity, nationality or entitlement to continue to hold a passport. HMPO has an established process in place whereby the police, courts and prisons notify it of court or police conditions attached to an individual, including persons wanted, arrest warrants, bail conditions and travel restrictions.
I do not have an estimate of the costs involved in setting up a database as suggested in the amendment, but imagine it would be in the hundreds of thousands rather than millions. The issue is one of value for money. To what use would we put the information? If there were a benefit in setting up such a database, we would do so and the costs would be outweighed by security and public protection considerations. However, as I indicated, Her Majesty’s Passport Office already requires a person applying for a first-time passport or renewing or replacing any existing passport to indicate whether they have had any sort of passport—British or otherwise—or been included in any passport before.
Where a passport applicant indicates that they have, they are then required to send to the Passport Office all uncancelled passports. This requirement to submit a passport held in a second nationality is primarily for identification purposes. It can also assist in the determination of British nationality. However, the primary function is to ensure that any British passport issued is compatible with the identity and personal details contained in the existing overseas passport.
Border Force and law enforcement agencies can access data held by Her Majesty’s Passport Office provided it is relevant to their examination of a passenger at a port or is necessary in connection with any investigation or inquiries being undertaken. Accordingly, the information gathered by HM Passport Office is available to assist Border Force and others in helping to prevent and detect crime.
Holding dual national status is perfectly lawful in the UK. It is not a barrier to the issuing of a British passport. We believe that it would therefore be disproportionate to require a person to notify the UK Government of any subsequently acquired overseas passport unless that was relevant to an outstanding application for a British passport. Should such a person fail to disclose at the point of application for a British passport that they hold a passport under another nationality, it would be a criminal offence on the basis that they would have made a false statement on the application form. Apart from considerations of criminal proceedings, it would be open to consider the exercise of the royal prerogative to withdraw or refuse the issue of a British passport. That would be considered on the individual circumstances of the case and the seriousness of the consequences of the attempted deception.
Lord Marlesford
My Lords, I thank my noble friend Lord Attlee for his comments. He was absolutely right: we had to adapt the amendment to the Bill. The Minister’s answer was exactly as I expected and also quite revealing. The emphasis on the Passport Office’s burden reflects my point that I suspect that its internal problems mean that it feels that it could not cope with it, and that if anything makes the proposal go away, so much the better. What he says is the Passport Office’s view is not the one that has been expressed to me by a number of people in the security world, which is that this is necessary.
I was not, of course, suggesting that the caliphate passport would ever be shown to a British Border Force inspector. The whole point about the caliphate passport is that it will be used in the sort of countries where we would want to know a British passport holder had been doing things. The one thing he has not mentioned is that there is a greatly increasing and very serious threat of Islamist terrorism from the al-Qaeda and ISIS terrorist wings of political Islam. Pray God there is not, but if there were some terrible atrocity and it was found later that we had no idea what was likely but that we might have done if we had realised a person was moving around with other passports, there would be some regret at the Government’s line.
Frankly, the Government are wrong about this. The passport is a powerful weapon for defending our borders but full use is not made of it. I very much hope that the Permanent Secretary who has been tasked with looking at the Passport Office will consider these issues. As I said earlier, I pay tribute to the Border Force, which has greatly improved since Admiral Montgomery took it over from the Civil Service. As I said last time, I suspect we will gradually tiptoe towards a sounder way of making the best use of the passport system to protect us and our citizens. I beg leave to withdraw the amendment.
Baroness Hamwee
“Guidance
In section 47 of the Policing and Crime Act 2009 (guidance), for subsection (3) substitute—“(3) Before issuing or revising any guidance under this section, the Secretary of State must consult the Lord Chief Justice of England and Wales, and representatives of chief police officers, local authorities, health authorities and persons concerned with the care of young people, the Youth Justice Board and such other persons as the Secretary of State thinks appropriate.””
Baroness Hamwee
My Lords, Section 47 of the Policing and Crime Act 2009—PACA, as my noble friend referred to it a few minutes ago—provides that the Secretary of State must issue guidance relating to gang-related violence injunctions. Under Section 47, the Secretary of State must, before issuing or revising guidance, consult the Lord Chief Justice of England and Wales and such other persons as the Secretary of State thinks appropriate. Given the multidisciplinary nature of gang-related violence, it is interesting that the only specific consultee is the Lord Chief Justice—the courts, essentially. My amendment would add consultation of representatives of chief police officers, local authorities, health authorities and persons concerned with the care of young people, the Youth Justice Board and, again, such other persons as the Secretary of State thinks appropriate.
I do not need to persuade the Committee of the interest, in a technical sense, of all those whom I have listed, in the issue of gang-related violence and the formation and operation of gangs. I appreciate that, under PACA, the Secretary of State is able to consult all these people but it would be appropriate to list a wider number of officeholders and interests than is simply caught up in “such other persons”. I beg to move.
Lord Taylor of Holbeach
My Lords, I am grateful to my noble friend Lady Hamwee for outlining her thinking behind this amendment. I entirely agree that the contents of any statutory guidance should be developed and agreed on by all the relevant parties in advance. I assure her that this is already the case. The statutory guidance on gang injunctions is being revised, as we have already discussed, and will be reissued in the autumn. We are already consulting the Youth Justice Board, the Ministry of Justice, HM Courts and Tribunals Service, the Judicial College, the Crown Prosecution Service and the College of Policing. We also plan to consult police forces and local authorities, through the Local Government Association, as well as the Department of Health and the Department for Education. This will ensure that the welfare of young people is integral to the process. I have emphasised, in my contributions, the importance of this guidance in making gang injunctions effective.
In legal terms, the current requirement to consult the Lord Chief Justice and,
“any other such person as the Secretary of State thinks appropriate”,
allows enough flexibility so that relevant parties are involved in the process as judged most appropriate. It is a commonly used form of words to describe this sort of consultation. Although I understand exactly why my noble friend has tabled this amendment, it is not possible to set out in legislation a comprehensive list of all those who should be consulted and I am not persuaded that anything further would be achieved by laying out a list of consultees. For this reason, and in the knowledge that the new guidance involves considerable consultation—though not I hope so much that it would mean it is not available by Report—I hope my noble friend will feel able to withdraw her amendment.
Baroness Hamwee
My Lords, we know the phrase well. When my noble friend started to list those who are currently being consulted, I thought that this was sticking, again, with the court system. However, he widened that, and I was very pleased to hear confirmation that the importance of the welfare of young people, not just a criminal justice response, is being encapsulated in the consultation going on at the moment. I do not intend to pursue this, but I am glad to have that information and to have the recognition articulated in that way. I beg leave to withdraw the amendment.
Baroness Hamwee
Baroness Hamwee
Amendment 40B will end this part of the work on the Bill with, again, something of a whimper, but nevertheless I shall pursue it very briefly in order to get the Minister’s comment.
Clause 56 deals with the retention or return of substances seized under these new provisions. Subsection (7) provides that where the substance is being retained for a second period, reasonable efforts are made,
“to give … notice to the person who the officer thinks may be entitled to the substance”.
The amendment would simply add that notice should also be given to the person from whom it was seized if that person is different. I may be missing something somewhere else in this clause, but I beg to move.
Lord Howarth of Newport
My Lords, I am aware that the Committee is hungry. I am hungry myself, so I shall be extremely brief. This amendment, helpfully tabled by the noble Baroness, Lady Hamwee, provides us with the only opportunity to debate the provisions in the Bill that deal with cutting agents used to bulk out illegal drugs. I simply want to draw to the attention of the Committee the law of unintended consequences. Cracking down on relatively harmless cutting agents such as benzocaine runs the risk that you drive criminals to use much more damaging cutting agents. A case was reported in Scotland recently in which six people died. They had used heroin that had been bulked out with a cutting agent contaminated with anthrax. Criminals are entirely unscrupulous. I hope that, when under the terms of this clause, the police, customs and courts are considering whether to return or retain cutting agents that have been seized, they will think very carefully about the consequences of impounding relatively safe cutting agents, thereby providing an incentive for criminals to use much more dangerous cutting agents.
I will also, although this is a painful thing to do, draw to the attention of the Committee the utterly tragic case of Martha Fernback, a 15 year-old girl who died nearly a year ago after consuming ecstasy—MDMA—which was 91% pure compared to the average street-level purity of 58%. Had that MDMA been cut and the purity been what it would normally be when it came into her hands, she would still be alive today. Her mother, Anne-Marie Cockburn, has campaigned with tremendous courage and great wisdom asking that the Home Secretary and the shadow Home Secretary think deeply about whether it would be right to move from the system of prohibition that trapped that girl towards a system of legalisation and strict regulation as well as vastly better education in this field. I will not enlarge on that theme because the Minister and the House know my views well, but as the House determines whether to approve these clauses we ought to bear in mind that legislation with the best of intentions, which the Government have, can lead to horribly counterproductive effects.
Baroness Williams of Trafford
My Lords, if a court approves the further retention of a suspected drug-cutting agent beyond the initial 30-day detention period, it is only right that the responsible police or customs officer makes reasonable efforts to inform the person who may be entitled to the substances if the person was not present or represented at the court hearing. A person entitled to the substances is defined in Clause 53 as the person the substances were seized from or the owner of the substances. It is important that all those persons who are entitled to receive notice do so. This provides additional protection for the legitimate trade, ensuring people have sufficient time to consider and act upon the notice, if appropriate.
I commend my noble friend Lady Hamwee for ensuring that we continue to minimise the impact on the legitimate trade by setting out in clear terms who should be informed of the court’s decision. I shall therefore give further consideration to extending the provision to ensure that notice is given to the person from whom the suspected drug-cutting agents were seized, if different from the owner. I will reflect on this point and let her know the outcome in advance of Report.
On the two points made by the noble Lord, Lord Howarth, about switching to more dangerous cutting agents, the proposals include a general seizure power which covers any substance suspected of being intended for use as a drug-cutting agent. Therefore, we do not anticipate that they will lead to drug traffickers using cutting agents that are more dangerous than those currently being used. I have heard of dangerous cutting agents being used currently. Any new substances that traffickers begin to use would be equally subject to seizure under these powers.
On the risk that the powers to seize cutting agents would place drug users in danger because of purity issues, by restricting the ability of drug traffickers to cut drugs we anticipate that the new powers will reduce harm by limiting the availability of drugs on the street. Lower availability should increase prices and therefore reduce use. The powers will also attack the profits of drug traffickers, which they use to fund a range of other harmful criminal activities. Moreover, the most common cutting agents are far from harmless. There has been a move away from inactive cutting agents to more dangerous pharmaceutical agents, such as benzocaine, lidocaine and phenacetin. Toxic doses of benzocaine and lidocaine can decrease the oxygen-carrying capacity of the blood and can cause convulsions that mimic the acute toxicity of cocaine. Phenacetin, a painkiller, is no longer used in the UK due to its carcinogenic and kidney-damaging properties.
I hope my response has addressed the issues that my noble friend and the noble Lord have raised and that my noble friend will be content to withdraw her amendment.
Baroness Hamwee
My Lords, the Minister is extremely generous and I consider my wrist to have been slapped. I beg leave to withdraw the amendment.
Arrangement of Business
Baroness Anelay of St Johns (Con)
My Lords, yet again with the Serious Crime Bill we have had not only good and strong arguments but we have considered them succinctly. As a result, we are in the position that we have reached the target for today’s consideration of the Bill at a point when it means that the Question for Short Debate in the name of my noble friend Lady Wheatcroft has become the last business of the day. This has the advantage for those who previously thought that they had seven minutes that they may now have 10 minutes for speeches. The number of minutes for the proposer, my noble friend Lady Wheatcroft, remains at 10, and for my noble friend the Minister at 12. However, for all other participants, it is now 10 minutes.
Industrial Strategy: British Business Bank
(10 years, 5 months ago)
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Baroness Wheatcroft
To ask Her Majesty’s Government what is their strategy in relation to industrial policy, and in particular the British Business Bank.
Baroness Wheatcroft (Con)
My Lords, I am delighted to be leading this debate on the industrial strategy and the role of the British Business Bank within it. The good news is that there is a strategy. The even better news is that it is working. We have in the past seen Governments meddle with industry with less happy results. In steel, in motors and even in travel agency, Governments have demonstrated that they are not great when it comes to running things.
However, this Government have a well thought-out strategy which is not about short-term froth but about long-term benefits for the country. Establishing the British Business Bank is an important facet of that strategy, helping smaller firms to overcome that perennial problem of how to get their hands on finance. Governments sometimes seem to struggle to breach the divides between various departments but, on the industrial front, we really do have joined-up government: the Treasury working with BIS and UKTI to get the right results, to help our businesses grow and, crucially, to export.
The overarching policy is to provide an environment which nurtures business generally, with low corporation tax and sensible, not overburdensome, regulation. Although there are some difficulties which cannot be addressed overnight, and will in fact take years to put right, such as infrastructure failings and the skills shortage—which all too often means a failing of numeracy and literacy—the UK is nevertheless now an attractive place to start, build and grow a business. It is Europe’s top destination for foreign direct investment, the money flows that create jobs.
There is one school of thought that argues that government should not attempt to intervene in industry beyond providing that hospitable environment. Certainly, picking winners is a dangerous occupation, not that some Governments do not still attempt it. Choosing individual companies to be nurtured into being national champions is a recipe for national disaster. This Government have avoided it and wisely chosen to look not at companies, but at those sectors where we already have an edge and where an extra push might produce the greatest benefits for the country.
There are 11 such sectors. Another Administration might have rounded the number up and gone for a neat dozen, or rounded it down to come up with a top 10. The fact that both those options have been resisted in favour of 11 chosen sectors surely indicates that a genuine plan, rather than passing headlines, is what this is all about. The sectors are aerospace, agricultural technologies, automotives—and here I declare an interest as a director of Fiat; we do not yet manufacture in the UK but I am doing my best—construction, information economy, international education, life sciences, nuclear, offshore wind, oil and gas, and professional and business services.
Is it not instantly cheering to reflect that in all those really important and high-growth sectors, the UK already has some world-class businesses and they are going to get better? There are things that an enlightened Government can do to help. Within each sector, top executives now get together, not to collaborate on price—which would see them land up in jail, which is not part of the Government’s industrial strategy—but to look at where there are barriers to growth and things that Ministers can do to make life easier for them.
The Government can, and do, help to fund research which will benefit these chosen sectors. For instance, there is now a £7 million centre for “extreme engineering” at the University of Newcastle. The Neptune Centre for Subsea and Offshore Engineering brings together industry and academia to develop technologies that can withstand the world’s harshest environments. Future success in the oil and gas industry will depend on being able to employ the best science and technology, and what emerges from this centre will keep British companies at the forefront of these developments. Siting this ground-breaking centre on the north bank of the Tyne will give a boost to the revival of this part of Tyneside.
It is absolutely vital that our industrial strategy is not just about rebalancing the economy in terms of its dependence on the service sector, but about rebalancing it geographically. The concentration of wealth and wealth creation in London and the south-east is simply not healthy. In terms of gross value added, the average Londoner generates more than £37,000, while in the north-east the figure is marginally over £16,000, and in Wales it is even less than that.
While I am sure that we here in the capital like to think that we are doing our bit for the economy—although there are of course some who doubt that we do much of it in here—I am confident that in the north-east and Wales people feel the same way. These figures are a reflection not of a lack of energy or enterprise but of the huge growth in the financial services sector which has benefited London and of a lack of investment in the regions. Perhaps the Minister could tell the House how industrial strategy is contributing to rebalancing that. We need to make sure that the profits of growth are shared across the country and not just in the wealthy south-east. The growth is coming but we need to be sure that it is shared.
Remarkable evidence of that growth has come just today, with the latest figures from the National Institute of Economic and Social Research. It estimates that in the previous quarter Britain enjoyed its fastest growth for four years, at 0.9%; that really is cause for celebration. Yet, despite that remarkable achievement, we could do better. Too many of our small businesses stay just that way. For some that is a lifestyle decision, but for many it is because they hit hurdles that they simply cannot get over.
That was why the Government established the British Business Bank. In some ways this is still a notional entity, as it has to go through the laborious process of getting EU approval before it can take on a life of its own. That should come, I hope, by the end of the year. However, for now, the British Business Bank is part of the Department for Business, Innovation and Skills, and here it is already at work.
I confess to something of a maternal interest in the British Business Bank as I was a member of the steering group which tried to plot a useful course for this innovation. It was conceived as a potential solution to growing complaints from smaller businesses about the banks’ reluctance to lend, or at least to lend on reasonable terms. It is all very well to make an offer of funding to a small firm, but if it is at an interest rate and on terms which are completely impossible that does not really constitute an offer at all. The latest available figures indicate that banks’ reluctance to lend remains. According to the Bank of England, in the first four months of this year total lending to small and medium-sized enterprises was almost £2 billion lower than in the same period last year, which was itself £1.5 billion lower than in the previous year.
Now, maybe demand has really shrunk, but it is hard to believe that it has evaporated on that scale. The British Business Bank is therefore attempting to bridge the gap, encouraging new lenders into the market and channelling funds into innovative operators such as the peer-to-peer lender Funding Circle. Here I must confess to a touch of nervousness when I read the bank’s promotional material and see: “We’ll use … securitisation techniques”. It goes on to say:
“By using leverage as a tool”,
we will be able to—noble Lords will get the gist of what concerns me. Securitisation and leverage are not of themselves ruinous, but anyone who has lived through the ravages of the financial crisis has learned to treat them with a degree of caution. Can the Minister reassure the House that the business bank will remain focused on helping smaller firms rather than becoming a government-owned investment bank? I have always struggled with the term “investment bank” anyhow, because investment seems to be the antithesis of what those organisations do. Will the business bank specifically help companies in those 11 sectors that have been set out as the strategic sectors for the country?
The business bank can do much useful work in just guiding smaller firms through the various schemes available for them—all 810 of them, according to the website. From the Armagh Business Centre through the Survive and Thrive programme to the Wood Energy Business Scheme, there surely must be something for everyone—but finding it may be difficult. A bit of streamlining might not go amiss. The business bank website is on its way to becoming a user-friendly information hub, but there is still a way to go. Often money is not the key to what smaller firms need.
I will end—and I promise that I will end here—by mentioning a scheme launched at the beginning of this year to bolster the 8,900 mid-sized businesses in this country. Currently those businesses make up just 0.5% of all businesses, but contribute around a fifth of employment and turnover. The CBI reckons that if they were to reach their full potential, they could add £20 billion to £50 billion to the economy. I cannot see why the sky should not be the limit. However, only 17% of those businesses export. The Government have now sent a personal letter to each one of those companies, asking if they would like individual support from UKTI to get them exporting. There are specialists ready to work with them. Is that not an industrial strategy in action?
Lord Haskel (Lab)
My Lords, I am most grateful to the noble Baroness for moving this Motion, because it provides us with an opportunity to learn more about the business bank. It seems to have been below the horizon in recent months, but I notice it published a strategy document last month, in June.
The noble Baroness puts the business bank in the context of an industrial policy strategy. My response is: what strategy? Yes, she explained actions that the Government are taking, and Ministers refer to an industrial strategy that was announced in 2012. Last Thursday, the Minister spoke of a strategy in a debate on manufacturing and mentioned several initiatives, all of which are very welcome. However, the noble Baroness described initiatives reacting to market opportunities or to issues that have arisen in the economy: skills, training, technologies and sectors for support, exporting and, yes, financing. She also described existing businesses.
However, that does not add up to a strategy. Those are piecemeal responses to changes or problems that have arisen over the years. A strategy has to be intellectually coherent. It has to provide a framework for all of these activities. It has to be a means to an end—a means for achieving a vision. If we have one, perhaps the Minister can tell us what is the purpose of our strategy? Is it economic growth, or to benefit us all?
Ministers like to learn from Germany. Fifteen years ago, Germany was the sick man of Europe. Their strategy was laid out in Lisbon 2000 and the Haas report. It was economic, social and environmental, and yes—it has worked. It has provided a path for everybody in Germany to improve their quality of life and their ability to earn a living, and their economy is winning the race to the top. That is a strategy.
The noble Baroness is therefore right to put the question of the business bank in the context of a strategy. However, I put it to her that this is yet one more example of the Government reacting to events. Indeed, she told us as much when she said that the bank had resulted from what occurred during the banking crisis, because of lack of investment funds for small and medium-sized enterprises.
I welcome what the bank has done, acting as an intermediary in supplying credit, unlocking funds through guarantees and filling in other small funding gaps. I also welcome the way it has tidied up the work of the small loans guarantee and the capital for enterprise initiatives. The website gives us the numbers, but it does not make clear how much are loans on the bank’s own account and how much are for acting as intermediaries. Perhaps the Minister can tell us that. Although welcome, the amounts are quite small in relation to the size of the financial market and will have a modest impact on the market.
A proper strategy would deal with the financial market itself, not just one of its failures. It should be a market which provides patient capital to allow small and medium-sized enterprises to develop their businesses. It should provide investment in capital intensive schemes such as power stations or cement works, which are mainly foreign owned because our financial market is adverse to this kind of investment. The same goes for infrastructure investment. The market should work for us all instead of finance largely being an end in itself.
We know that just giving the banks more money to lend to business obviously does not work—the money goes elsewhere. A proper strategy would encourage putting money into industry for the public benefit instead of inflating the value of our homes for private benefit. For instance, in many European countries, including Germany, you cannot borrow against the rising value of your house, so rising property values do not suffocate lending to business. A proper strategy would encompass more competition. In this morning’s Financial Times there was news of the potential for 30 new banks. That is good.
If the objective of the business bank is to raise the quality of life of us all and help our industry win the race to the top, all those issues have to be part of a strategy, throughout government. An industrial bank can help, especially as part of a coherent strategy, but it cannot do it alone.
Lord Stoneham of Droxford (LD)
My Lords, it is a pleasure to take part in the debate initiated by the noble Baroness, Lady Wheatcroft, and to have her tour d’horizon of the Government’s industrial strategy from her perspective of experience in the business world and business journalism.
As the noble Baroness said, there are very good and encouraging signs of recovery as the economy starts to rebalance and growth resumes. When Vince Cable first started to refer to the term “industrial strategy”, I must say that I had certain concerns about that terminology, because I always associated it with the Government’s failed ventures to intervene in industry in the 1970s. However, the work at BIS over the past four years matches the Treasury in providing the essential components of recovery and the hope for sustainable growth. The brand “industrial strategy” is clearly being restored and reinvigorated, and it looks like a winner. I want to explain to the noble Lord, Lord Haskel, that there are components of an industrial strategy here. They are very clear, have been set out very clearly by the Secretary of State for Business, and a lot of them build on the good foundations left by the previous Secretary of State for Business, the noble Lord, Lord Mandelson.
There are four key components of this strategy. The first is the partnership activity concentrated on the key strategic sectors. We have seen the recovery in the automobile sector: it is remarkable. We are now one of the leading producers of motor cars in Europe. Now we have to concentrate on making sure that the component supplies are provided in the UK and not simply imported. This weekend in Silverstone we saw the spotlight on the specialist engineering companies which are behind the development of Formula 1, and all the reforms that they have introduced, particularly on energy conservation. Many of these SMEs are based here in the UK.
Two weeks ago, I visited Airbus in Toulouse, another example of where partnership between Government and industry has been remarkably successful. In 1995, 20% of passenger aircraft were made in Europe by European manufacturers; the rest were made in America. Today, more than 50% of those planes are made in Europe, largely through Airbus and its suppliers, and we have 10,000 employees in Airbus and 100,000 working in the supply chain of this company. It is impossible to see how success would be possible in that sector without a partnership between the Government on research and development and a vision of what a European industrial strategy could achieve in this sector. Any idea that a partnership with the German and French aviation sectors could take place so successfully outside the EU is, in my view, ludicrous.
The second key component of the strategy is the promotion of key technologies, particularly based on the partnership with universities and the development of catapult centres. The role of universities has been recognised as essential to economic growth. They are building on the competitive advantages in research, which we must now exploit in a successful industrial strategy, whether it is in energy storage, robotics, regenerative medicine or the other sectors and technologies that they have identified as part of the strategy.
The third component—and where the coalition has had great success, although I will not go into the detail tonight—is addressing skill shortages and unemployment through the growth of the apprenticeship scheme and a refocus on the importance of technical education. The provision of skills in these technical areas is vital for our industrial strategy.
The fourth component of the strategy is to provide financial support, particularly for small and medium-sized enterprises. We know that SMEs are a major provider of jobs and have been over the past couple of years—remarkably so as we have recovered from recession. There is great potential now through more start-ups and more growth from these companies. It is remarkable that until 2012 this country was the only one of the G8 countries without a specialist institution seeking to intervene and provide finance and advice for SMEs. Germany has its KfW bank; the USA, despite moves in Congress, still has the Small Business Administration. These are bodies with vast resources and expertise which all help with financing and advice for small businesses. I hope that our British investment bank, once it is approved by the European Union’s competition authorities in the autumn, will be a further force for us in this competitive market.
We are grappling with market imperfections in respect of financing small businesses. At a time when bank choice is down to four, with many withdrawing from high-risk, high-cost, more risky finance for small businesses, we needed to do something to fill that gap. It is long overdue. It is a problem that has existed in this country since the 1930s and when markets do not work then the Government have to help make sure that they do. There has been a lack of provision for debt and equity financing for these companies and there has been demand weakness as well. There has been a lack of awareness of business potential and of the benefits of raising finance at cheaper rents. Without the funding, these companies will not fulfil their potential. The first step is to develop the local networks, through investment partners, to form a strategic plan, which we have now seen published by the business bank, and then to develop the key partnering to help private finance think longer term and take advantage of government backing to lever lower borrowing costs. We have seen substantial progress in the first year of the bank: £282 million lent to 30,000 businesses; and the formation of 80 financial partners, with the aim of increasing this investment to £10 billion by 2018.
For the country to make its mark and to gain competitive advantage we have to see some continuity in these policies over the next four to 10 years. It is important to recognise that we will not see the benefits of some of these policies until the next Government or the Government after next—these policies take time to emerge—but we have got to see ongoing work to simplify financing schemes and to finesse them in different markets. We have to develop the bank to match the best of our competitors in other countries, particularly in Germany.
There are two final elements to the industrial strategy. The Government are making moves to ensure that government procurement is aimed at helping small businesses, particularly with the success of the Olympics in 2012. In the regional economic partnerships we have the basis for encouraging growth in the regions, and I hope that these organisations will be used to help promote financial opportunity for small businesses.
Just as the Treasury’s determination and focus on the financial and economic policy of the country are showing signs of working, so the industrial strategy, led by BIS, is ensuring that the firm foundations for industrial recovery and export growth are built on a genuine partnership between the Government and key industrial sectors: knowledge, the strength of our universities; firm initiatives to improve skills; government procurement policies; and, at last, the establishment of a heavy-weight, specialist organisation, the British Business Bank, to assist and advise SMEs on financing, which is long overdue.
Lord Leigh of Hurley (Con)
My Lords, I thank my noble friend Lady Wheatcroft for instigating this debate. Her insightful remarks come as a result of her very distinguished career as a business journalist at the Times and the Wall Street Journal, where her articles were a must-read for any businessperson for many years. I am particularly pleased to be able to take part in this debate because the financing of SMEs is an area in which I have had an interest all my working life. I refer your Lordships to my various interests as declared in the register of interests. I shall focus my remarks on the British Business Bank.
It was very clear to many of us in 2010, when the coalition Government first came to power, that the country’s finances had been left in a ghastly state in many areas and directions. It was not just the out-of-control debt and deficit which were threatening the whole economy and country, but the shock of the global financial crisis meant that banks were making life extremely difficult for many perfectly good businesses that desperately needed finance, both for working capital, or short-term finance, and longer-term equity injection.
It is probably safe to say that the incoming Government were shocked by the inability of the traditional banks at that time to take on the role they had previously undertaken in providing finance to SMEs and were acting a bit like rabbits caught in the headlights. The numbers bear this out. Successful loan applications for SMEs had dropped from 88% in 2007 to 65% in 2010, as opposed to 76% in Germany. In addition, the changing capital requirements, commonly known as Basel III, applied a risk weighting system with increased premiums for lending to SMEs which simply exacerbated one of the main areas in the UK for retail clearing banks. Indeed, it seemed clear that the retail banks simply could not, or would not, lend money to SMEs and found themselves incapable of doing so on a cost-effective basis. As the noble Lord, Lord Haskel, mentioned in the debate on Thursday on manufacturing, the noble Lord, Lord Young, reminded us of his recent enterprise report and noted that more than 95% of firms in this country currently employ fewer than 10 people. Smaller businesses are crucial to economic growth, and the current ratio of 80% of UK smaller business having as their bankers one of the four big banks is not sustainable.
There are particular circumstances for SMEs, which mean that they need special help. Many do not have a finance director but rely on the owner’s ability to do a service function and many other functions, and they rarely have time to shop around for finance. Indeed, research shows that 71% of SMEs seek finance only from their existing provider and, on average, in terms of median, the time spent by all SMEs looking for alternative sources of finance is less than one hour. Like all of us, SME owners do not enjoy filling out forms. Accordingly, in 2010, the word was out that banks were no longer interested in lending to them and, as a result, the problem became self-fulfilling as SME owners did not bother to apply to banks for such finance.
It then transpired that around the world, as the noble Lord, Lord Haskel, said, there were better ways of doing business. The noble Lord, Lord Stoneham, mentioned that in Germany there was the successful KfW model, which dwarfs anything that has been done in this country. We were the only country in the G8 not to have a comparable institution—by which I mean an institution that lends and invests in banks themselves. This is the work of the British Business Bank, which is probably misnamed. Although it is certainly British and certainly business-focused, not domestic, it is not really a bank as commonly understood, but rather an investor in challenger start-up organisations, which themselves pump-prime finance in a mixture of debt and equity to their own clients. This is infinitely preferable to the well trodden route of government direct intervention and subsequent massive write-off and losses.
I understand that the British Business Bank is tasked to achieve a return roughly equivalent to five-year gilts. It is not money that is written off; it is money on the books of BIS that seeks a return. I hope that we see full transparency on the results of BBB and, equally important, of each of its partners, some of whom, such as the start-up loans, will find profitability a stretch. I note that £300 million has been allocated to the investment programme to promote choice and competition in business finance, of which £203 million has been recommended. This is an excellent initiative, but it contains a large element of risk. Trying to achieve a return comparable to five-year gilts will prove a challenge.
There has in the past, before BBB, been a plethora of direct schemes available to entrepreneurs but, as I have said in this House, finding out about government grants and availability of funds has not been easy. Although the Government have reduced the schemes down to one government website, which is very helpful, the results are not produced in a way that is easy for an entrepreneur to select the appropriate scheme. The last time I looked, I found 791 schemes available to entrepreneurs seeking grants. I then tried a more selective search and I chose to look for a business in London with up to 250 employees in the service sector; by pressing the button, I was offered 42 grants, which is still too confusing.
The creation of the British Business Bank is a huge step forward and reflects the approach taken by this coalition Government to business, often by people in government who have had real experience of running a business with all the frustrations and pleasures that this entails. It is particularly pleasing to see that only 19% of British Business Bank’s business has been in London, so more than 80% is in the rest of the UK. It has ambitions to unlock further substantial sums as the new legislation allows. This is, of course, in addition to the £6 billion of growth deals announced by the Government yesterday, which is a separate matter.
I want to emphasise that the British Business Bank is not the only source of finance to businesses arranged by the Government. I particularly recommend to your Lordships the Business Growth Fund, an organisation that is finally coming to fruition and is investing equity finance into British business. I look forward to the British Business Bank reporting that its allocation of close to £3.9 billion has been deployed. I very much hope that all parties, while they may not have supported every aspect of the Chancellor’s successful recovery, will commit in their forthcoming manifestos to support the British Business Bank.
Lord Wrigglesworth (LD)
My Lords, I join in congratulating my noble friend Lady Wheatcroft in introducing this short debate, which provides us with a very useful opportunity to discuss industrial strategy and the role of the British Business Bank and banking more generally. The comments from my noble friend Lord Stoneham set out very clearly, when linked with what my noble friend Lady Wheatcroft said about industrial strategy, exactly what the Government are seeking to achieve. I am somewhat surprised by the comments of the noble Lord, Lord Haskel, because I think that BIS and the Secretary of State have set out a very clear industrial strategy.
We have a lot of history in this. If you go back to Tony Benn, you have the extreme of wanting to nationalise the 40 top companies in the country. You then go through the Industrial Reorganisation Corporation and the National Economic Development Council, picking winners. That is another strategy. I think that the Government have got it absolutely right, as the noble Baroness said. They are facilitating the success of the banking sector and the other sectors and activities pointed out by my noble friend Lord Stoneham.
I wanted to intervene in this debate because I have had experience in two banks. One of them was a state bank, established by Tony Benn when he was Secretary of State for Trade and Industry, called the National Girobank. I worked in the City for that bank for a number of years. The intention was to give everybody in the country a bank account, so that everybody could transfer money from one account to another by the new electronic means that was just becoming available. It all sounded absolutely wonderful; but of course it paid no attention to what was going on in the market. The bank ended up being privatised and sold off to the Alliance Building Society. It is still doing a useful little job there, but nothing like the major ambitions of Tony Benn in that time.
Because of my experience I want to bring some reservations to this debate about government policy at the moment—although I heartily endorse all that the Government are seeking to achieve. There is a great risk that expectations are raised too high about what can be achieved in creating competition in the banking sector. I was delighted to read—as the noble Lord also pointed out—in the Financial Times today that there is potential for another 30 banks. I hope that there are going to be 30 new banks; but I shall believe it when I see it. It also reported that five new banks had been given a certificate. I tried to start a bank in the north-east some years ago and know what it was like to try to get a licence to operate. There are five new banks—two of them Nigerian, two of them Indian and one British. The British one, Paragon, began life financing buy-to-let flats and houses in the boom before 2007-08.
We are therefore a long way from seeing the competition appearing that I think everybody would like to see. We hear a lot about challenger banks appearing on the scene. Nobody can disagree with it, but the greatest force in banking, from my experience, is inertia. People do not change their bank accounts. We need more competition in order to encourage them to do so; but to get carried away and think that in the term of one Government we can completely change the structure of the banking system in the country is pie in the sky. This is a very good start. It is very well worth doing and should be supported, but it is important that we do not get carried away and think that it can achieve everything in five minutes.
Similarly, on the regulatory side, there is a great danger that people think more can be achieved than actually can be achieved. In a previous incarnation I went to the United States to look at banking regulation there, which has always been rather more rigorous than it is here. I visited the comptroller of the currency; I remember meeting Paul Volcker; I met the chairmen of the Senate committee on banking and the House Committee on Financial Services, and a whole host of other people. The one message I got from it was that, no matter how much regulation we introduce, we will still get problems in the banking sector. I am slightly concerned that while we are spending our time discussing deregulation Bills and everybody is calling for deregulation in every other sector, if we are not very careful, in the stampede to regulate our banks we are going to kill the goose that has laid the golden egg in recent years.
That is not to say that things have not to be done; but there are over a million paragraphs of regulation in the FSA rulebook. When the Bank of England was given statutory responsibility over bank supervision in 1979, fewer than 80 people were engaged in the supervision of financial firms. Since then the number of UK financial supervisors has increased to around 1,200. In 1980 there was one UK regulator for every 11,000 people employed in the UK financial sector. By 2011, there was one regulator for every 300 people employed in finance. Those numbers do not even include compliance people in the private sector, the number of which has exploded since the crisis.
In 1974 returns could have around 150 entries. Today, UK banks are required to fill in more than 7,500 separate cells of data—a fiftyfold increase. Forthcoming legislation could see that rise to between 30,000 to 50,000 data cells spread across 60 different regulatory forms. We are in danger of killing the goose that laid the golden egg. While we are rightly concerned to control the banking sector, we need to realise that there is a limit to what should be done and what can be done.
The British Business Bank is getting off to a really good start. As my noble friend said, it is not really a bank; if anything, it is a wholesale bank. It is supporting or partnering other institutions. I think that that is the right way ahead; as a result, it is getting quickly to a very substantial number of small firms. The truth is that 80% of the lending to firms in this country is coming from the big institutions. Clearly, that is not a desirable situation so we want to see this institution succeeding.
I am slightly concerned, in reading the bank’s documents, that it says that:
“Unlike most banks, our impact is not measured in terms of profits generated but rather by the benefit of increased economic activity it creates”.
That is all very fine. I hope that the bank achieves the rates of return to which my noble friend referred because I do not want to see this institution crowding out other banks and other financial institutions seeking to operate on proper rates of return. Therefore the rates of return that it achieves are terribly important. I am pleased to see the objectives in there and the monitoring of them that the institution is proposing.
The British Business Bank deserves support. It is targeted in the right way through a whole host of institutions and it clearly has made a very good start in helping firms in the small and medium-sized enterprise sector which so clearly need the support that the bank is giving.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the noble Baroness for securing this debate. I very much enjoyed listening to her comments. She is someone to whom the House always listens carefully because she knows a lot about the subjects she discusses. I am sure the Minister will reflect on her comments as he prepares to respond to the debate.
However, like my noble friend Lord Haskel, I found the noble Baroness’s somewhat unrelenting optimism about what she called the industrial strategy a little hard to take. I liked it better when she talked about some of the problems that still remain to be solved, including rebalancing the economy and trying to get more of a regional spread. That, I felt, was the more authentic voice which I have come to enjoy listening to. However, we look forward to what the Minister will say in response to the important points that she made.
I was very struck by what the noble Baroness said about the content of the industrial policy in the sense that she made play, I think, of 11 sectors. It was an interesting little number that I initially fell for, but I do not think that 11 is a particularly magic number. I am not an expert on the magic of Hogwarts, or anything like that, but I do not think that 11 features in that. Why 11? I think it is 11 because it is not 12. It is not 12 because, if you read the document produced by BIS last year, from which that is taken, you will see that it covers the 11 sectors which the noble Baroness listed, which are important and are being picked as winners. That may or may not please some noble Lords. The 12th and most important of these is, of course, the creative industries, but they do not appear in the document because they are not covered by BIS. That seems to me to suggest a fractured approach, meaning that the Government are not joined up about this. There is a danger that the sectors which BIS selects and supports are the ones that it provides for. As the noble Baroness pointed out, that would be rather ridiculous. Therefore, those 11 sectors but not the creative industries may well be in a beneficial place as regards the British Business Bank, export support or UKTI. That would be a terrible shame. I hope that is something the Government have picked up and are working on.
The 2008-09 crash exposed long-standing structural problems in our economy: an economy unbalanced by sector and region; short-termism in our corporate culture leading to low levels of business investment and low productivity; a dysfunctional finance system; and a stubborn and increasing trade deficit. Although some growth has finally arrived, which we certainly welcome, it is not the balanced and sustainable growth that we need. Prices are still rising faster than wages and the continuing cost of living crisis for many means that individuals are, on average, £1,600 a year worse off compared with 2010, so “business as usual” is certainly not good enough. To set the foundations for future success, we need to take a different approach.
Labour has a long-term plan to earn and grow our way to higher living standards. Our goal is a high-productivity, high-skilled, innovation-led economy. To get there, we need more British-based businesses creating good jobs, investing, innovating and exporting. If elected in May 2015, we will deliver an economy creating good jobs and opportunities, offering people a ladder up and the best chance to make the most of their potential. We will take action on immediate pressures that businesses face and cut business rates. We will reform the energy market and boost competition in the banking sector. To lay the foundations for long-term success, Labour’s plans already include: radically reforming vocational education and apprenticeships; creating a proper, independent British investment bank and a network of regional banks with a responsibility to boost lending in their areas; supporting green growth by backing the 2030 decarbonisation target; and establishing a small business administration to champion small businesses at the heart of government. Some of these points were raised by the noble Lord, Lord Stoneham. When we come to power, I hope that we can count on his support for these measures. I think that he wants to see an all-party approach to ensuring that our economy is sustainably supported over the long term.
What is the problem that the British Business Bank is trying to solve? I agree with the noble Lord, Lord Leigh, who said that in some senses it is a misnomer. I think that point was also picked up by the noble Lord, Lord Wrigglesworth. Indeed, it is more of a wholesale operation. The bank picks up that point in its strategy document and says that it is not a bank in the conventional sense. We understand that. According to the business bank’s new strategic plan, which was published only last month, its goal is to,
“change the structure of finance markets for smaller businesses, so these markets work more effectively and dynamically”.
Any scheme that helps small businesses to access finance is clearly welcome but the record of the Government in getting the clearing banks to lend to small businesses is one of complete failure. This, presumably, is a statement endorsed by the Government confirming what we have been saying to the Government for some time: every scheme, from Project Merlin—remember that one?—to Funding for Lending, has completely failed to deliver to the small and medium-sized businesses.
Indeed, as was quoted by the noble Baroness in her opening remarks, according to the Bank of England's most recent Money and Credit statistical release, net lending to SMEs has fallen by £1 billion in the last quarter and is down by £2.2 billion overall compared to last year.
We have a bit of a problem here and it is very interesting to read in the strategic plan of the business bank what it thinks about it. For example it says very early on in its strategic aims:
“We will increase the supply of finance available to smaller businesses where markets don’t work well”.
If we unpick that, this means there is a problem in that the present system is not supplying finance to where it is needed. Markets are not working well and the supply of finance is therefore reduced. The strategic plan also says:
“We will create a more diverse and vibrant finance market for smaller businesses, with a greater choice of options and providers”.
Again, if we duck behind the language, that means that the existing system does not provide the funding, the existing banks are not worth working with and they need to come up with something that will make more of a difference in terms of the flow of funds to those who can use them. I think we would agree with that.
The plan also says:
“We will build confidence in the market by increasing smaller businesses’ understanding of the options available to them”.
That is an interesting point; if you go behind the language, it suggests that the bank is saying that the people who start businesses—the people who are in charge of the small business sector—are untrained in trying to raise finance, probably not very good managers at that either, and do not understand what they need to do in order to get the finance, so they will have to embark on education in order to get to the point where they can even complete all the forms that the noble Lord, Lord Leigh, was saying are very difficult. I enjoyed his riff about the trouble of getting through the website. He mentioned that in an earlier speech to which I was responding. I followed him through it and I had even more trouble than he had in getting to anything. I am glad to say that the British Growth Fund, which he also mentioned, has a much simpler website where you can get to very easy options straightaway. I understand why he recommends that.
I have had a bit of fun with the wording of the strategy document, but I do not think the Minister necessarily needs to go through it. Unless he says anything to the contrary, I will take it to be a validation of what we have been saying. There is a problem and the banks are not solving it. We also have a bigger problem in that people do not really understand what they need to do to get the funding they want.
This section that I have been quoting ends with the proposition:
“We will achieve this whilst managing taxpayer resources efficiently and within a robust risk … framework”.
The noble Baroness, Lady Wheatcroft, was on to that as well. I understand where she was coming from. I too had great difficulties with this section of the report—I do worry about it. Having said that, I want to get the compliments out of the way first. The strategic plan is really good. It is a very good read—and I mean that as a compliment. It gives some interesting figures and background to the context which I have not seen brought together before. For example, there is a little table that shows very clearly that 53% of businesses with up to 50 employees who have applied for a loan from the clearing banks were declined. This is slightly bigger than the figure that the noble Lord, Lord Wrigglesworth, mentioned. It really is a disaster—if nearly 50% of the businesses cannot get the money, there is a problem.
I also liked the direct funding programme that they have in the strategy. The Aspire programme which is up to £1 million for women-led SMEs seems to be a very good proposition. That is an area of the market that has not been looked at in any detail, and I pay tribute to the British Business Bank for picking up the opportunities that are there for women-led SMEs.
I also like the enterprise finance guarantee, which uses the financial strength that is available in the bank to help those who need guarantees to get lending, because they may not have collateral or assets that they can pledge in return for their money.
I also think that there is still a huge opportunity for start-up loans, which used to come from the banks and of course have dried up completely. Throughout the report, which I recommend to noble Lords, the case studies are very interesting about what is happening on the ground and the way in which the bank is operating.
I am, however, concerned about the way the bank operates for the majority of its interventions. In the Written Ministerial Statement, which accompanied the lodging of the strategy in the House of Commons, the Secretary of State draws attention to the fact that 61% of the bank’s activity is channelled through smaller investors and lenders, with only 39% going through the big four banks. He continues:
“Over the coming years, I expect that this bias away from the big banks will continue”.—[Official Report, Commons, 26/6/14; col. 21WS]
I have already explained that I smell where that is coming from. But that 61% going up and being channelled in a wholesale manner through other institutions is interesting and, like the noble Baroness, I worry about that.
My worry is slightly different in practice because examples of what are called “innovative investments” over the past year have included: £7.8 million to the Dawn Capital II venture capital fund; £25 million to the Episode 1 venture capital fund; £30 million committed to the Praesidian Capital Europe debt fund; £15 million to BMS Finance; £40 million invested through Funding Circle, which is a good thing, and £20 million in the Sussex Place Ventures capital fund. These are somewhat opaque titles and giving money to venture capital funds and hedge funds, which already seem to be quite good at gathering cash to reinvest, seems an odd way to supply support. Perhaps the Minister might reflect on that when he comes to respond. For instance, why are those companies not doing their own funding alongside existing sources, including the British Growth Fund?
This will of course raise issues of propriety. I draw the Minister’s attention to a recent report in the Independent on Sunday. It said:
“Millions of pounds of taxpayers’ money is being spent on a venture capital fund overseen by one of the Conservative Party’s biggest donors … The British Business Bank, which is run by the Department for Business, has committed £7.8m to the Dawn Capital II investment fund … Dawn Capital II’s parent company is Dawn Capital, whose chairman is Adrian Beecroft”.
Does the noble Lord wish to intervene?
Lord Newby (LD)
I was seeking to draw the noble Lord’s attention to the time.
Lord Stevenson of Balmacara
I am sorry; I got carried away and I have overrun. I will not go on, as I think the point is made, but the report asks whether there is a problem about a company drawing money from the state and giving money to an individual who is a well known supporter of the Conservative Party. I would be grateful if the Minister could respond to that.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
My Lords, I am extremely grateful to my noble friend Lady Wheatcroft for initiating this important debate. I pay tribute to her for her contribution to the business bank steering group.
Changes in international economies are creating new challenges and opportunities for business across Britain. Last week, in a debate in this House, I talked about what we are doing to support manufacturing in the UK, which was mentioned earlier. This debate allows me to go in to more detail on the Government’s industrial strategy and how the British Business Bank is providing access to finance for smaller businesses to help them grow and prosper. I fear that I will not be able fully to address the questions raised by the noble Lords, Lord Haskel and Lord Stevenson, because there were some particularly negative opinions given. As my noble friend Lord Stoneham said, I believe that the industrial strategy is clear and I seek to try to explain that today.
Your Lordships will be aware that the industrial strategy, launched by Vince Cable in 2012, has given impetus and focus to this Government’s long-term plan for growth. I am pleased to hear that there was much agreement today on that. It provides businesses, investors and the public with more clarity about the long-term direction of the economy, looking beyond this Parliament. The Government are working in partnership with industry to provide support across a wide range of sectors. They are broad sectors rather than picking winners, as my noble friend Lady Wheatcroft said.
The noble Lord, Lord Haskel, asked what the purpose of the industrial strategy is. The industrial strategy is providing a spectrum of support for a range of sectors and this partnership with industry is giving both government and industry confidence in the future direction of the economy and confidence to set policy to address the needs of business, and for business to invest in long-term growth. But it is more than that. The industrial strategy is about economic growth and providing benefit for us all.
The noble Lord, Lord Stevenson, asked about the creative industries not being one of the industrial strategy sectors. The Government are providing a spectrum of support for a wide number of sectors, over and above the 11 listed in the industrial strategy, and BIS is working closely with DCMS on the creative industries strategy. Nicola Mendelsohn, the industry chair of the creative sector, sits on the industrial strategy council, which is a sign of the breadth of engagement outside the 11 sectors.
The UK also has great strengths in the life sciences field—a sector I want to focus on—where, among other successes, and as evidenced in the news today, we are world leaders in ground-breaking dementia research. Last week, we launched “Create UK” in support of the creative industries, which are worth £71.4 billion to the UK economy, a sector that I know well in my role as the Minister for Intellectual Property.
My noble friend Lady Wheatcroft asked how we would address regional imbalances in terms of investments and funding. Only yesterday we launched the growth deals for the 39 local enterprise partnerships further to support local growth throughout the country through £6 billion of funding for transport, housing, business support and skills projects in the regions. These growth deals are the latest part of the Government’s long-term plan to boost growth around the country, following, among other projects, the multi-billion pound regional growth fund, and the city deals signed with 26 urban areas across the country.
My noble friend Lady Wheatcroft raised the issue of ensuring that the impact of the industrial sector is felt across the UK. As the House will be only too well aware, my noble friend Lord Young of Graffham is working hard with the sectors to increase their help for small and medium-sized enterprises, and in the professional and business services sector, which I co-chair, we run regular regional workshops for SMEs. Members of the council, including my co-chair, attend these and offer advice.
I will be focusing primarily on access to finance but there are some cross-cutting themes that underpin our support for all sectors. As I mentioned last week, we have invested £600 million in the “eight great technologies”. These are the technologies where we have the research expertise and business capabilities to be a world leader. They are supported by the Technology Strategy Board and include robotics, big data and energy storage. We are helping to bridge the gap between research and development and the market through £74 million of investment in nine catapult centres, which are complementary to our industrial strategy.
On the important subject of skills, which was raised by my noble friends Lady Wheatcroft and Lord Stoneham, we need to address the current and future shortages. We need to strengthen our science, technology, engineering and maths skills base by building a skills pipeline at all levels from technicians through to postgraduates. To do this, we are, first, investing £185 million in the teaching of STEM subjects; secondly, offering traineeships to young people; thirdly, we are building and delivering a network of new national colleges to provide specialist vocational training; and finally, as the House will know, we have set up university technical colleges.
As my noble friend Lord Stoneham highlighted, we are unlocking procurement opportunities, advising businesses in advance what the Government are planning to purchase so that they can invest in the right skills and equipment to make the most of these opportunities. Through UKTI we are helping our companies to export. In April 2014, UK organisations won four new contracts worth £1 billion to establish 12 technical and vocational training colleges in Saudi Arabia. Key events such as the International Festival for Business in Liverpool, which I attended two weeks ago, help us to showcase our companies and technologies on the world stage. The festival is creating new business-to-business relationships, and unlocking commercial openings for small, medium and large companies, both at home and overseas.
I now turn to the important point of access to finance. Well-functioning markets for finance are crucial for ensuring that firms can invest and operate when they need to, producing new and improved goods and services, and in turn boosting the UK’s productivity and competitiveness. We do understand that there are some well-documented long-standing supply and demand issues, which mean that smaller firms cannot always access the finance that they require. My noble friend Lady Wheatcroft alluded to this. We have been addressing these issues, and hence the reason that this Government have established the British Business Bank.
The business bank is providing funding and guarantees through private sector finance providers, allowing them to offer more targeted and appropriate finance products for smaller firms so that they can prosper and grow. My noble friend Lady Wheatcroft raised issues about using securitisation techniques as part of the modus operandi of the business bank. I agree with my noble friend that the business bank should operate for the good of the economy. It will not operate for its own benefit. It is already staffed by skilled professionals who know how the markets work. But it will operate within the rules set by BIS and the Treasury, and with a sensible risk appetite.
Over the next five years, the bank aims to unlock up to £10 billion of financing for commercially viable smaller businesses. A range of British Business Bank programmes is already making a real and significant difference, catering for the diverse needs of smaller firms, such as start-up loans, which support entrepreneurs looking to start a business with a repayable loan of up to £25,000, and give access to a business mentor. I am delighted to report that more than 18,500 of those loans have now been offered to entrepreneurs, with more than £92 million approved to finance start-up businesses.
The British Business Bank also provides guarantees through the enterprise finance guarantee scheme to support loans to firms that would otherwise be declined funding due to a lack of collateral for working capital purposes. This programme has proved a considerable success, providing nearly 15,500 loans since the election and resulting in more than £1.6 billion of additional lending to smaller businesses.
The bank also provides a suite of venture capital interventions, including enterprise capital funds, which support and promote a diverse and vibrant market to help early-stage and high-growth firms. The enterprise capital fund programme currently has 16 separate funds, nine of which are investing in early-stage opportunities, with a combined capacity of more than £530 million.
As my noble friend Lord Leigh mentioned, a £300 million investment programme has been developed to provide support for a range of finance providers, including debt funds and peer-to-peer finance platforms. To date, £198 million of awards have been recommended by the investment panel, which will support more than £800 million of lending capacity.
The British Business Bank will also provide information and advice to smaller businesses about how to successfully go about getting the right type of finance. One example of this is the recently published Business Finance Guide, produced in association with the Institute of Chartered Accountants in England and Wales.
We believe that the investments made by British Business Bank programmes are already delivering significant results. In total, British Business Bank programmes facilitated £782 million of new lending and investment in the last financial year. Over 60% of this funding was provided through new, emerging or smaller finance providers.
My noble friend Lord Wrigglesworth mentioned the need to balance good regulation in banking with promoting sensible risk-taking. Banking regulation has tightened greatly. This Government have led global efforts to increase capital and liquidity requirements but we are also aware of the need to promote competition. This is why rules for small and new entrants are not as strict and the process for new banking licences has been streamlined. We see the results in new banks coming into the market.
My noble friend Lord Stoneham asked about success measures for the British Business Bank. Last week we published our success measures in the bank’s strategic plan, which are: increasing the amount of finance for small firms; increasing choice; increasing small firms’ confidence in finance markets; and finally, doing all this while managing taxpayers’ resources efficiently. These will be turned into detailed KPIs over the next few months and this will be monitored by the British Business Bank’s board, which itself will report to BIS Ministers.
My noble friend Lord Leigh asked to see greater transparency on the British Business Bank’s results. I assure my noble friend that all results will be published and fully transparent.
The noble Lord, Lord Haskel, if I read him correctly, asked how much of the British Business Bank’s activity is effected on its own account. All the bank’s lending and investment is exercised alongside private sector providers. So, of the £782 million of lending and investment last year, around one-quarter is public sector money and the rest is new money from the private sector.
To conclude, the British Business Bank is integral to the UK’s long-term industrial strategy and is playing a vital role in removing the barriers to businesses accessing finance. This Government’s commitment to a long-term industrial strategy has already proven a success in supporting growth and turning our economy around, and its impact will continue to be felt long after this Parliament. It is essential that we continue to work in partnership with industry to address barriers to growth, both to unlock the potential of British business and to deliver strong and sustainable growth.
Baroness Wheatcroft
My Lords, I thank the Minister for his comprehensive response, and I take comfort from the fact that he reassured us that the business bank will work within strict limits as to the risk it takes. I take rather less comfort from his reassurance—
Lord Newby (LD)
My Lords, I am sorry to interrupt the noble Baroness, but I should perhaps remind her that in this type of debate she does not have the right of reply.