Grand Committee
Local Audit (Delegation of Functions) and Statutory Audit (Delegation of Functions) Order 2014
Baroness Williams of Trafford
That the Grand Committee do consider the Local Audit (Delegation of Functions) and Statutory Audit (Delegation of Functions) Order 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
Baroness Williams of Trafford (Con)
My Lords, this order is one of a number of statutory instruments that will put in place new arrangements for the audit of relevant authorities as set out in the Local Audit and Accountability Act 2014. I do not wish to take up your Lordships’ valuable time by repeating in this debate the arguments that were put forward during the passage of the 2014 Act supporting the abolition of the Audit Commission. However, it remains the view of the Government that the arrangements that we are putting in place, including this order, will create a more efficient audit system, giving greater responsibility to local bodies whilst providing greater opportunities for local people to hold those bodies to account. They will also save £730 million over the five years between 2012 and 2017 and an estimated £1.2 billion over 10 years.
On the specifics of the instrument being considered here today, the order delegates certain of the Secretary of State’s powers in relation to the eligibility and regulation of local auditors to the Financial Reporting Council, which is the independent regulator responsible for the oversight and development of corporate governance standards. Let me provide a little context on its background. The Financial Reporting Council is a company limited by guarantee that is partly funded by the Government. You might also wish to know that its board of directors is appointed by the Secretary of State for Business, Innovation and Skills, and it already carries out delegated functions, similar to those that I will shortly outline, for statutory—that is, company—audits. The functions that this order delegates to the Financial Reporting Council include: authorising professional accountancy bodies to act as recognised supervisory bodies for local audit; authorising professional accountancy bodies to offer a local audit qualification; undertaking significant public interest disciplinary cases and, where appropriate, imposing a range of sanctions on those auditors found to have committed misconduct; carrying out an additional level of oversight and monitoring of audits of significant local public bodies, defined by regulations as “major local audits”; and reporting to Parliament annually in relation to inspections. The order closely follows the existing delegation order for statutory—that is, company—audit approved by Parliament in 2012 and, in article 10, makes a small amendment to that order to ensure that the same minimum consultation period applies to Financial Reporting Council consultations whether the consultation relates to company audit or local audit.
How does the order fit into the new audit framework? These arrangements will simplify the rules that currently apply to auditors by removing unnecessary duplication from the system. At present, audit firms have to work under two regulatory systems—one set by the Audit Commission and the other by the Companies Act 2006. The new audit framework largely replicates the Companies Act regulatory regime, with which auditors are already familiar, to cover local audit. That is not to say that we are removing necessary safeguards or compromising the quality of local audit; the work of the auditors will not change. The National Audit Office will set out what auditors should do to fulfil their statutory duties and, as set out in this order, where appropriate the Financial Reporting Council and professional accountancy bodies will monitor the quality of audit, as they already do for the private sector.
Through this order, the Financial Reporting Council will take on the responsibility for authorising professional accountancy bodies to act as recognised supervisory bodies. These bodies will, in turn, have responsibility for deciding which firms are eligible to undertake local public audit and for monitoring compliance with the rules and practices that they have established, and also with auditing standards. The Financial Reporting Council will also have responsibility for the recognition and supervision of audit qualifications that are not recognised by the Companies Act 2006. In approving an additional qualification, the Financial Reporting Council will need to assess whether it meets the minimum requirements as set out in the Local Audit (Professional Qualifications and Major Local Audit) Regulations 2014—SI 2014/1627—which were laid on 27 June and are subject to the negative procedure.
The monitoring of major local audits will be covered by the Financial Reporting Council. The Secretary of State has specified in the regulations that I have just mentioned which relevant authorities will have their audits defined as major local audits. Briefly, the conditions are that an audit of relevant authorities with either total income or total expenditure above £500 million, or an audit of relevant authorities with local government pension funds with assets in excess of £1 billion or more than 20,000 members, will be considered to be a major local audit. The Financial Reporting Council will also, subject to consultation, be able to give a direction to a relevant authority specifying that its audit will be a major audit.
Why do we need this order? Without the order, the Secretary of State would retain oversight of the whole regulatory framework for local auditors, thus continuing an anomalous position and a dual regulatory regime. As I said earlier, the powers being delegated to the Financial Reporting Council here largely mirror those delegated by the Secretary of State for the Department for Business, Innovation and Skills to the Financial Reporting Council for oversight of the regulation of statutory—that is, company—audit.
Before the introduction into Parliament of the measures included in the 2014 Act, we consulted widely both on the broad policy approach and also in more depth on the proposed framework, through the publication of a draft Bill. Noble Lords may also recall that a parliamentary pre-legislative scrutiny committee provided detailed scrutiny of what is now the Act while it was in draft form. During the Bill’s passage through Parliament, we also provided draft regulations on several of its key provisions to the parliamentary Bill Committee, and last autumn we undertook an interactive public consultation exercise. Over 130 replies to the consultation were received in total, of which 62 commented on the regulatory framework, including the main audit firms which currently carry out local audits and which have been engaged throughout this process.
Nearly 80% of the relevant replies were in favour of the approach proposed for the regulatory framework. This reflects the work that we undertook before consulting, in having regard to the existing statutory framework and engaging with key stakeholders through a working group to make sure the proposals reflect their views. It was found that 71% viewed the Local Audit (Professional Qualifications and Major Local Audit) Regulations as providing an appropriate framework to allow a body to develop a suitable qualification for local audit, and 63% agreed that the proposed thresholds were appropriate to capture the audits of significant local bodies.
Following comments made during the consultation about the role of the Financial Reporting Council, we made minor changes to the order being discussed here today. It now includes a requirement that the Financial Reporting Council consults any bodies whose audits it decides should be subject to additional monitoring by being treated as a major local audit, even though it would fall outside the conditions described as defining a major local audit in the regulations I have just mentioned.
I commend the order to the Committee.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for her very full introduction to this order. As has been explained, it puts in place elements of the regulatory framework for the local audit regime. This involves delegating certain of the Secretary of State’s powers to the Financial Reporting Council. As would have been apparent from the debate in another place, we do not oppose this order. As has been said, it is about removing duplication and an attempt to replicate the Companies Act regime for local audit. However, I have one or two questions.
The Audit Commission is to be abolished in 2015. What arrangements are in hand for the management of the audit contracts that were outsourced and are not due to come to an end, I think, until 2017? Has a decision been taken on whether or not they are to be extended? I think there was the option of extending them for a further three years. Paragraph 7.1 of the Explanatory Memorandum makes reference to an “open and competitive market”. Could we therefore have an update on how many different firms are currently undertaking local audit work and how many were eligible to bid under the Audit Commission’s final transfer? Perhaps we could also have an update on the ultimate disposition of those audit contracts—I think some of them were bundled on a regional basis—and how they were transferred, and whether any of those arrangements have had to be unpicked and retendered for one reason or another.
As the noble Baroness explained, the FRC will have responsibility for monitoring “major local audits”. This term has been defined in the recent set of negative regulations, which have been referred to. Can we be told how many major local audits there are expected to be? Reference has been made to the consultation exercise from last autumn and comments received from the LGA about the Financial Reporting Council being involved in local authority audit policy. Would the Minister care to comment on that?
On the Government’s suggested savings, can we be told how much will be saved as a result of the audit arrangements already contracted out by the Audit Commission? I think that was a bone of contention when we debated the Bill.
Subject to the answers to those questions, as I said, we have no difficulty with this order and I am happy to support it.
Baroness Williams of Trafford
I thank the noble Lord for being the only person present for the beginning of the debate, and for the points he has raised.
He asked how many local bodies will be undertaking major local audits. We estimate that there will be around 100 to 150. He also asked whether there would be an extension to the existing audit contracts that are in place, to allow for the transition phase. We have asked the LGA to set up a company which will manage existing audit contracts, running to 2017, so I hope he is satisfied by that. We will make a decision on whether or not to extend those contracts in due course.
I think I have answered both his questions. Was there another one?
Lord McKenzie of Luton
I think there were one or two. There was one about the savings. I think the figure of £730 million was referred to. I was trying to understand how much of that, if any, relates to the work that was already done by the Audit Commission outsourcing its contracts in 2013 and perhaps 2014 as well. I was also interested in getting an update on how those contracts were actually dealt with when the Audit Commission contracted them out. I do not think they were all done in one contract; I think they were done in a series of regional contracts but I do not have in my mind the totality of how that all worked. Have any of those contractual arrangements had to be unpicked? I think the arrangement was that they were contracts between the audit companies and the Audit Commission.
I am certainly grateful for the update about the LGA being the entity that will monitor and manage those outstanding contracts, and that there is not yet a decision on whether or not they will be extended. If the Minister were able to pick up some of those other points, that would be helpful.
Baroness Williams of Trafford
I apologise to the noble Lord. On the £730 million-worth of savings that we have estimated over the next five years and the point that the noble Lord raised about the previous period, we estimate that there were about £200 million-worth of savings. I will write to the noble Lord with an update on who has the contracts and how they are located.
I have a correction. The LGA will set up a separate company, and we are working together for it to do so.
Lord McKenzie of Luton
To be clear, is that separate company going to manage the existing contracts as well as possibly looking to amalgamate or centralise contracted audits in the future, or is it just one of those functions?
Baroness Williams of Trafford
I understand that a transitional body will be in place to run the contracts at this stage. If the noble Lord is not entirely satisfied with those slightly hurried answers, I am happy to write to him.
Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) (No. 2) Regulations 2014
Baroness Williams of Trafford
That the Grand Committee do consider the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) (No. 2) Regulations 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
Baroness Williams of Trafford (Con)
My Lords, these regulations amend the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012. The regulations have been approved in the other place and, if approved by the House, would come into effect at the end of this month. The regulations introduce a new level of fees payable for prior approval applications for permitted development for change of use and associated physical works.
The coalition Government are committed to reducing planning regulation and ensuring that the system for securing planning permission is proportionate to the potential impact of any development. We want to ensure that the best use can be made of existing buildings and that we deliver the homes we need without unnecessary regulation. To support these key aims, we are increasing national permitted development rights so that appropriate development can take place more quickly.
In the Budget document, we set out the three-tier planning system. A full planning application is appropriate for larger-scale developments with the greatest impact on neighbours, the wider community or the environment. Permitted development rights, on the other hand, remove the need for a planning application. They are appropriate for small-scale changes and some strategic development where the impact is less. Permitted development rights with prior approval provide an intermediary role between permitted development and a full planning application. This is a simpler and cheaper process where the principle of the development has been established but certain specific issues still require local consideration.
In April, an order came into force introducing further flexibility for owners to make better use of existing buildings and to help increase housing supply. These new permitted development rights include enabling shops and agricultural buildings to change use to homes. For the first time, they also allow the limited building works necessary to deliver the new homes.
These permitted development rights are subject to prior approval, providing applicants with a less complex and less costly process than a full planning application. Prior approval for change of use normally requires the local planning authority to consider matters such as the impact on transport and highways and contamination and flood risks. By allowing some physical works, as well as the change of use, the local planning authority will also have to consider the proposed design and external appearance of the building. For example, an existing shop front with a large plate glass window is unlikely to be appropriate for a home without some alterations. However, it is important that any resulting frontage is still in keeping with the area. It may be adjacent to other shops, and the local planning authority will have to ensure that the design does not have a detrimental impact on an area.
Prior approval for change of use requires the local planning authority to consider specific issues, and we introduced a fee of £80 last year for these applications. These regulations now provide that a fee of £172 is payable for prior applications where the local planning authority considers not only the specific impact of the change of use but the design and appearance of building works associated with that change of use. This recognises that these applications involve some additional work for the local planning authority compared to a straightforward change of use.
These regulations will apply to the flexibilities introduced in April allowing change of use from shops to homes and from agricultural buildings to homes together with associated building works. The fee of £172 for prior approval is a considerable saving to the applicant. If we had not introduced these permitted development rights, a farmer making a planning application to convert a barn to three new homes would have faced a fee of £1,155, which is calculated as three times the planning application for a dwelling-house. When we consulted on the package of increased flexibilities for change of use last summer, we set out our intention to introduce a £172 fee for prior approval applications where some physical works are also permitted.
It is important that we continue to take steps to simplify the planning system and make the application process proportionate to the impact of development. This modest fee for a prior approval application for both change of use and some building works is a saving for developers trying to make better use of their existing buildings and will help planning authorities in meeting the costs of these applications.
I commend the regulations to the Committee.
Lord McKenzie of Luton (Lab)
My Lords, I again thank the Minister for explaining the regulations. As we have heard, they are focused on the very narrow point of the level of fee applicable to permitted development rights for change of use where prior approval is necessary and where limited building works are associated with the change of use. The fee is to be £172.
The Minister will be aware from the debate in another place on these regulations that we are not in agreement with the underlying policy involving this particular use of permitted development rights. As my honourable friend the shadow Planning Minister Roberta Blackman-Woods put it,
“we are not against allowing change of use, but we believe that it is best achieved through adherence to local plans”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 8/7/14; col. 5]
The Government’s Greater Flexibilities for Change of Use consultation proposed five different circumstances but, as I understand it, only two are the subject of this order. The fee levels apply where the change of use can involve some building work: one is where the change of use is from shops or financial and professional services buildings to a dwelling-house, and connected building work is involved; the other is when existing buildings currently used for agricultural purposes are to be used as a dwelling-house, and building work connected with the change of use is involved. In each case, certain building work is permitted. Can the Minister say something about the parameters under which that is considered? When is it connected to the relevant provision and when does it go beyond that? There are obviously plenty of opportunities for abuse of these provisions. I would like to understand how that matter is to be approached. In the case of change of use of shops, it appears that prior approval will be required to cover design, transport and risks of flooding, as the Minister explained. For agricultural buildings, prior approval will focus on siting and design. As I understand it, the prior approval is not necessarily looking at the same thing in each case. It has to look at specific things. That, presumably, is tucked away somewhere in regulations. I hope that the Minister will enlighten me on that.
One of the other flexibilities not covered by this fee proposal relates to the change in building use from buildings for agricultural purposes to new state-funded schools. How many times has this flexibility been used to date? Has it been used to facilitate free schools? I reiterate that we have difficulties with the underlying policy but, subject to the points I have made, we will not oppose these regulations.
Baroness Williams of Trafford
I again thank the noble Lord for taking part in this two-way debate. Our objective is basically to simplify the planning process, thereby making it easier and cheaper for developers who want to carry out small-scale works with a limited impact.
I was asked about the scope of a development. I understand it to be within the permitted development rights of the said dwelling. If it is anything other than that, I will let the noble Lord know. I hope I have responded to the point that he made but I take it to be within permitted development rights, which will, of course, be different for each dwelling.
Permitted development with prior approval provides developers with a less complex and less costly process than a full planning application. These regulations support that approach. As regards what building works would be allowed under this provision and what would not, work which is required to deliver a new use would be allowed and, I think, probably nothing beyond that. Therefore, in the case of a shop front, a smaller window as opposed to a large frontage would be allowed. If it was a barn, I am guessing that a suitable front door might be allowed but nothing beyond what would be required to change from the old use to the new use of dwelling. I think that addresses the point about not going beyond the original intention of the regulations.
I will have to write to the noble Lord about the point he made on schools. I have some experience of this issue in terms of free schools. I know that if local authorities have land or existing schools available, negotiations can be entered into but, as schools are not dwellings, I will have to write to him on that. Does that address the issue?
Lord McKenzie of Luton
I am grateful to the noble Baroness. Her response touched on the key points. As regards the point about whether the provision is connected with the building works, change of use from, say, an office to a dwelling is one thing, but I guess that what would be permitted to facilitate the change of use of agricultural buildings could be more contentious. Did the noble Baroness say that these provisions were set down in detail in the regulations or in the permitted development rights themselves?
Baroness Williams of Trafford
I understand that it is within the permitted development rights of those buildings, whatever those permitted development rights are. If that is not the case, I will write to the noble Lord. However, I will let him know whether or not the provisions are set down in the regulations.
Lord McKenzie of Luton
I am grateful. Perhaps the noble Baroness can write to me on the issue of schools. I was prompted to inquire because the terminology now used is “new state funded schools”. I have a feeling that we had a bit of run around this because we originally saw a specific reference to free schools, so I was interested in finding out what the current situation was on that. I have, however, no further queries and I am grateful for the response.
Baroness Williams of Trafford
I should clarify this because there is something in the recesses of my mind. Where local authorities have suitable buildings, and free schools are being set up, they should try to assist in making those public buildings available, but I will clarify that in a note.
Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014
Baroness Williams of Trafford
That the Grand Committee do consider the Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014.
Relevant document: 4th Report from the Joint Committee on Statutory Instruments
Baroness Williams of Trafford (Con)
My Lords, the private rented sector now represents the second most common form of tenure in England, providing for 4 million households. We believe that there are more than 3 million residential leasehold properties in England. I declare at this point that I am both a leaseholder and a landlord.
Approximately one-third of letting agents and a minority of property managers are not members of a redress scheme. This means that people using these services do not have ready access to an independent complaints procedure if they receive poor service from their agent. The majority of letting agents and property managers provide a good service. However, for people living in or owning property in the private rented and leasehold sectors, who rely on these agents, the inability to seek redress can have a significantly detrimental impact on their quality of life.
The Enterprise and Regulatory Reform Act 2013 gave the Secretary of State the power to require all residential letting agents and property managers in England to be members of a government-approved redress scheme. The first order, laid before this House on 25 October 2013, gave the Secretary of State the power to approve redress schemes and to set out requirements for them. As stated when that order was debated in November, a second order was to be made, making the requirement mandatory, once the Secretary of State was satisfied that all agents were able to join a redress scheme. The Secretary of State is satisfied that we have now reached that stage and we propose that the duty to belong to an approved redress scheme will come into force on 1 October this year.
In April 2014, the Secretary of State approved three schemes: the Property Ombudsman, the Ombudsman Services Property and the Property Redress Scheme. These three schemes provide an independent, transparent and competitive source of redress for landlords, leaseholders and tenants. Furthermore, the performance of these redress schemes will be monitored, ensuring that a high level of service and standards is maintained.
The redress schemes will have a range of options to tackle poor service by letting agencies. They will be able to require apologies, explanations, compensation, making good and even expulsion from the scheme. To ensure that all letting agents join a scheme, councils will be able to fine agents more than once for failing to join one. Yet the order is fair, in that should an agent or property manager feel that the fine is wrong or unreasonable, they will be able to appeal to the First-tier Tribunal.
We recognise that enforcing the requirement for membership of a redress scheme will entail a new burden for local authorities, so we will make additional funding available. Furthermore, councils will be able to retain the fine, enabling the proceeds from tackling cowboy agents to be used to tackle yet more rogue agents, where they exist, thus continually driving up standards in the industry. Councils will also be assisted by the redress schemes working together and with trading standards, minimising the capacity for rogue letting agents and property managers to hide.
The definition of what constitutes letting agent and property management work is very broad. We have therefore provided some exemptions where there is already a suitable mechanism for customers to seek redress or there is existing regulation. For example, universities helping to find student accommodation or operating halls of residence, legal professionals, managers of refuge homes and mortgage receivers are all engaged in work that could be covered by this order but are subject to existing regulation.
The order will bring a source of redress to the individuals who use around 3,000 letting agents and property managers. It will complement and strengthen existing provision in both the leasehold and private rented sectors. It will also complement the requirement that we are introducing through the Consumer Rights Bill for letting agents to publicise their fees both in their offices and on their website. This will encourage competitive fees, deterring agents from charging tenants and landlords for the same service.
Overall, we want to raise standards for landlords, tenants and leaseholders. Mandatory redress and transparent fees will go a long way to achieving this. I commend the order to the Committee.
Baroness Hayter of Kentish Town (Lab)
My Lords, I welcome the noble Baroness, as I think that this is the first time that we have done this. For me, this is a great delight because, as I am sure that she will not need reminding, it implements the amendment that I managed to secure, against the Government’s wishes, in the House. Needless to say, therefore, I warmly welcome the order. However, I want to make some comments and pose some questions to the Minister. I understand that my questions landed her on desk a little late and that some of the answers may have to be by letter.
First, the scheme will work only if all landlords and tenants become aware of their right to take any unresolved complaints against letting or property management agents to an ombudsman. What plans are there to raise such awareness? Will these include requiring every agent to publicise the relevant ombudsperson on their headed notepaper, website or whatever?
Secondly, in other retail areas, the consumer can shop around between providers, so normally transparency of fees is of great assistance. However, this of course is a different industry, where that does not apply to tenants, 60% of whom find their home via an agent. The tenant can choose only between properties; they do not select the agent. It is the landlord who selects the agent. What plans do the Government have to encourage landlords to shop around and thus drive up standards? Tenants simply cannot do that.
It is obviously too much to expect that the redress scheme itself will raise standards. It will certainly not be able to do it unless local authorities enforce the awards—although we are delighted with the incentive that the Government have made available, which I think local authorities will grab with both hands. In addition, standards will not rise unless there is some sort of feedback loop to ensure that bad practice is stamped out rather than continually requiring the consumer to suffer and then make individual complaints.
The Government may well say that they will oversee the redress schemes to make sure that they are effective, but I am more interested in how we oversee the sector to see that the lessons from those redress systems are brought together. Somebody should have responsibility for seeing what the common problems being complained about are and driving up standards in that way. It is, as we know, an industry infamous for instances of bad practice. According to Shelter, one in four people have been charged unfair fees. Reference checks can cost as little £10, which is very nice, but as much as £275, while renewal fees can cost up to £200. This is in a sector of 9 million tenants, where rents have increased by twice as much as wages since 2010. These unfair charges are hitting a group already suffering from high rents.
The Minister touched upon cases of agents double-charging; that is, charging both landlord and tenant for the same service. I am less relaxed than the Minister that simply putting up the list of charges will deter that. There is, furthermore, probably an interesting legal question as to whether tenants become clients if they pay an agent for a service. Can the Minister tell the Committee whether a payment for such a service makes the tenant a consumer under the Consumer Rights Bill? Would they therefore have the same consumer rights over those services, especially the right to have such a service provided with “reasonable care and skill”, as set out in that Bill?
It is clear that redress systems themselves cannot, of course, enforce their awards. If a letting or managing agent does not implement an adjudication, all the redress scheme can do is de-list the agency. The two existing schemes have an agreement that they would not take on an agency which has been debarred by the other, which is a pretty essential requirement to aid enforcement. Can the Minister tell the Committee whether the new, third scheme will undertake not to take on an agent that has been debarred from one of the existing schemes for not abiding by an adjudication? Without that, there will be no enforcement—unless the Government have something else up their sleeve they have not yet told us about. Can the Minister also tell us whether the new, third scheme will operate to an existing code, which the other two obviously already work to? What thought has been given to consistency of outcomes, which the two existing schemes strive to achieve?
On the selection of redress schemes, outlined by the Minister in her introduction, could she explain why, for the very first time in the development of statutory requirements to belong to an ombudsman, a profit-making body has been approved? All the others, across housing, energy, health, local government, telecoms, and legal and financial services, are either statutory bodies or not for profit. Why do the Government consider that this area of public policy should reside in the hands of someone out to make a profit? Why, anyway, did the Government want to add a third—a new, non-existent body—to two established, recognised and respected schemes? Is helping to set up a new ombudsman not at variance with Cabinet Office guidance that the Government should not set up a new ombudsman where there is already a satisfactory one in the relevant market? It would be interesting to know what risk assessment has been done of a “flight to the bottom”—in other words, making it as cheap as possible for landlords, when the majority of complaints will come from tenants—if there is a plethora of ombudsmen, with fairly obvious consequences for the quality of adjudications.
I understand that the new scheme is seeking to charge landlords considerably less than the established schemes, but does such competition on price—to be paid by the landlord, who will not be making the complaints on the whole—not risk compromising the quality of service provided to tenants? Will it not be confusing for consumers, tenants and landlords, to have to try and find out which is the appropriate ombudsman for their particular letting agent? Elsewhere, there is a move to rationalise and even reduce the number of schemes to make it easier for consumers, as we have seen from the report by the Select Committee in the other place. At the very least, should we not be working towards a common portal to help complainants rather than setting up ever more ombudsmen?
Baroness Williams of Trafford
My Lords, I thank the noble Baroness for her input on this debate, and I congratulate her on the part she has played in this area. I will go straight to the various questions which the noble Baroness raised. The first question was about raising awareness and agents publicising their fees. We expect scheme membership to be publicised by members, and all three schemes will publish a list of members. We expect the schemes to work with their members to publicise which scheme they have joined. This should be displayed on an agent’s letterhead and perhaps on a sticker in their windows, on their website and so on. As for what happens when an agent fails to display their membership details, all three schemes will publish a list of their members, which will enable the general public to search those lists. Alternatively, someone could contact their local authority, which will be obliged to investigate.
The noble Baroness asked what will prevent an agent being kicked off one scheme and then joining another without the public knowing. All three approved redress schemes have agreed to work together. They have the power to share information with the appropriate regulatory bodies and with each other to ensure that rogue agents do not play one scheme off against another. Should one of the schemes expel an agent, it must set the conditions for readmittance of that agent and tell the other schemes. An agent must then meet those conditions before they can join any of the schemes. Given that the majority of letting agents provide a good service, with only one-fifth of tenants and 17% of landlords dissatisfied with the service according to a Which? report of November 2012, this will only apply to a few exceptional agents.
The noble Baroness also asked whether tenants would qualify as consumers under the Consumer Rights Bill. I will write to her about that. She also asked whether the third scheme was working with the existing schemes and whether it will use the existing code. The answer to that is, simply, yes. The noble Baroness asked what the reason was for the third scheme. The DCLG will monitor the performance of the schemes through key performance indicators and will undertake a review of the policy in around a year, after the regulations come into force, to ensure its objectives are being met. The schemes were selected as they all met the conditions for approval, including demonstrating that they are independent, fair, effective, transparent and accountable. The first two are existing schemes, as the noble Baroness pointed out, which between them already have 60% of the total 11,560 agencies as members. The PRS is a new provider but is very much open for business.
The noble Baroness also asked whether approving a scheme which is run by the same company as one of the tenancy deposit schemes will create a conflict of interest. The PRS met all the conditions for approval, including that it should be independent. It indicated in its bid that it will apply for membership of the Ombudsman Association, which will demonstrate that it embodies the key characteristics of redress schemes, namely effectiveness, fairness, openness and transparency. I hope it will give the noble Baroness comfort that the DCLG will monitor the performance of all the schemes and will have the ability to withdraw approval should a scheme no longer meet the conditions for approval.
I think that addresses all the points that the noble Baroness made. If not, I shall write to her afterwards.
Baroness Hayter of Kentish Town
Some of those answers are particularly welcome, for example about publicity and working together, but the Minister has not commented on the use, for the first time, of a private for-profit company. I assume she took my comment as a comment rather than a question. I would be interested if she could respond to that but, if not, I will let it lie on the table.
Baroness Williams of Trafford
Perhaps I could write to the noble Baroness on that point.
Public Bodies (Marine Management Organisation) (Fees) Order 2014
(9 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord De Mauley
That the Grand Committee do consider the Public Bodies (Marine Management Organisation) (Fees) Order 2014.
Relevant documents: 1st Report from the Joint Committee on Statutory Instruments, 2nd Report from the Secondary Legislation Committee
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, the order is made under the Public Bodies Act 2011. Section 4 of the Act enables Ministers to make an order modifying the funding arrangements of certain public bodies, including the Marine Management Organisation. The purpose of the order is to allow the MMO to charge for the monitoring, varying and transfer of marine licences.
The MMO is the principal regulator of marine activities around England and was created by the Marine and Coastal Access Act 2009. Its mission is to enable sustainable growth in our marine area, facilitating growth in coastal communities while protecting and enhancing the marine environment. Its responsibilities include the operation of the marine licensing system in English waters and the offshore waters of Wales and Northern Ireland.
Part 4 of the Marine and Coastal Access Act created the new streamlined marine licensing system for most UK waters. The system replaced the previous licensing system under the Food and Environment Protection Act 1985. A marine licence enables consistent decision-making about what activities are allowed to take place in the marine environment. Developments subject to a marine licence can range from small projects, such as the installation of buoys or the construction of small jetties, to larger harbour, dredging and wind farm developments. It is government policy to recover licensing costs where practicable. To a large extent, the Marine and Coastal Access Act and regulations made under it allow for the recovery of most of the costs associated with marine licensing. Indeed, the fee structure for marine licensing was updated and revised in April this year. This revision was designed to ensure that the calculation of fees more accurately reflected the actual costs incurred by the MMO.
However, the powers in the Marine and Coastal Access Act do not allow for the recovery of all the costs associated with monitoring, variations and transfers of licences. These costs were recoverable under the previous licensing system, and it was never the intention to omit them from the Marine and Coastal Access Act. The proposed order under the Public Bodies Act is therefore designed to close this particular funding gap. The order specifies that the MMO may charge a fee in relation to monitoring an activity authorised by a marine licence, the variation of an existing licence and the transfer and variation of a licence from the licensee to another person. The order specifies the level of the fees that may be charged. The basic principle is to charge applicants for the hours that are worked on a case, with the hourly rate fixed at £94. However, maximum ceilings will apply to simple variations or transfers, or the monitoring of non-complex cases. This is intended to provide greater certainty for smaller businesses and other operators. A different formula will apply in relation to the monitoring of disposal sites for dredged material. In these cases, the fee is calculated on a per tonne basis, up to a maximum of £15,000. This is because disposal sites are typically used by more than one operator and the MMO needs to have a method for apportioning the monitoring costs. Once in force, the order will increase the MMO’s income from marine licensing by about £600,000 a year. In the overall context, that sum of money may not appear huge but, in the context of the MMO’s budget of about £28 million and the focus on costs, it will make an important difference.
We have consulted on these proposals. As explained in the explanatory document accompanying this order, most respondents agreed with the overall principle and the need to recover costs. However, there were inevitably some concerns about the potential burden of regulation and the need for transparency and consistency in charging. We and the MMO are sensitive to the pressures on marine businesses and other users and have worked hard to remove unnecessary regulation and make the system work as efficiently as possible. This has included exempting low-risk activities, the use of longer licences for activities such as dredging and disposal, fast-track licensing for simple straightforward applications and the introduction of a coastal concordat to improve co-ordination of the consenting process for coastal developments in England.
I am grateful to the Secondary Legislation Scrutiny Committee for clearing the draft order within the 40-day affirmative procedure. In its consideration of the order, the committee agreed with the Government that in the longer term it will be desirable to rectify the deficiency in charging powers through an amendment to the Marine and Coastal Access Act. My department will continue to look for a suitable opportunity to do so in the future.
In summary, the Government consider that the approach set out in this order will provide a fair means of charging, a modest saving to taxpayers and an essential support to the MMO’s efforts in safeguarding the marine environment. To this end, I commend the order to the Committee.
Lord Greenway (CB)
My Lords, I thank the Minister for his explanation of the order, which I very much welcome. I chaired the joint pre-legislative scrutiny committee on the Marine and Coastal Access Bill. One of the concerns of the committee was the funding of the Marine Management Organisation. That was reinforced during the passage of the Bill through this House. As the Minister said, the Marine Management Organisation is still somewhat underfunded. This is especially so since Defra’s budget was cut. I think that what is proposed here is really a variation on the “user pays” principle. It is absolutely right that the MMO should be able to recover the full costs of varying or monitoring marine licences. In my opinion, the measure is very much to be welcomed. I think the Minister said that the MMO will gain to the tune of £600,000 a year and the taxpayer will be saved from paying that amount.
Lord Grantchester (Lab)
I thank the Minister for his explanation of the ordering. From these Benches, I am happy to approve of the measure. The Marine Management Organisation is a relatively new organisation set up by the previous Labour Government under the Marine and Coastal Access Act 2009. It was set up with cross-party support, and it is encouraging that it still receives that support.
We continue with our support for this order to allow the MMO to move towards full cost recovery in relation to the activities it undertakes. The old licensing system under Part 2 of the Food and Environment Protection Act 1985 was insufficient in a number of ways to allow cost recovery. It is therefore regrettable that, under the charging powers of the Marine and Coastal Access Act, monitoring costs, especially for dredging, are still not fully recoverable. While powers under the Public Bodies Act are being used to move more quickly towards full cost recovery, I join with the Secondary Legislation Scrutiny Committee in considering that it would be desirable that Defra remedies the situation through an amendment to the MCAA 2009 at an early opportunity.
I also recognise that the MMO has undertaken a review of activities and moved quickly to reduce unnecessary burdens and costs on businesses and other marine users by increasing the number of exempt activities, expanding the use of longer licences and other efficiency measures. Further improvements will be encouraged through the organisation’s stakeholder forum group, customer satisfaction surveys and key performance indicators.
Can the Minister clarify further, however, how the MMO will operate in relation to establishing an ambitious, ecologically coherent and well managed network of marine protection areas, which was also part of the MCCA 2009? Can he confirm that the MMO will be involved under the power to designate marine conservation zones in UK waters? What assessment have the Government made to allow the MMO to move towards full cost recovery in the activity on designation and regulation of the planned marine coastal zones? An independent science advisory panel concluded that 120 sites would contribute to an ecologically coherent network of marine protected areas, and that this network would need to be strengthened. However, in November 2013, the Government designated just 27 zones, covering 8,000 square kilometres of offshore waters and around 2,000 square kilometres of inshore waters. Will these cost recovery powers allow more sites to be designated and monitored at an earlier date—that is, much sooner—following further site-specific conservation advice?
Finally, I ask the Minister whether, under the regulations for fee ceilings, which will limit the cost to smaller-scale projects for small businesses, the cost met by the public subsidy will have a cap attached. If so, at what level will it be and how will it work? With those few comments, I am content to support the order.
Lord De Mauley
My Lords, I thank noble Lords for their comments on the order—in particular those of the noble Lord, Lord Greenway, which were helpful.
Noble Lords know that we are committed to achieving a sustainable marine economy, which means, among other things, having an effective system for managing activities taking place in our seas. The marine planning and licensing systems are operated by the Marine Management Organisation and are key to that. In setting up the MMO, the Government have been keen to ensure that it can operate effectively and efficiently, and it needs to have the right people and resources to act as a modern enabling regulator. This means working to find solutions that enable sustainable growth to take place while protecting and enhancing the marine environment. It also means recovering the reasonable costs that it incurs in licensing.
Noble Lords referred to the views of the Secondary Legislation Scrutiny Committee. As I said, the committee has agreed with the Government that, in the longer term, it will be desirable to rectify the deficiency in charging powers through an amendment to the Marine and Coastal Access Act, and we will continue to look for a suitable opportunity to do that.
The noble Lord, Lord Grantchester, asked a number of questions, partly around MPAs. As he said, we have announced an initial 27. The MMO will be involved in meeting the objectives on marine conservation zones; for example, through marine plans and licensing. We intend to designate further sites and will make a decision on them early next year.
The noble Lord’s other questions centred on capping of fees. Costs will be met by public subsidy, which we will be able to manage through careful case management and efficiencies. If I have missed anything in that answer, I will write to the noble Lord, but I hope that he will accept it.
Approval of the order will enable the MMO to recover the cost of regulatory activities that it cannot currently charge for. As I have said, this change will result in a saving of about £600,000 annually to taxpayers. Despite that not being a huge sum of money, it will make a big difference to the MMO’s finances in these straitened times and is essential to delivering and maintaining a high-quality service. I thank noble Lords for their contributions.
Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014
Baroness Verma
That the Grand Committee do consider the Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, since its launch in January 2013, the impact of the Green Deal has been growing steadily. At the end of May, more than 230,000 Green Deal assessments had taken place. Almost 24,000 of those took place in May alone. Research has shown that 80% of those who have had a Green Deal assessment have installed, or intend to install, at least one measure. More than 800,000 energy efficiency measures had been installed in almost 700,000 homes through the energy company obligation, cashback and the Green Deal by the end of April. This is a great achievement.
To continue building momentum, we recently launched the Green Deal home improvement fund. This fund will help even more people to install energy efficiency measures in their homes by providing them with money back on the contributions they make towards the installation of improvements. People in England and Wales can now get up to £7,600 back through this new fund, which will allow them to take control of their energy bills and have warmer, cleaner and greener homes. This includes: up to £1,000 for installing two energy efficiency measures from an approved list; up to £6,000 for installing solid wall insulation; and up to a £100 refund on the cost of their Green Deal assessment. Take-up of the Green Deal home improvement fund has been positive. The latest figures show that, as of 14 July, 9,559 applications had been received and 6,607 vouchers issued, with a total potential total value of £36,484,100.
The delivery of more measures, on a large scale, can dramatically improve people’s quality of life by making their homes warmer, by having an impact on their health and by driving down the cost of having a decently heated home. The successful implementation of the Green Deal is dependent on encouraging consumers to take decisions to retrofit their homes with a range of measures that they can trust to deliver savings in energy consumption and in their bills. To do this, we have put in place a robust framework that defines what measures are legally eligible for use within the Green Deal, alongside a robust methodology for estimating the savings that will be realised.
When the Green Deal was launched in 2013, the Green Deal (Qualifying Energy Improvements) Order 2012 defined an initial list of 45 measures that would be legally eligible for use. To ensure that we are promoting the maximum number of measures possible and taking account of developments in energy efficiency product technology, we are committed to keeping this list under review. This amendment order makes two minor technical adjustments to the original 2012 order. The instrument amends the 2012 order to allow two additional energy efficiency improvements to be installed under a Green Deal plan. Those are: more efficient circulator pumps; and storage wastewater heat recovery devices—attached to baths or showers. We will be introducing a number of further measures within the Green Deal later this year, which will not require a technical amendment to the 2012 order as they are already covered by its definitions. These additional measures are: energy efficient luminaires, including modern LED lighting for the first time in domestic properties; the use of replacement glazing panels for double-glazed windows; party-wall insulation; and more efficient storage heaters.
The amendments brought about by this order are technical in nature but will add greater choice under the Green Deal and form part of continuing efforts to maintain and improve a robust legal framework that provides consumers with the confidence required to take forward whole-house retrofit and therefore save energy. I commend the order to the Committee.
The Earl of Lindsay (Con)
My Lords, I welcome my noble friend’s explanation of this amendment order. I declare an interest, first, as chairman of the United Kingdom Accreditation Service, which provides accreditation in order to protect the consumer interest in the rollout of the Green Deal, although that is not relevant to this order. I also have a more specific interest, as I have recently had a Green Deal assessment of my own and have signed up to a number of measures arising from that assessment, although I should point out that the specific proposals in this amendment order do not affect my own circumstances.
I just want to put a question to my noble friend. Having had a long involvement with better regulation and advising the Government on how to make legislation and regulations more efficient, I welcome any ability for existing legislation and regulations to be amended promptly and easily. I have looked with interest at the final sentence of paragraph 8.1 of the Explanatory Memorandum—it contains a certain amount of gobbledygook or a typo, as it does not quite make sense, although I think I understand what it intends to communicate—which suggests that the measures are being brought forward after technical dialogue, albeit at an informal level. The question that I want to put to my noble friend is: is there a continuous process for reviewing and, where necessary, revising the technical and other aspects of the Green Deal, especially as they relate to legislation and regulation, or is it a periodic process? I suppose the sub-question of that is: is it a formal process or, as implied by that paragraph, is it very much reliant on informal dialogue? I ask that last question not because I have any concerns about the value of informal dialogue but to be better advised as to what that process is.
Lord Grantchester (Lab)
I am grateful to the Minister for her introduction to the order before the Committee today. On this side, we are very happy to support the Green Deal and all that it seeks to achieve to improve the energy efficiency of the UK’s housing stock. However, we urge the Government to do better. In the past, the Minister has side-stepped my requests for the Government to share with us their measure of success for the uptake of Green Deal plans. In the context of her extolling the numbers to date, is she able to tell us the date, on a projection forward, when the Government would identify the Green Deal programme as having been a success?
The measure before the Committee today is merely technical, in extending by two the measures that could be taken up under a Green Deal plan: namely, circulatory pumps and storage wastewater heat recovery devices attached to baths and showers. I am happy to support the order and agree that it is good to be able to make more measures available that will improve energy efficiency further.
In the debate on the order in the other place, it was mentioned that householders must now have two items to qualify for a cashback contribution. Will the Minister clarify that householders can still proceed with only one measure in their plan—they will just not qualify for cashback—or is the level of expenditure also important? The Minister might argue that this is sensible to drive forward the ambition for home energy efficiency improvements, but might imposing supplementary qualifying standards have the effect of reducing uptake? I appreciate the information given by the Minister on further measures to improve uptake. Will her department be monitoring the effects on uptake once these are introduced?
There was widespread concern about the cost of finance under the funding provisions at the inception of the Green Deal. While the introduction and extension of cashback measures may be a reaction to the slow uptake, can the Minister say who provides the cash for cashback and whether the department has plans to review the terms of finance from the Green Deal Finance Company? Will the Government be reassessing the total amount that could be financed under the Green Deal, especially in relation to the addition of these two measures today, and indeed any further measures once they are introduced?
We are a little anxious that the plethora of measures under the Green Deal may be adding unnecessary complexity to the scheme, but endorse the order before the Committee today.
Baroness Verma
My Lords, I am extremely grateful to my noble friend and the noble Lord for their supportive remarks. I reassure my noble friend that we are constantly reviewing the process, whether internally or externally with industry and more widely. That is because this programme is the first of its kind in the world and, therefore, as we learn how to better streamline some processes or make available information so that consumers can engage much more fully, we want to ensure that the process is responding outwards so that we get as much uptake as possible.
My noble friend is absolutely right. I have just looked at the grammar and I think that the grammar might be tweaked slightly. I will ensure that I take that back to those who put it in there in the first place.
The noble Lord opposite had several questions, as always, on this very simple order. If I do not pick up all his questions, I promise to write to him. He asked what success would look like. He is aware that these are still very early days in the programme, but I have indicated the figures that are now beginning to emerge. Of course, success will take many forms, so it would be wrong for us to put in place a real target, but an aspiration would be to have possibly around 1 million households adopting some of these measures by 2015. I add the caveat that we may not know about the take-up of some measures which have been financed through a different route. I am looking for inspiration from the officials behind me as regards other responses. If they are not forthcoming, I will have to write to the noble Lord on those responses.
The noble Lord also asked about cashback and whether it constituted support through subsidy. He is, of course, aware of the golden rule which is in place to protect consumers, so that, whatever they pay, they will make savings. Overall, I judge that the noble Lord supports this order although he will continue to question and challenge what the Government are doing, which is absolutely right. Does he wish to ask me another question, given that I have failed to answer the others?
Lord Grantchester
I merely wished to tease from the Minister whether cashback was a subsidy or part of the golden rule. Could people’s bills be larger at a later stage because they had received some cash savings upfront?
Baroness Verma
No, my Lords. As the noble Lord is aware, the golden rule is very strict. The cashback is the incentive which should encourage people to put measures in place given that the savings which flow from that will count towards the cost of installing the measures.
I will need to look at some of the questions that the noble Lord has raised. I hope that he is reasonably satisfied with my response. I commend the order to the Committee.
Gangmasters (Licensing Authority) Regulations 2014
Baroness Williams of Trafford
That the Grand Committee do consider the Gangmasters (Licensing Authority) Regulations 2014.
Relevant document: 5th Report from the Joint Committee on Statutory Instruments
Baroness Williams of Trafford (Con)
My Lords, the regulations were laid before Parliament on 9 June 2014. They revoke and replace the Gangmasters (Licensing Authority) Regulations 2005 and reform the governance of the Gangmasters Licensing Authority (GLA) by reducing the size of the board from its current 29 members to nine members and enabling board members to be recruited through open competition rather than by nomination from a restricted set of organisations.
The GLA was set up in 2004 to protect vulnerable and exploited workers after the tragic deaths of 23 Chinese cockle pickers in Morecambe Bay. The authority licenses businesses which provide workers to the farming, food processing and shellfish-gathering sectors to make sure they meet the employment standards required by law, and carries out inspections and enforcement activity. Since 2004 the GLA has issued over 2,500 licences and initiated the successful prosecution of 70 individuals. Since 2010, the GLA has identified £1.2 million in proceeds of crime and protected over 5,000 workers, recovering some £4 million for victims. The GLA became a Home Office non-departmental public body on 9 April 2014, transferring from Defra.
The regulations before noble Lords today reflect one of the key recommendations of the Red Tape Challenge review of the GLA’s operations and implement a measure announced in a Written Ministerial Statement presented to Parliament in May 2012 by the noble Lord, Lord Taylor, when he was Parliamentary Under-Secretary of State at Defra. The planned reform of the board was a key recommendation of the triennial review of the GLA, which reported in April 2014.
When the GLA was established in 2004, the main concern underlying the design of its governance structures was to encourage a high level of participation from the widest possible cross-section of industry stakeholders in order to secure support for the introduction of the licensing regime. This resulted in a very large, representative board with places reserved—subject to ministerial appointment—to specific organisations named in statute, as well as a number of ex-officio places for government departments and agencies with operational interests in common with the GLA. This approach succeeded in helping the GLA establish itself as a well respected and effective regulator. However, it was recognised that the governance structures enshrined in the 2005 regulations were intended to serve the authority during its early years of operation, and that they should be reviewed to ensure that they continued to enable effective leadership.
The Red Tape Challenge review of the GLA concluded that its developing role in tackling worker exploitation and criminal activity demands more focused leadership, and the review recommended the introduction of a smaller board to provide the authority with clear strategic oversight and direction. Reforming the board in the way provided for in these regulations will enable the GLA to better adapt to the changing circumstances that it faces. Strong and effective engagement with the sectors that the GLA regulates remains important. This will be ensured through improved advisory groups reporting to the main board, building on the current system of sector liaison groups. I commend these regulations to the Committee.
The Duke of Montrose (Con)
My Lords, I greatly welcome the measure introduced by the Minister, particularly the reduction in the number of people involved in running this operation. This will presumably result in better value for money in what is produced by the Gangmasters Licensing Authority. However, considering that originally—and, probably, even now—the expenditure was supposed to be recovered from the applicants, will this mean that the cost of the licences will now reduce? I do not know whether the GLA was successful in that regard. It might well have had a shortfall but, as the Minister mentioned, it certainly issued a great many licences over the period.
Originally, the GLA appeared to have only one set fee in obtaining a licence, and I wonder whether the new body will be allowed to differentiate at all between large and small employers. This is a topic that I have followed on and off for some time, and one of the interesting things is the range of activities that the GLA covers. The Explanatory Memorandum states that the GLA issues licences to businesses supplying labour in connection with agriculture, and the gathering of wild animals and wild plants. The Minister mentioned this in her introduction, but it may not be immediately obvious to Members of the Committee that apparently the gathering of wild plants includes forestry, and therefore the whole forestry industry seems to be brought into the regulations.
The particular issue that I came across was that many of the people who come to work in forestry are single, individual contractors. For example, I came across a fencer. In fencing it is much better to have two people, but as an independent contractor he would ask someone to come along and cut branches off the trees along the path of the fence he was building. If that person, however, finished his work and stopped to pick up a hammer in order to help the fencer, a gangmaster’s licence would be needed. The distinguishing feature is that if you are in charge of equipment, you are not part of a gang. The minute you become involved in manual labour for someone else, a gangmaster’s licence is required. I should be grateful to know how this has progressed and whether there will be any discretion under the new body to tailor the way in which it applies the regulations.
Lord Grantchester (Lab)
I thank the Minister for her explanation. From these Benches, I am unhappy and reluctant to endorse this measure as currently drafted. Several features of the order cause considerable concern.
Labour is rightfully proud that in government it established the Gangmasters Licensing Authority. I remember that my noble friend Lord Whitty steered the Bill through this House without any amendment. It is unfortunate that the Government wish to press ahead with this order despite the misgivings voiced in the other place calling for a period of reconsideration, and the measure having been subject to a vote. That the Government wish to proceed with the governance alterations in spite of this controversy is to be regretted, given that the authority is so important and does such vital work.
My first anxiety stems from the fact that responsibility for the Gangmasters Licensing Authority passed from Defra to the Home Office in April this year. This runs the risk of interpreting the work of the authority as merely enforcement. I am sure the Minister will appreciate that there will be a difference of culture between the two departments. We are concerned that the Home Office may be focused only on prosecutions. Can the Minister outline how her department will widen the approach beyond mere prosecution towards prevention and guidance to encourage interplay in farming activities, with a view to achieving outcomes beyond prosecution?
Labour is approaching this area with a view to extending and building on the gangmasters legislation so that it covers other areas. In this regard, it is disappointing to hear that the Government may well have intentions to withdraw forestry from the authority’s areas of responsibility. The governance structure is a vital part of establishing full participation in the objectives and strategy of the authority, which is leading the way in tackling abuse among certain workers. The approach from my colleagues in the other place was to seek to be satisfied that the reduction in board representation from 29 ensured that the full skill set and expertise required by the authority would still be present. The Minister did not explain the logic behind reducing the number on the board to nine. While recognising that numbers could be reduced, we are looking for assurances that the board will continue to be effective, and indeed improved, by reducing its size to a certain number.
It is disappointing that the Minister in the other place did not explain how nine would be the correct number to ensure that the members of the board brought the level of expertise needed and that there was enough recognition from and connection to the community that will ultimately implement the regime. Instead, the Minister concentrated on the belief that the order had to be brought in immediately and could not be subject to further consideration. Since it is recognised that the board members will now be members on the basis of their own abilities and not as representatives of various organisations, the Government must have given some thought to the range of skills needed in order for the number nine to be proposed.
It would be helpful to understand better the consultation that was undertaken on the matter as explained in the memorandum. The explanatory document gives details of the consultation where the respondents agreed with the proposals to reduce the size of the board and to move away from a representative board to one recruited by open competition. Respondents were also asked to give details of their preferred mechanism for ensuring that a smaller board would have access to and take account of the wide range of stakeholder views. The memorandum says, at paragraph 8.5:
“Of those answering the question about the GLA Board structure, 56 agreed with the Government’s proposal for reform, while 5 expressed their disagreement. Forty five of the 48 responses to the question seeking views on how to maintain stakeholder contact with a reformed Board were in favour of the retention of a formal mechanism for ensuring these views were heard. There was no clear consensus on how this would best be achieved”.
I repeat the last sentence:
“There was no clear consensus on how this would best be achieved”.
Can the Minister say how many respondents came up with a number and how popular nine was?
I will be so bold as to suggest an amendment to the order today. Would the Minister consider an alternative, whereby the number of board members must total at least nine but not more than 15? That might go a long way to ensuring that the right skill set was always present on the board and make it flexible as to the operation of the authority and responsive to the challenges that may be thrown up in future. Would the Minister like to withdraw the order today to consider that? The TUC argued in its representation:
“If the Regulations are adopted, future Board members will be recruited against a generic skill-set. There is a risk that future Board appointees will have no knowledge of the agricultural, fresh produce and shellfish industries … The appointees are also likely to lack experience in representing or protecting vulnerable workers from exploitation”.
In her response today, will the Minister also include some further details that are not included in the regulations? Under Regulation 5, relating to,
“Tenure of office and remuneration of the Board”,
neither the length of time of a board appointment nor whether a board member may serve multiple terms of appointment is stated. Is this included in an earlier regulation that is not being changed by these regulations? Could the Minister perhaps expand with further details on how the department expects the board to be constituted and how it may operate? What assessment has been made of the impact of these changes on vulnerable workers? How will the Government ensure stakeholder engagement and provide joined-up government? Finally, will the Government review the impact of these governance changes on the Gangmasters Licensing Authority and its ability to perform its functions? On this crucial area, where so many people are vulnerable, I would like to be reassured by the Minister today.
Lord Young of Norwood Green (Lab)
My Lords, I thank the Minister for her explanatory statement. I did not find that it addressed all the issues of concern that my noble friend Lord Grantchester has already enunciated. I declare my interest as the acting chair of the Ethical Trading Initiative, the organisation that probably drove the previous legislation, along with the trade unions and corporates that were involved at the time. Understandably, we have a significant interest in the current proposal.
We feel that the general direction of travel during the past few years has been to make the GLA a bit more biddable to the Government’s agenda, including a focus on enforcement, possibly to the detriment of licensing and standards-setting work, which is widely acknowledged as having been important in driving a change in attitudes in the industry. It is often stated that it was a part of the Government’s Red Tape Challenge in its early days to consider whether to dissolve the GLA as a burden to business. I hope that the Government have moved away from that.
The noble Duke, the Duke of Montrose, talked about better value for money. It depends on how you assess that value for money: whether we are talking about just the cost to business of providing the scheme or about whether potential employees in these industries are still being adequately protected. We know that a lot of the risks have not gone away. I do not profess to be knowledgeable about the forestry industry; I am more familiar with the meat-processing and shellfish industries. We need to be careful about how we assess value for money.
I share the views of my noble friend Lord Grantchester about the move from Defra to the Home Office and his feeling that it will focus attention on enforcement and prosecution. While we do not regard that as unimportant, there is a concern that it will be to the detriment of standards-setting and best practice development. I would welcome the Minister’s comments on that, because we think that prevention, rather than dealing with the symptoms through prosecution, is just as important. We know that the risk is still there and in some ways has an impact on modern slavery, of which we have had examples in these industries. We should not be under any illusions about the level of risk. We may not have had a Morecambe Bay tragedy—and thank goodness for that—but we have had other tragedies of individuals being held more or less in a situation of bondage or slavery, with passports confiscated, living in terrible conditions and not even being paid minimum wages. We should not forget that.
I listened carefully to what was said about the size of the board. If we are changing to a board of nine, it is legitimate to ask whether there will be a sufficient skill set in the way that my noble friend has suggested.
I want also to ask about the advisory committees that are referred to in the consultation document, which states that,
“this instrument permits the Board to establish advisory committees. Unlike the existing stakeholder liaison groups, the measure introduced in this instrument obliges the Board to pay due regard to the advisory committees findings and recommendations”.
Can the Minister give any more detail on “pay due regard”? Will the board publish the recommendations of the advisory committees and will we be able to see how the Gangmasters Licensing Authority reacts to them? That is important, because it is inevitable that the committees will raise the concerns of stakeholders in those industries.
By having the right type of legislation and a body with a statutory mandate, positive lessons have come out of the GLA experience for tackling deep-rooted practices such as labour abuse. I am not sure how one would tackle modern-day slavery across different industry sectors without bodies such as the GLA.
On the review process, I notice that the Explanatory Memorandum states that there is no need for an impact assessment because there will be no changes that merit it. Nevertheless, this is a fundamental change to the operation of the Gangmasters Licensing Authority. Will the Minister reflect on the suggestions made by my noble friend Lord Grantchester? If she is not prepared to go quite so far as he suggested today, will she consider the need for a review process before a triennial review given the change that is taking place?
The Duke of Montrose
My Lords, perhaps I might come in again. It was very interesting to listen to the noble Lords opposite and hear their concerns. I wonder if we have a clear picture of what the members of the Gangmasters Licensing Authority are required to do. Presumably they have a very great role in drawing up the regulations and looking into the particular circumstances of any industry. By and large, the regulations are fairly clear. The enforcement is laid on those who employ the gangmaster. At the same time, of course, the police and various other bodies can carry out the enforcement. I do not know whether the members of the Gangmasters Licensing Authority are asked to go round and check on what is happening in different circumstances. Particularly if there is a legal case that arises, I suppose that they are required to appear in court. I wonder on how many occasions the members of the Gangmasters Licensing Authority have been asked to appear in court to defend their regulation.
Lord Young of Norwood Green
There were two figures that the Minister quoted that I thought were interesting. I missed exactly whether the £1.2 million was the licence fee—I might have got that wrong but she can correct me if so. As interesting was the £4 million compensation that was obtained. I presume that was in circumstances where, for one reason or another, employment rights had been transgressed, whether it was minimum wage or whatever the circumstances were. It would be interesting to have some detail about what that compensation involved.
Baroness Williams of Trafford
My Lords, I thank all noble Lords who took part in the debate. First, I will discuss the future direction of the GLA now that it has become a Home Office body, which has been touched upon in various speeches.
The Government are determined that criminals who engage in forced labour, trafficking and other abuses, and unscrupulous employers who exploit vulnerable workers should face tougher enforcement action and stronger penalties. That is why the GLA became a Home Office body in April, to enable it to strengthen its enforcement and intelligence-gathering capabilities. In the Home Office, the GLA can benefit from closer co-operational links to the wider law enforcement family and it will work in partnership with the National Crime Agency, regional crime hubs, local police forces and immigration enforcement teams. The GLA will be able to secure expert support from the National Crime Agency intelligence hub and immigration enforcement intelligence. The GLA will also have access to College of Policing-accredited training developed for immigration enforcement investigators.
The GLA is at the forefront of the fight against worker exploitation, forced labour and slavery. Some noble Lords touched upon modern slavery. A reformed board able to steer the organisation through change and provide leadership is essential. This reform is even more important now that the GLA sits alongside enforcement bodies in the Home Office, sharing intelligence and reducing crime.
The first point made by my noble friend the Duke of Montrose was about value for money. The reform is not primarily about saving money but about increasing effectiveness. The cost of licences is a slightly separate issue, but there is no current plan to change the licensing fee structure. The fees are currently banded according to the turnover of businesses, which I think one noble Lord touched upon, and the lowest fee is £400.
My noble friend also touched on forestry businesses. Forestry businesses were excluded from the need for licensing under an order in October 2013. As in the example given by my noble friend, forestry is therefore not an issue in this case.
Going back to the move to the Home Office, it is not about narrowing the focus of the GLA to prosecutions only. The move will only enhance partnership working, in our view.
The noble Lord, Lord Grantchester, talked about getting the right skills for the board. We are aiming for a board that has the best skills and expertise, which includes the expertise of the sectors being regulated but also those with other relevant experience; for example, commercial, financial and legal expertise, and expertise in the regulation of comparable sectors. Each individual applies through open competition and will go through a recruitment process. We want the right make-up for the board so that it can take forward the reforms that are needed to ensure that the GLA can continue to fight for workers and ensure that they are not exploited.
Noble Lords also touched upon the advisory committees that will sit alongside the main board. It is a matter for the board how it establishes and works with advisory committees. The Government’s transparency agenda would expect the board to publish relevant papers as appropriate.
There has been quite a lot of discussion this afternoon about why the Government want to reduce the current number of board members. I do not know whether noble Lords have sat on boards; I certainly have, and a board of 29 does not make decisions in a very efficient manner. Just from personal experience, I would rather sit on a board of nine than 28 or 29. The current make-up of the GLA board was designed 10 years ago to encourage all stakeholder groups affected by the licensing scheme to take part in establishing the authority. Now that licensing is established in the regulated sectors, the GLA needs a more streamlined board with a clear remit to provide strategic oversight. Having a board appointed on merit through open competition will bring the GLA in line with similar public bodies and widen the pool from which candidates can be drawn.
One noble Lord—I think it was the noble Lord, Lord Young—talked about the wide variety of stakeholders to be heard and asked how the board would do that. The advisory committees will help in that endeavour, and the existing stakeholder liaison groups, which cover the labour providers, labour users, workers and businesses concerned, will also continue.
Noble Lords asked why nine is the magic number. We believe that the right skill set can be gained through a board of nine members, while also ensuring that it is able to take swift and clear decisions. Nine is not inconsistent with comparable boards of other arm’s-length bodies.
If I could just touch on the point that the noble Lord, Lord Young, made about the £1.2 million, that is how much the GLA has identified in proceeds of crime and in protecting more than 5,000 workers and recovering some £4 million for victims. That is where the £1.2 million has come from.
I do not know whether I have satisfied the concerns of the noble Lord, Lord Grantchester, but I am sure that he is about to stand up and tell me if I have not.
Lord Grantchester
I start by saying that I omitted to mention my farming interests in a dairy farm. I apologise to the Committee for that omission. However, in my experience in the farming sector I have never heard of a lack of back-up for any of the enforcement authorities that cover the many regulations that the general practice of agriculture has to abide by.
I listened very carefully to the Minister but I do not think I picked up how it was explained that the Home Office would ensure that best practice guidance and prevention would be maintained, even though there would be a greater emphasis on enforcement. Perhaps I could gently ask for that assurance to be given.
Similarly, I recognise that 29 is a very unwieldy number and that it could be reduced now the GLA is established. If the Minister could say a little more to reassure me on several of the further questions I posed about the GLA’s continuation of its functions, so that the Home Office could reassure stakeholders and the TUC, as the representative of workers, that possession of the proper skill set will be part of the background assessments in making an appointment, that would be most helpful.
Lord Young of Norwood Green
I asked whether the Minister would consider the review timetable. I do not know whether the existing triennial review is all that is proposed but, given the changes that are taking place, a shorter period would seem to be appropriate. If the Minister could respond to that, I would be grateful.
Baroness Williams of Trafford
As I understand it, the GLA’s current role and practice will continue. I will write to noble Lords and correct this if I am wrong, but I understand that there will also be a slight budget increase for next year. We are not taking anything away in the move to the Home Office. As to whether the GLA will focus only on enforcement, it will continue as a regulator in the sectors that it covers. It regularly issues briefing notes to the sector on licensing employment and the awareness of exploitation, and I understand that that will continue.
Baroness Williams of Trafford
As I understand it, there is currently a triennial review, but I will clarify that in a note to the noble Lord.
Licensing Act 2003 (Mandatory Licensing Conditions) (Amendment) Order 2014
Lord Popat
That the Grand Committee do consider the Licensing Act 2003 (Mandatory Licensing Conditions) (Amendment) Order 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
Lord Popat (Con)
My Lords, I apologise that my noble friend Lord Ahmad could not be here this afternoon. He has been moved on and I am taking up this particular order.
The order was laid in Parliament on 23 June. It makes provision for changes to be made to the mandatory licensing conditions. The purpose of the instrument is to tighten the existing mandatory licensing conditions relating to irresponsible promotions, the provision of free water, the adoption and application of age verification policies, and the provision of small measures at licensed premises.
The Policing and Crime Act 2009 amended the Licensing Act 2003 to confer a power on the Secretary of State to specify further mandatory licensing conditions relating to the sale and supply of alcohol. Sections 19A and 73B of the Licensing Act allow for such conditions where she considers it appropriate for the promotion of the licensing objectives.
The department carried out a consultation on the alcohol strategy from 28 November 2012 to 6 February 2013. This consultation included questions on reviewing the mandatory licensing conditions. A number of suggestions were received but, in order to strike a balance between promotion of the licensing objectives and burdens on business, it was decided to restrict the changes to those which caused the most concern. These are the measures that are before noble Lords today.
The order would apply to all licensed premises in England and Wales. Scotland and Northern Ireland are subject to different legislation. The measure will make the existing conditions more effective and ensure that they are consistently implemented, particularly those regulating irresponsible sales and promotions.
I will now talk about the impact of this order. The changes will affect four areas—irresponsible promotions, provision of tap water, age verification and availability of small measures of alcohol.
First, we have made the condition regarding irresponsible promotions clearer. Some promotions, such as drinking games where the aim is to drink as quickly as possible, and using promotional materials that condone anti-social behaviour or drunkenness, will now be irresponsible in all circumstances. We have removed the exemption for table meals that allowed some premises to offer unlimited drinks, and have instead clarified that such promotions are permitted only if they do not carry a risk of breaching the licensing objectives. We have also simplified this part of the mandatory conditions by incorporating into this strengthened condition on irresponsible promotions the current ban on dispensing alcohol directly into the mouth. We have also removed the specific reference to the ban on the provision of free or discounted alcohol in connection with a sporting event. This type of irresponsible promotion is already covered by the ban on the provision of unlimited or unspecified alcohol for free or for a fixed or discounted fee.
Secondly, on the provision of tap water, we have also stated in the existing mandatory licensing conditions that free tap water must be provided to customers on request. We are strengthening this condition to state free potable water to customers on request, rather than simply water from a tap. This will ensure that the water is of sufficient quality to be consumed.
Thirdly, on age verification, we have made it clear that the designated premises supervisor must now ensure that the supply of alcohol complies with the venue’s age verification policy. This means that the supervisor is personally responsible for compliance with the policy. We have also extended the range of identification that can be accepted by premises by stating that ID can contain either a holographic or ultraviolet feature. This means that, for example, visitors from overseas without a UK driving licence or passport will find it easier to prove their age.
Finally, we have tightened the rules on the availability of smaller measures of alcohol. We are requiring premises to display smaller measures—half pints of beer, 125 millilitre glasses of wine, and 25 or 35 millilitre measures of gin, rum, whisky or vodka—on menus or price lists in the venue. Where a customer does not state their preferred size of these drinks, they must be made aware of the range of sizes available.
These amendments aim to further the promotion of the licensing objectives and make the mandatory licensing conditions more effective in achieving the objectives that were originally set for them—namely, to raise standards across the industry, ensure that alcohol is sold responsibly and ensure that the alcohol industry plays its part in tackling the unacceptable levels of crime and disorder that blight our communities.
I hope noble Lords will agree with the Government that this order is an appropriate use of the powers conferred on the Home Secretary by the Licensing Act 2003. I commend the order to the House.
Lord Kennedy of Southwark (Lab)
My Lords, I generally approve of the order. I should mention that I am the vice-chair of the All-Party Parliamentary Beer Group and a member of CAMRA.
Alcohol-related crime and anti-social behaviour are at unacceptable levels and the provisions in the order to tackle that are welcome. I was struck by the impact assessment, which stated that the cost to society of alcohol-related harm is £21 billion a year, £11 billion of which is accounted for by alcohol-related crime—a shocking figure.
The beer, wine and spirits trade is important to the UK and to the economy. We all want to see an industry that is well run, creating jobs and enabling people of all ages to go and enjoy themselves. But alcohol-related crime and other problems due to the misuse of alcohol or irresponsible promotions are not welcome.
I looked at the points that the order is seeking to tackle and have the following comments and questions for the noble Lord, Lord Popat. Simplifying and tightening the law on irresponsible promotions is welcome. I can see the point about interpretation, and the problems that it has caused in the past for regulators and licensees, so this should be a better way. How do the Government intend to keep all this under review? Can the Minister explain to the Grand Committee how businesses will have to adapt to the removal of the exemption for alcohol provided with table meals?
Is the irresponsible promotion provision intended to be a catch-all? The provisions do not seem to deal with off-sales. When I go shopping at the weekend or on a bank holiday and walk past the beer mountain at the entrance to the shop, I always look at the price of it. They are just giving it away. That, too, is irresponsible, and perhaps we should look at that as well.
Requiring premises to list the prices of small measures is again welcome. I think that many well run establishments would do that anyway.
I welcome the requirement for free tap water to be provided. It amazes me that a provision making someone provide free tap water has to be put in legislation. It is ridiculous really.
On the provisions on age verification, the clarification that the responsible person is the premises’ supervisor is again welcome. I was today at a meeting of the All-Party Parliamentary Group on Voter Registration, of which I am the chair. We had a very interesting presentation from Mr Graham Shields, the Chief Electoral Officer for Northern Ireland. There, they provide every single citizen with an electoral identity card. He told us that young people love this card and everyone wants it, because, of course, it confirms their age for going into pubs and clubs. I have met the brewing industry and it confirms that the card is widely accepted in Northern Ireland as confirmation of a person’s age. Everyone uses it. It is provided free of charge by area registration offices. Could the Minister look at that? It is a clear example of good practice in Northern Ireland and perhaps it should be looked at over here, because it ensures that people going for a drink are lawfully able to buy a drink. That clearly has worked very well for them.
My final point relates to point 4 on page 6 of the impact assessment. The reference there to getting a free drink if England win a match is just cruel.
Lord Popat
I thank the noble Lord, Lord Kennedy, who raised a number of issues. The cost of alcohol-fuelled crime in England and Wales is £11 billion, and this is unacceptable. In reality, that figure is what the noble Lord cited: £21 billion—through loss of work, sickness and the burden on the National Health Service. We want the alcoholic drinks industry to raise its game and to do more to promote responsible drinking.
We have already introduced a radical package of measures to overhaul the Licensing Act, including giving local areas more powers to deal with problem premises. We see such premises in our major cities such as Sheffield and Leeds and they are a major problem, especially late at night. Local licensing authorities are quite capable of addressing the problems that they have in their own area.
Alcohol-related crime also entails a huge cost to the police. They will be reviewing what they charge for licences to make sure that charges cover the cost of policing areas which have a lot of crime.
Lord Kennedy of Southwark
I am pleased to hear that. As I said, I grew up in Southwark and I remember how, when I was a young man, there were lots of pubs on the Old Kent Road on Friday and Saturday nights. When I became a councillor there, I spoke to the superintendent in charge and he said that the resources he had to deploy on those two nights of the week to police alcohol-related disturbances gave him problems deploying officers for the rest of the week. Thankfully, things have moved on, but this is still a serious problem and I welcome the noble Lord’s comments.
Lord Popat
It is a serious problem. In fact, many operators are responsible and there are fewer problems in some areas than in others, so we have empowered local licensing authorities to look at that.
The noble Lord also referred to the off-licence trade and alcohol sold in supermarkets. There are significant differences between businesses where people remain on the premises consuming the alcohol they have just bought and those where alcohol is purchased for later consumption. It would not be appropriate to apply conditions such as requirements to provide free tap water to customers or to make small measures available to off-trade businesses. We recognise that there are issues with irresponsible promotions in-store and we are working with the off-trade to address these through self-regulation. We also talk to the Federation of Small Businesses about both alcohol and cigarette branding.
Lord Kennedy of Southwark
Supermarkets are at fault in this regard, not small businesses which often do not have the necessary resources. When you walk into a supermarket, often around a bank holiday, you have to walk past the beer mountain, comprising cheap lager, not usually of very good quality. There is an issue there. I hope that the noble Lord will look at it and get back to me on it. The behaviour of people who drink large quantities of alcohol at home also needs to be looked at.
Lord Popat
I referred to off-licences, and of course supermarkets have off-licences but a large number of them are independent shops. Supermarkets promote alcohol by offering deals such as two for the price of one. We have now made it mandatory for them not to sell alcohol below cost price. However, we cannot stop them setting a price whereby they make a small profit. As supermarkets buy alcohol in bulk, it is often cheaper in a supermarket than in a pub. However, the good news about people buying alcohol from supermarkets is that they tend to take it home and drink it at home and not commit alcohol-related crime in the streets, which costs money to tackle.
Lord Kennedy of Southwark
I am sorry, but there are issues with people drinking at home. For example, it can lead to violence against women, so I do not think the noble Lord can just say that, if people take alcohol home, there is no problem. As I say, there are issues with people drinking at home and the problems that arise from that.
Lord Popat
We are working with retailers, including the Federation of Small Businesses, to promote responsible retail practices. Last week, the Retail of Alcohol Standards Group committed to new guidance on this issue. But I understand what the noble Lord says about violence and drinking at home.
We are also seeking to clarify the irresponsible promotions condition. Removing this exemption will contribute to that. We do not believe that the impact of removing this exemption will be significant. Businesses can still offer this type of promotion as long as there is no significant risk of a breach of one of the licensing objectives.
The noble Lord, Lord Kennedy, mentioned Northern Ireland. I think it is best that I write to him. I have received some notes, but I want more information and it is best that I write to the noble Lord in detail on the subject. I think I have covered every area raised by the noble Lord, Lord Kennedy. The only things I have to write to him on are Northern Ireland and ID cards.
I welcome this debate. It came to me at very short notice, but I have really enjoyed doing it. When used responsibly, alcohol can be a welcome part of social situations and community events. However, alcohol-related harm affects many people in England and Wales, with victims in almost half of all violent crimes believing the perpetrator to be under the influence of alcohol. This is completely unacceptable, and that is why the Government are committed to tackling this issue, and why it is crucial that the Government use all the tools at their disposal to tackle the causes of that harm.
Through our alcohol strategy, the Government are promoting proportionate and targeted action to reduce the costs and problems caused to society by irresponsible and excessive drinking without affecting responsible drinkers. We have introduced a ban on the worst cases of cheap alcohol being sold below the level of duty plus VAT. As I said to the noble Lord, Lord Kennedy, quite often the supermarkets do that as well. We have also challenged the alcohol industry to do more to address the harm caused by alcohol and the Government welcome the package of new pledges by the industry that was announced on 8 July.
We are giving local areas more powers to address the alcohol-related problems that they face on a daily basis. We are also supporting local areas as they seek to reduce alcohol harms through the local alcohol action area scheme, which offers support to local areas in cutting alcohol-related crime and disorder, and reducing the damage caused to people’s health.
Licensed premises have a part to play in reducing alcohol-related crime by ensuring that they are responsible retailers of alcohol. The amendments to the mandatory licensing conditions will not only tighten the conditions to ensure that alcohol is sold responsibly but clarify them so that retailers can take steps to avoid a breach.
Now and in the future we must build upon and maintain this momentum and our commitment to reduce the harm caused by alcohol to consumers and their families, to the thousands of victims of alcohol-related crime, to local communities and to the businesses that are vital for our economy. I commend this order to the Committee.
House of Lords
Census 2021
(9 years, 9 months ago)
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Lord Naseby
To ask Her Majesty’s Government, in relation to the next census due to take place in 2021, whether they have now rejected the possibility of replacing the traditional census format.
Lord Wallace of Saltaire (LD)
My Lords, the Government recognise the value of the census but believe that it is outdated in its current form and could be more effectively and more cheaply delivered. Decisions about its future after 2021 will be announced in the usual way but the Government agree with the conclusion of the Public Affairs Select Committee that the census needs to change.
Lord Naseby (Con)
Has my noble friend read the Economist of 5 April? It said:
“Britain’s decennial population count has been saved. Now make it work better”.
The Office for National Statistics also stated in March that it,
“recognises that special care would need to be taken to support those who are unable to complete the census online”.
In the light of both those statements, can my noble friend tell the House what safeguards there are to ensure that the roughly 20 million who are not literate online, and the half a million who were left out from the last census, will be able to take part in this new census?
Lord Wallace of Saltaire
My Lords, the Government are of course keen to encourage people to respond online. The paper-based census takes a great deal of time to analyse and transpose. It was some 16 months from the last census in 2011 until the first data became publicly available. If more people do it online, that could all be done a great deal more quickly but in 2021, although we already understand that 80% of households now use the internet daily, there will of course be support from the usual recruited field force to assist those who do not use online materials.
Baroness Whitaker (Lab)
My Lords, following the very pertinent question from the noble Lord opposite, can the Minister give the House an assurance that the new category—that is to say, since 2011—of Gypsies and Travellers will not be lost in any new system, because it has already yielded invaluable factored information about the disadvantage experienced by these communities?
Lord Wallace of Saltaire
My Lords, I think that all Members will recall that we use a field force to go and find the people who are the most difficult to get hold of and those in whom we are most interested. The Office for National Statistics estimates that the last census was some 94% complete. We suspect and fear that the 6% we missed were strongly represented among the most vulnerable elements of the population.
Lord Greaves (LD)
My Lords, the Minister referred to the delay last time between the census and the publication of the first results, and indeed to the further delays for the more detailed results. The forms are not complicated. Putting the information into databases and publishing it should not take 18 months, two years or even more. It is a simple task to get the information from the forms, whether the information is collected digitally or on paper, and then publish it. Can we have an assurance that the Government are looking at making this much more efficient and quick next time?
Lord Wallace of Saltaire
It is part of our mission to try to get the information ready for use more rapidly. It is also part of our mission, and the Office for National Statistics and the Public Affairs Select Committee reports both touch on this, to use the administrative data that are available to the Government so that we do not just have a snapshot of where we are every 10 years but, rather, we can have a rolling set of information about what we have. For example, if you want to know how many children there are living in a local authority area, the Government have that information in the form of recipient addresses for those on child benefit.
Lord Wigley (PC)
My Lords, given that presumably there will be a census organised on a UK basis from London in the year 2021 irrespective of the technology that is used, can the Minister give us some commitment on behalf of the Government that figures relating to the number of Welsh speakers living in England will be collected? The figures at the moment relate only to Wales, and whereas other languages are collected in England they are not in relation to Welsh speakers in England. This is very misleading.
Lord Wallace of Saltaire
I note the noble Lord’s question. We have not yet decided exactly how many questions there will be in the next census. I should correct him, however: the census covers Great Britain. The arrangements for Northern Ireland are a little different.
Lord Wills (Lab)
My Lords, I welcome the Government’s acceptance that the census needs to be updated. I also welcome what I take to be the Minister’s announcement today that the Government are planning to reuse administrative data to get more accurate and timely information. However, can he confirm that such reuse of administrative data will be coupled with a sample of annual household surveys to ensure that whatever conclusions are drawn from those data are accurate?
Lord Wallace of Saltaire
That is one of the issues currently under consideration. We have some time yet before we go final for the next census. Administrative data are an important issue. At the moment the Government are involved in an open policy-making process with stakeholders to discuss how we might modernise the various structures of law that apply to different departments and different local authorities about how one collects administrative data. It is our intention in the autumn to publish a White Paper on this.
Lord Stern of Brentford (CB)
My Lords, I speak as the president of the British Academy and on behalf of researchers who are working on the big social and economic issues of our time. In thinking about the census design, will the Minister place a high priority on its enormous value in validating other surveys that are at the heart of much of the research on these issues in the UK? Without the ability to validate them against the census, it is extremely difficult to use those to their full extent.
Lord Wallace of Saltaire
My Lords, we are well aware of the relevance to the social science community of government data in all their forms. The administrative data, some of which are not yet available, are also of considerable importance to social scientists of all sorts. I know that consultations are well under way, including with the British Academy, and I am sure that they will be taken fully into account.
Lord Harrison (Lab)
My Lords, the previous census recorded the increase in the number of us who profess no religion. Will the Minister ensure that that question is re-examined as there was a lot of controversy about it last time?
Lord Wallace of Saltaire
My Lords, there is a great deal of discussion about how many questions to put on the census on each occasion because the more questions you put on, the less likely it is that everyone will fill them in completely. That discussion is well under way, but we do not have to decide that until we are a good deal closer to the next census.
Lord Roberts of Llandudno (LD)
My Lords, with a multilingual Britain, will the forms be available online or offline so that everybody is able to fill them in and understand the full implications of their answers?
Lord Wallace of Saltaire
My Lords, I do not have full information about how it will appear online, but I note the question about the many different languages. The administrative data include a very good indicator of the changing ethnic and linguistic composition of local authority areas. The best indicator about changing composition is the first language of children coming into reception class in primary school. That is a rolling indicator that the Government can use to supplement the census.
Northern Ireland: National Crime Agency
(9 years, 9 months ago)
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Lord Empey
To ask Her Majesty’s Government when they expect the National Crime Agency to be fully operational in Northern Ireland.
The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)
My Lords, we fully support the efforts of the Northern Ireland Justice Minister David Ford to secure the support of the parties for the full extension of the NCA’s remit to Northern Ireland. We want to see an early resolution of this issue to avoid serious gaps emerging in law enforcement in Northern Ireland in areas where there is deep public concern, such as drug enforcement, human trafficking and other forms of serious criminality.
Lord Empey (UUP)
My Lords, I rather suspected that the Minister would answer in those terms. Is she aware that the Northern Ireland Executive has not discussed the National Crime Agency this year? Is she further aware that the Police Service of Northern Ireland has neither the personnel nor the financial resources to fulfil the functions that should be carried out by the National Crime Agency, which is a matter of grave concern?
Baroness Randerson
My Lords, the Government are well aware of the impact on the PSNI and of the need for agreement to be reached as soon as possible. I understand the noble Lord’s concern. It is clear to us that the NCA in Northern Ireland obviously has less capability than elsewhere. However, this is a devolved matter and it is right that discussions are ongoing between the Justice Minister, the NCA and the political parties—but UK Government Ministers and officials remain fully engaged.
Lord Trimble (Con)
My Lords, I understand the Minister’s desire to proceed by agreement, but with regard to the particular issues of trafficking, drugs and the related matters that she mentioned, is it the Government’s view that it is in the national interest that the National Crime Agency be fully operational throughout the United Kingdom on those issues?
Baroness Randerson
My Lords, in our view it is clearly in the national interest that the National Crime Agency is fully operational throughout all parts of the United Kingdom. However, the Sewel convention must apply at this point, and it is clear that we do not normally intervene and legislate on matters within the competence of the devolved Administrations without their consent.
Lord McAvoy (Lab)
My Lords, this is no nationalist versus unionist argument; clearly it is about the national interest. The non-involvement of the National Crime Agency in Northern Ireland was highlighted the other day when a Treasury Minister, from that Dispatch Box, indicated that HMRC was having difficulty in collecting taxes, VAT and so on. Despite the mention of the Sewel convention and the Justice Minister, surely it is time that some leadership was shown by the Northern Ireland Office in bringing these people together to get agreement, in the national interest.
Baroness Randerson
My Lords, the Government have taken the view that agreement is most likely to be obtained under the leadership of David Ford, the Justice Minister, who, after all, has support across the parties in Northern Ireland. It is important that we ensure that his discussions with the parties and with Keith Bristow of the National Crime Agency, which are active and ongoing, are facilitated. I assure noble Lords that my right honourable friend the Secretary of State for Northern Ireland is fully engaged in the process, and that the Home Secretary remains prepared to consider proposals that are put forward.
Baroness Harris of Richmond (LD)
My Lords, the National Crime Agency, as my noble friend said, is doing a terrific job under the leadership of the very able director-general, Keith Bristow, who told an audience at the Police Foundation conference two weeks ago that last year, 93% of five to 15 year-olds in the UK used the internet, which makes them very vulnerable to predators in that online space. Does my noble friend believe that some politicians in Northern Ireland could be endangering the lives of their young people by not letting the NCA investigate appalling internet crimes, some of which involve children?
Baroness Randerson
My noble friend makes an important point, and I very much hope that politicians in Northern Ireland who have not found themselves able to reach agreement so far on the remit of the NCA and its answerability in Northern Ireland are listening at this time, or will read the record afterwards, in order to realise the seriousness and importance of reaching agreement.
Baroness Butler-Sloss (CB)
My Lords, since this is a matter of enormous concern throughout the United Kingdom, and not just a Northern Ireland issue, what can the UK Government do about it?
Baroness Randerson
My Lords, I hope that I have made it clear that the Government are very closely involved in this, and that we remain optimistic that agreement will be reached. I understand the frustration that noble Lords are exhibiting at the length of time it is taking to reach agreement, but the talks and discussions are ongoing, and the work within the office of the Justice Minister is very much an active piece of work; we are reassured of that fact.
Lord Kilclooney (CB)
My Lords, if, as the Minister says, this is a matter of national interest, is it not time that it ceased to be a matter for a devolved Government?
Baroness Randerson
I think that noble Lords will appreciate that, having established devolution, it is very important that one trusts it to work its way through, despite issues and problems that arise on the way.
Palestine
(9 years, 9 months ago)
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Lord Hylton
To ask Her Majesty’s Government what is their response to the formation of a Palestinian Government of unity with the prospect of elections in 2014.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, we welcome the formation of a new interim technocratic Government for the Occupied Palestinian Territories. We have made it clear that our continued support for the new Government will depend on their commitment to the principles of non-violence and an acceptance of all previous agreements and obligations, including Israel’s legitimate right to exist. However, we believe that the current crisis in Gaza decreases the prospects for elections in the near future.
Lord Hylton (CB)
My Lords, I thank the noble Baroness for her reply. She will appreciate that my Question was tabled a month ago. Will Her Majesty’s Government work towards a common European vision that would enable ordinary Israelis and Palestinians to demand effective ceasefires, together with an agreed ending to occupation and blockade? Are there not major incentives and penalties that Europe could apply?
Baroness Warsi
My Lords, the view of the United Kingdom, and indeed of the European Union and the wider world, is that there should be a ceasefire and it should come as soon as possible. The noble Lord will also be aware that the unprecedented package that the European Union put forward in the event of an agreement when the Kerry talks began is clearly the kind of incentive to which the noble Lord refers. The prize for peace is a much better life, both for Palestinians and Israelis.
Lord Anderson of Swansea (Lab)
My Lords, does the noble Baroness agree that, however welcome the formation of a unity Government, we are still some way from the development of a negotiating partner for Israel which can deliver; and that, given the failure of the unity Governments in the past and the deep divisions within the partners of Fatah and Hamas, perhaps the most appropriate response is considerable caution?
Baroness Warsi
My Lords, we welcome the formation of a new interim technocratic Government for the Occupied Palestinian Territories. We feel that reuniting Gaza and the West Bank under a Government committed to peace is a necessary condition for resolving the Israeli-Palestinian conflict. We have to be positive at all times; when we find a partner that agrees to the quartet principles, we should see it as a genuine partner for peace.
Lord Alderdice (LD)
My Lords, I very much welcome my noble friend’s announcement of the British Government’s approach, which appears to chime with the approach of the Obama Administration. However, part of the agreement is that there should be subsequent elections in the Palestinian Territories. Is my noble friend further prepared to recognise that the outcome of those democratic elections, if they are held in a free and fair manner, should also be respected, and that whatever Government or Governments emerge from that should continue to be part of any negotiating process?
Baroness Warsi
My noble friend makes an important point. However, sadly, the original timetable of six months from June—which was when it was anticipated that elections would take place once the technocratic Government had been formed—looks much more vulnerable because of the current situation. At this stage, all minds are focused on a ceasefire but, of course, we hope that elections will follow thereafter.
Lord Turnberg (Lab)
My Lords, leaving aside the failure of Hamas to accept the ceasefire that Israel accepted yesterday, does the noble Baroness agree that it is extremely difficult for Israel to continue to exchange security intelligence with a Government who get their main support, or part of it, from an organisation that is committed to Israel’s destruction, let alone to engage in meaningful negotiations with them?
Baroness Warsi
The noble Lord will be aware that no members of Hamas have formed the technocratic Government, which of course we welcome. However, it is important that we do not leave aside positions as regards the ceasefire. We welcomed Egypt’s attempt to secure a ceasefire, the Palestinian Authority’s endorsement of it and President Abbas’s commitment in calling on the different Palestinian factions to accept it. The Israelis’ acceptance in principle of the proposed ceasefire and the support for it from the Arab League are positive things, which I hope will soon form the basis of a ceasefire.
Baroness Hussein-Ece (LD)
Can my noble friend say whether media reports that Hamas was not even consulted on the so-called peace deal that Egypt announced are true, and that members of the Knesset themselves learnt about it from the media?
Baroness Warsi
It is important that any ceasefire and agreement have the agreement of the Palestinian and Israeli peoples through their elected representatives. There has been some reporting about the basis of that ceasefire. Although my noble friend raises an important issue, if the possibility of a ceasefire is on the table, it is important that we do all we can to support that process.
Baroness Uddin (Non-Afl)
My Lords, I take this opportunity to condemn the merciless attacks on innocent women and children in Gaza. While I accept the premise of this Question and its importance, does the Minister accept that the real issue of concern for the international community should be the illegal occupation and the continuation of illegal settlements?
Baroness Warsi
My Lords, there is no doubt that unless the underlying causes are resolved, this dispute will continue and we will see eruptions of the violence that we saw in 2008 and 2012, and which we see again in 2014. That is why we were supportive of the Kerry talks and that is why it is important that we have a ceasefire and that both parties can get back to the discussion table to try to resolve those underlying issues.
Lord Lexden (Con)
Are there to be international observers at the Palestinian elections, if and when they take place?
Baroness Warsi (Con)
My Lords, I am not sure. Certainly, we hope that these elections will happen in due course, but I am sure these are matters that will be discussed at the time.
Baroness Morgan of Ely (Lab)
Does the Minister agree that any Palestinian Government should take better account of the needs of the youth of the territory, bearing in mind that 55% of the Palestinian population are under the age of 25, one-third of the youth are unemployed and 48% of Gaza youth have suggested that they would support an uprising against Hamas and believe that the new generation of leaders would do a better job? What can Her Majesty’s Government do to support the needs of Palestinian youth to help them get their voice heard in the future of their territory?
Baroness Warsi
The noble Baroness is absolutely right. This boils down to people and their futures. The Palestinian people and the Palestinian youth have a right to a strong, stable future where they can have the ambitions that we so take for granted. However, the tragedy of the current situation is that, unfortunately, if you look at what is happening on the ground, because of this current crisis Hamas is becoming more popular. That is not in the interests of the Palestinian people, it is certainly not in the interests of Israel and it is not in the interests of world peace.
Royal Mail Sale
(9 years, 9 months ago)
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Lord Young of Norwood Green
To ask Her Majesty’s Government what recent assessment they have made of the value for money achieved from the sale of Royal Mail.
Lord Popat (Con)
My Lords, the Government’s overall objective in selling shares in Royal Mail was to protect the universal postal service by ensuring that Royal Mail has a sustainable and secure future. The sale raised £2 billion for the taxpayer and it enables Royal Mail to access the private sector capital that it needs to invest in growth. The sale guards against the real need for Royal Mail to request additional taxpayer support in the future.
Lord Young of Norwood Green (Lab)
My Lords, I thank the Minister for his reply, even though it was what I expected. If the enhanced share price, which today stands at 479.60p, was just market “froth”, can the Minister explain why the long-term priority shareholders sold their stakes for huge profits? Given that the National Audit Office has said that the business department’s desire to sell Royal Mail before the election next year resulted in a knockdown price that cost taxpayers £750 million, does the Minister feel that there are any lessons to be learnt for any future sale?
Lord Popat
My Lords, there are a number of questions in the noble Lord’s question. First, let me cover the share price. The share price for Royal Mail is very volatile. It reached £6.15 in January and stands at £4.79 as of this morning. The Government achieved their intention to ensure that Royal Mail started with core, long-term, stable investors who understood the business, along with some hedge fund participation to ensure liquidity in the aftermarket. This was absolutely real value for money and such a success story of this Government.
Baroness Wilcox (Con)
Would the Minister remind the House that the Labour Party failed completely in its own attempt to sell Royal Mail, and was much relieved when this Government managed to sell it for what was certainly at that time a fair price, in order to save the post offices which we still have and—most importantly—to save the pension scheme, which had no money left in it at all?
Lord Popat
My noble friend raises a very important question. The party opposite failed to achieve a sale or to find a solution to the problem of Royal Mail. This Government have taken a loss-making public enterprise and turned it into a highly successful, respected public company. Both the National Audit Office report and last week’s Select Committee report reached the important conclusion that we had successfully achieved our objectives. The Royal Mail IPO has inspired other companies in the UK to go for a flotation.
Lord Low of Dalston (CB)
My Lords, the noble Lord will be aware that much concern has been expressed by Royal Mail and others at the threat posed to the sustainability of the universal postal service by the rapid rise of direct delivery competition in postal services, which are able to cherry pick the lowest hanging fruit without any obligation to serve less profitable and harder-to-reach markets. Would he agree that, in those circumstances, it would be helpful if Ofcom, which has responsibility for the integrity of the universal service, undertook a full review of direct delivery as a matter of urgency, instead of in 2015 as planned, and determined quickly any regulatory changes needed to protect the universal service?
Lord Popat
My Lords, the businesses complement each other. As the chief executive of Royal Mail has said, it is unthinkable that the two companies will not always work very closely. Ofcom is an independent organisation and it will regulate and oversee the function of the Royal Mail.
Lord Clarke of Hampstead (Lab)
My Lords, we certainly do not need to be reminded of the failure of the previous Labour Government, because I still feel the shame about how the Bill was introduced in this House. However, putting that to one side, could I ask the Minister a question that is pretty much along the lines of the previous question? I am sure that he will recall the assurances that the Government gave to Royal Mail and the British public. In talking about the value of Royal Mail, one should look at the value of the service that it gives. Has the Minister any idea of bringing forward the review, which I am told will not be until next year? The cherry picking is already having a great effect on the ability of maintaining a universal service, and I am sure that the Minister will agree that, if it carries on haemorrhaging the profitable parts of the mail business to unregulated operators, the regulator will quickly have to have another look at Royal Mail’s situation. Could he please give us the assurance that the review will take place sooner rather than later?
Lord Popat
My Lords, here was a company which prior to privatisation was turning around £9 billion a year. It lost money for a number of years, to the tune of £1 billion. Preceding the era of privatisation it made a £300 million profit, hence we went for the flotation, at the time when there was the real threat of the American debt crisis as well as unions threatening to strike—and each strike day costs roughly £30 million, so a £300 million profit can be wiped out in 10 days. It was a successful flotation, and the Secretary of State has appointed the noble Lord, Lord Myners, to look into how best we can do any future flotations.
Lord Stoneham of Droxford (LD)
My Lords, despite the generally successful privatisation of the Royal—
The Chancellor of the Duchy of Lancaster (Baroness Stowell of Beeston) (Con)
I am sorry that we have reached the 30 minutes for Question Time and, even though it is me who is at the Dispatch Box next time, I think that it is time that we moved on.
Leader of the House: Cabinet Membership
(9 years, 9 months ago)
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Lord Forsyth of Drumlean
To ask Her Majesty’s Government whether the Leader of the House will be attending Friday’s Cabinet meeting as a full member of the Cabinet.
Lord Forsyth of Drumlean (Con)
My Lords, I beg leave to ask a Question of which I have given private notice.
The Chancellor of the Duchy of Lancaster (Baroness Stowell of Beeston)
My Lords, I will attend Friday’s Cabinet, as my noble friend and predecessor Lord Hill would have done, and will be able to participate fully in Cabinet discussions just as he would have done.
Lord Forsyth of Drumlean
My Lords, I am sure that I speak for the whole House in congratulating my noble friend on her appointment, and I am sure that she will do a brilliant job as the Leader of the House. The Companion to the Standing Orders, in paragraph 4.03, on page 61, says:
“The Leader of the House is appointed by the Prime Minister, is a member of the Cabinet, and is responsible for the conduct of government business in the Lords”.
It says so because it is vital that the Leader of the House has the authority of a Cabinet Minister, especially given the large volume of legislation that comes from the other place undebated and unconsidered. She needs the authority to be able to say to other Cabinet Ministers, “This will not wash”, and to say to the Prime Minister, “I think you need to think again”.
Can my noble friend reassure me that the Prime Minister will bring the situation into line with our Standing Orders and with the guidance in the Companion? Is she really happy with a situation where, for the first time in the history of this House and of Cabinet government, there is no Cabinet Minister in this House? What sort of signal does that send to the Civil Service and others about the authority of this place in its important duty of revising legislation?
Baroness Stowell of Beeston
My Lords, my noble friend raises a number of important points. Clearly he is right to question whether the Leader of the House of Lords is fully equipped to do that job. I am absolutely confident that the Prime Minister has given me the authority I need to represent your Lordships in Cabinet. A few months ago, in answer to a Question on another topic, I said that sometimes I liked to think of myself as an action woman. I like to get things done. I do not need status in order to get things done. I have the authority I need and I shall be judged on the work that I do.
Baroness Royall of Blaisdon (Lab)
My Lords, I have no doubt that the noble Baroness can get things done. This is not about her status; it is about something much more profound. When I heard about this yesterday, I simply did not believe that it could be true. When it was confirmed later in the day, I was deeply dismayed that the Prime Minister could treat this House with such contempt. The men previously appointed to this post by the Prime Minister sat at the Cabinet table as full members. When it is in government, my own party will reverse this. I shall refer the issue to the Constitution Committee and I hope that it will ask the Prime Minister to give evidence.
I have a number of questions but for the moment I will confine myself to this. Other than for a party chair, what are the precedents for a political party paying part of the salary of a Cabinet Minister? Given that the Leader is the Leader of the whole House and not just of the Conservative Benches, surely this is both improper and unethical.
Baroness Stowell of Beeston
I would emphasise to the noble Baroness and to all noble Lords that I shall sit around the same Cabinet table and participate fully in its discussions in exactly the same way as all my predecessors did. It will be a great privilege to do so. As to her question about the salary that the post attracts, I can assure the House that careful consideration is being given to the propriety of any arrangement.
Lord Cormack (Con)
My Lords, what is at stake here is not the status of my noble friend but the status of this House.
Baroness Stowell of Beeston
I can tell my noble friend that I believe that we have a duty to uphold the reputation of the House as a serious and distinguished institution that serves the public interest. That is what we will be judged on and that is what I intend to do. I hope that I have the support of all noble Lords in fulfilling that responsibility.
Lord Laming (CB)
My Lords, does the Leader accept that she commands the full support of the House? There is no doubt about that. Lest there be any doubt, she should understand that the Cross-Bench Members of this House join with all other noble Lords in saying we believe that it is most important that the Leader of this House is a full member of the Cabinet.
Baroness Stowell of Beeston
I am grateful to the noble Lord. As I have already said, I understand why noble Lords are raising this issue. However, if I were concerned that the status I have been given as Leader were in any way diluted and would affect the practical way in which I shall conduct myself in fulfilling my responsibilities, I would clearly question it. I do not believe that it does.
Baroness Stowell of Beeston
I believe that we have not heard from the Lib Dem Benches.
Lord Dholakia
My Lords, does my noble friend agree that the important aspect of this appointment is that the status of a full member of the Cabinet enjoyed by the former Leader, the noble Lord, Lord Hill of Oareford, is in no way diminished by the present appointment? Would she give a categorical assurance that this will be so?
Baroness Stowell of Beeston
I say to my noble friend that, in all practical ways, I will contribute to Cabinet in exactly the same way as my predecessor. That is what the Prime Minister asked me to do.
Lord Cunningham of Felling (Lab)
My Lords, I first join with the noble Lord, Lord Forsyth of Drumlean, in saying that this Question has nothing to do with the ability or the integrity of the noble Baroness. These issues concern the status of this House. Does not history tell us that since 1902 the Leader of this House has been a full member of the Cabinet? What has happened is not that the noble Baroness has done anything wrong; it is that the Prime Minister has diminished the standing and rank of this House.
Baroness Stowell of Beeston
Some historians might question whether there has ever been a Leader of the Lords who was not a full member of the Cabinet. Some documentation I have seen suggests that one of my most distinguished predecessors, my noble friend Lord Carrington, was not a full member of the Cabinet when he was Leader of your Lordships’ House. I refer back to my point that the most important issue, in the context of the status of this House, is how we all conduct our responsibilities.
Lord Crickhowell (Con)
My Lords, it may be true about the time when my noble friend Lord Carrington was Leader of the House, but at least two other Cabinet Ministers at that time were from the House of Lords. Is my noble friend aware that there is no constitutional or formal limit on the size of the Cabinet? The only limit arises on paid members of the Cabinet under the 1975 Act. Therefore, it ought to be possible to arrive at a solution that enables the Cabinet to be large enough to provide what the whole House thinks should happen: that the Leader is a member of the Cabinet.
Baroness Stowell of Beeston
I can assure my noble friend that all options have been carefully explored. The decision the Prime Minister has made is the right one given the constraints under which he has to operate. I share his view on that matter.
Baroness Scotland of Asthal
My Lords, can the noble Baroness accept from all of us that she has our wholehearted support? However, can she not understand that this is a matter of constitutional importance? When she stands at the Dispatch Box she represents the whole of this House. When she says, on behalf of the Prime Minister, that she understands his position, will she not accept that no one else in this House does? Will she convey to him, in the strongest possible way, that it is this House’s view that he has committed what amounts to a constitutional outrage that this House does not accept?
Baroness Stowell of Beeston
I believe that, in making his appointments yesterday, the Prime Minister ensured that we have a Government well equipped to serve the people of this country. I have made the point about the status of the Leader of this House. Clearly, I understand the very strong views that have been expressed during the supplementary questions to this Question. However, for my part, I want to focus on how I do my job and what I do.
Baroness Royall of Blaisdon
My Lords, I realise that a Private Member’s Bill is now due to be introduced, but this is a self-regulating House and there are two or three more noble Lords who wish to put a supplementary question to the Leader of the House. I have the greatest sympathy for the noble Baroness but I ask whether, in this self-regulating House, those Members who still have a question to put to her can do so.
Lord Newby (LD)
My Lords, I remind noble Lords that we are indeed a self-regulating House—but a House that has very clear rules about how we conduct our business. Noble Lords opposite are great defenders of the Companion. I propose that we respect the Companion in this regard.
Lord Bassam of Brighton (Lab)
My Lords, with the leave of the House, we could continue this session for at least another five minutes so that these important and valuable constitutional questions could be addressed. I think that the House is owed that by the Government.
Lord Elystan-Morgan (CB)
My Lords, I respectfully put to the noble Baroness the Leader of the House that the Act which limits the number of Cabinet members to 23 essentially creates a first and second division. The first division comprises ex officio members of the Cabinet, and that is a special status. In the 300-year life of the Cabinet as we know it, there has never before been a situation when at least one Member of the Lords, and probably more than one Member, was not an ex officio member. Has the Prime Minister done this out of oversight or out of a deliberate policy in relation to this House?
Baroness Stowell of Beeston
My right honourable friend the Prime Minister clearly has to operate in accordance with the legislation that prescribes how many Cabinet posts can attract a salary. He has made his decisions on his appointments, as he is at liberty to do, and I believe that he has made those decisions properly. I understand that noble Lords want to keep debating this matter but, as there is very little more for me to offer beyond what I have said so far today, I can only repeat what I said: some important points have been made but I am quite clear that the status that the Prime Minister has afforded me accords me to do my job appropriately.
Lord Foulkes of Cumnock (Lab)
My Lords, does the noble Baroness recall that when Gordon Brown was Prime Minister, he had not just my noble friend Lady Royall as a full member of the Cabinet but my noble friends Lord Mandelson and Lord Adonis as well—there were three full members of the Cabinet. The noble Baroness is Leader of this House. Surely she recognises the view of this House. Why can she not go back to the Prime Minister and say, “This is the view of the House”, and then come and tell us whether the Prime Minister will reconsider his decision in the light of the views of this House?
Baroness Stowell of Beeston
My Lords, the Prime Minister in the previous Government was responsible for the appointments that he made and I am not going to comment on them. However, the one thing that I will say to the noble Lord is that it was the previous Government who decided to make a very substantial constitutional change to this House, leading to the removal of the Lord Chancellor from this House. As I have said, many points have been made in this debate and I am grateful to all noble Lords for what they have said.
Chancel Repairs Bill [HL]
Select Committees
The Chairman of Committees
That Baroness Stowell of Beeston be appointed a member of the following Committees, in the place of Lord Hill of Oareford: House, Liaison, Privileges and Conduct, Procedure and Selection.
Lord Foulkes of Cumnock (Lab)
This Motion is debatable. We are talking about appointing the Leader of the House to various committees. If Members of the House wanted to pursue the issue that we were discussing earlier, we could discuss it now. This is a self-regulating House. It is unbelievable that one distinguished Member of the House—he is leaving now—should get up and move a Private Member’s Bill when it was clearly the wish of the House, indicated by my noble friend the Opposition Chief Whip, that we wanted to ask more questions and have this discussed. It is a pity that this House is being steamrollered in such a way.
Lord Elton (Con)
My Lords, we are now on the next business. I suggest we get on with it and rely on my noble friend the Leader of the House to take the message that we have given her to the Prime Minister and to ask him to read Hansard.
Supply and Appropriation (Main Estimates) Bill
(9 years, 9 months ago)
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Data Retention and Investigatory Powers Bill
Data Retention and Investigatory Powers Bill
(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
My Lords, when I repeated the Statement of my right honourable friend the Home Secretary last Thursday, I outlined to the House the urgent need for this legislation. I am sure that noble Lords will agree with me that it is essential for both the Government and this Parliament to ensure that law enforcement, and the security and intelligence agencies, have the powers they need to do their duty. Those powers are now at risk. If we do not take urgent action, lives could be lost. As your Lordships’ House has already heard, the situation is pressing. The timetable for this legislation is, accordingly, inevitably very tight, and I will talk about the reasons for that.
However, it may be helpful to the House if I make clear that Members who wish to table amendments for the Committee stage of the Bill are now able to do so. Amendments for the Marshalled List may be tabled up until the rising of the House, at which point the Legislation Office will produce a Marshalled List in the normal way. Members will also be able to table manuscript amendments for the Committee stage of the Bill tomorrow morning. Arrangements for tabling amendments for subsequent stages of the Bill will be announced in due course.
Perhaps I may turn to the legislation itself. I should like to take a moment to reassure the House. This Bill does not provide any new powers. It does not alter or amend existing powers. It simply provides a clear basis, in respect of both data retention and investigatory powers, for the exercise of existing powers. Crucially, and quite rightly, the legislation is sunsetted. Its provisions will be repealed at the end of 2016. The intention—Clause 7 has been amended in the Commons to provide an explicit legal basis for this—is that we will have time in the interim for a proper debate about what powers are required in the future. There will be a review, led by the independent reviewer of terrorism legislation, David Anderson QC, into what powers and capabilities might be required in the future, considered in the full context of the threat. That review will consider capabilities but it will also consider safeguards to protect privacy, the challenge of changing technologies, issues of transparency and oversight, and the effectiveness of current legislation.
David Anderson’s work will be far-reaching. It will provide a robust, independent basis for the subsequent work of a Joint Committee of Parliament, to be established following the general election. There will be a public debate and Parliament will have the necessary time to consider legislation on these important and complex issues. I know that some noble Lords have questioned the timing of the sunsetting provision. I hope now that the Government’s intentions behind that timing are clear.
Noble Lords will also be aware of the wider package of measures, announced by the Prime Minister last week, which will strengthen safeguards and reassure the public that their rights to security and privacy are equally protected. We have now published terms of reference for the various measures, including the privacy and civil liberties oversight board. Following ongoing discussions with the Opposition and consideration in the Commons, we have amended Clause 6 to ensure that the independent Interception of Communications Commissioner will now report every six months. I am sure that your Lordships will agree that these measures will help to ensure a better-informed public debate.
I now turn to the purpose of the Bill and the matters before us today. Communications data—the who, where, when and how of a communication, but not its content—can be used to piece together the activities of suspects, victims and vulnerable people. They can prove or disprove alibis, identify links between potential criminals, tie suspects and victims to a crime scene, and help find vulnerable persons at risk of imminent harm. Only this morning, noble Lords will have seen the news that the National Crime Agency has made more than 600 arrests as part of a six-month operation targeting people accessing child abuse images online. Senior officers are clear that, without access to communications data, many of these investigations would hit a dead end.
Those data are held by communications service providers for their business purposes and where they are required to do so by law. They are then accessed by law enforcement, subject to stringent safeguards, where it is necessary and proportionate to do so for a specific investigation. But, as I explained last week, a recent judgment in the European Court of Justice has put into doubt the legal basis on which we require service providers in the UK to retain communications data. As a result, we run the risk of losing access to data that are vital to a wide range of investigations. This could be devastating. It would seriously undermine the ability of the police, the National Crime Agency, the intelligence services and others to prevent and detect crime, catch terrorists, and safeguard and protect children and others at immediate risk of harm.
The Bill also deals with investigatory powers and, specifically, the interception of communications. The content of a communication—the text of an e-mail or a telephone conversation—can play a critical role in the work of law enforcement and the intelligence agencies. The majority of the Security Service’s top priority counterterrorism investigations use interception in some form to identify, understand and disrupt the plots of terrorists. The police and the National Crime Agency rely on interception to prevent and detect serious crimes, including drug trafficking, human trafficking and child sexual abuse.
The House will know that interception can take place only if there is a warrant authorised by a Secretary of State and that can happen only where he or she considers it necessary and proportionate and where the information sought cannot reasonably be obtained by other means. The legislation that provides for interception—the Regulation of Investigatory Powers Act 2000 or RIPA—obliges telecommunications service providers to give effect to interception warrants. This Government, like our predecessors, have maintained that this obligation applies to companies with customers in the UK, irrespective of where those companies are based. Given the increasing reliance of suspects in the UK on internet-based communications, the compliance of overseas companies is increasingly important to the UK’s interception capability. However, in the absence of explicit extra-territoriality, some overseas companies have now started to question their obligations under RIPA. Those companies have made it clear that they will comply with the law only where there is an explicit obligation to do so. Unless we put the matter beyond doubt, we could, very shortly, see a damaging loss of capability.
I now turn to the Government’s response to this situation. The Bill before the House today is a narrow and focused response to these two issues: the ECJ judgment and the potential loss of compliance with RIPA. On both matters, it makes explicit what we have always asserted to be the case. The first part of the Bill deals with the issue of data retention. At present, we can oblige companies to retain data where they are issued with a notice under the data retention regulations passed by Parliament in 2009. This means that the data are available when the police need them for an investigation. In spite of the ECJ judgment ruling, we have been clear that these regulations remain in force. However, in the light of the judgment, it is necessary to put the legal basis for these requirements beyond doubt. If we do not, there is a risk that these companies may begin to delete crucial data. Equally, if there were a successful challenge in the domestic courts, this would lead to an immediate loss of data.
Accordingly, Clauses 1 and 2 of the Bill provide a clear basis for data retention. They will replace the existing data retention regulations of 2009, maintaining the status quo. The data types to be covered by this new law will be identical to those in existing law. Although the European Court of Justice was critical of the data retention directive, it recognised the importance of data retention in preventing and detecting crime. Crucially, while the court asserted that the directive itself lacked the necessary safeguards, it did not take into account the robust regimes that exist in member states governing the access to the data. We believe that our retention and access regimes already address many of the ECJ’s criticisms. Among other safeguards, they include an authorisation process that was scrutinised in detail and endorsed by the Joint Committee on the Draft Communications Data Bill, ably chaired by my noble friend Lord Blencathra, and they are subject to robust, independent oversight by the Interception of Communications Commissioner.
The Government have, however, considered the judgment at length and are bringing forward changes that will extend the safeguards in place in order to respond to elements of the judgment and to ensure that the Bill is compliant with the European Convention on Human Rights. These include: the imposition of a requirement on the Secretary of State to consider the necessity and proportionality of a data retention notice before issuing it; specifying that the length of time for which data must be retained should be a maximum, rather than an absolute, period of 12 months; and the creation of a code of practice for data retention, which will place on a statutory footing well-established best practice.
A number of further safeguards will be introduced through the regulations made under the Bill. These regulations were published in draft last week.
Lord Phillips of Sudbury (LD)
I apologise for interrupting the flow of my noble friend’s speech. However, he started by saying that the Bill introduced no new powers and did not amend existing powers, but he appeared just now to indicate that there were new powers in the Bill. Have I got it wrong?
Lord Taylor of Holbeach
My noble friend has got it wrong: it is about safeguards. I am talking about safeguards, not powers. I am talking about the Bill imposing limits on the discretion of the Secretary of State through the regulations and the Bill itself. If my noble friend will allow me to continue he will see that I am placing that in the context of seeking to provide a basis for continuing the provisions of the Bill without extending the powers that are available to the Secretary of State or the Government under the Bill.
Lord Knight of Weymouth (Lab)
I apologise for intervening in the Minister’s speech, but given that he has just been interrupted anyway, on the same point, can he clarify that Clause 4, “Extra-territoriality in Part 1 of RIPA”, is not an extension of the legal powers that the state has in respect of these matters?
Lord Taylor of Holbeach
I can indeed do so. Extraterritoriality was assumed by the Government to be part of RIPA, and rightly so, as part and parcel of their legislation. We are making it explicit so that there can be no question of doubt about it. On extraterritoriality, as I said in my opening remarks, RIPA was based on the correct assumption that any firm that provided services here within the UK was governed by the law that we had in connection with these matters. In my view, there is no argument about that. Perhaps I may go on and finish my speech. The noble Lord is gracious enough to acknowledge that this is all of a piece, and I would like to be able to present it to the House as a piece.
I mentioned the number of safeguards to be introduced through regulations made under the Bill. These regulations were published in draft last week to enable parliamentary scrutiny and are available from the Printed Paper Office. The Delegated Powers and Regulatory Reform Committee has considered those regulations and made a report, which I am sure many noble Lords will have considered. I thank the committee’s members for their work. They have, as always, provided a useful and thorough review of the issues. In the case of this Bill, they have done so in a necessarily short period of time.
The committee is of course correct that it would be best to avoid a gap between the passage of this legislation and the passage of regulations. That is why the Home Secretary has been clear that our intention is to ensure that this secondary legislation can be approved by both Houses before the Summer Recess. This should reassure members of the committee, and other noble Lords, that the powers in question will not be exercised in lieu of those regulations being approved. It will not, therefore, be necessary to use the “made affirmative” procedure in this case. However, I thank my noble friend Lady Thomas of Winchester and her committee: their suggestion was a positive one. I am pleased that we have been able, through the usual channels, to ensure a more direct way of achieving the same objective —bringing the regulations into play before the Summer Recess.
The committee has also invited me to address the potential scope of the delegated power at Clause 1(3). I am pleased to do so. The Government have already published a provisional draft of the regulations to be made under the Bill, and these go no further than the existing data retention regulations 2009. They are, I can confirm, limited to matters relating to the powers conferred by Clause 1(1) and (2). I hope that this will satisfy the House of the Government’s intention.
The second part of the Bill deals with interception. In relation to interception, Clauses 4 and 5 make it clear that the obligation under RIPA to comply with interception warrants applies to all those companies that provide communications services to people in the United Kingdom, regardless of where those companies happen to be based. These provisions do not extend existing powers. They simply seek to make explicit what has always been asserted to be the case.
I know that many noble Lords will be interested in Clause 5, which clarifies the definition of a telecommunications service. When RIPA was considered by Parliament in 2000, it was intended to be technologically neutral. Much of it relates to fixed line or mobile telephony, so it also covers web-based e-mail and social media communications. We are simply seeking to clarify that definition in order to put this matter beyond doubt.
These provisions will make clear the legal obligation on companies that provide communications services to people in the UK to comply with warrants issued by the Secretary of State. In the absence of such clarity, vital capabilities may be lost in the near future. It is of course never ideal for these matters to be considered in haste, but I trust that noble Lords will agree that it is imperative that we urgently address these issues.
I know that some noble Lords have asked about the delay between the court judgment on 8 April and this legislation being introduced. Following that judgment we needed to balance the necessity to respond quickly with the need to ensure that care was taken to get our response right. We could not have acted prior to that judgment because the precise response needed to be framed in relation to the detail of the judgment. While we are clear that the existing regulations remain in force, we must act now to put this matter beyond doubt, providing a basis in primary legislation and responding to some of the points made by the court.
In relation to interception, as I have told the House, we have reached a dangerous tipping point. It has become clear that without immediate legal clarity we could soon see a loss of vital co-operation. This is not a matter that we are able to leave until after the Summer Recess.
I express my thanks to both sides of the House for the support that they have given to the Bill. It has been constructive, I think, to have spent Monday talking to various Peers about it. I particularly pay tribute to the noble Baroness, Lady Smith of Basildon, for the constructive approach that the Opposition have taken. I look forward to an equally constructive debate in the House as we consider the Bill on Second Reading and at later stages.
I recognise that this is a tight timetable, but I hope that I have made clear the reasons for that. They were accepted in the House of Commons, which overwhelmingly backed the Bill yesterday. I am sure that noble Lords agree that we must ensure that the police and the security and intelligence agencies have the capabilities they need to protect the public and keep us safe. That is what the Bill will do. I beg to move.
Baroness Smith of Basildon (Lab)
My Lords, we are grateful to the Minister for his explanation of the content of the Bill before us today. We were clear in responding to the Statement last Thursday that, while recognising the immediate need to retain existing evidence relating to investigations into serious and organised crime and national security, the Government’s handling of this issue raises serious questions and concerns.
Those concerns remain, and I will come back to them, but, at the outset, I welcome the Government’s acceptance of the two amendments that we tabled yesterday in the other place, which gave statutory authority to both a six-month review of this legislation and a wider review of RIPA, the Regulation of Investigatory Powers Act—the legislation that provides for and underpins the whole basis of intercept evidence. That means a much more detailed and fuller consideration not just of the legislation but also of the context, application, implementation, impact and effects—and, importantly, the oversight—of the wider issues involved in retaining data and of intercept evidence. As the Minister said, that will be undertaken by the independent terrorism legislation reviewer, David Anderson, and we consider that such a comprehensive review is essential.
These are highly sensitive and crucial issues. Fast-tracking this legislation in the week before the House of Commons rises and just two weeks before your Lordships’ House goes into recess, when it could have been brought forward earlier does not inspire the confidence to which we and the public are entitled.
Clauses 1 and 2 provide for the retention of communications data—which is very similar to the powers provided for in the data retention directive and then in the 2009 order that gave effect to it. The directive allowed for data to be retained for up to 24 months, although the 2009 regulations provided a limit of 12 months, as the then Labour Government considered that to be adequate and proportionate. As the Minister explained, legal action then followed and, as a result, the directive was struck out in April this year. Although the UK regulations remain, they could be legally challenged.
We accept the necessity of retaining that data as an essential tool in investigating and providing evidence of some of the most serious and organised criminal activity. We also concur with the judgment of the Constitution Committee in its report today that the ECJ legal judgment means that the 2009 regulations lack legal authority and that new legislation is required urgently to replace them.
However, we are told that following the ECJ judgment, an assessment had to be undertaken as to the legal framework and what action was required by the Government. Why “following”? I appreciate that the judgment was detailed, but the basic, fundamental issue was clear. Given how important it is, we find it absolutely incredible that, prior to the court decision, the Government appear not to have undertaken the necessary work to ensure that a new legislative framework could have been put in place with the appropriate scrutiny of both Houses of Parliament in good time.
In its report today, the Constitution Committee reinforces this point in its comment at paragraph 6, when it says:
“The contrast between the time taken by the Government to consider their response and the time given to Parliament to scrutinise the bill is a matter of concern, not least because of suspicions that are naturally aroused when legislation is fast-tracked”.
It is not the first time. Albeit on a different issue, in July 2012 when the courts struck out the statement of Immigration Rules, it appeared that the Government had not taken the necessary advanced preparation and no action was taken until after the court decision; it was rushed in in the few weeks before recess. This is no way to legislate. Since the first Bill we have been dealing with in this new Session of Parliament was the Serious Crime Bill, I have to press the Minister as to why this legislation was not brought in alongside that Bill to ensure greater scrutiny. We may still have had to accept some truncated intervals but it would have been a significant improvement on what we have now and would have removed some of the distrust and suspicion that fast-tracking has brought.
In its 2009 report Fast-track Legislation: Constitutional Implications and Safeguards, the Constitution Committee set out certain principles that should be addressed when Governments seek to fast-track legislation. Looking at this, it seems that many of those principles have now been met, either in the legislation or by the Government’s acceptance of our amendments yesterday in the other place. Noble Lords will be aware that in the discussions we had with Ministers, we were insistent on a sunset clause. That has been agreed. The 2009 report also referred to post-legislative review; the Government’s acceptance of our amendments regarding the six-month review of the legislation and a statutory basis for the review of the Regulation of Investigatory Powers Act meets that criteria.
The Constitution Committee listed other principles then but there is one on which I seek a distinct and precise response from the Minister, and it is raised again by the Constitution Committee in its report today. Why has this had to be fast-track legislation? I have been clear, and the committee is clear in its report, that the issue is not the time imperative which we now face to ensure that investigations of serious crime can continue but why the Government failed to bring legislation forward before now. The Government have a duty to provide Parliament with a significantly better response than we have received to date.
As we have heard, Clauses 1 and 2 of the Bill, which is now somewhat affectionately known as DRIP, provide for the continuation of powers to retain communications data collected in the UK for a limited time. We are clear that these powers are needed. This information is used to investigate and prosecute some of the most serious crimes, and of course it can be used to prove an alibi of someone wrongly accused of such crimes. My understanding is that these data, held temporarily for up to a year, are used in something like 90% or 95% of all serious and organised crime investigations, counterterrorism investigations and online child abuse investigations.
For absolute clarity, it would be helpful if the Minister could confirm that nothing in those first two clauses on data retention allows for the content of communications to be retained, only information relating to the fact that a communication has taken place. Can he also confirm that nothing in these clauses in any way extends or enhances the existing data retention directives and that, as the Home Secretary said in her Statement, the number of public bodies able to access communications data will be reduced, as referred to in the judgment of the ECJ? Is he able to say anything more about that at this stage and when the order limiting use of these data is likely to be brought forward?
The Minister commented earlier on the Delegated Powers Committee’s report on this issue. It addressed that in paragraph 7 and suggested using the “made affirmative” procedure to ensure that the regulations are in force before the powers can be exercised. That is a helpful and welcome suggestion, as he acknowledged, because it addresses the illogicality of having fast-track primary legislation if the accompanying and essential secondary legislation which provides safeguards is not made available at the same time. I heard what the Minister said in response to that report in his opening comments. If I understood correctly, he agreed that that should take place but I was not totally clear whether he was agreeing to the procedure or saying that some other procedure would be found to ensure that secondary legislation would be in place when this Bill comes into force. It would be helpful to the House if he could explain that when he winds up.
Clauses 3 and 4 make explicit the territorial provisions in RIPA to put it beyond doubt that interception warrants can be issued on companies which provide services to the UK but are based outside the UK. They also clarify how such warrants can be issued. As I think noble Lords understand—I am sure that the Minister understands this from the meetings that he has had with me and others—this part of the Bill is more complex and illustrates how global the communications world has become. Increasingly our communications are global rather than local, but local communications can also be provided by companies that provide services within the UK while their headquarters may be outside the UK. The distinction between national and international data is extremely blurred in the light of modern technology. Will the Minister confirm that such information is already sought and provided in certain circumstances, and that these clauses ensure that the legal framework is explicit?
We have heard from the interventions from the noble Lord, Lord Phillips, and my noble friend Lord Knight about whether the extraterritorial claims go beyond current legislation. It would be helpful to have further clarification on this. My understanding, and perhaps the Minister can confirm this, is that it does not extend beyond the current practice and application of the law but reassures companies of the legal basis to comply with the legislation.
Lastly, I want to address the issue of safeguards and the wider review. The Government have to recognise that bringing forward these measures under the fast-track procedure means that it is essential that Parliament returns to these issues but that it does so in a completely different way. As important as these measures are, we should all recognise that this is temporary. There is a sunset clause to say that these provisions will expire at the end of 2016, when new legislation will have to be in place. Before then, a much wider review has to take place that must inform any such future legislation and oversight arrangements.
We believe that data communication information and intercept evidence are vital in tackling the most serious of crimes, and for national security. I think that all noble Lords recognise that we do not live in an ideal society where all citizens are guaranteed total and absolute privacy, and that modern technology requires legislation protecting security and liberty to be kept up to date and relevant. Equally importantly, we recognise that there must be safeguards to ensure that any collection of information must be proportionate and justified, and that measures should be used only for the purpose for which they are intended. There must be safeguards to protect the public interest and public privacy. The public have a right to confidence that the collection and retention of data meets these criteria. The establishment of a privacy and civil liberties board, as mentioned in the Home Secretary’s Statement, is welcome but it will have to be set up and operated in a way that inspires confidence in its title. We also support strengthening and enhancing the Intelligence and Security Committee.
Previously, the Government have resisted our calls for an independent review, so we welcome their acceptance of our amendments in the other place yesterday to ensure the statutory review of RIPA and the wider implications of the legislation. There has to be more than that, though; following that review, and before new legislation, there has to be a wider public debate. I said at the beginning that these are sensitive issues; they are also complex ones that strike at the heart of the issues that we care about most. We care about crime, national security and public safety, but we also care about the rights and privacy of individuals. It is not unreasonable for the public to demand both security and liberty. We have to get that balance right. We have to have public understanding of the issues and public consent, and fast-track emergency legislation does not give us that.
We support the Bill and are content that it maintains the existing capabilities, and we are content that the proposals do not extend the application of existing frameworks but provide a secure legal position and fill an immediate gap to ensure that vital evidence will not be lost. However, these issues, with all their complexities and sometimes seeming contradictions, are not short term. They will be with us for a long time and we need proper, sustainable policies that command support, not just temporarily but for the longer term. The real challenge has yet to be met.
For all the concerns about the nature of today’s debate and the use of fast-track legislation, we should use this debate as a starting point. It is an opportunity to welcome the broader, wider review; to strengthen oversight; to properly and effectively consider the balance between liberty and security, between privacy and public safety, in a world where technology is developing faster than at any other time in history; and to ensure as far as possible that this is not a private debate but one that, through honesty and clarity, provides confidence that we can get the balance right.
Lord Paddick (LD)
My Lords, it is clear to me, having served as a police officer for more than 30 years, how important it is for communications companies to continue to retain the data that the Bill requires them to keep. Having said that, as a Liberal Democrat, I am extremely concerned to ensure that any invasion of privacy is undertaken only where it is absolutely necessary, proportionate and compliant with both the European Convention on Human Rights and the European Court of Justice judgment.
As the Minister said, there are two main aspects of the Bill: data retention and interception. On the first aspect, it is important, but not widely understood, that this legislation is about data being retained by private companies, not by the Government or their agencies, so that those investigating crime can make specific requests for data about specific individuals. It is also important, but widely misunderstood, that these data give only the context and not the content of the communication: the date, time, place and identities of those involved in the communication, but not what was said.
My noble friend Lord Macdonald of River Glaven will talk about his experience as a former Director of Public Prosecutions, but my experience is, as the noble Baroness, Lady Smith of Basildon, indicated, that there are very few prosecutions of those involved in serious and organised crime or terrorism that do not use such data. Indeed, some cases heavily rely on such data. I cannot overemphasise the importance of these data for crime detection purposes.
Despite the reassurances given by the Minister, there are justified and serious concerns about the haste with which this legislation has been laid before us. My noble friends Lord Carlile of Berriew and Lord Strasburger will take up those points. That is not to say that there are not justified and serious concerns about the use of these data. It is not just the data of those suspected of crime that are retained, but everyone’s data.
There are concerns that access to the data is being given where such action is not considered to be proportionate. In addition to the police investigating serious crime and the security services and the police investigating terrorism, other agencies, such as local authorities, can access these data for relatively minor matters. That is why the Liberal Democrats are insisting that the range of agencies that can access the data is restricted. Will the Minister please inform the House of what those restrictions will be?
There are also concerns that even those agencies that have legitimate access to the data might make requests that are not justified or proportionate. That is why the Liberal Democrats are insisting that annual transparency reports are produced to ensure that the number of requests does not significantly increase under this legislation. Will the Minister confirm that this will be the case?
The second area is the interception of the content of communication, which requires a warrant signed by a handful of senior government Ministers, and the apparent extension of this power overseas. Will the Minister confirm that it was always implicit in the Regulation of Investigatory Powers Act, passed by the former Labour Government, that the power extended to companies whose infrastructure is overseas and that this Bill merely clarifies and does not extend its geographic reach? I know the Minister made that statement in his opening remarks, but it would be helpful for it to be emphasised because it is a major concern of many non-governmental organisations.
More generally, there are genuine and serious concerns about the whole area of intrusion into privacy and where the balance needs to be struck between privacy and security, as the noble Baroness, Lady Smith of Basildon, said. That is why the Liberal Democrats are insisting that there is a fundamental review of RIPA. We are very pleased that that was taken up in the other place by the party opposite and put into legislation. We need a fundamental review of all other legislation in this area and a sunset clause in the Bill to ensure that this review is undertaken. We need a proper debate in this country about how far we are willing to allow the state to intrude into our lives to keep us safe. Such a conversation has been delayed for far too long, and I am very pleased that, through the negotiations by the Deputy Prime Minister, this review will allow a proper discussion of these vital issues.
Can the Minister also confirm that an independent privacy and civil liberties oversight board will be established to advise the Government, not only on this review but on an ongoing basis, and that the Intelligence and Security Committee will in future be chaired by an opposition MP, to provide further confidence that there is a proper check on the activities of the Government and their agencies?
The new oversight board, the review of RIPA and the new annual transparency reports to be made to Parliament are all things that the Liberal Democrats supported at our recent party conference, where we called for a new digital Bill of Rights. Far from being a new intrusion into civil liberties, the Bill, alongside the package of changes also announced, will, I believe, strengthen civil liberties. We need to go further and enshrine a new digital Bill of Rights in statute, but these measures are an important step in the right direction.
The Liberal Democrats are very concerned about this whole area of privacy and security, which is why we have sought the concessions the Government have promised. That is why, when the Home Secretary saw this case as an opportunity to bring forward the communications data Bill again, we again blocked it. However, we accept these changes, on the basis of one final and vital point—that it is clear that this new Bill does not extend the power to intrude into people’s privacy.
As the Minister has said, this is not about extending the law further via emergency legislation rushed through Parliament. It is about retaining the status quo, which has been undermined by recent legal developments at the European Court of Justice, and the Government are in discussion with major non-UK telecoms providers. On that basis, and subject to the agreed concessions coming into force, we support the Bill.
Lord Butler of Brockwell (CB)
My Lords, I should say at the outset that I am satisfied that the Government need the legislation before the House today. But like the noble Baroness, Lady Smith of Basildon, and others, I am very critical of the way in which Parliament has been treated on this matter. Taken with the subject discussed in the Private Notice Question earlier, this is a bad day for the relationship between Government and Parliament.
The Intelligence and Security Committee, on which the noble Marquess, Lord Lothian, and I represent this House, was warned a week ago today—last Wednesday, the day before the Home Secretary’s Statement—that this emergency legislation was to be introduced. The imminence of that Statement was widely reported in the next morning’s media, ahead of the Home Secretary’s Statement, so it appears that the media were briefed at the same time.
Why has Parliament been given so little time to consider this Bill? The two issues that it addresses have been apparent for weeks, indeed months. The ruling of the European Court of Justice was issued on 8 April. It was clear from that moment that the regulations that the intelligence agencies and the police in the United Kingdom use to seek details of communications from providers had become vulnerable to challenge. So the need for action, which this Bill addresses, has been known about for three months.
The second issue that the Bill addresses is the assertion that powers to require data from providers abroad have extraterritorial effect. But several of the communications providers based outside the United Kingdom have made no secret of the fact that they are willing to respond to requests for communications data only if they are required to do so by legislation. There is nothing new in that. Nor did it only become apparent last week that some of the major providers were based outside United Kingdom jurisdiction, or were about to move there. That, again, has been known for a long time.
The House may remember that following the Home Secretary’s Statement last week, which the Minister repeated, I raised this issue with him. He gave me a reply that at the time seemed good to me. However, on reflection, I find that I am not persuaded by it. The Minister explained that the delay between the ECJ judgment and the announcement of this legislation was due to the fact that the Government had been working with the law enforcement agencies and the data providers to get the details right. That is very understandable. Therefore the Government were discussing this problem with Microsoft, Yahoo! and other providers. Why were they not willing to discuss the issue similarly with Select Committees of Parliament when they were already discussing it outside the House? If the Government could reach a conclusion about the necessity for this legislation one week before the House of Commons went into recess, it beggars belief that they could not have reached that conclusion three weeks before the Recess, thus giving Parliament proper time to consider the Bill.
In 2012, when faced with the growing difficulty of getting access to communications data, the Government published a draft communications data Bill, as the House will remember. That Bill provided for a substantial extension of the Government’s powers, and the Government, very properly, provided the opportunity for a Joint Committee of both Houses and the Intelligence and Security Committee to examine the Bill and report on it. Both committees made some criticisms of the draft Bill, and the coalition decided not to go ahead with it as a result of the reservations of the Liberal Democrat members of the coalition. Unlike that Bill, this Bill does not break new ground, so the Government’s failure to give Parliament longer notice of it and enable Parliament to satisfy itself about its details is more difficult to explain. Those who take a conspiracy view of government might be tempted to speculate that having burned their fingers through consultation on the communications data Bill, the Government thought it wiser to bounce Parliament rather than to run the same risk again. The Minister owes the House an explanation of that.
I criticised the Government for their delay in consulting Parliament about the Bill. I have also asked myself whether the Bill is so urgent that it has to be treated as emergency legislation in the few days remaining before the Summer Recess. On this I believe the Government have a more convincing story to tell. I understand that the Government take the view that the UK regulations based on the European directive do not automatically lapse as a result of the ECJ judgment. One might therefore take the view that it could be several months before they could be challenged in a UK court, which would enable Parliament to consider the Bill properly in the autumn. However, I am advised that following the ECJ judgment, and ahead of a challenge, communications providers might feel obliged to destroy data that are no longer needed for their own operational purposes, and that evidence valuable for the prosecution of crime or prevention of terrorism might be lost. Similarly, the co-operation of communications providers outside the jurisdiction is sufficiently valuable in the prevention of serious crime and terrorism that I accept that the assertion of extraterritorial coverage should not be delayed. Therefore on the substance of the legislation, as I said at the outset, the powers in the Bill are necessary, subject always to the reservation that there has not been time to study its provisions in the detail that would have been desirable.
When the Intelligence and Security Committee examined the communications data Bill, which extended the Government’s powers, we were satisfied with the case in principle for extended powers, subject to important issues of detail. Although our committee has not had as much opportunity as it would have wished to examine the present Bill, it would be odd to cavil at the maintenance of existing powers which have been shown to be very important for the investigation and prevention of serious crime. Therefore, with regret that the Government have not given Parliament the time to examine the Bill properly in detail, I support the legislation.
Lord Howard of Lympne (Con)
My Lords, in view of the support for the proposals in the Bill, which has been voiced by the last three speakers—hedged around with caveats though that support was—I hope that I can be relatively brief in my support for those proposals. It is, of course, for my noble friend the Minister to reply to the criticism made by the noble Lord, Lord Butler, but it does not seem to me to be wholly unreasonable that the Government waited until they knew how they were going to proceed before putting proposals to Parliament or its committees. They could not know how they were going to proceed until they had completed their consultations with the companies to which the noble Lord referred. That does not seem to me to be unreasonable. However, that is really a matter for my noble friend the Minister. I propose to address my brief remarks to the substance of the Bill and the general proposals. They have not yet been challenged, but the debate is young and there may be those who may yet wish to challenge them.
One of my honourable friends in another place said yesterday that we should be cautious about allowing technology to infringe our freedoms. I would put it rather differently: I believe that we should embrace technology in order to protect our freedoms. The greatest freedom that any citizen can have is the freedom to carry out his or her lawful business without the danger of being blown up or being the victim of some other serious criminal offence. If the law enforcement authorities are to be able to carry out their job and protect that fundamental freedom, it is essential that they have the powers which are contained in this Bill.
The point was put extremely eloquently yesterday in another place. If noble Lords will permit me, I shall do something which I do not believe I have ever done before, which is to quote—with approval—from the observations of my immediate successor as Home Secretary, Mr Jack Straw. He said that,
“where there is a suspect for a crime, it is for a crime that has been committed in the past. The police will not know who that suspect is until they come to the police’s attention, at which point they have to get historical evidence. These days, part of that historical evidence will be in data records. They have to be able to access everybody’s data records in order to find those of one particular person, because the police, no more than the rest of us, are not given powers of clairvoyance with which to anticipate who is and who is not to be a suspect. Unless or until I hear from opponents of this Bill and of data retention how the police can be expected to identify in advance those who are going to be suspected of crime, I have to say that the whole logical basis of their argument completely falls away”.—[Official Report, Commons, 15/07/2014; col. 734.]
Mr Straw was absolutely correct in those remarks. They go to the nub of the need for the powers contained in this Bill. He went on in his speech to explain that the supervisory powers over the authorities which have the ability to exercise the powers contained in the Bill has been extended and strengthened in recent years. I believe that that supervision is robust, and that it is adequate to protect the essential liberties of the citizen. I commend these proposals to the House.
Lord Knight of Weymouth
My Lords, I have to start —like the noble Lord, Lord Butler, who made such an excellent contribution—by saying that the Government’s handling of this Bill has been a disgrace. I cannot repeat any better why it is a disgrace, and it would be ridiculous of me to try to compete with the noble Lord’s analysis. To have given Parliament three days when they have had three months to consider their response is a disgrace. Although my ministerial experience, at just five years, is much more limited than that of the previous speaker, whom I equally respect, particularly his experience as Home Secretary, I know that when there was the threat of a case in the European Court, Ministers would receive a risk analysis. I find it difficult to believe that no one in the Home Office had a plan B. If they were to lose that case, the thinking was not going on within government as to how they were going to handle losing the case and the uncertainty with which they would then have to deal with the RIPA powers. So I am afraid that that is my starting point.
I would also strongly agree with my noble friend Lady Smith of Basildon and others when they say that there is a need for Parliament to be seen to address the very real public concerns over the balance of privacy and security and the desire for personalisation of digital services. Some of us use digital services very heavily and are only just becoming aware of how much our desire for all those personal services that come through on our phones and tablets generate metadata that are now the subject of this legislation. Given the need for Parliament to be seen to address and debate, and lead a debate in the wider public, on those concerns, it is an affront to see the legislation railroaded using the fast-track mechanism. The basis of my comments is to analyse whether some of that is justified.
Yesterday, as is my wont, I gave some friends and some of their family who are over from Canada a tour of the Palace of Westminster. Highlights of that tour are always things such as the Magna Carta; there is a copy in the Content Lobby, and we will enjoy celebrating its 800-year anniversary next year. Then there is the statue of Lord Falkland, where the sword was cut to allow a suffragette called Marjory Hume to be taken off to prison in 1909, and the plaque commemorating Nelson Mandela speaking in Westminster Hall. Best of all is the broom cupboard in the Crypt, where Emily Wilding Davison hid on the night of the 1911 census, and the phrase at the end that Tony Benn put there:
“By such means was democracy won for the people of Britain”.
That tour contains in its highlights all those moments where we recognise hard-won civil liberties for us as individuals, both here and around the world. It is incumbent on us as a Parliament and those who serve at any given time in this Parliament to protect those liberties as strongly as we protect the safety and security of the people in this country.
We also need to remember that we have a different tolerance of our own privacy, because we agree to become public figures when we agree to come here, than do most people who live in our country. The information in Who’s Who would probably allow anyone who wanted to steal some of my information to do so, because it has my mother’s maiden name as well as my date of birth, which are the sort of questions that you get asked online. We understand that when we fill out the entry in Who’s Who and we are aware of the risks that we take when we do so. I hope when we make up our security information online that we are also aware of it and are accordingly cautious.
We also need to be aware of the issue of metadata. When I sat in the audience in the Donmar Warehouse theatre a month or so ago, as a guest of my noble friend Lord Mitchell, watching the play “Privacy”, we heard gasps from the audience when they found out how the default settings on an iPhone mean that Apple knows exactly where we are and exactly when at any given time, unless we change those settings. They were some of the greatest moments of theatre that I have seen in some years—it was my first profession— when I heard the gasps of the audience who saw the pictures of their houses flashed up on the back of the screen, because the researcher had researched them using metadata to show where they all lived. That is metadata, the subject of the Bill—and that is something that we have to be cautious about.
There has been a breakdown of trust in recent years between the people of this country and the state, particularly those pursuing criminal investigations. This is because of Hillsborough and Savile; because of phone hacking, and plebgate. We must have an active debate on a regular basis because of PRISM and because of the powers that the private sector and, through it, the state and GCHQ have to access our data. As a Parliament we have been remiss in not debating Snowden as actively as we should have and as actively as they have done in the US. If we do not, I think we are failing the public
I am persuaded by the arguments that Clauses 1 to 3 are necessary. I believe that security and the ability to continue criminal investigations mean that we have no choice but to pass Clauses 1 to 3 of this Bill. This was well put by the noble Lord, Lord Paddick. We need the status quo for criminal investigations.
I welcome the concessions that my right honourable friend the shadow Home Secretary, Yvette Cooper, has won in getting the RIPA review and six-monthly reporting into the legislation. I worry that the thinking behind these reviews is through the prism—if that is not the wrong word—of security and law enforcement as the starting point, rather than the data privacy of individuals. I should also like to see a review of the operation of the Information Commissioner’s Office. According to its website, it is:
“The UK’s independent authority set up to uphold information rights in the public interest, promoting openness by public bodies and data privacy for individuals”.
That office needs to be the guardian of members of the public on these issues. I hope the Minister will be able to give an assurance from the Dispatch Box that the Information Commissioner’s Office will be included in some of that review work.
Clause 4 concerns what I will call the new powers overseas because I cannot pronounce extraterritoriality very well. I struggle to see the emergency for this to be included in a fast-track Bill. In the report of the Constitution Committee, published today, paragraph 11 says:
“It is not clear why these provisions need to be fast-tracked”.
It may not be fashionable to quote Liberty but it says that Clause 5 of DRIP, read together with Clause 4 (8), gives the Government “new, express powers” to go to foreign webmail providers and demand that they hand over or obtain communications data. The objectives of the snoopers’ charter are therefore met via another route. That is their charge. If the Minister were able to respond to that, I think that supporters of Liberty would be pleased to hear it.
As I am sure your Lordships will all have done, I have received a letter from a list of highly credible legal experts on internet law. These are professors from a whole range of our best universities. They say that this clause,
“introduces powers that are not only completely novel in the United Kingdom, they are some of the first of their kind globally”
The letter continues,
“the proposed Bill arguably breaches EU law to the extent that it falls within the scope of EU law, since such mass surveillance would still fall foul of the criteria set out by the Court of Justice of the EU in the Digital Rights and Seitlinger judgment”.
They would say that the reassurance which the Minister gave, following my intervention, is not true. I am sure that everything the Minister is saying is on good advice and in good faith. I know him to be a completely honourable and truthful man and I do not question what he is saying. However, I would value it if he were able to publish or circulate to Members of your Lordships’ House the advice he has received that this legislation, particularly Clause 4, is not in further breach of EU law, and that it will not extend the legal rights—not the practice but the legal rights—of government in respect of these matters.
On balance, very reluctantly, I support the Second Reading of this Bill, but I question whether Clause 4 should continue to be in the Bill.
Lord Macdonald of River Glaven (LD)
My Lords, I am not going to labour the importance of communications data in serious criminal trials. That has been widely acknowledged. However, I cannot think of a single major terrorist trial in recent years in which this material has not been deployed to significant and sometimes determinative effect. As the central purpose of the Bill is simply to preserve a situation in which this material may be accessed and used under appropriate lawful authority, I support it.
Of course, the ambit of the Bill goes far beyond phone calls. The world has changed, bringing with it the internet, e-mails and social media. I listened with great interest to what was said a few moments ago by the noble Lord, Lord Knight. However, I do not believe that any sane rule of law jurisdiction can confer on the internet a form of immunity so that what occurs there cannot be used as evidence of criminal wrongdoing if it is such evidence. As for extraterritoriality, it is difficult for me to understand why e-mails to and from individuals in the UK should be accessible if they are routed through a UK server but somehow inaccessible if they are routed through the United States. For my part, I prefer these matters to be resolved by legislation, which can be debated, amended, repealed and improved, rather than by nods and winks between our authorities on the one hand and overseas providers on the other, which is what may have happened too frequently in the past.
The point surely is the means by which the state obtains access to the preserved material. If these means are proportionate and prescribed by law, the process is consistent with the rule of law. There is nothing in the Bill that alters the mechanisms by which this preserved material may be accessed by the state. It remains, in criminal cases, by warrant following suspicion. The Bill has nothing to do with a snoopers’ charter or with Operation Tempura. It mandates the limited preservation of data so that, where real suspicion exists, they may be accessed by lawful authority. It is not the bulk collection of data for random mining by the security agencies or the police. It is not a snoopers’ charter.
I make two other points. First, since the Snowden revelations first appeared in the Guardian and since we first learnt about Operation Tempura, many people have called for a wholesale review of the Regulation of Investigatory Powers Act. I have been one of them. We have argued that RIPA is hardly capable of regulating this sort of activity in 2014 and that the technological means of communication have altered so dramatically since the year 2000, when it was passed, that we need fresh legislation. The Bill brings that review in its wake. I welcome that very strongly. Secondly, many of us have looked with some admiration at the work of the Privacy and Civil Liberties Oversight Board, which was set up following a recommendation by the 9/11 Commission in the United States, and have called for the establishment of a similar board in our country. It seems, and I would welcome the Minister’s confirmation, that we will also have a privacy and civil rights oversight board in the United Kingdom.
From my perspective, these are powerful reforms, both coming in the wake of the Bill. My noble friend Lord Paddick referred to others. These powerful reforms show balance and the advantages of coalition. With respect to some of my noble friends, I very much doubt that we would have had these reforms without coalition. In combination, the Bill and these reforms seem to herald an environment with more respect for the appropriate relationship between national law enforcement imperatives and the prize of personal freedom. The Bill, set out as it is with clarity about extraterritoriality, in combination with these reforms will place us in a better environment than we have hitherto seen in this area. I welcome and support it.
Lord Lloyd of Berwick (CB)
My Lords, this debate has clearly attracted the attention of a large number of experts on this subject. We have already heard from five such experts on the Back Benches. My only justification for taking part is that I was the first ever Interception of Communications Commissioner, appointed as long ago as 1985. I think I can claim that, whatever my expertise may be, it at least antedates that of all the other experts in the Chamber today.
In the Statement that the noble Lord read the other day, he referred to the important role that communications data play in prosecutions. He mentioned that they are relied on in 95% of all prosecutions, and I have no reason at all to doubt that figure. However, as for the purpose for which the evidence is used, we were told that it is in order to identify criminal associations between people and possibly to answer a defence of alibi. Some of your Lordships must have thought that those were very narrow justifications or purposes for which the information is used, and they would have been very right to be puzzled by it. As we know, the evidence can be given to prove that a telephone conversation has taken place between two people. However, the contents of that telephone conversation cannot be used in evidence, yet that is by far the best evidence that there could be because it would mean that the criminals could be convicted out of their own mouths.
Before I am called to order by the noble Lord for venturing far beyond this Bill, he will understand why I am doing so, as this is a subject that I have been interested in for a very long time and I find it impossible not to mention it. No doubt, if there is to be a review of RIPA, it will be covered.
As for the Bill, it is clear that we must continue to be able to use communications data in court. For that reason, we must be able to serve valid retention notices on those who provide communications services to retain data for up to 12 months.
The 2009 regulations which contain those provisions are based on the data retention directive of 2006. Through no fault of ours, that directive has been held to be invalid by the ECJ—not the ECHR, which is of course the usual culprit in these matters. Therefore, it seems to me that we must give those regulations a better foundation. That is all that the Bill does; so far as I can see, it does not alter them or add to them in any way.
As for the other part of the Bill—the so-called extraterritoriality provision—I have certainly always understood that interception powers are applied to companies providing communications services in this country, wherever those providers are based. Apparently, that has now been questioned but, to my mind, the questioning is without foundation. All companies operating in this country must surely be subject to the same regime, and that is all that that part of the Bill achieves. It is extraterritorial—a word which always raises hackles—only in the sense that it enables us to serve warrants on companies which are based outside the country but operate within the country. Therefore, I can find no objection to that part of the Bill.
This, in my view, is a necessary and urgent Bill, and I can find no fault in it. I therefore urge the House to accept it.
Lord King of Bridgwater (Con)
My Lords, I join noble Lords who have expressed their regret—the noble Lord, Lord Butler, did so most forcefully—at the speed with which this legislation has come forward, and questioned whether there is a convincing explanation of why the European Court of Justice judgment, made in April, ended up with one day in the House of Commons in late July. I have my own suspicions as to how that happened. We seem to be quoting a lot from the other place, but if anybody reads Mr Jack Straw’s attempt to read the European Court of Justice judgment—which he found pretty incomprehensible and a load of porridge, as I think he described it—they will see that that may have been part of the extension of the problem. When this matter was raised in the debate on the Statement I warned the House that one is right to be deeply suspicious of emergency legislation that appears in this way. I should also say, deeply cynically, that that is even more the case when such legislation comes with all-party agreement. That is a time to fasten your seat belts and wonder what the background to it really is.
After that unhelpful opening comment for my noble friend, I should also say that I would regard it as pretty unacceptable if the Bill involved a major extension of powers. However, if it is true, as the Government maintain—and as is widely accepted, including by the Constitution Committee—that something that was lawful may now cease to be so, then a different situation obviously arises. Having said that, I certainly accept that this legislation is necessary. I absolutely recognise the critical importance of the retention of data and appropriately controlled interception in our fight against the increasing challenge of terrorism, crime, paedophilia, organised crime or whatever it might be.
The redeeming feature of the Government’s legislation is the sunset clause. I see that an amendment was moved in the other place that this should last only until Christmas, but that is quite inadequate. Having put this emergency legislation in place, we now need to have a serious look at the issues which arise out of it. I will quote again from the other place. I was impressed by the speech made by a former colleague, Yvette Cooper, who I was delighted to have serving with me under my chairmanship of the ISC. As a new Member of Parliament, she was immediately put on the ISC and made a very useful contribution to it. She rightly called for this not to be such a short sunset period, but to provide the opportunity for a major review of the issues of liberty and security. I am delighted to see that the ISC is going to conduct such a review. She also, in passing, made a comment about the many private companies that are making far more use of our private data than any police or intelligence agency has ever dreamed of doing. Some of us would be delighted to see this included as part of the consideration in any review that is conducted.
The former Attorney-General, Dominic Grieve, intervened to say that the question of interception is nothing new. This has been taking place since the telephone was invented. Alan Johnson then made an even more interesting observation that when he joined the Post Office there was a whole section in St Martin’s Le Grand post office entirely devoted to the steaming open of envelopes. Professor Christopher Andrew, in his study on this, identified that in 1969 that section opened 221,000 items. This is part of the background to some of these practices but it is not to say that any of this is justifiable unless it is strictly controlled, under proper legal authority and there is some accountability for the actions taken and the challenges that exist.
When I chaired the ISC, which goes back to when it started 20 years ago, it was clear that even then the agencies were struggling to keep up with the development of new technologies, with the amount of different systems and ways in which criminals, terrorists and others could communicate, and with how to keep some sort of effective protection against them. That was pre-Twitter, pre-Facebook and pre all the developments that have taken place.
The challenges now are definitely all the greater. Huge opportunities are offered to terrorists, to those involved in serious organised crime and to criminals who are very sophisticated in some of their methods of communication. It is a temptation for them. It is also a temptation for the agencies—not for any improper purpose but because they are trying to protect us and to keep us safe. They will be continually pushing against the limits of the constraints of legislation in the interests of trying to make sure that this country is as safe as it can possibly be. The challenges of oversight, of proper legislative authority and control, and of public confidence are very important.
Perhaps I may add one little personal note. I was delighted to see that Yvette Cooper said that if there were to be a Labour Government they would insist that the ISC should have a chairman from the Opposition, which is very wise. I have great respect for those who have been chairman of that committee, including Margaret Beckett and the current chairman, Sir Malcolm Rifkind. However, if an issue had come up that the ISC had to look at, and its chairman had been Foreign Secretary and responsible for the SIS, MI6 or GCHQ, maintaining public confidence when it produced a report would have been all the more difficult. I am delighted that that has become Labour Party policy and I encourage my noble friend to ensure that we move in that direction.
I am not sure that we have got the message across to the general public: they think that the retention of data is all about reading or listening to everybody’s messages and communications. I do not think that more than one person in 1,000 in this country knows what metadata means, which is the word that is frequently used. As my noble friend said in relation to data, we are concerned about the who, when, where and how, not about what people are actually saying. That is what we are talking about in relation to these data. I think that it is very important to do it.
I support this emergency legislation. If it goes through, it will protect our defences and ensure that they are in place in the next phase. Then we must look at the relationship between privacy and security. Although I have not heard much about it, I welcome the announcement about the privacy and civil liberties board. I welcome the work that it can do in ensuring that while we maintain our defences in a very dangerous world, the rights of the citizen, his liberty and his privacy are properly protected as well.
Lord West of Spithead (Lab)
My Lords, I start by saying that our nation needs secret intelligence agencies and the clue as to how open they should be rather lies in the word “secret”. Their job is to discover information, often hidden, that is important for our people’s security, safety and prosperity. It has always been important that adequate checks are in place to ensure that the agencies and the state behave in a manner that the nation expects of them.
What is unhealthy is the desperate desire generally, and particularly in some areas of the media, to see secrets and, indeed, to decide what should and should not be secret. Apart from anything else, it shows immense arrogance. I know that the days of thousands of men and women who worked at Bletchley Park keeping quiet for decades have gone, but the propensity of so many people today to divulge secrets about themselves and others on social media seems unfortunate. Indeed, in the case of national secrets it can be very damaging. As the noble Lord, Lord King, mentioned, although there are repeated concerns about our Government’s legal and warranted access to communications, we seem to accept quite happily that communications providers and other private firms read the content of our e-mails and use metadata—I actually understand what metadata are—to find out how we shop, how we travel, where we travel, where we live and about our lifestyle for the purposes of advertising. They do all those things, and yet Liberty and other such organisations do not seem to mind at all. Those private firms are totally uncontrolled, while the state is very controlled in what it can do.
Does UK law balance privacy and security in terms of the Government’s activity? I believe that it does. Article 8 of the European Convention on Human Rights states:
“Everyone has the right to respect for his private and family life, his home and his correspondence. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security … the economic wellbeing of the country”,
and for the prevention of serious crime. As has been mentioned by a number of noble Lords, to ensure that our agencies stick to the law, they are overseen by the Intelligence and Security Committee, the independent commissioners for oversight, the Intelligence Services Commissioner, the Interception of Communications Commissioner and the Investigatory Powers Tribunal. I know, from my time as a Security Minister and from travelling around the world, that we have one of the world’s strongest legal and regulatory frameworks governing the use of intercepted intelligence—much stronger than a number of countries in Europe. I believe that the intelligence agencies take their obligations under the law very seriously. When I was a Security Minister, it was implicit in the legislation passed by the Labour Government that it had effect on extraterritorial companies. That was the assumption, for the reasons explained so well by the noble and learned Lord, Lord Lloyd, and other speakers.
As the Minister said—it is worth repeating—the police and intelligence agencies currently use communications data to investigate crimes and catch criminals. They are crucial in 95% of cases. As a result of the European Court of Justice judgment, as was said, there is an imminent risk that this ability, which we have had for so many years, will be lost. The court said that it did not consider that the directive had the necessary safeguards, but it did not really understand our RIPA legislation. However, as far as that goes, we are where we are.
I share the view of my noble friends Lady Smith of Basildon and Lord Knight and the noble Lord, Lord Butler. I am not impressed by the speed with which this has happened. Something funny has happened; I would love to know what that is, and I feel that we have been slightly bounced. I am not happy with that, but we are where we are; that is the reality.
Nevertheless, I believe that this legislation is necessary and proportionate. It will ensure that the communications data required by the police and others continue to be available in the future, as they have been in the past. People refer to a snoopers’ charter, but I hate that expression; it really annoys me. We should call it the guardians’ charter—before Mr Rusbridger thinks that it has something to do with his newspaper, it is because I believe that the people who are doing it are guardians of the safety and security of us all. Snooping is a loathsome way of describing it. Do we really think that terrorists and criminals should have means of communication that they can be confident are beyond the sight of the Security Service, GCHQ and Special Branch acting with a proper legal warrant? I think not. It would be a disgrace if that were the case.
I suppose my parting shot is that I see the agencies and Special Branch as allies, not enemies. They are full of good, patriotic men and women working extremely hard, sometimes risking their lives for the good of our nation. They are part of our nation, not some alien force. Clearly, we must regularly review oversight mechanisms and it is right and proper, particularly in the case of emergency legislation, which none of us likes and is normally bad legislation, that we look in detail and include lots of safety caveats. Many noble Lords and Members of the other place have done that. I believe that we have the correct checks and balances in place, including the sunset clause. From what I have heard, they are sound and they are there. But speaking on an emotive level, and I like to go on the emotive level, I find it extraordinary that some of my fellow countrymen see the men and women of our agencies as the enemy. They are not. I would happily have them on my right flank in a fight. They work around the clock to ensure our safety and I believe the majority of our countrymen feel the same.
Lord Armstrong of Ilminster (CB)
My Lords, I do not propose—indeed I am not qualified—to comment on the ruling of the European Court of Justice which has made it necessary to introduce the legislation that we are considering. But as a consequence of what I learnt as a member of the Joint Committee for pre-legislative scrutiny of the Government’s draft communications data Bill, chaired by my noble friend Lord Blencathra, I am sure that it is important—indeed necessary—that there be no doubt about the legality of requirements placed on communications service providers to make communications data other than the content of communications available, mainly for the detection and prevention of serious crime and of terrorist outrages, but also for other purposes, particularly child protection, and to retain those data for longer than they would need for their own commercial purposes.
Yesterday, the Minister described the Bill as a puncture repair to keep the car on the road, not a new tyre. I accept that the Bill does no more than restore the legal cover to the state in which it was, or was believed to be, before the European court’s judgment, and as such I believe that noble Lords can and should approve it. I also believe that the case has been made for extraterritoriality, as was said by my noble and learned friend Lord Lloyd of Berwick. But I remember an occasion in 1993 when the late Lady Thatcher, in a visit to the United States, took the US Secretary to the Treasury robustly to task for the US Government’s attempt to impose their powers extraterritorially. It was so robust that when she had finished the Secretary to the Treasury said, “Margaret, you need to watch your blood pressure”, to which she answered, “I should like you to know that my blood pressure is extremely low”.
The inquiries made by the Joint Committee chaired by my noble friend Lord Blencathra persuaded me, and I believe other members of the committee, that a strong and effective system is in place for ensuring that only communications data essential for a specific and justifiable investigation are required from the communications service providers. As another noble Lord has pointed out, this is a real safeguard to protect the privacy of the ordinary citizen going about his or her ordinary business.
In this business, there is constant tension between the need to respect and so far as possible to protect the right of the citizen to privacy in the conduct of his or her life and business, and the duty of the Government to protect the safety and security of the citizen as he or she goes about that life and business. In this tension, there are no absolutes as to how the balance between them should be struck. That balance changes as circumstances change, as the technology of communications changes and develops, which it does with great rapidity, and as new threats to safety and security emerge.
The state of legislation on communications data needs to be constantly reviewed as those changes progress. But, in the end, it is Parliament that must strike the balance. Parliament last reviewed the balance during the passage of the Regulation of Investigatory Powers Act 2000. To save myself stumbling over that in future, I will call it RIPA. The world of communications has changed—as the noble Lord, Lord Macdonald, pointed out—almost beyond recognition in the 14 years since 2000. The determination and ingenuity of those who commit serious and organised crime have not diminished. New threats, or potential threats, of terrorism have appeared in this country. It is high time to look again at the balance and to introduce new legislation to take account of those changes. We are asked today to approve a puncture repair. We should be looking at a new set of tyres.
The Government produced a draft communications data Bill earlier in this Parliament. The committee of the noble Lord, Lord Blencathra, thought that the draft Bill had not got the balance right, and made recommendations for changing it to rectify the balance. The Home Office then revised the draft Bill in the light of those recommendations and made improvements which, in the judgment of many of us, went a very long way towards meeting those recommendations and striking a proper contemporary balance between the right to privacy and the need to protect safety and security. Unfortunately Parliament was denied an opportunity to consider that revised draft Bill.
There will now be no opportunity, this side of the forthcoming general election, for Parliament to consider a full-scale and up-to-date new Bill, finding and striking a new balance between the right to privacy and the requirements of safety and security in this area of communications data. However, there will be a pressing need to do so early in the life of the new Parliament, because of both the lapse of time and the pace of technological change since RIPA was passed in 2000, and now because of the sunset clause in this emergency Bill.
I welcome the proposal, as provided for in Clause 7, to set up a review by the independent reviewer of terrorism legislation. I have one query about that. The independent reviewer is the reviewer of terrorism. It is not clear from the Bill whether his remit would extend to the use of the communications data regulations for purposes other than countering the terrorism threat, including the detection of serious crime and the other purposes set out in Section 22 of RIPA 2000. I hope that the independent reviewer will have the remit to go that far—he is well equipped and qualified to do so. However, the point should be made absolutely clear.
To change the metaphor, today's Bill, though urgently necessary, does no more than patch the sleeves of the existing and old-fashioned jacket. What is required by the end of 2016 is a brand new jacket cut in the latest fashion.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I begin by reminding the House of my involvement with the All-Party Parliamentary Group on Extraordinary Rendition and my trusteeship of Fair Trials International, since I shall want to refer to some of that in a minute or two.
It was quite properly said by the Prime Minister, and indeed by my noble friend Lord Howard in his comments a few minutes ago, that the first duty of a Government is to keep the citizens safe. Before us is a Bill that focuses solely on that objective. Moreover, it is a Bill with a sunset clause: one that is—for my taste —a trifle long, but nevertheless a sunset clause. Add to this the fact that my noble friend took the trouble to invite those Members of your Lordships’ House who were interested to a briefing—for which I greatly thank him. So what’s not to like? For me, like the noble Lords, Lord West and Lord Armstrong, the issue is of course balance: the balance between the need to keep us safe and the need to respect our privacy and our freedom. Never does the one trump the other. As the noble Lord, Lord Armstrong, pointed out, the balance is constantly shifting. It is that sense of balance on which I should like to focus in the next few minutes and on which I hope that my noble friend can provide reassurance when he winds up the debate later.
First, the Bill addresses a technical matter in what is a fast developing field—so fast developing that, we have been told, although the purpose of the Bill is to restore the status quo prevailing before the ECJ judgment, the technical developments in the industry in the mean time require an extension of powers. In the words of the Explanatory Notes, that is to ensure that,
“the definition of ‘telecommunications service’ ensures internet-based services, such as webmail, are included”.
The Explanatory Notes do not use the word “extending” to describe that; they use the word “clarifying”, which I suppose goes to show that one man’s clarification could be another man’s extension.
I am forced to ask myself what other aspects of clarification there are in the Bill on which I hope that my noble friend can reassure me. In particular, I hope that he will dwell briefly on the issues raised by Clause 4, which other noble Lords have raised, which concern extraterritoriality. Noble Lords will have received briefing papers circulated on the Bill which argue that RIPA as it stands has never had any extraterritorial powers. Indeed, your Lordships’ Constitution Committee raised that in paragraph 10 of its report. The Government may have acted as if it has, but the legal base does not exist. If that is the case, this would be another extension, not a clarification. Indeed, as the Constitution Committee pointed out, it emphasises the unfortunate necessity of rushing this through if we are actually extending the law, not merely putting a patch on a puncture.
Then there are questions about the utility of the provision: whether modern encryption and other safeguarding mechanisms render any data collection of little or no value. Perhaps my noble friend will enlighten the House later on whether he has had discussions with service providers on that point.
Finally, there are those who want to be reassured that the provisions of extraterritoriality are a one-way street: that there is nothing in the Bill—mutual recognition implied, or the like—which would enable overseas organisations to reach deeper into the personal information of UK residents.
In the Statement that the Home Secretary made on 10 July, which my noble friend repeated in this House, there was reference to the role of communications data in ensuring convictions. My noble friend said:
“It has played a significant role in the investigation of many of the most serious crimes in recent times, including the Oxford and Rochdale child grooming cases, the murder of Holly Wells and Jessica Chapman and the murder of Rhys Jones”.—[Official Report, 10/7/14; col. 280.]
Those are appalling crimes, and it is excellent that modern techniques have brought perpetrators to justice, but the use of those high-profile cases does not mean that we should suspend or blunt our critical judgment about the proposals before us today.
As a parallel example, my noble friend knows my concerns about certain aspects of the European arrest warrant. Defending the warrant, Ministers always use the high-profile cases of murderers, terrorists and paedophiles who have been speedily returned to justice. That is very good, but less publicity—or no publicity—is given to those cases where the process goes awry and innocent people suffer greatly. I am anxious to explore whether, in passing this legislation, we may be opening similar challenges or difficulties.
One answer to the conundrum given in the briefings is that the legislation refers only to the making of a communication—that is to say, as other noble Lords have said, the when, the where and the with whom—not its content. The Minister and the noble Lord, Lord Paddick, referred to that in their comments. However, as I understand it, this is another area where technological developments are beginning to blur familiar distinctions. The noble Lord, Lord Knight, referred to the term “metadata” as being increasingly used to describe the ability to build upon limited information to create a broader picture. My noble friend Lord King said that he did not have a definition but I do, provided by the invaluable Wikipedia. It says:
“Metadata assists in resource discovery by ‘allowing resources to be found by relevant criteria, identifying resources, bringing similar resources together, distinguishing dissimilar resources, and giving location information’”.
I am concerned that this could—not does but could—take us perilously close to the general mining and profiling of our fellow citizens and, in this regard, it is important to note that the House of Commons Library briefing note provided for the Bill makes it absolutely clear that the use of metadata does not require a warrant from the Secretary of State. With this so-called clarification, the Bill may open up a much greater degree of surveillance of the ordinary citizen than has to date appeared possible.
Given the complex nature of the Bill, it will therefore be vital that the public have confidence in these proposals if they are transparently operated and the Government of the day are frank about them. Those of us who have been involved with the UK’s involvement in rendition have not found it easy to establish such trust with the Government. For years, the previous Administration denied any complicity in rendition but have had to admit that in 2002 two rendition flights landed in Diego Garcia, the British Overseas Territory in the Indian Ocean with a base leased to the US Government. Now we are told that flight records since 2002 are,
“incomplete due to water damage”,
so I fear that the truth will probably never be known.
I share my noble friend Lord King’s concern about the importance of the role of the privacy and civil liberties oversight board. To do its job effectively, its members need the appropriate powers. I understand that there are some terms of reference being circulated; I am afraid that I have not yet seen them. However, these sorts of questions are not just about the terms of reference. They are questions such as: will the members of the board be guaranteed a proper degree of security clearance, and how will it actually operate? Will it be a day a week for senior grandees to glance over the issues and make a few ex-cathedra statements, or will they be expected to get their hands dirty and do the unglamorous but necessary work of ensuring that the proper procedures are followed? Only if the latter approach is followed will the public be reassured that the right balance between security and liberty is being struck.
Twelve years ago, in the spring of 2002, another piece of legislation concerning the Anglo-US extradition treaty was rushed through in response to the terrorist threats, post-9/11. In the event, most of the requests under that agreement have been about financial crime. There is nothing wrong with that but it was not what it said on the tin. Latterly, we have had the bizarre case of Mr Gary McKinnon. He may have been an unusual man but he was no terrorist: his crime was to embarrass the Pentagon by hacking into its computer systems. As my noble friend Lady Browning memorably said, the Pentagon should have hired him rather than seeking to imprison him. As we consider this legislation, we need to bear in mind these sorts of unintended consequences that result from rushed scrutiny.
Baroness Kennedy of The Shaws (Lab)
My Lords, like the noble Lord, Lord Hodgson, I have some problems with the Bill. It is utterly wrong that the Bill is being introduced as emergency legislation. Others may be quite sanguine about that but I am not. It has involved drawing down this expedited procedure when no emergency need has existed at all as there was plenty of time in the past three months to have dealt with this expeditiously. That is a serious abuse of Parliament. The use of emergency procedure to enact laws that are controversial and have a significant impact on individual rights is happening too often. This is not the first time it has happened and it is the sort of rubber-stamping that makes for careless law.
It is my concern that the Bill is seeking to provide a lawful basis for the unlawful exercise of power by the UK security agencies. I say that because the Snowden disclosures showed that in fact there was a sharing of information by GCHQ with the American security services. They were looking into metadata in ways that none of us knew about and which were certainly not covered by RIPA. It meant that the security services were involved in activities that were not covered by law. It is right that there should be new legislation but this is not the way to do it. It is deeply regrettable that we are having a bite at it in this way.
I am concerned that the excuse being made is that companies would have rushed out and somehow destroyed material in response to the judgment of the European Court of Justice. However, the Government were involved in deep and amicable consultations with provider companies. Indeed, their involvement in those consultations was given as the reason for the delay. Provider companies want to co-operate with the Government. It is in their interests that they have the support of government for many of their activities. I do not believe for a minute that undertakings could not have been given that there would be no rush to destroy material in the knowledge that legislation was in the pipeline.
Although it is generally accepted that RIPA is not fit for purpose—as the noble Lord, Lord Macdonald, said, it was enacted when the internet was in its infancy and no one anticipated that technological changes would enable government agencies to obtain enormous quantities of data on the personal activities and lives of individuals—I do not think it is right to embark on legal reform without full and well informed debate. The noble Lord, Lord King, is right. There is still inadequate understanding by the public of what this legislation will mean, but it is no wonder when there is not proper parliamentary debate and public discussion about giving the state intrusive powers about which they should be concerned. Information is not being given to the public.
When all three main parties agree to a piece of legislation behind the arras, the smell of rat regularly permeates Parliament and it is usually a signal that something else is up. The claim is made that this legislation merely maintains the status quo until a sunset clause expires in December 2016. How does the status quo comply with the ruling of the European Court of Justice that the UK’s data retention directive was contrary to law? And why is the sun setting so far in the distance?
I understand that the main political parties do not want accusations being made of being soft on terrorism and do not want finger-pointing. That is why this is being dealt with in this way. That is the truth and the reality of why we are rushing the Bill through Parliament now. It is a sad reflection on the quality of debate about terrorism that there is so much finger-pointing. We live with the fear that we would be blamed if a particular party were to say, “Hold on a minute”.
Legal experts in this field are clear that the Bill now being rushed through Parliament does not even try to comply with the ECJ judgment. Furthermore, DRIP does far more than replace the data retention regulations. It makes substantive changes to the interception warrants, interception capability and communications data access provisions of RIPA. We should always remember that it is the practice of those who draft legislation about the functions of the security services to make it as complex and impenetrable as possible, and that is what this legislation is—obscurantist lawmaking at its height. It is very difficult to fathom what is going on here. One of the tricks is to mix definitions. If Europe uses one set of definitions, we will find that the drafters of legislation here invent their own. If an old law exists, drafters choose to create new language but at times slip into old legislative usage just to confuse.
What we are definitely seeing here is a broadening of RIPA definitions. It is also important to know that words such as “facilitating” flag up to any lawyer that we are moving into “broad interpretation” territory. On 13 July the Sunday Times reported the Home Office as saying:
“The bill clarifies how the current definition should be interpreted, but this cannot change or extend the meaning of the definition in RIPA to capture new services”.
The lawyer Graham Smith says that this is “twaddle”, while the Explanatory Notes attached to the Bill say explicitly that it is intended that webmail and other internet-based services should be caught. There is a suspicion among many experts in the field that something else is going on here and that a significant change is being made without properly explaining the purpose behind it. That should be a matter of concern to this House.
The Minister tells us that it is important to be able to access communication data that can help to place a person in a certain vicinity at a particular time through their phone records. I agree with those who have spoken, who are criminal lawyers like myself, or who have been involved in very serious cases, that there is no doubt that it is invaluable to be able to access this kind of material. In my view, it is right that there should be the retention of data and interception, but with proper warrants and proper controls.
We should all recognise that our phones and other technological equipment are enormously revealing about our movements, activities, associations and interests, and that crime warrants are sought for this kind of material. However, we have to recognise that the disclosures of Snowden showed that we are regularly seeing programs such as Trojan or backdoor programs enter into our material without, one suspects, those kinds of warrants being obtained. Similarly, clouds can be accessed and captured so that they can be used for intelligence purposes without proper procedures being applied. If that were to be the case, we should know about it, and we should be insisting on proper controls. There is no doubt that there are important issues here requiring primary legislation, but they should not be subject to rushed law and they certainly need proper debate.
There is another matter of concern. It was announced in the past few days that there will be a privacy and civil liberties board, which will have four members. That may be very welcome but it will replace David Anderson, the independent reviewer of terrorism legislation. Will the new board have the same access to sensitive intelligence? I am glad that the noble Lord, Lord Carlile, is in his place and will be speaking shortly. The argument was always made that having just one trusted individual made that office effective and watertight. I would be interested to know whether it will be the same with the new board.
Secrecy is required for certain aspects of state function, but too often secrecy is overclaimed. It can be a cover for abuse, which is what we are seeking to prevent. That is why safeguards are essential and it is why Parliament has such an important role. The procedures that we are discussing today should have had the opportunity for much greater scrutiny. Civil liberties have to be protected and they require constant vigilance. They are eroded usually by creep, in small slices at a time, and we have to be the guardians of civil liberties and our constitution as well as our security.
Lord Carlile of Berriew (LD)
My Lords, like most noble Lords who have spoken, I support the Second Reading of the Bill on the understanding that its purpose is to preserve evidence of a kind that is currently available to the courts. Indeed, I congratulate the Government on their declared intention to increase the safeguards over the use of communications data, though I shall have something to say about safeguards a little later.
I am concerned that some near-hysterical misinformation has appeared in the media in relation to the use of the data concerned. The canard has been sold—I think that is what you do with canards—wholesale that the Bill is directed mainly, even exclusively, at terrorism. That this is not so is demonstrated by one statistic from the Crown Prosecution Service—my noble friend Lord Macdonald adverted to this—which is that 95% of its serious and organised crime cases include evidence of this kind as part of the proof against the accused, and sometimes it is the crucial proof. There is a necessity to ensure that such crucial evidence remains available and, of course, it is important that service providers know what the law is and where they stand.
All that said, I have three reservations with which I hope the Minister can assist the House. They have grown over the days since the Bill was announced, particularly on reading yesterday’s debate in another place. The first is my concern about the case for urgency. I, too, noticed the observations and reservations of the Constitution Committee, which were published this afternoon. The reasons given by the Home Secretary in the other place on 10 July and yesterday were, I am afraid, far from convincing. I have spent most of the past 15 years trying very hard to disagree with David Davis on almost everything, and he has been trying equally hard to disagree with me, but on this subject I agree with him. I also particularly agree with the noble Lord, Lord Butler, who brings to this discussion all his experience of the workings of government. I can see that a shortened period for this legislation might have been necessary, but one day in the Commons and two here just are not sufficient for legislation of this importance. Indeed, with a proper period, the new safeguards could have been included in the Bill and could therefore have been part of a holistic package, as opposed to a less than holy promise. There is absolutely no evidence that I have seen that this Bill could not have been introduced a month ago, and given that we are sitting until, I understand, 30 July, there is no reason why the Bill could not have been given some more days for proper debate in Committee. Indeed, as a veteran of dealing with the Anti-terrorism, Crime and Security Act 2001 when I was independent reviewer of terrorism legislation, I remind your Lordships that Ministers who introduce legislation in haste are later left to repent it in panic.
I now turn to my second reservation. Nothing more than a summary of the intended future safeguards is available. That is hardly a reassuring position. As I understand it, there has been precious little consultation about them outside Parliament. Will the Minister tell your Lordships who outside Parliament has been consulted formally on the safeguards? One of the things that were announced yesterday was the abolition of the independent reviewer of terrorism legislation, who is currently the brilliant David Anderson QC. We have heard much entirely justified praise of him in this debate, but he is being abolished. Can we have an explanation of why? Will the Minister please tell the House when Mr Anderson himself was first informed of the intended abolition of his post? How much earlier than yesterday was it? How long was he given to respond to the proposal? What arrangements exist for a full and proper consultation on the proposal to abolish the independent reviewer, who has the advantages just mentioned by the noble Baroness, Lady Kennedy of The Shaws? Why does the Minister believe that the replacement of the independent reviewer with a committee or board will strengthen the scrutiny of issues, subject to limitations that are necessarily dictated by national security?
I turn to my third concern, which is about the terms of reference of the proposed, so-called independent privacy and civil liberties board. The first thing I say to my noble friend is: let us be honest about what this board is. It is the counterterrorism oversight board, and we would do well to adopt the title used in the United States so that it is what it says on the tin, as it were. I ask my noble friend to answer these questions. Was Mr Anderson consulted about the terms of reference for that board, which have been published today? If he was, were any of his comments rejected as part of the terms of reference, and if so, which ones? I am sure that the Minister will have information at his fingertips within minutes. In particular, there is the crucial question raised by the noble Baroness, Lady Kennedy. Will members of the board enjoy developed vetted access to be able fully to scrutinise counterterrorism activity by the services? It is crucial that, if his post is abolished, someone should have that access. It is important to have a positive assurance of that, otherwise what has been announced is a seriously retrograde step in terms of scrutiny.
Mr Anderson, and, indeed, I before him, spent more than 100 days a year up to now as independent reviewer. At the worst time, after 2005, in one year I spent 144 days, I think, as independent reviewer. It was certainly more than 140 days. Will the members of this board be expected to give, and will they be paid for, the 100-plus days per year that independent reviewers of terrorism legislation have given in every single year since 2001? Can we be assured—I speak here of David Anderson, not of myself—that the people on this board will be of such a quality that they are able to scrutinise such matters using their past analytical experience? It is not something you can just walk into out of some other discipline.
I notice that one of the aims is expressed in the terms of reference, rather oddly, as being to:
“Provide public assurance that the current arrangements ensure”,
satisfactory regard to, “privacy and civil liberties”. May we at least have an assurance that the words “or otherwise” will be added so that the mission is not just to ensure that the Government are doing the right thing, but to be able to state clearly when they may be doing the wrong thing?
Also, can the Minister assure us that the current requirement for an annual review of all sensitive counterterrorism legislation will be part of the terms of reference of this board if the independent reviewer is abolished? That is something that happens now and it has proved peculiarly useful. My suggestion to your Lordships would be that if the Government wish to create this board—and, as I said at the beginning of these comments, I am very much in favour of increased safeguards—alongside that they should continue to have the independent reviewer of terrorism legislation, and he can usefully chair the board as well. It might involve more than 140 days, but I am sure somebody could be found to do it because it is an extremely interesting and intellectually rewarding task.
I apologise for taking up more than the average time in this debate, but the points I have sought to make are all, in my view, important ones that we could and should include in legislative scrutiny, were we to have a more normal timeframe. In the absence of that, I invite the Minister to respond to the questions I have just raised.
Lord Hope of Craighead (CB)
My Lords, it was on a Wednesday in July, like today, just over nine years ago, on 7 July 2005, that the London bombings took place. I am sure that all noble Lords have their own memories of that dreadful day. My memories are closely associated with this Chamber. That morning the Lords of Appeal, who were still working in this building, gathered to give judgment. We were due to give judgment at 9.45, and before we could sit, as the House, to give judgment, prayers had to be said—but we found that the Bishop was missing. Prayers were said by the senior Law Lord, Lord Bingham, on our behalf.
The rumour was that the Bishop had been unable to come here because there had been an electrical surge on the Underground, and his line had been out of operation. It was only when we got upstairs to our rooms on the west corridor that we realised the real horror of that day. Those who remember it will recall how London became completely seized up with traffic jams, no public transport was able to move, mobile phones would not work, and the general feeling was one of extreme distress—horror at what had happened to the victims, and immense inconvenience and disruption to the way of life in London.
I mention that because whenever I am confronted, in court or indeed in here, by this kind of issue, about the balance between security and the right to privacy, I seek to find where the balance should be struck, realising how immensely important it is, from whichever side one is looking at the problem.
Against that background, one must commend the security services for the painstaking work that they do on our behalf, which is, no doubt, greatly assisted by the data that we are thinking about. One should also appreciate the immense burden that rests on Ministers, who have to take some of these acute decisions on our behalf, balancing, as they have to, privacy against security.
This is an extremely difficult issue, but on the principle of the measure I am in no doubt—as I think almost all of us agree—that the Bill should have a Second Reading. Its purpose, and the principle that lies behind it, seem to me entirely beyond question. The problem, as always when one considers matters in this House, is one of detail—and it is the opportunity of detailed scrutiny that is, in effect, being denied to us by the speed with which the measure has come forward.
Speaking entirely for myself, I think it is a great shame that the Government have excited criticism of the kind that they have, which undermines public confidence in an area where, as others have said, public confidence is so important. It is a great pity, it is a great disadvantage, and it is difficult for us, who are coping with detail in an unfamiliar area, to meet the requirements we have to meet in order to contribute effectively to the debate.
For my own part, I started my study of the issue by looking at the judgment of the European Court of Justice that gave rise to all the problems, in the case called Digital Rights Ireland, reported in April this year. It is an interesting, and quite easily read, judgment, and quite a lot of it entirely supports what the Government seek to do. The basis of the criticism is Article 7 of the European Charter of Fundamental Rights, to which this country is not a party. However, one has to bear in mind the fact that Article 52(3) of the charter says that in so far as it,
“contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms”—
the ECHR, to which we are, of course, a party—
“the meaning and scope of those rights shall be the same as those laid down by the said Convention”.
So there is a read-across between Article 7 of the charter, which the European Court of Justice was talking about, and Article 8 of the convention, to which the noble Lord, Lord West, referred, which contains the guarantee of the right to privacy. However, it is extremely important to appreciate that, as he also said, it contains the balancing provision that:
“There shall be no interference … except such as is in accordance with the law and is necessary in a democratic society”.
One is entitled to take that into account in considering what the court was talking about.
When the court analysed the case—this is in paragraphs 41, 43 and 44 of the judgment—it was satisfied that there was a genuine national interest in what the measure sought to do, and indeed in the objective of the measure that it was considering, which was the directive. In its judgment the court clearly makes the point that in connection with such issues,
“the retention of … data may be considered to be appropriate for attaining the objective pursued by that directive”.
So far, so good. But what was the basis of the criticism? One has to examine the judgment a little bit to understand what caused concern, and ultimately led to the decision that the court gave. We find that in paragraphs 37, 45 and 46, as well as paragraphs 59, 64 and 65. It was the detail of the wording of the directive, and in particular the wide-ranging and potentially serious interference with fundamental rights that it gave rise to, that caused the problem. This is the crucial sentence, in paragraph 65:
“without such an interference being precisely circumscribed by provisions to ensure that it is actually limited to what is strictly necessary”.
We find the same phrase—
“limited to what is strictly necessary”—
in paragraph 64. The noble Lord, Lord Paddick, picked up that aspect when he used the phrase “absolutely necessary” in his speech. This is a high test, and the court found that it was not satisfied by the directive.
That leads me to my first point for the Minister. In Clause 1(1) of the Bill, everything depends on the view taken by the Secretary of State about the requirement being imposed. The phrase used is “necessary and proportionate”. I would be grateful if the Minister could explain where that phrase comes from. It is not the phrase used by the European Court of Justice, and one might be forgiven for thinking that it does not constitute quite as high a test as the strict test that the court laid down in the phrase, “strictly necessary”.
The wording is important, because any court that is testing the ability of the scheme that the Bill contains to satisfy the requirements of the convention will look at the precise wording and see whether the guidance given to the Secretary of State, who has to take the decision, is sufficiently accurate and precise to enable him or her to fulfil the requirements of the directive. I am disappointed, I must say, that the carefully chosen wording of the court was not adopted here, and I would be grateful for an explanation of why that was not the case.
This is not an opportunity to go into detail, but one of the unfortunate aspects of the procedure being adopted is that we are being asked to rest on the basis of amendments to a code of practice and no doubt further regulations, which we have not seen. So a great deal of this has to be taken on trust. I am prepared, in this area, to repose a great deal of trust in Ministers. But the wording of the test that they are being asked to apply is absolutely crucial. If one is seeking a sound foundation—a legal basis that puts the matter beyond doubt—one needs to choose the words extremely carefully.
Finally, I come to the question of extraterritoriality. Like others, I have been given suggestions—including a considerably detailed one—that there is an extension of the investigatory powers. I think I owe it to Jack Straw, as the noble Lord, Lord Howard, mentioned earlier, to make this point: in Section 2 of the Regulation of Investigatory Powers Act there is a definition of one of the expressions in the Act—“telecommunications system”. That definition says that a “telecommunications system” means a system,
“whether wholly or partly in the United Kingdom or elsewhere”.
Jack Straw stressed the words “or elsewhere”, and said that built into the definitions in RIPA from the very beginning was a recognition that such systems operate widely well beyond our own shores, so it was wrong to think that extraterritoriality was something new. I accept that, and here is the foundation for that proposition, right in Section 2 of RIPA. I also accept that since then there has been some informal method of imposing extraterritoriality—no doubt very properly, with the co-operation of overseas bodies—but that, the way things are nowadays, there is a need for that to be regularised. That is what Clause 4 is all about. However, I have a word of warning. Warrants are all very well; you can write a warrant and get it issued. The problem is in its enforcement.
I will give two examples, one of which takes us back to 1987 and the Zircon affair, which may not mean very much to us nowadays. The journalist Duncan Campbell was working with the BBC to present a series of programmes called “Secret Society”. One of his programmes was about the funding by government of a spy satellite, which in those days seemed a horrifying thing to do—perhaps we are now so used to them that we do not mind them. Nevertheless, Duncan Campbell thought that something extremely sinister was going on, and the BBC, in Glasgow, as it happened, had in its possession a great deal of material on that. Special Branch knew about that, got a warrant in London, went over the border to Glasgow and delivered the warrant to the BBC, which caved in and gave a lot of material to Special Branch. The BBC then consulted its solicitor, who looked at the warrant and said, “This is no good, because it hasn’t been passed through the system for the enforcement of warrants in Scotland—no sheriff has been asked to look at it”. So all the stuff had to be handed back. Special Branch went back over the system, tried a second time—got it wrong again—and the third time got it right. All sorts of things could have happened, although I do not suppose that much happened, because they were dealing with paper copies. However, nowadays it is so important to get the system right. Has thought been given—as has obviously been given to the mechanism for the creation of the warrant in the first place—to its enforcement?
The other example is a reported decision of this House in a case called Granada Television, in 1999, which was the reverse problem. The Scots were trying to enforce a warrant or to obtain material in Manchester under a warrant for use in Scotland. They ran into all sorts of difficulties, which are described in that case, because of the problems of cross-border warrants. Therefore, while a great deal of thought has been given to the design of Clause 4—which I admire, as it deals with many of the problems—has thought been given to how you can enforce these warrants on people overseas? What about their enforceability in the United States or in China and the mechanisms which are necessary to make them effective? There is enough here that goes so far within our own shores, but the enforceability of warrants overseas may matter at the end of the day if we are to move beyond the informal process into an area that stands up to scrutiny in a court of law.
Lord Wasserman (Con)
My Lords, I am very grateful to the noble and learned Lord, Lord Hope of Craighead, for that brilliant explanation of the judgments of the European Court of Justice and related matters. I find it intimidating to continue now with some rather tedious political points after his brilliant exposition.
I will not detain your Lordships very long this evening. I simply want to record my strong support for this essential Bill and to urge your Lordships to give it a speedy passage on to the statute book. However, before I say anything more, I declare an interest as a strategic adviser to the head of public sector business of Telefónica UK. As an international company, it provides communications services to customers in the UK and therefore will be directly affected by the Bill when it becomes the law of the land. I have never discussed any aspect of the proposed legislation with anyone at Telefónica, and my connection with the company is declared in the register of members’ interests. Nevertheless, I thought it wise to mention that to avoid any possible misunderstandings at a later date.
On 16 June, at Second Reading of the Serious Crime Bill, which your Lordships have been considering in Committee, I said that although I welcomed that Bill, I was disappointed that it did not deal with the situation caused by the 8 April decision of the European Court of Justice, which struck down the European Union’s data retention directive, thus raising serious legal concerns about our own national mandatory communications data retention framework. I am pleased that those concerns have been confirmed by the report of the Constitution Committee published today. I went on to say that the court’s decision had very damaging consequences—perhaps I should have said potentially catastrophic consequences—for our fight against terrorism and serious and organised crime.
As was pointed out by the Minister and many other noble Lords who have spoken, communications data of the kind affected by the court’s decision are critical to the success of almost all investigations of serious and organised crime, including rape, child sexual exploitation and murder. Of course, they are also critical to the prevention of terrorist activity at home and abroad. That material is also vital to securing convictions and, as one or two noble Lords have mentioned, to protecting the vulnerable who are at risk of serious harm. That is why we cannot afford for there to be doubts surrounding the legality of our communications retention and investigatory arrangements. In the speech of a month ago which I referred to, I also urged the Government, in putting things right by removing those doubts, to “act boldly and courageously” so that our law enforcement, security and intelligence agencies were able to use the full range of available technological systems and equipment to assist them in their mission of keeping us safe.
In saying that, I had in mind the communications data Bill, which, sadly, we will not consider in this Parliament. I very much hope that we as a nation will not have cause to regret the decision of the coalition Government not to proceed with that Bill at this time. I say that not only because I believe that a Bill of that kind is essential if our policing, security and intelligence services are to have even half a chance of keeping up with the ever-expanding capabilities of the information processing and communications industries. I say it also because that draft Bill was described in this House last Thursday by the noble Lord, Lord Armstrong of Ilminster, and again today, as,
“a good Bill which balanced the essential needs of civil liberty and privacy against the Government’s first duty to protect the security and safety of the citizen”.—[Official Report, 10/7/14; col. 288.]
That Bill has been ready for introduction for some time now, and has been sidelined for purely party-political reasons, despite a large amount of work having already been done on it by both the Government and the Joint Select Committee under the chairmanship of my noble friend Lord Blencathra. How sad that we should play politics with an issue that is so central to our national security and to the safety of our communities.
Be that as it may, I must admit that it would be difficult to characterise the provisions of this Bill as either bold or courageous. We have heard on a number of occasions from my right honourable friend the Home Secretary and from the Minister that this is a narrow and limited Bill, which does nothing more than maintain the status quo and ensure that police investigations do not suddenly go dark and criminals escape justice. I am sorry about that—it all sounds a bit too cautious for me. However, perhaps it is just as well that the Bill is not more courageous and bold. As we all know, courageous and bold Bills have a tendency to excite a good deal of political controversy, and therefore take up a good deal of parliamentary time. In the present instance, time is something we do not have very much of.
It is essential that we get these provisions on the statute book as quickly as possible. I see no justification for wasting precious parliamentary hours and days arguing about whether the Government should have brought the Bill forward more quickly, made it shorter or more comprehensive, or anything else. There will be plenty of time to argue about the Government’s management of the Bill and about their general approach to public safety and fighting crime in the run-up to the general election, which is about to begin, if indeed it has not already done so. The fact is that the Bill does the job that needs doing now. It does it efficiently and effectively. Those who want to have these issues discussed at much greater length can take heart from the fact that the Bill contains a sunset clause, which ensures that it will be repealed on 31 December 2016 unless Parliament acts to continue it, with or without amendment. That is why I endorse the Bill without reservation and urge other noble Lords to do the same.
Lord Davies of Stamford (Lab)
My Lords, we have heard a number of speeches this evening which, unfortunately, have been dismissive of public concerns about this Bill, but I am glad to say that the general tenor of the debate has been very thoughtful. We have heard some very sophisticated speeches which have engaged with this subject in considerable detail. I pay particular tribute to the speeches from the noble Lord, Lord Hodgson, the noble Baroness, Lady Kennedy, the noble Lord, Lord Carlile, and the noble and learned Lord, Lord Hope. There were a large number of questions in those speeches, and I hope the Minister will take time to address those when he sums up and to provide the House with suitable considered answers because I do not think that the public concern in this matter is misplaced.
The concern is probably growing because of the volume of communications and data available. It is certainly growing because of the phenomenon of metadata which has already been dealt with in a number of colleagues’ speeches. The concern has also grown because of a major scandal which, curiously, has not been mentioned. The Snowden revelations revealed that the NSA—it has a symbiotic relationship with GCHQ, as the House will know—was severely in breach of American law. The chief executive of the NSA gave answers which were certainly less than full and frank, to a committee of the US Congress. That sort of incident can only greatly exacerbate public concern. Emergency legislation on such a sensitive matter is a perfect formula for maximising public anxiety. So it is not surprising that there are some very serious questions in people’s minds. It is important that Parliament makes sure that it does its job today, and indeed tomorrow, and makes sure that all the various angles of concern are pursued and addressed and that we get suitable answers from the Government.
I agree with the remarks of my noble friend Lord West. Having mentioned the NSA, I want to make that clear. I also have had a lot of professional dealings over the years with officials of the three major agencies. I have always found them—and genuinely believe them to be, in their vast majority—people of great professionalism, who are patriotic, extremely well motivated, entirely honest and concerned to obey the law. So I agree with what my noble friend said and I endorse those remarks. However, at the same time, we need to make sure that the legitimate concerns are properly addressed.
We all have to strike a balance this evening in how we decide to deal with this matter. My strong inclination is to support the Government. We have heard the Government say that major criminal prosecutions depend on the continued availability of these powers. We are talking about powers that, in the main, are already in place and with which we are familiar, although there were interesting questions today about surreptitious and covert extension of the powers in the Bill. The Minister, who takes his duties very seriously and for whom the House has the greatest regard, said in his introductory remarks that lives may depend on the continuation of these powers, by virtue of our passing this Bill as rapidly as the Government are asking us to do. For those reasons, it would be difficult to do anything to hold this Bill up. I do not intend to do that. Nevertheless, I look forward with great interest to the answers from the noble Lord.
I want to make three brief points. The first is a repetition of what I said last week when the Statement was made, but the audience is slightly different tonight so I will repeat it. It is clear that we would not have got into this particular mess, and the Government would not have required this emergency legislation, if we had used primary legislation to provide ourselves the original powers. This is not a party political point because it is a point for both Governments. I know very well, and I said last Thursday, that all bureaucracies—it must be true around the world—and all Ministers like to have a quiet life if they can. Their first, instinctive, default reaction is always to try to put any legislation through the secondary process so that the scrutiny will be pretty soft, maybe even perfunctory, and unlikely to be very profound. That sort of behaviour only changes when it is seen to have a cost. On this occasion it does have a cost for the Government so I hope that a lesson will be learnt. When we have legislation that raises important principles, or as in this case, an important conflict of principles between privacy and security, that sort of legislation should always go through the primary legislative process.
My second point deals with timing. I repeat what has already been said by many others. I do not believe for a moment that it was necessary to wait three months after the ECJ judgment to tell Parliament—or anybody at all—that there was a need for new legislation on this matter. The Government, if they had been half-competent, would have known before 8 April that there was a possibility of the ECJ deciding in the sense in which it did, and therefore could have prepared some reaction on a contingency basis. Even without that, by 9 or 10 April, they knew what the position was and they could have taken action accordingly. Silence for three months followed by the demand that Parliament passes something in a week or two, is frankly taking Parliament for granted. I do not think Parliament can or should ever allow itself to be taken for granted. This is a very serious point. The Minister himself is not responsible for this. He has to come to this House to defend the actions, or failure to act, of colleagues. We understand that, but it is important that a message goes back that the Government’s behaviour on this occasion is simply not acceptable.
My third point is this: I have had no collusion with the noble Lord, Lord Butler—I had not the faintest idea what he was going to say. I personally was absolutely horrified that there was no report by the Intelligence and Security Committee available, when we have to take a decision so rapidly on this Bill. I may be wrong, but I thought the whole purpose of the Intelligence and Security Committee was that we had their ears and eyes on our behalf behind the security wall, able to ask questions of the agencies, able with their great experience and knowledge—which the noble Lord, Lord Butler, certainly represents—to weigh the answers, to decide what exactly the threat is, to decide whether the powers that the agencies have are adequate and if not, in what way they need to be supplemented, or whether they are excessive and gold-plated. All these questions are those which the committee is able to reach a judgment on, on our behalf. We could ask the questions but we would not get the answers, whereas the committee can not only ask the questions but can insist on getting the answers.
I was absolutely stunned that there was no report at all. I could not quite believe it. I went to the Printed Paper Office and asked for the committee report—I was told that there was not one. As the noble Lord, Lord Butler, has told us, the committee did not hear about this until a few hours before the rest of us, and so it is not surprising that it could not produce a report. If it had had two or three months’ warning, which it could easily have had, we could have had a very intelligent and helpful report. It might have helped the Government—I am assuming that the Government are not actually up to some terrible trick and are not deliberately trying to disguise the facts from the public and from Parliament. What an extraordinary. idiotic thing it was, to pre-empt the possibility of such a report being produced in the first place.
As I said, I will be supporting this Bill but I am very concerned about these matters. I think that the whole House is waiting with great interest to hear the Minister’s response.
Lord Strasburger (LD)
My Lords, I start my contribution to this debate with the words of Benjamin Franklin, in a letter to the colonial Government more than 250 years ago:
“Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety”.
Having said that, nobody in this House more than I wants the people of this country to be safe—to be safe from terrorists, safe from paedophiles, safe from drug barons, safe from anyone who would do us harm. I am sure that every noble Lord feels the same way.
I am also confident that we all agree that there are some limits on the price we are prepared to pay to nudge the threats to our citizens closer to zero. For example, not many of us would be happy to see the Government installing equipment in everyone’s home to continuously record video and sound. We would not like it if all our letters were being steamed open by the authorities, and then scanned and recorded for no better reason than that we might one day go off the rails and commit a serious crime. Although these measures would probably reduce crime of all types, most people would consider the level of intrusion too big a price to pay. We all have a privacy red line we would not cross in return for some sort of reduction in the threat to our safety. It is a matter of where that red line is that we are debating.
By the way, some noble Lords may not realise that so far as our use of the internet is concerned, the red line has already been crossed. GCHQ’s Project Tempora is doing the digital equivalent of steaming open our e-mails and web browsing, and recording it all, with no differentiation between metadata and content. I have tried on many occasions in this Chamber to raise this huge invasion of our privacy, which is without the people’s consent, but have just been stonewalled by the Home Office, which would rather that we talk about something else and leave it to get on with trampling on our liberty and our privacy.
To return to this Bill, some will be surprised to hear that I support it, for two reasons. The first is that I accept that the ECJ judgment could leave our police and intelligence agencies with no communications data about those who have committed, or are about to commit, serious crime. We do not have time to discuss and agree a Bill to replace RIPA that would deliver the data on the bad guys and leave the innocent alone, and would provide the extra security and control that is needed. So we have no option but to pass this Bill to temporarily fill the gap. Although that means that vast numbers of suspicionless citizens will have their metadata collected and stored, I am reassured that this Bill, when it is enacted, will start life under a sentence of death in 29 months. I will come to my second reason for not opposing this Bill in a moment.
Although other noble Lords—in fact, every noble Lord—has referred to it in this debate, I cannot stand here without drawing the House’s attention to the scandalous affront to democracy that is the timetable for this Bill. The Home Office and everyone else knew about the ECJ judgment on 8 April. Despite being told by many specialists in the field that there was a consequential effect on the validity of the UK’s 2009 data retention regulations, the Home Office repeatedly asserted that there was no problem. Then suddenly, 13 weeks after the ECJ judgment and two weeks before the Summer Recess, the Home Office now tells us that there is a problem and an emergency Bill has to be passed within a week.
There are only two possible explanations for this chain of events. The first is pure incompetence and a failure to understand the judgment; the second one, to my mind, is that it is a ploy by the Home Office to suppress scrutiny of important and complex legislation. Last Tuesday I watched the Home Secretary struggle to explain the sudden panic to the Home Affairs Select Committee. Perhaps my noble friend the Minister could have a go when he responds to this debate. Why was this Bill not mentioned in the Queen’s speech, which took place eight weeks after the ECJ judgment? Was it a mistake or was it a conspiracy? No wonder there is such cynicism about and distrust of politicians out in the country.
RIPA was deeply flawed for many reasons when it was passed. Today it is also out of date, having been passed seven years before the first smartphone was introduced to the market—Apple’s iPhone—and internet on the move became ubiquitous. It allows too many public authorities to delve into too much of our data for too many reasons. While the equivalent in America is used less than 60,000 times a year, there are more than half a million access requests a year in the UK. But the biggest problem with RIPA is that it contains a deliberate and well concealed loophole that is used to claim legal cover for Project Tempora’s hoovering up of everything that everyone does on the internet and storing it. The British people were never asked, via their representatives in Parliament, “How do you feel about the Government helping themselves to all your private data?”. I presume that they were not asked because the Home Office knew what the answer would be—and it would not have been, “Yes please”, especially if it had been explained that it is as if there is a man or woman from the Ministry looking over your shoulder and making notes whenever you use the internet, at home or at work or on a train, or wherever you are. So instead of getting the permission of the British people, the Home Office used legislative sleight of hand to slip it in under the radar. That must ring alarm bells about related legislation such as this Bill being rushed through without proper scrutiny.
Parliament, too, must take its share of the blame for this state of affairs. For too long, parliamentarians have been asleep at wheel when it comes to watching our spies or resisting Home Office land grabs. Is it not to Parliament’s shame that it took an ECJ judgment to point out that the European directive on data retention, which the UK was heavily involved in promoting, fails to comply with human rights law in many ways? Many specialist lawyers are saying that existing UK law and regulations, after amendment by this Bill and its accompanying regulations, fail to answer at least two of the ECJ’s concerns, which leaves them vulnerable to challenges. As a former Conservative chairman and shadow Home Secretary said in the other place yesterday:
“While the Bill may be law by the end of the week, it may be junk by the end of the year”.—[Official Report, Commons, 15/7/14; col. 731.]
What then—another emergency Bill?
I said earlier that there was another reason why I am supporting this Bill. It is that the Deputy Prime Minister has been very astute in extracting a high price for his co-operation. I am particularly pleased that the long overdue review of RIPA will now happen and that Mr Anderson’s report will go to a Joint Committee for consideration. The new Government will have to take notice because RIPA will be heading for the buffers when this Bill expires in 2016. As other noble Lords have said, it is high time that there was a full debate in this country on how much privacy we are prepared to sacrifice for a bit more security. The setting up of a privacy and civil liberties council has the potential to redress the balance in favour of the citizen versus the state. Time will tell. The small but meaningful decision that the chair of the ISC must be from an opposition party will make a difference.
Finally, I am not a politician, but I hope that noble Lords will forgive me for making a political point. None of these important steps forward, and others that I have not mentioned, would have happened without Nick Clegg’s steadfast insistence. None of them would have happened without the Liberal Democrats being in government.
Baroness Lane-Fox of Soho (CB)
My Lords, when Tim Berners-Lee famously typed his message “this is for everyone” at the start of the 2012 Olympic ceremony, I do not think he could have imagined just how prescient that statement would be and why. Tim has always striven for an open, transparent and universal web, one where people are able to have private conversations and assume complex identities. Nowadays his Olympic optimism could be read instead as a statement of the irrevocable powers of Governments and commercial organisations to know everything that people are doing in their digital lives.
I do not think that many of us who were around at the beginning of the web’s development imagined that the landscape would so quickly look as it does today. I certainly thought that, as the web became more mainstream, it would open up enterprise, policy-making and the monopolies that had characterised our society. The power for individuals to disrupt the status quo and to create better services—both public and private—seemed significant. Instead, it is remarkable how quickly the freedoms that I found so energising are in danger of being eroded.
In this context, I want to talk about three aspects of the Bill: first, the digital skills needed within Parliament to achieve proper scrutiny; secondly, the timing of the sunset clause; and, finally, the nuances of Clause 4. I spend a great deal of my working life encouraging large organisations to embrace the digital world, particularly the pace of digital change. Generally, I am on the side of speed, and I am often mocked for setting an unfeasible and unreasonable timeframe to complete a project. As noble Lords have said, the timeframes for this Bill are alarming.
I agree with all noble Lords who have raised the point, as well as with the World Wide Web Foundation, which said that,
“we fundamentally disagree with the lack of consultation and the speed with which the Bill will be rushed through. Full and frank public debate that informs the legislative process should have occurred by now—after all, these issues have been making headlines for over a year and the relevant ECJ judgment was delivered in April”.
Putting aside whether it is proper parliamentary process, this rush seems to highlight an issue of growing importance which we, as parliamentarians, face. I consider myself fairly digitally literate and yet I have struggled to understand the nuances that are informing this legislation. Whatever our political persuasion and whatever we feel about the subjects, we can all agree that these are complex areas which are understandably unfamiliar to many parliamentarians who are being asked to consider them. I felt as if I had a head start, yet I struggled to assimilate the different areas addressed in the Bill. As the noble Lords, Lord Knight and Lord Hodgson, demonstrated so effectively, even the meaning of metadata is complicated. Contrary to popular belief, it can very easily and quickly lead to individual identification.
Through no fault of their own, parliamentarians may well be making judgments on areas which are rapidly evolving and where technology is changing the art of the possible. For example, ways of intercepting and recording data that do not exist today will undoubtedly be invented. There are many products launching right now which will change the boundaries again. How do wearable technologies, such as Google Glass, which collect data fit into this new picture? It therefore makes me extremely nervous that Bills which require such deep technical expertise are given so little time.
The digital capability of the other place and of your Lordships’ House is something that will become more and more profoundly significant. All pieces of legislation will soon have aspects of technology at their core and our ability to scrutinise effectively will rely on a deeper understanding than currently exists. As someone from the digital sector, it is also disappointing to watch as legislation that directly affects that sector is so cursorily debated. It only goes to further people’s belief that neither House understands the modern world nor cares about their digital lives. It is a tough problem to crack, but may I suggest to the Minister that it would be interesting to consider a review of our own skills which might lead to some actions to improve them?
The lack of time to scrutinise the Bill is what makes the sunset clause so vital. If debate about these issues is as important as the Government reassuringly claim that it is, why would a sunset clause not come into force much more quickly than after two and a half years? The pace of technological change is so great that to be certain of anything two years out is brave. The questions under discussion are becoming more, not less important to citizens. Many in the technology community, including Jimmy Wales, the founder of Wikipedia, are calling for a six-month sunset clause. Despite the six-month reviews included as part of the amendments made yesterday, that would seem extremely sensible and desirable.
My final point is on Clause 4 of the Bill. If this clause is seeking to preserve the status quo, it is a status quo that has never been clear or legal. It is a status quo which, as has been intimated by other noble Lords, read in conjunction with Section 8(2) of RIPA would allow for the blanket interception of all data from international technology companies. Like the noble Baroness, Lady Kennedy, I would appreciate clarification as to whether this complies with the ECJ judgment.
I am not clear why, in an age where all data can be collected, all data should be collected. We require reasonable suspicion and an individual search warrant in order to enter someone’s home. Why cannot the same be true in respect of someone’s online property? No one would suggest that, where appropriate, Governments should not be able to target individuals about whom they have suspicions. The security of citizens is paramount. I have felt reassured that, where necessary, the security services have the ability to track an individual who may pose a threat, using all the available new platforms. However, I believe that this Bill is building on a modus operandi that has been going on for too long without clarity or transparency, and because it has been happening it does not mean that it should go on happening. In some ways it could be argued that at least Clause 4 puts a legal framework around something that, as the Home Secretary herself has said, was just previously assumed by Government, but at least let us be honest about the extent and genesis of these powers.
When the Snowden revelations broke, President Obama immediately set up an expert panel to examine oversight of the security services. That showed how far the political discourse in the UK lagged behind that of the US. No such steps were taken here. This panel looked into claims by the NSA about the necessity of data gathering. It found only one case where the bulk collection of phone records was helpful—itself a money laundering incident. Allegations that GCHQ and the NSA undermined encryption alarm everyone who trusts the web with their medical, financial or personal records. Public trust is at an all-time low and I fully understand why. We ignore people’s anxiety at our peril.
As many noble Lords are aware, this year is the 25th anniversary of the world wide web. It is essential that we do not charge headlong into decisions about the relationship between citizen and state in the new world that will influence us for the next 25 years. I am an optimist, but I must confess that I am uncharacteristically depressed. The web I want seems to be disappearing. Addressing the ECJ ruling and planning this Bill far earlier could have been an extraordinary opportunity to instigate a wide-ranging and sophisticated review about the future, a review which carefully considered the implications of data collection, the role of surveillance and the trade-off between privacy and security. Instead, we are being catapulted into legislation that builds on the badly understood and arguably dysfunctional RIPA legislation.
This Bill sets a precedent from which, even with reviews and a sunset clause, I believe it will be hard to row back. I sincerely hope that we do not regret it. I look forward to the Minister’s response.
Lord Judd (Lab)
My Lords, I am glad to follow two such courageous, perceptive and challenging speeches, with which I found myself in great agreement.
It would be foolish to deny that we live in a very dangerous world. One of the most important considerations is that we do not—deliberately or, at worst, inadvertently—give victories to the extremists. We must become resolute in defending the things that make our society worth protecting. At times I share the noble Baroness’s despair, which she was very honest about. I have an awful feeling that if we looked at ourselves from another planet and saw what had happened to the quality of our life in the past 20 years, we would be appalled at how far the extremists have won victories by getting us to restrict and undermine the whole quality of our society, of which law, as we understand it, and the operation of law is so essential.
A long time ago I dealt with security in the Ministry of Defence. I was not dealing with it in this particular context, but as a Service Minister. It struck me then that if you believe that in the reality of the world in which we live there must be security services, by definition it is crucial that they are headed and staffed by people who are second to none in their commitment to the defence of liberal democracy, and who in that context really believe that what they are about is maintaining the quality of British life. Therefore, it seems to me there has to be trust in all this. That is why it is so important to be able to be confident that the right culture operates in the security services and the Home Office.
That is why I cheered the very stern rebuke at the beginning of the debate from the noble Lord, Lord Butler, with all his distinguished experience. It is totally unacceptable and a very sad day for the quality of British democracy that we should rush the Bill through at the end of the summer Session, with all this duress. I share the view of the noble Lord, Lord Carlile. I cannot see any evidence as to why we could not have considered this earlier. One is forced to the sad conclusion that a political game is going on here: that the Government want to reduce the amount of public discussion. Let us take one statistic: 88% of the British public want their telephone communications to be private. If we move into this kind of area, it is crucial that we have the maximum public debate and discussion, starting with Parliament, about what is involved and what is at stake. We have not had that. Whatever the improvements to the legislation—I take my hat off to those who have worked very hard to get it improved—we still know we are not going to be able to begin to scrutinise it in the required detail.
I want to make another general observation. I often reflect that, in an age of advanced IT and incredibly advanced surveillance techniques, it is just possible that we in institutions such as Parliament are all trying to shut the stable door once the horse has bolted. That brings me back to trust. Unless the security services and others operate with a relentless commitment to values that matter, I am very dubious as to how far effective scrutiny can ever be ensured in the future. We can take certain steps, but there will always be potential for abuse. In recent years, there have been too many disturbing examples of the security services going off course. In saying that, I do not want to join an ill informed body of people yelling at the security services, which are doing immensely challenging work in very difficult circumstances. I have great admiration for them. However, we have to face up to the targeting, which has been seen in recent years, of benign activist organisations, of trade unions and, indeed, of my noble friend Lady Lawrence. Those are profoundly disturbing issues that raise all sorts of questions about how much trust there can be and how we can ensure we have as much accountability as possible, with all the reservations I have expressed.
In the mean time, I would like to raise certain specific issues, on which it would be helpful if the Minister was able to comment or indeed write—although I do not think there is much time to write to us before tomorrow. The Minister and the Government have repeatedly said that DRIP just maintains existing interception capability, but is that really the case? Is it not, in effect, primary legislation that is supporting and extending controversial mass interventions—let us face up to it—such as those revealed by Snowden, the use of which has been doubted by the US Privacy and Civil Liberties Oversight Board and criticised by the Interception Commissioner? I would like to hear more from the Minister on that point.
How can I know if we come to this urgent situation because we currently have some sort of acute emergency? How can any of us know the realities of the nature of that acute situation? If we really have such a situation, why will it take two and a half years before the emergency measures have to be reasserted and positively endorsed by Parliament? That is a hell of a long time. Surely we should have a much shorter period.
If there is to be an independent review of RIPA it obviously has to be robust. I believe it must include terms of reference, proper funding, specified timescales and scope. What is really needed is a convincing board of people with relevant and impressive experience, with a credible chair.
There is one other matter. If we are trying to establish minimum requirements for a review of UK-USA data sharing, we need to clarify our goals. We need to update existing arrangements for data interception and processing by the US in the UK. We need to review the whole process of UK-US data sharing, and we have to look at the US’s use of data retention in view of new technologies and innovative practices since the original 1946 UKUSA agreement, as amended. We need a specific assurance that UK data will not be available to support activities that would be unlawful in the UK, including extrajudicial targeted killing—noting confirmation from senior US officials that “metadata kills”. That is an extremely serious issue, which we cannot skate over. We need very specific reassurances from the Government.
I conclude as I was arguing a moment ago, and some of those who serve on the same Select Committee as I do will get a bit weary of how often I find myself repeating this. Because of the nature of the IT advances and the huge scope of surveillance that we now have, we are playing around unless we are second to none in the fight to establish a culture to defend what freedom, justice, the rule of law and open government are really all about. I am afraid that we have slipped a very long way.
Baroness Kidron (CB)
My Lords, it is an honour to follow such a speech from the noble Lord, Lord Judd. I feel that I had better declare my involvement in iRights, a civil society initiative that seeks to establish five principles that would frame all interactions with children and young people under 18 when they use the internet and digital technologies.
There seem to be four aspects of the Bill that cause concern: the process by which it came to your Lordships’ House; whether it does or does not represent the status quo; whether the status quo is what we want to reproduce; and, given the uncertainty of the first three, whether the sunset clause is too far away.
Given how much has been said on the first point, I just want to share the dismay of others at the lack of both foresight and oversight. I understand that heading off opposition and consulting stakeholders are legitimate parts of the legislative process but, somewhat unusually, in considering this Bill it is worth us noting that nearly all the UK population uses the technologies that the Bill addresses. They, too, are stakeholders, and to deny them a proper understanding through the reporting of public debate that the parliamentary process provides is at the very best disrespectful and most probably a further blow to public confidence in the political establishment.
The question of security versus freedom and privacy will be central in a world in which web and digital technologies become the organisational technologies of our society. Rushing through emergency legislation that has been privately consulted upon by an elite group of parliamentarians and international companies does not send a reassuring message of transparency and accountability that such an important issue deserves.
We are repeatedly told that this Bill is not intended as an extension of powers but that it simply upholds the status quo, that Clause 1 restores the previous position on communications data retention, and that what had previously been assumed about the extraterritorial application of communications data acquisition and interception powers was now being properly put on the face of the Bill in Clause 4. This reassurance has been repeated in briefings, in the Explanatory Notes attached to the draft Bill, in the impact assessment, in the other place and today in this debate, but it is in this Chamber on multiple occasions, listening to the likes of my noble friend Lord Pannick, the noble Lord, Lord Lester, my noble and learned friend Lord Woolf and many others that I have experienced the powerful art of clarification.
The companies at which the extraterritorial reach of RIPA is established and aimed want clarification, by Ministers’ own admission. If they need clarification, it must mean that there is some doubt. If there is no longer doubt then there has, de facto, been an extension, the purposes and meaning of which have not adequately been tested by the British public nor by their Parliament.
My noble friend Lady Lane-Fox, in her debate that celebrated the 25th anniversary of the world wide web and again today, suggested that we as a nation and we as a Parliament had not properly responded to the revelations contained in the leaks orchestrated by Edward Snowden. In spite of what we now know and the Pulitzer prize-winning efforts of the Guardian and the Washington Post to make us care, we are rushing through a Bill without the opportunity to determine whether the status quo should be underlined and underscored or whether, in a world where communications are central to every aspect of our lives, we now need to think again.
I should like to make it clear that I have little appetite for a lawless and untended communications highway with no responsibilities to real-world outcomes. Like most others who reject this emergency legislation, I would actively support a more carefully considered Bill that sought to address some of the broader issues that have been raised today and some of the newer technologies on the horizon. However, imposing suspicionless blanket communications data retention on the entire population challenges the basic premise of a free society. For that reason, this policy has been struck down in constitutional courts across Europe and, for that reason too, we must have a regime that takes account of all possible consequences of data retention, as well as the absolutely legitimate needs of the police and security forces.
The European Court of Justice found that on 10 counts the 2009 regulations failed to deliver proportionate retention of data. It laid out specific criteria that needed to be met. We have been told by Ministers in briefings that the Bill in front of us answers some of those findings and that others are answered by existing UK legislation. In spite of reading many late briefings, I cannot fully comprehend in sufficient detail whether all 10 counts have been fully answered. I ask the Minister whether there is any danger that the Bill simply re-enacts the disproportionate retention that has already been found unlawful by the European Court of Justice—a point put much more eloquently and precisely by my noble and learned friend Lord Hope of Craighead.
It is disappointing that the Bill has come to your Lordships’ House in such unhappy haste and that its progress to becoming law does not serve to educate Members of both Houses about the issues at stake. Nor does it ignite a desperately needed public debate about who is gathering the data, what those data are, and when and how they are being gathered. It is desperately worrying that its development has taken place entirely in private. I find myself wondering whether the explanations given by Ministers for conceiving this Bill in private suggest that Her Majesty’s Government’s need for privacy is a little more equal than the need for privacy of the population as a whole.
Given the inevitable passing of the Bill without it being subject to the parliamentary journey that it deserves, your Lordships may wish to send a message to the citizens of the UK by inserting an earlier date for the sunset clause. It would be a date not designed to serve the needs of the election cycle but one that reflects the urgent need of the British people—indeed, it is an emergency—for their Parliament to understand, investigate and decide how we are going to balance their need for security against their need for privacy and liberty.
Lord Blencathra (Con)
My Lords, I support the Bill, which is an essential stop-gap measure.
We must continue with our current powers and the 12-month retention period until we pass new legislation which tackles the so-called capability gap, deals with the vexed question of IP addresses and strikes a proper balance between the needs of the security services and the police on the one hand and the privacy of the individual on the other. For the moment, that means the Bill that we are considering today, and it means more Elastoplasts on the broken and bleeding RIPA 2000. Also, we must attempt to persuade our United States service providers to co-operate with us—the extraterritoriality clause.
I do not want to sound like a second-hand car salesman as I return yet again to extol the virtues of the report of the Joint Committee on the Draft Communications Data Bill, which I had the privilege of chairing 18 months ago. We were fortunate to have the noble Lords, Lord Armstrong of Ilminster, Lord Strasburger and Lord Jones, my noble friend Lord Faulks and the noble Baroness, Lady Cohen of Pimlico, as well as six excellent colleagues from the Commons. Our task was to scrutinise the draft Bill, which was then commonly known as the snoopers’ charter. We all started with some fairly strongly held beliefs, some of which we discovered were quite wrong, and we held widely different views on key issues. Nevertheless, we agreed on a unanimous report, which I commend to the House and the Home Office as a blueprint for new legislation to replace RIPA. It is only £15.50 and I have lots of remaindered copies.
To be fair, just after we reported, the Home Office showed me and the noble Lord, Lord Armstrong, the framework for a new Bill, which incorporated about 95% of the recommendations we made in the report. Unfortunately, that new draft did not find favour with all members of the coalition, but I will not be critical. However, it is essential that after the next election measures along the lines we suggested should proceed expeditiously. Why, you may ask? It is simply because RIPA is no longer fit for purpose and should not be the framework on to which we patch amendments to catch up with technological changes. The Home Office says that there is a capability gap of 25% in the information it collects now as compared to 2000. My committee was highly sceptical about that.
In 2000, I had a top-of-the-range Nokia phone which held about 100 phone numbers and 120 short text messages. I wish I had that phone back. In 2000, only 50% of UK adults had a mobile phone. In 2012, that figure was 92% with 81.6 million mobile subscriptions. What does your iPhone or Galaxy hold now? A thousand times more information, as it can also handle all web and e-mail traffic. Facebook was invented on 4 February 2004 and Twitter on 1 March 2006 and both have added billions of bits of new information to the airwaves. After Twitter was launched, we were told that it took three years before the billionth tweet happened. Now there are a billion tweets every two days, God help us. That is why my committee said that,
“the volume of communications data now available is vastly greater than what was available when RIPA was passed. The much quoted figure of a 25% communications data gap purports to relate to data which might in theory be available, but currently is not. The 25% figure is, no doubt unintentionally, both misleading and unhelpful”.
Clause 2 of the Bill defines “communications data” and gives them the same meaning as Section 21 of RIPA, but what exactly are communications data? There are three parts to this. First there are traffic data, identifying the location of the device to or from which the communication is sent. Secondly, there are use data, which are anything other than content about the use made of a service. Finally, there are subscriber data which are data, other than traffic or use, held by a service provider about the persons to whom it provides the service. Traffic and subscriber data are absolutely vital for law enforcement authorities, as we have all heard, since they give the location, name and address of the subscriber, their bank account details and stuff such as that. At least that was all they did in 2000, when half of communications were by land line. However, RIPA was drafted in such a way that every bit of information one supplies to a service provider is automatically classed as subscriber data unless it is in the narrow category of traffic or use data. Subscriber data have, therefore, accidentally become a catch-all for everything not called traffic or use. That is one major reason why there was widespread criticism of the draft Bill and why many people called it the snoopers’ charter.
However, there were other reasons. The original Bill was exceptionally widely drafted, for the best of intentions. That was a tactical mistake by the Home Office. It wanted to make the legislation technologically future-proof. Facebook and Twitter came out a few years after RIPA was passed and the Home Office, Ministers and many of us who served there know that although one can get a crime and justice Bill in nearly every Queen’s Speech, there was little likelihood of a new RIPA being passed every year. So the Home Office tried to make the legislation in the draft Bill as wide as possible, taking into account any new gizmo, widget, app or service that some brilliant geek might invent in his bedroom many years hence. Inevitably, that very wide scope concerned many people and rightly so. My committee said that no area of technology was moving faster than communications technology and that if Parliament wanted more control of legislation in this field, we had to have a very efficient means of annually, if necessary, amending the legislation to keep up with technological advances. That was the quid pro quo; if this House or the other place wanted narrowly focused measures requiring parliamentary approval, we had to give the Government a rapid mechanism to approve changes.
The other major tactical mistake that the Home Office made originally and later corrected—but by that time the damage was done—was not to spell out exactly what were the crucial bits of information it really wanted in the new measures. Opponents were rightly pointing out that the draft Bill wanted to capture and store every communication, including the content of all e-mails and records of every website visited. We were told that the reasons could not be revealed because of secrecy, hence the very wide drafting of Clause 1. Initially, the Home Office would not tell us what data types it was looking for. However, when we talked to the police and others, it soon became clear that 98% of the time they needed only location, name, address, bank details and numbers. This is basic traffic, use and subscriber data—the who, what and when stuff.
When applied to computers and the technology we have now, that meant three slightly different things. Subscriber data would include IP addresses, but that is no different, in principle, from telephone numbers. The second, highly contentious items we wanted were data identifying which services or websites are used on the internet up to the first forward slash. Thirdly, there were data from CSPs based overseas, which are addressed in Clause 4 of the Bill. The Home Office confirmed to my committee on 24 October 2012 that those three items were the capability gap it wanted to plug.
The extraterritoriality provision in Clause 4 attempts to deal with the difficulty of obtaining information and co-operation from giant service providers based mainly in California. I am with very distinguished and learned noble Lords but that clause is a little bit of wishful thinking. We are legally powerless to compel Google or Apple, or any of the rest of them in California, to give us information held on their servers outside the UK. However, in 2012, we heard fairly powerful evidence that they co-operated all the time with the British Government—nudge, nudge, wink, wink: we do all that co-operation stuff—but they wanted a comfort blanket of something judicial or semi-judicial that they could rely on. That is what they get in the States. The FBI gets a judge to approve a warrant and then the CSPs will hand over everything straightaway. So they wanted this fig leaf of some British warrant so that they could say to their customers, “We do not want to give anything away, we will keep everything secret, but we have this judicial warrant so we have to hand it over under the law”. It is great if they do that, but do not expect United States service providers to feel legally bound by the power we are putting in here. It is a good little fig leaf; it is ours and we should give it a go.
The one mega item that my committee wrestled with was internet protocol or IP addresses and web logs. There is deep division in the country and in Parliament about the state collecting and storing all these and how far that impinges on personal liberty. This is not the time to go into it but it is the core of the concerns raised about the earlier Bill. This Bill, rightly, does not touch on it, but we will have to return to this issue early in the next Parliament. My committee concluded that a new Bill should be drafted in such a way that this one item could be voted on in both Houses of Parliament and a definitive decision reached on it. We did not want it hidden away in some obscure legal or technical jargon that would cause suspicion of the Government’s motives, as well as confusing every single one of us who were supposed to vote on it.
I am proud to say that my committee was thorough and meticulous, not because of me but because of the others who served on it. We savaged the Home Office draft Bill and I make no apology for that. However, we drew up a framework for a better Bill. I pay tribute to Home Office Ministers and officials who rapidly took on board 95% of what we suggested. The noble Lord, Lord Armstrong, and I were fortunate enough to see some of the revised draft. That draft did not get full coalition support but, in my opinion, it dealt with all the problems. If that Bill were to be presented again, it could never be properly called a snoopers’ charter. It targeted the gap, narrowed the scope and built in protections.
Turning to Clause 7 and the independent reviewer, I shall send Mr Anderson our report since we have done most of the work for him—at least, on items concerning Clause 7(2)(b) to (f). We were not allowed, and we did not want to have, the power to comment on current and future threats to the United Kingdom. There is a clear case for new legislation to replace RIPA to give our security services, the police and others the powers that they need, but that has to be based on parliamentary approval of all aspects of all the powers. The public will consent to quite large levels of intrusion so long as the powers to do it are clear, open and proportionate, and have had proper democratic scrutiny. I hope that when Mr Anderson reports we will not be faced with a heavily redacted report on which the Government may wish to base the reasons for new legislation. That simply would not get through this House.
Noble Lords will be pleased to hear that that leads me to my final point. I think I heard the Home Secretary say that there will be a scaling back of the organisations that could get access of some sort to the data. On our committee, I think we were all surprised and appalled to discover that more than 600 organisations, including 400 councils, could use RIPA to access data. None of them is in RIPA except the police, SOCA, which is now the National Crime Agency, HMRC and the security services. That was another fundamental presentational mistake that the Home Office made and is still making. We have the repeated mantra from Ministers and the Government that access to communications data is essential to deal with terrorists, paedophiles and serious crime, and that these organisations need the exceptional powers granted in RIPA to deal with them. We all agree on that and there is no argument there. But when one finds that local councils are included as relevant authorities, and that one used RIPA to catch out a parent outside a school catchment area, and that others use it to catch fly tippers, no wonder people simply do not believe that the Government were thinking only of taking exceptional powers to deal with terrorists, paedophiles and serious crime.
Among the 200 other organisations is my favourite bête noire: the Defra egg inspectorate is on the list because its job, through its Veterinary Medicines Directorate, is to investigate the serious crime of stamping the little lion on the wrong eggs. I kid you not. I checked on the website this morning and—I do not know how this can be put in Hansard—I can give the Minister the pages from the website, including the picture of the little lion on the eggs. That is still being done. I make that slightly silly point because these organisations are on the list and they undermine the argument that we need RIPA powers to deal with the serious crimes. I ask the Minister to get rid of all these other organisations, which account for less than 2% of the access requests to RIPA but do enormous discredit to the main argument. I know that they cannot get access to intercepted communications data and that they are more limited in what they can get access to, but they get some form of access. Let us restrict the new RIPA powers to the police, the security services, the FSA, the NCA, HMRC and the United Kingdom Border Agency—the big players. If we do that, we will go a long way to removing the snoopers’ charter label. The British people and this Parliament will be happy to grant exceptional powers to these important organisations to access all data if it is to catch terrorists, paedophiles and serious criminals. But the quid pro quo is that they, and only they, should have access to these powers. I appreciate that some of these matters are not for this Bill but they are part of the broken and bleeding sore that is RIPA just now and which this Bill is trying to patch up. We need the Bill but we need a new RIPA even more. I apologise for taking so long.
Lord Soley (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Blencathra, who knows a lot about this area. I do not need to repeat many of the very good arguments that have been made, including the obvious case about the delay between the European Court passing its judgment in April and this Bill being rushed through now, which is right. The Government have to answer for it. I do not wish to pursue it. I agree that the legislation needs to go through and that it is very good that the Government have accepted some of the amendments dealing with reviews, the sunset clause, and so on.
I heard the Minister say in his opening speech that he accepted the second recommendation in the Delegated Powers Committee’s report. I did not hear him say that he accepted the first recommendation, which deals with the affirmative procedure being used after the regulations have been brought into effect. Will the Government accept that recommendation in paragraph 7 of the report? The noble and learned Lord, Lord Hope of Craighead, made a number of interesting points. If I understood him correctly, as regards Clause 3 on grounds for issuing warrants and obtaining data, his question deserves an answer. Why are the Government using the words “necessary and proportionate”, which is a weaker phrase, when the European Court of Justice refers to “strictly necessary”? I am relieved to see the noble and learned Lord nodding because I did not quite follow some of the legal points that he made. That seems to be an important point.
I now turn to the issue in its wider sense, which has been very important to me for some time. I have had a long involvement in legislation, as the noble Lord, Lord Howard, will know, including in the Prevention of Terrorism Act in the House of Commons. The noble Lord, Lord King, made the point that about 30 to 40 years ago there was a department in, I think, the Home Office, which steamed open letters to see what was written in them. My memory is of making a speech in about 1979 pointing out that MI5 and MI6 did not have an existence in statute. No statute recognises the existence of those two organisations despite the fact that MI6 probably was the most famous secret service in the world, thanks in no small part to James Bond and, rather less romantically, to the Cambridge spy ring. What interested me was that they had no legal existence in the normal sense. As a result of the questions that I and others asked at that time, legislation was passed in the early 1980s which gave them a statutory basis.
It is also right to say that Bletchley Park, which was unacknowledged, emigrated after the war to Cheltenham and became GCHQ. I am not quite sure of the history. I asked the noble Baroness, Lady Trumpington, but I am not sure that she knew either at what point it became part of statute. To put this in a historical perspective, the interesting reason is that it is difficult for democratic states to deal with legislation of this type. Although everyone has been rightly saying that our security services are very good and deserve praise, it is also right to point out that the various civil liberty groups and individuals who rattle the bars at times of legislation of this type going through at high speed are absolutely right to do so. Although some people might get frustrated with them, a healthy democracy, if it did not have such groups and individuals, ought to invent them. It is worth pointing out that they are as necessary as the security services.
I strongly agree with the noble Lord, Lord Blencathra; we have discussed before how the Regulatory and Investigatory Powers Act was unfit for purpose before it hit the statute book. It was already out of date. In a sense, my main point, which also relates to the speech made by the noble Baroness, Lady Lane-Fox, is that we should be extremely proud in this country that Tim Berners-Lee invented the world wide web. We underestimate how much he is appreciated around the world. In the context of this debate, we also underestimate massively the complexity of the path before us with modern technology.
There is a balance here. We all know that the balance is between the powers of the state and the rights of individual—freedom, citizenship, privacy and so on. It is a recognition that, because of the nature of modern weapons, the threat particularly from terrorism—although the Bill goes wider than just terrorism—is profoundly dangerous, far more dangerous than the 19th-century anarchist going around with a smoking bomb, ready to throw it. We are now talking about the death of thousands, or perhaps tens of thousands, of people.
On the other hand, there is the complexity of the technology; it brings us great freedoms and we ought to be grateful for that. I am sorry that the noble Baroness, Lady Lane-Fox, was a bit depressed by it. I find that, with the invention of modern technology, the freedoms and the ability to deal with problems accelerate. I will give a very brief example. I was out walking in the Oxfordshire countryside at the weekend and came across a cow stuck in a pool of mud and water. It was drowning. Thanks to modern technology, I was able to give the precise latitude and longitude of the position to a police officer—using the 101 number, not the 999 number. Within 35 minutes—we were 30 minutes away from the nearest track—two firemen appeared and pulled the cow out. It might seem a minor example, but you have only to think of all the examples in your life in which modern technology had been profoundly useful and had opened up all sorts of possibilities. If that had been the old days, I would have had to walk for miles to find a phone or a farm, and I probably would not have got back in time for this debate. The difference is massive and, of course, it opens up all sorts of possibilities in real life.
I come to my main point in this debate. I was very glad that the Government had accepted the recommendations about reviews, sunset clauses and so on because I believe that the challenge to us is to use this time that we have, in this House and in the House of Commons, to devise better ways of looking at legislation, particularly in relation to issues of this type. We do not have a structure for examining legislation in a way that keeps us up with technological change. I agree with all the comments that have been made about some of the committees and so on. I feel that this view applies not just to this Bill but to many Bills, which are often slightly dated by the time they come into effect because they have been overtaken by technology.
Legislation such as this is particularly important because the control of the security services evokes the Nineteen Eighty-Four argument about how much power should be given to the state and how much you risk if you take those powers away and leave yourself at risk from the activities of other groups. I wish that I had a nice, simple model to offer to the Minister and could say, “This is the sort of structure that we need to develop in this House in order to have the processes that could keep us up to date with technological change on the legislation that we are passing”. I do not have such a model, and the challenge to this House and to the House of Commons is to devise such structures. Both Houses are famous—and rightly so—for their ability to defend and speak up for freedom over the centuries, but we are in such a strange situation.
I return to what the noble Baroness, Lady Lane-Fox, said about technology. Her speech was important because it was the only one so far in this debate that put it in the context of the digital revolution. As we try to legislate now, I do not think of myself as at the cutting edge of the digital revolution; I manage, but it is more of a struggle than a great success. Yet it is so important. It affects so many walks of life and so many people, and there is a danger that the public see us as not being relevant, in part because we cannot keep up our legislative processes with the speed of technological change.
There is an opportunity here to use this Bill and the period working up to the sunset clause to start looking at more effective ways of keeping legislation up to speed with technology. The importance of this Bill is massive because of the balance between the security of citizens in the face of threats from crime and the protection of their rights, of which we are so proud both in this House and in the House of Commons. I urge the Government to acknowledge that we all need to focus on how we can improve our legislative processes so that we do not have situations like this and, if we have to rush something through, that we examine and process them in a way which does not mean that we end up losing some of the freedoms that we value so dearly.
Baroness Jones of Moulsecoomb (GP)
My Lords, I thank noble Lords for allowing me to speak. I will be brief, not least in view of the erudite speeches that have gone before. I thank the Government for adding to my general knowledge because until a week ago I did not know what metadata were, and I cared even less; now I know, and I care very much.
We have debated various parts of the Bill extensively today. On the emergency aspect of this Bill, I find it hard to believe that all those big brains at the Home Office did not see this coming. I simply find it impossible to believe. Along with hundreds of thousands of people outside this House, I do not understand why this is an emergency.
Do these regulations come in before the Summer Recess or will they be delayed until after? That, of course, has an impact on whether this truly was an emergency.
On the issue of extraterritoriality, the powers seem to have been implied, but they were implicit rather than explicit. For me, this is an expansion of powers and therefore should have had a proper consultation. Ducking public consultation is really not part of the democratic process. We hear again and again that this is being done to protect us, but the security services and the police will always ask for greater powers and more weapons so that they can do their job properly. However, it is for politicians to decide whether that is appropriate and whether it is for the common good and for the public good; I would argue that it is not.
Some of the clauses from the other place were accepted, and I am very pleased about that. However, the one on bringing the sunset clause forward to 2014 was an opportunity missed because, quite honestly, if we are not having a proper debate now, having it as soon as possible and ignoring the political timetable would have been a good way forward.
As other noble Lords have said, it is very easy to encroach on civil liberties and it is for us to decide where the line is between national security and civil liberties. I feel again and again that it is easy to be pushed into things through fear rather than for sensible reasons of national security. I do not support the Second Reading of this Bill.
Lord Rosser (Lab)
This Bill was the subject of just nine hours of discussion and debate in the House of Commons yesterday. We will have to wait and see whether the time spent on discussion and debate in this House exceeds or falls short of that over the two days—today and tomorrow—that have been set aside.
Serious concerns have been raised in this debate over the way in which this Bill is being rushed through in the light of the fact that the European Court of Justice judgment, which the Government say has been the driving force behind the need for this Bill, was handed down more than three months ago. The reality is that the date of the Summer Recess was known in April, when the judgment was given. Thus the need for minds to be focused on reaching conclusions without delay was also known. We could have avoided the situation that we now have of rushed legislation, rushed committee reports, committees being sidelined and a general feeling that the Government could have ensured that there was more time to consider the proposals in the Bill before it needs to be passed prior to the Recess.
The rush means that the reports of the Delegated Powers and Regulatory Reform Committee and the Constitution Committee have only today been published. The Constitution Committee has commented on its report that between the date of the ECJ judgment in early April and 10 July the Government did not indicate that fast-track legislation might be necessary to address the court judgment, and that the contrast between the time taken by the Government to consider their response and the time given to Parliament to scrutinise the Bill is a matter of concern. The DPRRC has stated that there is no actual duty on the Secretary of State to make regulations under Clause 1(3), simply a power. The committee also said that since the powers conferred by Clause 1(1) and (2) on retention notices, which allow a significant intrusion into the privacy of members of the public, will come into force on the passing of the Bill, with the regulations under Clause 1(3) subject to the affirmative procedure, it is possible with the Recess imminent that there will be a period of three months without any regulations under Clause 1(3) in place to govern the exercise of powers under Clause 1(1) and (2). The Minister has said that that will not be the case, but like my noble friend Lady Smith of Basildon, I would like him to spell out again the timetable that the Government will be following to avoid the potential situation highlighted by the DPRRC from actually arising.
The Delegated Powers and Regulatory Reform Committee also pointed out that Clause 1(3) confers a power on the Secretary of State to make further provision by regulations about the retention of relevant communication data, and does not restrict the scope of the powers conferred by Clause 1(3). Perhaps the Minister will also respond to the view of the Constitution Committee in the light of the scope of the powers conferred by Clause 1(3) that, since it is the Government’s intention that the Bill does not enhance data retention powers, perhaps the Bill should expressly so provide.
The delay in bringing forward the Bill and then having to rush it through is all the more surprising since the judgment of the Court of Justice of the European Union to declare the new EU data retention directive invalid cannot have been entirely unexpected to the Government, since it supported the earlier opinion of the Advocate-General in December 2013. He found the directive incompatible with the EU’s Charter of Fundamental Rights in respect of the right to respect for private life and the right to the protection of personal data. The case was brought by the High Court in Ireland and the Constitutional Court in Austria. In essence, the Court of Justice of the European Union concluded that the data retention directive adopted by the EU legislature exceeded the limits imposed by compliance with the principle of proportionality as it did not limit the interference in respect of the fundamental rights in question to what is strictly necessary, since the directive covered in a generalised manner all individuals, all means of electronic indication and all traffic data without any differentiation, limitation or exception being made in the light of the objectives of fighting against serious crime.
The effect of the European Court of Justice decision was to strike down regulations to enable internet providers to retain communications data for law enforcement purposes of up to 12 months, thus creating uncertainty among communications service providers about the legal basis for the retention of communications data in the UK. The ECJ ruling did not take account of any controls or safeguards in the domestic laws of member states and in particular our communications data access regime, which is governed largely by the Regulation of Investigatory Powers Act 2000. RIPA seeks to ensure that access to communications data can take place only where it is necessary and proportionate for a specific investigation. Our data protection laws mean that in the absence of a legal duty to retain specific data, companies must delete data that are not required under their strict business uses.
Communications data, as has already been said, have been crucial to every counterterrorism operation by the security services in recent years and are used as evidence in nearly all serious and organised crime cases dealt with by the Crown Prosecution Service. The view of the House of Commons Home Affairs Committee yesterday was that the retention of communications data, subject to appropriate safeguards, was an important tool in the fight against terrorism, organised crime and child sexual exploitation, and that the Government were right to bring forward urgent legislation.
Following the ECJ ruling, the concern has been that without new legislation data could be destroyed within a short period by communications service providers fearing legal challenges, with the result that the police and security services would be unable to access them. With the EC directive in question having been transposed into UK law, national legislation needs to be amended only with regard to aspects that become contrary to EU law after a judgment by the European Court of Justice, and a finding of invalidity of the directive does not cancel the ability for member states to oblige retention of data. Indeed, the European Court of Justice accepted that an ability to retain data was necessary and recognised purposes for which data could be retained. Its objection to the directive was to its generalised nature and scope.
The EU data retention directive was implemented through secondary legislation through the Data Retention (EC Directive) Regulations 2009, and the Bill that we debate today is intended to remove any doubt there may be about the legal basis of our 2009 regulations and to give effect to the ECJ ruling. Clauses 1 and 2 confer on the Secretary of State the powers currently in the 2009 regulations to require service providers to retain communications data. The Bill of course also addresses the application of our laws on interception to remove any doubt that the requirement that companies co-operate with UK law enforcement and intelligence agencies also extends to companies that are based overseas but provide services to people in the United Kingdom.
The Constitution Committee said in its report published today that it is not clear why this last part of the Bill on interception needs to be fast tracked as there is evidence that the Government have known about the problem for some time, since the Joint Committee on the Draft Communications Data Bill noted in its report published at the end of 2012 that,
“many overseas CSPs refuse to acknowledge the extra-territorial application of RIPA”.
Will the Minister give the Government’s response to that point?
A number of the contributions in this debate have referred to the need to strike a balance in making a judgment on the Bill between the two main concerns of privacy of information and the need for agencies such as the police and security agencies to know about information and have access to it. The need in a democracy is to sustain liberty and security, and privacy and safety. The Government have made it clear that the purpose of the Bill, which we support, is to maintain existing capabilities and indeed to restrict them in line with the ECJ judgment. Clause 3, for example, will change the basis for obtaining a warrant for intercept on grounds of economic well-being. At the moment, under the Regulation of Investigatory Powers Act 2000, economic well-being is the sole criterion without condition. In future it will be subject to the interests of national security.
In the House of Commons, the Government agreed to our amendments designed to ensure that the Bill does not go beyond existing capabilities by requiring six-monthly reports on the operation of the Bill when it becomes an Act, to ensure that its implementation does not go beyond what the Government have stated is its purpose. There is also a sunset clause in the Bill, on which we insisted, which means that the legislation will cease to have effect from the end of 2016. That provides an opportunity for full public consideration and debate about what powers and capabilities will actually be required and how they will be regulated after then in the field of communications data access and interception. It will also provide an opportunity to ensure that whatever is deemed to be required will have rather greater public understanding and acceptance than is the case at present. People want to feel secure, but they also value their privacy and they do not like to find out the sheer extent to which that privacy can be and is being invaded from whistleblowers. They rightly feel that there should be more transparency from government on this issue both on the extent and necessity, and with that greater transparency might well come rather more trust and acceptance of the need for what should be done, provided it is proportionate.
The Government said last week that they would review the interception and communications data powers that we need and how they are regulated in the context of the threats we face. It was helpful that in the Commons the Government accepted the need to go down the road of our amendments and place this work, which will be conducted in the first phase by the Independent Reviewer of Terrorism Legislation, David Anderson QC, on a proper statutory footing. I hope the Minister, having mentioned Mr Anderson, will respond to the numerous points raised by my noble friend Lady Kennedy of The Shaws and by the noble Lord, Lord Carlile, about the future of Mr Anderson’s post, and the role and powers of the proposed new board.
The review which Mr Anderson will be conducting in the first phase will also take account of the impact of changing technology on the work of the different agencies involved. We have been calling for an independent expert review of the legal and operational framework, and in particular of the Regulation of Investigatory Powers Act 2000, because the speed of the communications data revolution since that Act has probably already led to the law and our oversight framework becoming out of date. The police and the security and other relevant agencies need to be able to keep up with new technology, but the safeguards need to keep up too—though, as has already been said in this debate, it is the knowledge that some private companies and organisations have about our daily lives and what we do that is equally breathtaking.
We will play our part in seeing that this Bill is passed, because the existing powers that it seeks to retain are too important for public safety and security to be put at risk of being lost. However, we also need that full debate about achieving the right balance, in a democracy, in an increasingly technological age, between privacy and liberty on the one hand and safety and security on the other, and ensuring that that balance commands public consent and confidence.
Lord Taylor of Holbeach
My Lords, this debate has been an exceptional debate, not only because we are dealing with something of great importance but also because we have heard some extremely able and interesting speeches. Some have been more supportive than others of the Bill I have presented to the House, but I found them all interesting. The debate reflects the ability of this House to recognise the importance and significance of legislation and the scrutiny it can offer. We know that these are extraordinary circumstances: we are being asked to consider fast-track legislation. However, I think that everyone understands why the Government need a sense of urgency about this legislation.
I hope that where noble Lords have expressed reservations about that, I will be able to reassure them. I appreciate the concerns of some noble Lords about the constrained timetable, given the time that has elapsed between the ECJ judgment and this Bill being introduced. I hope that the House will understand and accept that we have had to make sure that our response both addressed the needs of law enforcement and intelligence agencies and provided the appropriate safeguards and public reassurance. This inevitably required careful consideration, in order to create a package to which all parties could agree.
We feel that it is important that the Bill has been widely supported across the parties, and indeed passed through the House of Commons with a very large majority. Building that consensus was important in a matter that was clearly as important as this.
In the absence of a clear legal basis for retaining communications data, the police stand to lose access to vital information, which—as has been pointed out—contributes to 95% of serious crime prosecutions. Unless we make clear the obligations that RIPA imposes on companies based overseas but providing services here in the UK, the security and intelligence agencies stand to lose their ability to monitor terrorists and organised crime groups in this country. Indeed, as a number of noble Lords have said, and have agreed with the Government, the Bill does not provide new powers. It does not alter or extend existing powers. It simply provides a clear legal basis for powers that the police and intelligence agencies have always relied on to keep people safe, which for different reasons—and there are different reasons within the two parts of the Bill—are now in question.
We have been clear that the Bill is not a permanent solution to the challenges we face in the future. We had a brilliant speech from my noble friend Lord Blencathra, who talked about the scrutiny he had given to previous attempts to find a solution to these problems. It is quite clear that in this Bill we are not attempting to address the future proofing of which he talked. It does not address the growing gap in relation to communications data that the draft communications data Bill sought to resolve. Nor does it address the wider question of the powers that law enforcement, and the security and intelligence agencies, will require in the future.
Those issues will have to be addressed. That is why the provisions in the Bill fall away at the end of 2016. A number of noble Lords have said that we need an earlier sunset. However, if we are to have a proper successor to RIPA, if we are to have a proper evaluation of this matter and if we are to have the public debate about these issues that noble Lords have called for, we need time to do so. Although there have been suggestions that we are being governed by the political timetable—the electoral timetable—I think it is important that we recognise that legislation is dependent on Governments, and Governments have to be elected. Governments have to develop programmes that they are able to communicate.
It is to the credit of this Parliament that we have been able to agree on this issue. I do not know who will form the Government after the election. I do, however, know that it is important that, whichever Government are elected, they have the responsibility of finding a successor to this law and future proofing this sort of issue in the ways outlined so ably by my noble friend. That is why the provisions will fall away. There will be a public debate. I want a public debate. It will have to take account of not only the threats we face but the safeguards required to strike the necessary balance between privacy and security.
Lord Soley
This is a very important point. I am sympathetic to the longer sunset, but I do not understand what sort of structures the Government want to put into place to enable that public debate to inform the changes.
Lord Taylor of Holbeach
For a start, not only will there be a review of this piece of legislation on a six-monthly basis, something that has been agreed and now forms part of the Bill, but David Anderson, the independent reviewer—that is the very paragraph I was turning to, the noble Lord, Lord Soley, will be delighted to know—will lead a review into these issues. The Bill now provides a clear basis in law for that review. The noble Lord, Lord Blencathra, suggested that Mr Anderson look at his report as a starting point for addressing this sort of issue. That will be available before the election, and will help inform public debate during the election. The wider safeguards and assurances that sit around the Bill are also important. I am glad that noble Lords have taken account of those safeguards, which build on the extensive safeguards that already exist.
However, there are wider issues, and I will do my best to go through some of them at this stage. I am going to demand a lot of my officials, in the sense that I will ask them, to the extent that they are able, before Committee tomorrow morning, to draft a letter which can be circulated to all noble Lords who have participated —if I do not get time, because I am conscious of time.
In a very interesting speech, the noble Lord, Lord Knight, asked whether there was compliance with the European Convention on Human Rights. The Home Secretary and I have signed on the Bill a declaration that it is so. We have also made available the memorandum to the Joint Committee on Human Rights, which explains how our Bill satisfies the ECHR. I hope that that reassures the noble Lord.
The noble Lord, Lord Rosser, asked: what are our plans for the timing of regulations? I understand the interest in that. The draft regulations have been published and we have informed the House that the Government’s intention is to lay the regulations following Royal Assent, so that they can be approved by both Houses of Parliament prior to recess. They have, of course, already been published, as I said, and we are liaising with both the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee, ably chaired by my noble friend Lord Goodlad, to ensure that they can consider these matters as soon as possible. The JCSI will meet on Monday to consider the regulations, so that the Commons can debate them prior to recess.
The noble Lord, Lord Strasburger, asked why the measures were not part of the Queen’s Speech. When the gracious Speech was written, our response had not been finalised. The noble Baroness, Lady Smith, asked why it did not form part of the Serious Crime Bill, which she and I are seeing through this House and has finished in Committee. As she knows, we will not return to Report until October. The difficulty of the timetable for that Bill means that it will not be through all its stages before the new year, if we are lucky.
Baroness Smith of Basildon
My Lords, the Minister has given answers to a lot of the questions that have been raised, but I said, when I talked about introducing the provisions at the same time as the Serious Crime Bill, that although these provisions may have had to be taken more quickly than the rest of the Bill, it is still the view of most Members of your Lordships’ House that these provisions could have been brought in sooner.
Lord Taylor of Holbeach
My Lords, I do not think that the Government consider that that was a satisfactory way to deal with the problem.
The noble Lord, Lord Davies of Stamford, asked why the Intelligence and Security Committee did not have time to report on the Bill. I note the noble Lord’s concern on that, but I draw his attention to remarks in the Commons yesterday by the chairman of the committee, Sir Malcolm Rifkind. He said:
“The Intelligence and Security Committee has considered the Bill, and we have taken evidence from the intelligence agencies on its content. If we were concerned in any way that the Bill simply added to the powers available to the Government and that they were using a fast-track procedure to implement it, we would not be able to recommend its endorsement, but we are satisfied that that is not the case”.—[Official Report, Commons, 15/7/14; col. 725.]
Noble Lords should bear that in mind.
Lord Taylor of Holbeach
Perhaps the noble Lord will allow me to answer other people’s questions.
The noble Lord, Lord Soley, asked about Royal Assent; I think that I have dealt with that. The noble Baroness, Lady Kennedy, was particularly concerned about the nature of the matters that we are trying to deal with. There are already a number of reviews in the system, including that to be headed by the independent reviewer of terrorism legislation, David Anderson. He needs to be given time to conduct that work. I see no point in requiring Parliament to return to those issues almost as soon as we return from the Summer Recess without the benefit of the work that we have set in train. Any such legislation would require an accelerated timetable, and we do not want to be doing that again if we can avoid it. I think all noble Lords will agree on that.
The noble Lord, Lord Armstrong of Ilminster, asked whether David Anderson’s review would cover all use of communications data. Clause 7 makes clear that the review covers the operation and regulation of investigatory powers. That extends to communications data for all purposes under RIPA for which it can be obtained. I hope that that reassures the noble Lord.
The noble Lord, Lord Knight, also asked: would the review consider all legislation relating to communications and lawful interception? It does indeed; I have just explained that to the noble Lord, Lord Armstrong.
In answer to the noble Lord, Lord Macdonald of River Glaven, the noble Lord, Lord Hodgson of Astley Abbotts, and the noble Baroness, Lady Kennedy, who is about to resume her place, as I said in my Second Reading speech, we intend to create a privacy and civil liberties board. The terms of reference can be found on the Home Office website and in the Printed Paper Office. Legislation would be required to establish the board, and we will have plenty of opportunity to discuss the detail of the board’s functions then.
I am grateful to my noble friend Lord Carlile for the work that he has done in this area; he has been a very important figure in these matters. David Anderson, his successor, has been consulted on the proposals before the announcement was made to Parliament and as they have developed. Parliament will have the opportunity to debate these matters fully when the legislation to create the board is presented.
The noble Lord, Lord Judd, asked about US data sharing. He will be aware that the Government have announced the appointment of a senior diplomat to look at the issue of data sharing. That is another feature of the non-legislative part of the announcements made by the Home Secretary in the Statement which I repeated here.
My noble friend Lord Paddick asked: what is the annual transparency report and how does it relate to the internet section of the commissioner’s report? There will be an annual transparency report relating to the exercise of powers under RIPA. It will take advantage of as much detail as possible. There will, of course, be a six-monthly report on the operation of the Bill.
My noble friend Lord King of Bridgwater asked: will we reform the ISC so that the chairman is drawn from the Opposition? In view of the reforms that we have made in the Justice and Security Act 2013, the Government have no immediate plans to make further changes, but it is a matter that is live and to which Parliament may well wish to return.
I turn to some of the detailed items under data retention types. The regulations made under the Bill will directly replace the data retention regulations of 2009; they will not extend the list of data types being regulated.
The noble Baroness, Lady Kennedy, asked about the ECJ judgment on the EU data retention directive. It did not take account of any of the domestic safeguards that we had in place. Many of the ECJ’s concerns were addressed in the UK’s domestic legislation. The difficulty in responding to the judgment was that we had to consider how we implemented some of the safeguards so that it was clear that they were in primary legislation, not the secondary legislation in which we had translated the European directive in the first place.
I have always enjoyed listening to the legal mind of the noble and learned Lord, Lord Hope of Craighead, working in its Rolls-Royce fashion. The noble Baroness, Lady Kidron, also asked: how do the regulations respond to the issue of the ECJ judgment? They will replace the 2009 data retention regulations. In particular, regulations will set out what must be specified in a data retention notice; place requirements on the Secretary of State to keep such notices under review; set out the security requirements that apply; provide that service providers can be reimbursed for any expenses incurred in complying with the requirements; and revoke the 2009 regulations, as they will be redundant.
The noble and learned Lord, Lord Hope of Craighead, asked why Clause 1(1) does not use the wording of the ECJ judgment. The test in the Bill requires the Secretary of State to consider whether it is necessary to require a provider to retain data, but also whether it is proportionate for that legitimate aim. This is in accordance with the judgment, which also makes it clear that it is necessary to verify the proportionality of any interference with a person’s rights when requiring the retention of data. That is why that particular wording referring to proportionality is used.
My noble friend Lord Blencathra raised a plethora of issues, if I may refer to them as such. It is vital that future consideration bears in mind the parliamentary inquiry and accordingly, as I have said, it is explicitly referred to in the terms of reference. Local councils will no longer be able to access communications data under these proposals. From the lists that I have seen, the Egg Marketing Inspectorate does not, nor has it ever had, access to communications data under RIPA. Indeed, Defra will also be losing its entitlement to such access in future. We recognise that the list has grown and that it needs to be cut down. The 13 bodies which will have their powers removed are the Civil Nuclear Constabulary, the Port of Liverpool Police, the Port of Dover Police, the Royal Mail, BIS, Defra, the Department of Agriculture and Rural Development in Northern Ireland, the Environment Agency, the Scottish Environment Protection Agency, the Department of the Environment in Northern Ireland, the Food Standards Agency, the Pensions Regulator and the Charity Commissioners. I should think that noble Lords are amazed that those bodies had access in the first place. This just shows the necessity for reviewing this sort of legislation and working it out on the basis of who actually needs it.
There was some concern over territoriality—a difficult word to say, particularly if one has been sitting here for a few hours. The noble Lord, Lord Knight of Weymouth, raised this, as did my noble friends Lord Paddick and Lord Hodgson and the noble Lord, Lord Judd. The Bill clarifies the territorial extent of the Regulation of Investigatory Powers Act: in the absence of explicit extraterritorial jurisdiction, some companies have started to question whether the legislation applies to them. This is nothing new. Jack Straw—who as Home Secretary was responsible for RIPA in the first place—made this clear yesterday in the House of Commons. He stated that the “clear intention” of that Act was to extend extraterritoriality. My noble friend Lord Howard of Lympne quoted Jack Straw to great effect; his was a very effective speech. I am pleased that many noble and noble and learned Lords, including the noble and learned Lord, Lord Lloyd of Berwick, recognise that this is not an extension of powers.
I have done my best, within the relatively short time that I have had to wind up what has been an extremely useful debate, to reassure noble Lords about this issue. The wider safeguards that sit around the Bill are important and we will have a chance to discuss them at length. However, I am glad that noble Lords have taken account of them in discussing the Bill before us today. We will no doubt be back tomorrow to consider it in Committee. There are wider issues and it is good that they have been raised by my noble friend Lord Blencathra.
I welcome this debate, and I would like briefly to reflect on the importance of the issues that we will return to tomorrow. Communications data and interception powers are intrusive. They are rightly subject to very strict safeguards, but they are also of vital importance to the work of law enforcement and the security and intelligence agencies. Without the legislation that we are considering today, those powers would be undermined. Those who mean us harm would be able to evade detection. Put simply, lives would be at risk. These are important issues. That is why this debate has been an important one. On that basis, I commend the Bill to the House and ask that it receive its Second Reading.
Bill read a second time and committed to a Committee of the Whole House.
Finance Bill
(9 years, 9 months ago)
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The Commercial Secretary to the Treasury (Lord Deighton) (Con)
My Lords, this Government have a clear and highly effective plan to secure our country’s economic future. It is a plan that is cutting the deficit, attracting investment and helping British households to work and to save. This Finance Bill builds on the strong foundations put in place over the past four years.
I begin with those measures aimed at increasing investment and growth. At the start of this Parliament, we set out our ambition to have the most competitive corporation tax system in the G20 and by the end, we will have delivered. We have cut our main rate at every Budget since coming to power. From 2015, it will be 8% less than the rate that we inherited. By 2016, that will mean £9.5 billion-worth of savings for businesses across the UK every year. That is why more and more businesses are starting up here and moving here. For the first time since 2007, business investment has grown for four consecutive quarters. We are helping businesses of all sizes to invest and create jobs. We have doubled the annual investment allowance to £500,000, introduced the first tax relief of its kind for investment in social enterprises and increased the research and development tax relief to provide support for early-stage companies that will become the industries of the future for us. These tax reforms are a central plank of our economic strategy. Employment is at record levels, business confidence is high and investment is forecast to grow rapidly. The Finance Bill 2014 continues to send the message that Britain is open for business.
The quid pro quo for our highly competitive tax regime is that all companies and individuals pay their dues. This Government have taken a firm line in tackling tax avoidance and aggressive tax planning. They have made more than 40 changes to tax law to tackle avoidance and introduced the UK’s first general anti-abuse rule—the GAAR. This approach is working but tough measures are still needed. Over the next five years, almost £5 billion of revenue will be brought forward from users of avoidance schemes which have been defeated in another party’s litigation, or which fall within the scope of the DOTAS rules or the GAAR. The evidence is that these cases are decided against the taxpayer, so this is a fair measure. It is fair to the millions of taxpayers who pay their fair share and expect others to do the same. This measure and others in the Bill which prevent the use of dual contracts or employment intermediaries artificially to reduce or avoid UK tax liability will help to ensure that setting up a contrived structure will not result in a tax advantage and that our tax system will help to provide a level playing field across the labour market.
Taking a firm stance against tax avoidance is an important part of delivering a tax system that is fair, but fairness goes further than just tackling avoidance. It is about making sure that those with the broadest shoulders bear the greatest burden. At our first Budget, we raised the income level at which people began paying tax and we have not stopped since. We are going beyond our original commitment to raise the personal allowance to £10,000, which we accomplished a year ahead of schedule, by introducing a personal allowance of £10,500 from 2015. To put this into perspective, when this Government came into office, the personal allowance was only £6,500. This Government have cut the number of income tax payers by a greater number in five years than any other Government in recorded history. That is not all that we are doing to help. The Bill introduces a transferable tax allowance for married couples, targeting the benefit on married couples and civil partner lower-income households.
Saving, especially saving for retirement, was a fundamental part of this Budget. Thanks to the changes in the Bill before us, from next April those individuals who have been sensible enough to put aside for their future will have far greater control over how they access and ultimately spend their savings.
I turn to this Government’s radical pension reforms, which from next April will allow individuals with defined contribution pension savings more choice and control over their pension wealth. The measures in the Bill help individuals who are approaching retirement now to benefit from that choice this year.
The Finance Bill before us reflects the Government’s commitment to greater consultation on tax policy changes. I thank my noble friend Lord MacGregor and the members of the Economic Affairs Committee for their detailed consideration of the draft Finance Bill legislation at the start of this year and for their report that followed on 11 March. I look forward to some of the contributions that follow, which I am sure will take us through their thinking.
I shall take this opportunity to respond to some of the main points raised in that very thorough report. The focus of the report was on the salaried member element of the partnerships measure, and a recommendation to defer this legislation for a year. The partnerships measure is about fairer taxation and removing distortions across different types of partnerships. It has two key elements. First, the new salaried member rules will reduce differences in the tax treatment between limited liability partnerships—the so-called LLPs—and partnerships generally by providing that individuals who are in essence employees are taxed as employees. Secondly, the mixed membership partnership element will prevent individuals from reducing their personal tax liabilities by allocating profits to a corporate member of the partnership. This measure brings in total tax and NICs revenue of about £3.3 billion over the current forecast period.
The salaried member legislation corrects an anomaly under current law that treats all members of limited liability partnerships as self-employed, regardless of the terms on which they are engaged. This legislation is based on specific statutory tests, as proposed in HMRC’s original consultation document. I would highlight that the draft legislation published last December did not go further than the original consultation proposals but merely updated them to reflect consultation responses received.
As set out in the original consultation document, the legislation has three conditions. Collectively, these capture what it means to be a partner in a traditional partnership by looking at the income entitlements of the members, the amount of capital they have at risk and whether they can significantly influence the LLP’s affairs. The legislation, which came into effect on 6 April 2014, will ensure that members of LLPs will be treated as employees for tax purposes if they are engaged on terms closer to employment.
The Government made clear from the start that the change would take effect from April 2014 and reaffirmed at Budget 2014 that there would be no deferral of this legislation. The argument, of course, is that any deferral would be unfair to the many LLPs that had already taken practical steps to implement these changes. Deferring implementation would also have a significant impact on the Government’s objectives of fairness and deficit reduction.
Noble Lords will of course be aware that the Bill before us today includes this revised legislation as part of the partnership clause and schedule. It was not amended during its passage through the Commons. This legislation will remove structural inconsistencies in the partnership rules and prevent the disguising of employment in LLPs and tax-motivated partnership allocations.
I turn to the points raised by the committee in relation to the development of tax policies in general. The Government set out a new approach to tax policy-making in 2010 following consultation. I am pleased that the committee itself said in its report:
“We commend the Government, HMRC and HMT on the quality of the consultations conducted and the tax legislation produced since 2011”.
Officials consult interested parties and groups from across the tax spectrum throughout the development of measures both to test policy and inform the Government’s understanding of the impacts. The findings are reflected in formal responses to consultations and tax information and impact notes, the majority of which are published with draft Finance Bill legislation in the autumn.
The Finance Bill contains a number of improvements from the technical consultation launched in December. We received more than 300 comments to the draft legislation that we published and have had continuing interaction with individuals and organisations since. The consultation has ensured better legislation and more effective policy.
The committee also considered the policy partnership between the Treasury and HMRC. I assure your Lordships that this is a strong, positive relationship where both departments work closely together, maintain constant contact and look at ways to improve things on a continuous basis. I can assure noble Lords that the policy partnership is kept under constant review to look for improvements. There is a big focus on improving skills and ongoing education. Part of that is being done through the introduction of the new programme, the Policy Skills Learning Programme.
To conclude, this Finance Bill legislates measures that improve our competitiveness, target tax avoidance and leave more money in people’s pockets. It carries out the Government’s economic plan, which has successfully consolidated our recovery and is now driving forward our growth and competitiveness. I commend the Bill to the House. I beg to move.
Lord MacGregor of Pulham Market (Con)
My Lords, I rise to speak to the Motion standing in my name on the Order Paper. However, before I do so, I shall make two brief points on the Budget as a whole. The Minister outlined many of the measures. I entirely endorse them, and I wholly support the Chancellor’s overall economic strategy and, in particular, his and the Chief Secretary to the Treasury’s heroic efforts to reduce public sector net borrowing and to reach the target of moving the public finances into surplus, which the OBR forecasts will be achieved for the first time in 18 years by 2018-19. That is, of course, clearly dependent on the return of a Conservative Government at the next election or, very much second best, but recognising the role that the Liberal Democrats have played in the past few years, perhaps a coalition Government.
In the context of the Budget itself, I warmly welcome the various measures in the Finance Bill which the Minister outlined, in particular on ISAs and defined contribution pensions further to encourage savings. Pensioners particularly hard hit by the current very low interest rates on savings will be helped by the new pensioner bond to be introduced by National Savings & Investments in January next year. There are various measures for businesses, including those designed to encourage and assist investment and exports and those specifically for small businesses. When I first became a Member of the other place, one of my passions was for small businesses. I give them my total support.
I cannot resist saying that for all of us who support tax simplification and all that goes with it, the Finance Bill is not the best example. I understand the temptation of a whole lot of fiscal lollypops, but it has resulted in a monumental Bill, one of the largest I can remember. Similarly, the Explanatory Notes are among the largest I have seen in all my time as a Minister or a Back-Bencher in the Committee on the Finance Bill in the other place. I shudder at the thought of having been on that one.
I now turn to the report of the Economic Affairs Committee on the draft Finance Bill. First, as the retiring chairman, I shall give some reflections on the role and process. The committee’s task is limited as the elected House, quite rightly, has sole prerogative over supply and all the revenue raising that goes with it. That means that in nearly all my time in the other place this House had no role in the Finance Bill. But it was recognised that there was considerable professional, actuarial, legal and accounting expertise here which was not being tapped. In addition, because of all the pressures in the other place as Members of Parliament have to deal with so many other things, detailed technical and less partisan examination of various tax issues with expert witnesses from outside was recognised as being a useful addition to parliamentary scrutiny, and so it has proved. I pay tribute to my noble friend Lord Wakeham for the crucial part he played in initiating that.
We cannot amend the Finance Bill so the committee concentrates on selected aspects of tax simplification, clarification, administration and so on which may not be the first priority in the other place. If the committee has to be useful, not least in drawing the attention of the Commons and, indeed, the Government, to certain issues or concerns, it has to work fast and be selective. The timetable aspect has been greatly aided by the present Government’s welcome decision to publish draft Finance Bills, which made our task easier and enabled us to make our report well in advance of the Committee stage in the other place.
Does the process add value? I believe it has three merits. It uses the often considerable experience, knowledge and skills of appropriate Members of this House; it is considerably valued by the expert bodies and associations outside concerned with tax, accountancy, legal issues and business generally in giving them a forum to bring to parliamentary attention in a non-partisan ways their concerns, which are quite technical but important; and it provides the Committee in another place with an independent assessment in its scrutiny of the Bill. There were references to our report in the debates in the other place on Clause 68.
I now turn to our current report. The Minister has already given answers to some of our points, but I still want to persist with them because I want a more detailed explanation. The draft Finance Bill was published on 10 December 2013, and we began our inquiry in January 2014 and published our report on 10 March. I thank my fellow members of the sub-committee for their substantial contribution, their intense scrutiny and the speed at which they were willing to work. I am also most grateful to our specialist advisers Dr Trevor Evans and Mr Tony Orhnial and our committee clerk Bill Sinton and his team for their immaculate and professional support. We made 34 conclusions and recommendations. This is a very complex area and I will touch on some of the most important.
We decided to look at the measures which deal with the taxation of partnerships, now Clause 68 of and Schedule 13 to the Finance Bill, because preliminary evidence suggested that they would be some of the most controversial proposals—technically and professionally as distinct from politically—in this vast Bill, and so it turned out. We had a lot of evidence from expert witnesses. As my noble friend said, the draft Bill contained various measures to counter the abuse—I stress the word “abuse” —of the current rules governing the taxation of traditional partnerships and limited liability partnerships, commonly known as LLPs. Our committee wholly supported the objective of that legislation.
A feature of the original Limited Liability Partnerships Act 2000 is that for tax purposes, all members of an LLP are treated as self-employed partners, even if they would have been treated as employees in a traditional partnership. Most of our witnesses accepted that this provision was being abused in order to minimise the income tax and national insurance contributions paid by LLP members. So the need for action was accepted.
The draft Bill introduced three legislative tests to distinguish between LLP members who were genuine partners and those who were in effect employees. As my noble friend said, the aim of those tests was to put members of LLPs in broadly the same tax position as members of general partnerships. LLP members failing the tests would pay income tax and national insurance contributions on the same basis as employees, and the LLPs concerned would pay employers’ national insurance contributions. There were also other provisions, including special arrangements to accommodate alternative investment fund management partnerships that were obliged to defer bonuses to meet the requirements of an EU directive. I do not have time to go into detail on those today.
Our report recognised the need for the current rules to be reformed in order to stem tax losses. The large majority of our witnesses, however, were concerned that the legislative tests proposed for determining whether, for tax purposes, a member of an LLP was an employee or truly a partner were quite different from those consulted on before the draft Bill was published. I heard what my noble friend said, but that was very much the tenor of the evidence that we were given—and we agreed with it. So: consultation good, but subsequent follow-up not so good.
Moreover, nearly all the evidence we received argued that the tests were unlikely to achieve the aim of aligning the tax treatment of LLPs with that of general partnerships. The differences from the original consultation document were key points for us, so we recommended that the proposals be delayed until April 2015, to allow both the legislative approach and the drafting to be got right, and to give LLPs time to adapt to the revised rules.
There was an issue of yield forgone here. The Government estimate was for a total yield at that stage of £3.26 billion—certainly not a sum to be sneezed at. However, we thought that only a very small part of that yield would be lost by delaying the measures for a year. Our main concern was that, given the substantial difference between the original consultation proposals and the draft Bill, and the concern of the professional bodies that in some respects the legislation could be unworkable—coupled with the fact that we felt that in order to minimise compliance costs, the Government should consider applying the new rules from the start of an LLP’s accounting year rather than the start of the fiscal year—a one-year delay to get all this right would be justified.
Another concern was that in the process of our inquiry the anticipated yield from these measures was increased by nearly £2 billion—pretty well all, I think, emerging from more detailed analysis by HMRC of the alternative investment fund managers sector. This difference was never really explained to us.
Our report was well received by the main professional bodies concerned. They supported our main conclusions, and pointed to the practical problems, which we had identified, in sticking to the Government’s timetable. The Chartered Institute of Taxation stated that,
“it is disappointing that the House of Lords recommendations have been ignored and this has been pushed through so quickly”.
The Law Society of England and Wales commented in similar vein.
In fairness, I must add that the Bill as published improved the drafting of some of the provisions, and introduced some new flexibility around meeting one of the tests. The guidance, too, has been redrafted and improved substantially following the consultation. We welcome these changes, which are in line with our recommendations. But the Government stuck to the proposed tests for determining the employment status of LLP members and to making the start date April this year. As a result, I understand that there is a general feeling throughout the industry—if I may refer to it as such—that although it has learnt to live with this legislation, it has caused a lot of unnecessary work and cost, and taken up a lot of unnecessary time, for not much revenue to the Government. It would have been so much better to have got it right through further consultation on the revised proposals in the first place. Having said that, this is an unfortunate case, because as we said elsewhere in our report, in our analysis of the new approach to tax policy-making:
“We commend the Government, HMRC and HMT on the quality of the consultations conducted and the tax legislation produced since 2011 in these areas (the large majority) where the new approach to tax policy-making has been applied comprehensively”.
There is much else I could say, but at this hour it is necessary to conclude. I will finish by saying that the Financial Secretary to the Treasury responded to the debate on all these issues in the other place on 13 May. In considering the Financial Secretary’s response to the debate, we maintain that the points made in our report have not been dealt with. First, while it is reassuring that the figures for yield have the OBR’s approval, the detail of how the figures were arrived at needs to be understood. That is why our report made a number of detailed recommendations for greater openness from HMRC. Secondly, the process of arriving at the legislative tests flies in the face of nearly all the evidence submitted to the sub-committee by witnesses. Thirdly, the proposed deferral of the salaried members provisions would have allowed more time for the tests to achieve the intended result and an orderly transition to the new system could have been managed. In contrast to the Financial Secretary’s assurances, the Financial Times reported on 14 April that:
“Thousands of UK lawyers, accountants and property consultants are scrambling to inject equity into their firms”,
in order to avoid falling foul of the new rules. Finally, the rejection of our proposals for formal, published post-implementation reviews is fundamentally inconsistent with the Government’s “new approach to tax policy-making”, which advocates openness and consultation at all stages of the process of developing and implementing a policy change and should include post-implementation reviews. Overall, however, I warmly commend the new approach to consultation that the Government are taking. Our committee makes a considerable contribution in assessing the key measures that we undertake to look at in the Finance Bill. I commend our report to the House.
Lord Joffe (Lab)
My Lords, it was a privilege to be a member of the Finance Bill sub-committee, which was so impeccably chaired by the noble Lord, Lord MacGregor, and which, as he has already said, was so superbly organised by the clerk to the committee and his staff and advisers. I will limit my comments to that report and the committee’s proceedings.
On the basis of the evidence received, I agreed and supported all the sub-committee’s recommendations. However, I was concerned about the very narrow base from which that evidence was drawn. There are some 420,000 partnerships of one form or another in the UK, 90% of which have three or fewer partners. Despite that, the evidence that the sub-committee heard was overwhelmingly from associations, organisations and professional advisers who represent large partnerships, which probably make up less than 1% of all partnerships. Professional advisers inevitably had potential conflicts of interest in that some of their members would benefit from a rejection of the proposed changes in the law.
The sub-committee recognised that narrow base in its recommendations in clause 291 of the report, in which HMRC and HMT were urged to urgently develop and publish comprehensive strategies for consulting smaller businesses, non-business stakeholders and other groups. It also drew attention to the same recommendation made by its predecessor committee in 2011, which does not appear to have been acted upon.
Clearly, it will take some time for HMRC and HMT to devise these innovative ways of reaching out to small businesses, or to non-business stakeholders and individual taxpayers. In the mean time, some balanced and objective evidence could be achieved by the sub-committee in future hearings by inviting a significant number of informed witnesses, from organisations to individuals, who are seriously concerned about tax avoidance from a society perspective and who would have no conflict of interest.
Additionally, it would probably be more effective if the committees of this House and those of the other place had budgets made available to them so that they could commission evidence from a wider variety of opinion on important issues such as tax policy. That would make a major contribution to accurately reflecting the views of society on controversial issues, unlike the present position, where we largely only hear from those with command of considerable financial resources, not from the rest of society.
Clearly, the problem for the Chancellor of the Exchequer—who has had considerable success in closing some of the loopholes in the law—is how to close all the gaps. This would require a complete revision of the law on taxation which currently provides endless loopholes that enable talented accountants and lawyers to devise lawful systems for companies and individuals to avoid paying the tax which these laws intend to levy. Unfortunately, the underresourced Inland Revenue is unable to confront on equal terms the talented and highly paid lawyers and accountants who devise these systems.
Pending a complete revision of the law, I draw attention to the budget suggestion made this year by the Association of Revenue and Customs, part of the First Division Association trade union representing senior staff at HMRC. Its suggestion was that if just £312 million a year were spent on additional senior staff in the department, then an extra £8 billion of tax revenue might be raised. If this is even half right, the question has to be why these funds are not being made available at this time, when tax revenue is insufficient to meet the needs of society as a whole.
The Government has rejected a key recommendation of the committee in relation to salaried members. I suspect that this will not make much difference to the amount of tax revenue that will be raised as a result of the changes in the law, as the professional advisers who so passionately oppose the changes in the law will now turn their talents to lawfully devising means to circumvent the provisions, and, with some knowledge of tax avoidance, I think they will probably succeed.
A final suggestion, which I fear may not be within the remit of the committee, is whether the army of highly paid tax lawyers and accountants—some of whom told the committee that the law was the problem—could not devote at least part of their time to developing proposals for policies for changes in the law to prevent avoidance of tax. They would thereby be using their talents and experience to benefit society as a whole, rather than mainly big business and the wealthy.
Lord Lawson of Blaby (Con)
My Lords, this is a relatively brief but remarkably wide-ranging debate. The most important thing, however, in my judgment, is to pay tribute to my noble friend Lord MacGregor, because this is something of a valedictory occasion. He described himself as the retiring chairman of the Economic Affairs Committee of your Lordships’ House. While his manner is always attractively modest, I have never considered him to be particularly retiring, but he is certainly retired, and his loss will be greatly felt. I have worked with him one way or another for quite a long time. We began working together when we were both what I believe is now known as special advisers to the then Prime Minister, Sir Alec Douglas-Home, 50 years ago. Off and on we have worked together ever since. He was a brilliant assistant and help to me—and more than that—when he was Chief Secretary to the Treasury during my time as Chancellor of the Exchequer. I hope that I served him equally well as a member of the committee under his chairmanship. I certainly enjoyed it; he will be a very hard act to follow. Nobody could possibly better combine a grasp of practical economics with the art of chairmanship of a committee of a very diverse kind, none of whose members was particularly retiring.
My noble friend the Minister began by saying a little about the state of the economy and how it was in pretty good shape. I absolutely agree with him, and I have no wish to add much to that. Of course, not everything is perfect. I am sure that the noble Lord who will respond from the opposition Bench will point that out, but I shall pre-empt that by saying that I have a secret to tell him. In this world, nothing is ever perfect. But the fact is that the state of the economy in this country is not merely pretty good in the way that my noble friend described; it is good relatively. It is the best performing economy in the G7, comparing particularly well with the economies of the eurozone.
One other thing that my noble friend the Minister could have said but did not is that in sticking to his guns, my successor George Osborne—goodness knows how many there have been in between—has proved to be right when pretty well everybody else was wrong outside those who supported the Government in the first instance. The Opposition predicted that these policies would prove to be completely wrong and would doom the country to an ever deeper recession, but they have been proved completely wrong. So has the IMF, which reminds me of the 364 economists who wrote that letter to the Times in 1981, saying that if we pursued the policies that we were pursuing—very similar to the policies that the present Government have pursued—we would commit this country to a self-perpetuating downward spiral. From the moment they said it, the economy recovered and went on recovering. It was exactly the same with the IMF; when it eventually said, “We no longer have confidence in you and you must change your policies”, from that moment the recovery became unequivocal. Of course, some academic economists supported the Government, but the majority did not—particularly the clever-clever ones, like Professor Paul Krugman of the United States, who is always wrong about everything. It makes him a rather useful man to follow, because you know what to believe. He, too, said that if the policy was pursued any further the recession would never end.
So what do we need to do now that the Chancellor has been vindicated? What threats face the economy? I refer to the threats within our own control. There are always threats that are not in our control, because we are exposed to the world economy. If things go wrong in the eurozone, which they usually do, or in China or the United States, it is bound to have a considerable effect on us.
There are three things in our own control, which I should like to mention. The first is the danger of allowing interest rates to remain at this crisis level of 0.5%—that is the official rate—for too long. Linked with that is the equally artificial crisis measure of quantitative easing, or “underfunding”, as it was known in my day. As many in your Lordships’ House are aware, I have always favoured an independent central bank. I think it is vital that monetary policy should be its province. That does not mean that noble Lords cannot comment on it. I believe it is of the first importance that we move away from the artificially low level of interest rates, and the sooner the better. We should also begin to unwind quantitative easing and change underfunding to overfunding, to use the old-fashioned expression.
I wish the present Governor of the Bank of England well, as we all must. He is relatively new. He got himself into a jam in the first place with the fiasco of his forward guidance which he has had to abandon. He has still been talking about what is going to happen next—perhaps more than he should.
The extremely able Labour Member of Parliament, Pat McFadden, who sits on the House of Commons Treasury Committee, told the governor that he was behaving rather like an unreliable boyfriend, blowing hot and cold. This was rather too close to the mark for comfort. He has given the impression of floundering, which is very dangerous. He does not need to talk about the future level of interest rates. When there is a change, then he needs to explain why it has happened, but he did not need to talk in the way that he did. The Governor of the Bank of England should not appear to be floundering; he should convey authority. It is particularly important in the context of the financial markets, which are very sensitive to this sort of thing.
The second problem, which is to some extent within our control, is the level of bank lending. We still have a situation in which thoroughly sound SMEs have difficulty getting adequate borrowing from the banks on which they rely. Big companies do not rely on the banks; they have no problem in accessing the capital markets directly. Small and medium-sized enterprises are reliant on the banks and it is very difficult for even the soundest of small businesses to get adequate finance at a reasonable rate of interest.
More attention needs to be paid to the recommendations of the Parliamentary Commission on Banking Standards. A number are relevant to this, though it is too late for me to go into them. I had the honour of serving on that commission. We need to see all those recommendations in force, including particularly ones that the Government have accepted in principle. Some of them are implemented in the banking Act which my noble friend dealt with so well in this House. Others are not in that Act because the Government said that it was not necessary to legislate since the regulatory authorities already had the power. We want to see these things being done. We want the separation between high street, as it used to be called, and investment banking rigorously enforced. Almost every month some new scandal emerges in the banking sector. It is always on the investment banking side and it is detracting from the need for the high street banks to finance SMEs. That is their job and their function.
In this area of bad behaviour we need also to stress the importance of individual responsibility. This is very strongly pointed up in the various reports from the Parliamentary Commission on Banking Standards. It is no good just fining banks. In my experience, that does not have a big effect on banking behaviour. There is no such thing as a bank being responsible for bad behaviour; it is always individuals who are responsible. Individual responsibility needs to be nailed down. Okay, penalise the banks as well, but it is important that the individuals responsible are punished. If they say, as they have in the past, “We didn’t know about it”, that is no excuse. It is their job to know what is going on in their institutions.
The structure of remuneration needs to be addressed. It is fundamental and again has not yet been done by the banks. It is the job of the PRA to ensure it is. It is also the job of the PRA and the Bank of England to introduce the requirement for banks to have a second set of accounts, which I hope they will accept. IFRS is of dubious correctness for companies generally, but it is clearly inadequate for banks. What we recommend, the Government have accepted and it is now for the PRA and the Bank of England to implement is that there should be a second set of accounts that meets regulatory needs and purposes.
The third threat that faces us is a misguided energy policy. Business and industry in this country, and indeed households, are forced to pay quite excessive energy costs as a result of the energy policy we have in place. It is accepted that that is done in the name of combating climate change. However, even Dieter Helm, the leading energy economist in this country and who accepts fully the alarmist interpretation of climate change, which I believe to be mistaken, is a bitter critic of the energy policies we have in place. His latest writing on this, which I commend to the House, is called The Return of the CEGB, which states that we are going back to a complete étatist energy policy—in fact, a rather worse one than we had under the Labour Governments of the 1970s. He also points out that it will be touch and go this coming winter whether the capacity margin will be adequate, but by the following winter it is almost certain the lights will go out because the capacity margin will come to zero or below.
It is very important that there is a change in our energy policy in the short term, but also in the medium term. Government talks the right talk about developing our indigenous supplies of shale gas, which will be a great help to the British economy in the medium term—although obviously not in the short term—but it is just talk. The most recent report of the Economic Affairs Committee, which as I say is so brilliantly chaired by my noble friend Lord MacGregor, was on this very subject. We pointed out that the regulatory regime is in a mess in this country and inhibits the development of shale. That is not because it is too strict—we need a strict regulatory regime—but because it is too cumbersome, involves too many departments that do not co-ordinate and too many agencies. It takes far too long. We produced a unanimous report.
We have now had a reply from DECC, which is the most complacent reply I have ever seen from any government department, and that is saying something. It says that everything is all right and that none of our recommendations is necessary. The department seems not to be aware of the evidence, including the fact that even now not a single exploratory well has been drilled. We had evidence from Cuadrilla, the most prominent of the companies operating, that, even if there is no judicial review of planning, it takes three years from first preparing the environmental impact assessment to being able to drill. That is ludicrous compared with what has happened so successfully in the United States. The response completely ignores the evidence that we had from Chris Wright, the father of shale gas in the United States and a great Anglophile. He said that he would love to invest in this country but, on the present basis, there is no way that it would make sense for him to do that.
I say to the Minister that there is one easy thing that he could do straightaway. The present Government have Cabinet committees on a whole range of trivial matters—one would find it hard to believe—but there is no Cabinet committee on something as important as the extraction of our shale resources. Because of all the departments and agencies involved—the Environment Agency and lots of others—it is absolutely essential to have a Cabinet committee to bring everything together, and we recommended that such a committee should be chaired by the Chancellor of the Exchequer.
I have one final point to make on the report of the Economic Affairs Committee. In 2012—again, under the excellent chairmanship of my noble friend—we produced a report on the economics of development aid. Again, there was unanimous, all-party agreement that the antiquated 1970 aid target of 0.7% of GNP made no sense. Above all, this should never be made statutorily binding. It is palpably absurd to make any public expenditure statutorily binding, and there are no such pretensions with things such as national health spending. I do not think that the public would see any sense in that at all, and we made that absolutely clear.
We are now told that there is going to be a Private Member’s Bill—from the Liberal Democrats, I understand —starting in the other House but reaching us during this Parliament, to make the 0.7% target statutorily binding. If it ever reaches this House—it may not—I hope that we will examine it with exemplary thoroughness and not take too little time over a Bill which is clearly a major nonsense and for which, if it were to be passed, future generations would curse us.
Lord Razzall (LD)
My Lords, I am glad that the noble Lord, Lord Lawson, has just contradicted his statement in The House magazine that the Liberal Democrats have only two policies; apparently, he has just added a third.
Many people outside your Lordships’ House regard this House as being rather pickled in aspic and stuck in procedures that have applied for the past God knows how many centuries. However, since I came to this House in 1997, there have been two significant procedural alterations. First, as demonstrated by this debate, although we cannot amend it, we now debate the Finance Bill. I remember the pressure to do that. The noble Lord, Lord MacGregor, was very much part of that and I think that the noble Lord, Lord Saatchi, also used to press for that to happen. Secondly, since 2003, we have had a Finance Bill Sub-Committee, which examines selected topics of the Finance Bill. This year, as we are debating today, it examined the detailed measures affecting changes in tax law for partnerships.
As a practising lawyer for over 30 years, I am well aware of the significant role that professional partnerships have played, especially the lawyers and accountants, in the development of the financial services industry. In my professional lifetime, there have been two very significant events in this area. First, a lot of people forget that, until 1967, no partnership could contain more than 20 partners. Our Victorian forefathers took the view that if you wanted to have a business with more than that, the appropriate thing to do was to have a limited liability company. Those of us who have attempted to manage professional partnerships in later years will realise their wisdom because of the significant problems of managing a large professional organisation where the owners of the business are also the means of production. The problem for the law and accountancy firms was that they could not incorporate because their professional organisations did not allow them to have limited liability. It was not until the Companies Act 1967 that, under pressure from the big firms of lawyers and accounts, the limit of 20 partners was removed. That has resulted in the huge organisations that have subsequently been created in both those industries.
The second major change was the Limited Liability Partnerships Act 2000. The major driver for that was the desire for individual firms of accountants and lawyers to obtain a limited liability to protect themselves against large negligence claims. Nowadays, almost all major professional firms have become limited liability partnerships and the structures of those organisations are well established. It would be common ground that, where a limited liability partner is in reality a salaried employee, he or she should be treated as such for tax purposes. However, as the noble Lord’s committee has indicated, there has been significant pressure from the professions that a case law test should apply to the definition of the nature of partnership rather than a legislative one. As the noble Lord, and his report, indicated, there has been significant concern that the consultation set up by the department was inadequate because the proposals on which it was based were not the same as those set out in the Finance Bill. I strongly support the recommendation by the sub-committee to delay implementation of these proposals until 15 April, not only to make sure that the rules are correct but to give a longer opportunity for firms to make any structural changes needed to comply with them. For example, this would enable them to put in place adequate resources so that the capital requirement needed by partners could be met.
As this House now has the opportunity to discuss the Finance Bill, I, like the previous speaker, cannot miss the opportunity to make an overall comment on the last effective Finance Bill before the general election. The tax provisions in the Bill must be looked at in the context of the overall economic position and the policy to reduce the deficit and the public sector borrowing requirement. As the Institute for Fiscal Studies has pointed out, no Government raise taxes in the year before an election but, surprise, surprise, taxes tend to go up straight after one. As noble Lords will be aware, both coalition parties are committed to eliminate the budget deficit in 2017-18, although there is some political difference about to how to do it. The Tories seem to propose that it should be done primarily through cuts in expenditure. I think that the Lib Dem members of the coalition think that there should be a mix between expenditure cuts and tax increases. The problem, as the Institute for Fiscal Studies has certainly demonstrated, is that if all the savings were to come from departmental cuts in order to get back to a budget equilibrium in that year, the cuts would have to accelerate from 2.3% per annum to 3.7% per annum.
Whoever is in government after 2015, if the decision is maintained to protect the National Health Service, the schools budget and overseas aid, and if they are immune to cuts in real terms, it is estimated that other departments will have to deliver annual cuts of more than 20% per annum for the three years after the election. The Home Office, the Ministry of Justice, Defra and DBIS, let alone other departments, could not deliver the current level of services if they were compelled to make cuts on that scale. Whatever political party, or combination of political parties, forms the Government after the general election, it would be impossible to achieve that in practice.
What is likely to happen? It may be that growth in tax revenues as the economy picks up will, to some extent, come to the rescue of a future Chancellor, or it may be that a future Chancellor will contemplate a modest deficit if the debt burden is falling as a share of GDP and if the economy is continuing to grow. In any case, I am sure that all noble Lords will accept that if we are forced by then to accept a drastically smaller state, a proper debate will need to take place.
Lord Wakeham (Con)
My Lords, this has been an extremely wide-ranging debate. Perhaps the Minister might like to take some comfort if I tell him that I support the Finance Bill that he has brought before the House and that I would like to see it passed. That would be an encouragement to him. I add my congratulations to my noble friend who has just finished his time as chairman of the Economic Affairs Select Committee. In fact, not many of us have been chairman of that committee because when it was set up the noble Lord, Lord Peston, was chairman. He was extremely good and when his term of office came to an end we changed the rules so that he could do another session as chairman. He might even have done a third term. He certainly did it for a very long time and was extremely good, so when I followed him as chairman some years ago, it was a bit of a revelation to have someone without the deep knowledge that he has. Certainly, my noble friend Lord MacGregor has tackled a number of very important issues very well. I remember my time particularly because the committee produced, as my noble friend Lord Lawson will remember, the first serious report on the economics of climate change. It was a unanimous report. As he was a very prominent member of the committee, we had a job to educate one or two members of some of the finer points but we got it through.
The Government need credit for their improved consultation but our report indicates that it is still not good enough. They are still not as good as I would like to see them in their consultation. Certainly, when plans change, they do not consult about the new plans. We are very impressed with the people who give us evidence. But I sometimes wonder whether, in practice, some of them know what they are saying or whether they are taking from their own members what they tell them to say. The noble Lord wanted experts in tax to come and tell us how to collect more tax, but I want these advisers to be very practical about telling us the unintended consequences of what the Government are doing. That is what I think these advisers are best at, or ought to be best at.
While the Government have made progress in all sorts of areas, the truth of the matter is that virtually every one of our taxes in this country will need some very serious looking at over the next few years—not necessarily to reduce the tax rates; that is not what concerns me. Virtually every tax has anomalies and difficulties. For example, with income tax, if you earn between £100,000 and £120,000 a year, your effective rate of tax is 60%, because as the personal allowances fall and you go up to the 45% rate, you end up paying 60% on your income. That is complete nonsense and it should not be so. The Government know this perfectly well and they should change it.
I will not go far into corporation tax because my noble friend Lord Lawson made a scathing attack on its inadequacies. However, if the Government think that they will get international agreement to deal with the problems of Starbucks and other such companies by negotiating on corporation tax in a wider world, they should forget it; that is not going to be the way. Corporation tax has passed its sell-by date as far as international business is concerned. We have to find some other way.
In the past I have talked about capital gains tax. Somebody in the Labour Party made a speech the other day to say that a rate of capital gains tax for long-term holders of investments should be considered. If that is not recognition that a substantial part of the capital gains tax that people pay is a tax on inflation, I do not know what is. Capital gains tax is very substantially —not completely, of course—a tax on inflation, and sooner or later we will have to face that.
I have had a go before in the House about stamp duty. It is fundamentally a bad tax. It is a tax on change. What we need in the country and in the world is for things to change and to improve. Of course, the Inland Revenue loves stamp duty because it is an easy tax to collect, but it is fundamentally a bad tax. The economic effects are being felt now. Things that would happen are not happening because stamp duty is too high. Lastly, I turn to inheritance tax. The Prime Minister has said in a speech that he thinks it needs to be looked at. Right across the board, you can see things that need to be done to bring our tax system up to proper modern standards.
The Minister quoted from a report about the greatly improved way in which tax policy is being achieved, but the formal review that was promised has not actually happened. I hope that it will happen. I am not saying that there are not some good things in what has been done, but I am not sure that it is as good as it might be. If the Government come to do their formal review, I would invite the people to look at one particular paragraph in our report. It is a quotation from the senior tax partner in a firm that I used to work for. I suspect that I left the firm long before he was born, so I do not know him, but he is very good. He is referring to the division of expertise between the Treasury and HMRC and whether that is right—whether the Treasury has sufficient experts. He says,
“if HMRC’s role was to ‘own’ the policies, ensuring that any proposals are rigorously evaluated by both the policy lead and those with practical experience of the operation of the tax system, then a number of the concerns of detail might be identified and addressed up front. HM Treasury would then have a clearer ‘scrutiny’ role, which would provide the ‘challenge function’ to the policies being developed”.
That is the way that policy arrangements between the Treasury and HMRC should develop rather than as it is at the moment, where there seems to be a division of expertise between the two. I am not sure it is as good as it might be. But I finish by saying that I am in favour of the Bill that the Minister has brought before the House.
Lord Flight (Con)
My Lords, I first make the rather obvious point that the relative brevity of this important debate and the thinness of the Chamber reflect the lack of power of this House to amend Finance Bills. It strikes me that now that this House is essentially an appointed and not a hereditary House, that is out of date. Much though I pay credit to the noble Lord, Lord MacGregor, and his committee, it is time for the issue of this House being able properly to consider financial legislation in the same way as the other place to be looked at.
I pay my own credit to the term of office of the noble Lord, Lord MacGregor, and the excellent work that his committee has done. His committee is right in its recommendations with regard to delaying the new measures for LLPs. I agreed with everything that my noble friend Lord Lawson and the noble Lord, Lord Wakeham, had to say. With regard to the issue of the personal conduct of bankers, I was recently rereading Professor Plumb’s biography of Walpole and noted that at the time of the South Sea bubble all those involved, including the Prime Minister of the day, were promptly clapped up in the Tower and had all their estates removed. They were let out in due course, but our forebears seemed rather more effective at disciplining people who had acted improperly than we are today.
There are obviously good things in the Finance Bill, and it has been a popular Bill. In particular, I like the improved export credit finance arrangements. Many of our small and medium-sized companies have found it increasingly difficult to get export finance. I also like the transferable tax allowance and the tax allowance for fracking development. But the most radical measures have been the anti-tax avoidance measures and I want to say a little about those.
First, I find it rather sad that even in this House the language of this territory has become rather muddled and, dare I say, misleading. Let us be clear: you start off with evasion, which is criminal. That is simply breaking the law and not paying the tax that you should pay. Then there is avoidance. By definition, avoidance is within the law. If it were not, it would be evasion and without the law. But within avoidance there is a hierarchy. There are all sorts of government tax incentives such as ISAs, EIS, pension saving and the very tax incentives that are in this Finance Bill, which everyone would say were fine. They are actually there to avoid tax. The other side of the coin is that they constitute tax avoidance. I am sure that there are very few Members of this House who have not invested in ISAs or benefited from the tax incentives of pension savings. Everyone is a tax avoider in that sense.
Then we have what have been essentially government schemes, but which have been poorly drafted and have then been exploited and abused where fundamentally the issue is that the original law needs tightening up. Then, at the bottom of the heap, are what I view as unacceptable schemes—fabrications. Tax is wholly justified on those. It has always been my view that I knew one when I saw one and always felt that it was unwise for anyone to consider using one of those.
However, the measures in this Bill do not apply just to the latter—as I think the noble Lord, Lord Deighton, implied. They also apply to statutory government schemes brought in by the previous Government, where the law is somewhat unclear—in part because they were legislated in a hurry—and where there are disagreements between lawyers and HMRC, often as to what is within and without the measures that were enacted.
There is a better solution—and here I declare an interest as chair of the EIS Association. There were criticisms that EIS was at one stage subject to abuse, and the industry sat down with HMRC and went through what HMRC thought and what the industry thought. It ended up with a win-win solution whereby in future all EIS issues are subject to pre-clearance. That means that those raising the money, and the companies, know where they stand, the Revenue knows where it stands, and the whole issue is satisfactorily cleansed of criticism. This Finance Bill introduces a retrospective requirement, where the Revenue considers that a scheme has been abused, for the full amount of tax being saved to be deposited. This applies to three areas of government statutory incentives in particular: to film and sale schemes, known as Sections 42 and 48; to enterprise zones; and, where I think there is most injustice, to the Business Premises Renovation Allowance —BPRA—scheme. I might add that I have no investment in any of these areas and no direct first-hand knowledge, but a lot of perfectly responsible people have brought concerns to me, and they have been raised with the Treasury.
I start by saying that if the Treasury and HMRC considered that some schemes did not meet the statutory requirements, they should probably have disallowed them at the outset. Instead, for years things have been waiting to be sorted out and have not been addressed one way or the other.
My next point is that many people registered under the so-called DOTAS—Disclosure of Tax Avoidance Scheme—rules before there was any obligation to do so. They registered with an intention to be transparent. Ironically, it now ends up with those registering being punished and those not registering not being punished. It is a very strange anomaly in the approach that has been taken. What is happening is that HMRC is demanding money when they cannot necessarily show that the relevant investors have done something wrong.
The proposed legislation which authorises HMRC to remove funds from individuals’ bank accounts goes even further towards a somewhat overbearing state. It is such a complicated and difficult area that very few people actually know what is in the Finance Bill in this regard. However, the Treasury Select Committee and the Chartered Institute of Taxation have complained about unprecedented HMRC executive powers of decision, and of HMRC being put in the position of judge and jury, and they have complained that it creates a precedent in the UK tax system whereby the tax authorities are given power to demand payment without any right of appeal. The Treasury Select Committee also objected to the retrospective nature of the requirement for taxpayers to pay 100% up front within 90 days—potentially applying, I think, to some 65,000 cases. This puts fiscal policy on a slippery slope towards arbitrary taxation. Many individuals have been good-faith, legitimate BPRA investors over several years with no complaints from HMRC. They now find themselves on the wrong side, with notices to pay.
Moreover, the current position seems immediately to be shambolic, in that although HMRC has published an extensive list of all those to whom those arrangements are to apply, at the same time it appears to be saying—if anyone can get through to it on the telephone—that, no, they will not apply until negotiations have been completed.
There is an important issue, which is that there may be some situations, particularly with the BPRA, where most of the schemes are completely in compliance with the law but some are deemed not to be by HMRC, so a modest and partial amount of tax may have to be recovered. I am advised—I do not know whether it is true—that HMRC did not take full external legal advice on the measures before the Finance Bill was produced and that there is a significant possibility of judicial reviews where the courts will find against HMRC.
Finally, the accelerated payments rules are contrary to two fundamental legal principles. First, I believe that in this country we are always innocent until proven guilty; whereas what is happening here is that the standard basis of self-assessment is being overridden and taxpayers are being treated as guilty until they can prove their innocence. Secondly, there is no proper appeal mechanism. As I have already said, HMRC is judge and jury in these matters. Extraordinarily to my mind, two of the schemes are—I repeat—government, statutory schemes, state-aid approved and brought in under the previous Government.
The Treasury and HMRC have been unwilling to listen to the concerns of many people. I exhort the Treasury and HMRC to be extremely careful how they use the new powers; to endeavour to use them justly; and that HMRC itself is wholly transparent in the use of those powers.
Lord Davies of Oldham (Lab)
My Lords, this has been a wide-ranging debate. I wish the noble Lord, Lord Flight, well in his campaign to wrest control of supply from the other place; he has to reverse more than a century of history and quite significant political obstacles before he achieves that objective.
We have had very interesting contributions. Of course, I particularly enjoyed that from the noble Lord, Lord Lawson. I appreciated him as a historian when he indicated to us that spads going on to become prominent parliamentarians is by no means a new phenomenon but went back more than half a century. As I shall show in a moment, he is also pretty good as a forecaster, because I shall be critical about the Budget. He is right on both counts.
First, I pay tribute to the noble Lord, Lord MacGregor, who introduced his report on limited liability companies and has played such a significant part in enriching our debates on Finance Bills through the reports of his committee. This was one of the more challenging reports in many ways, because it asked the Government to delay what they had clearly set their mind to do and indicated why consultation ought to be respected more clearly than appeared to be the case by both the Treasury and HMRC. My noble friend Lord Joffe put a particular perspective on that, suggesting that the committee itself could enhance its role in relationship to future Finance Bills by ensuring that it consulted in greater depth and produced reports that established contact with the smaller organisations in the country—even the very smallest. After all, this report was significantly about limited liability partnerships and SMEs. Of course, they are small. I gather that the danger for the committee was that it listened to representative organisations and a little less to those who are active on the ground. I am sure that my noble friend Lord Joffe has a significant point there. However, we all very much respect the work of the noble Lord, Lord MacGregor, and thank him for his contributions over the years. We know that he will still contribute significantly to our deliberations, even when he has retired from the chairmanship.
The noble Lord, Lord Wakeham, also introduced an interesting dimension to the debate. I identified three quite significant taxes which he wanted the Revenue to wipe out in terms of receipts. We are often accused on this side of the House of spending money too easily—quite wrongly, of course—but the noble Lord is in great danger of reducing the receipts of government in a dramatic way. Unless he comes out with some pretty clear proposals for where other tax revenues are going to emerge, I am quite sure that the Government will be giving fairly limited consideration to that at present.
The noble Lord, Lord Razzall, indicated that there will be choices before any Government after 2015. We know those choices to be harsh and challenging but he indicated that some amelioration might occur if the economy grew. My goodness: that is partly to recognise the Opposition’s case that the economy has not grown fast enough over these past few years, hence the level of privation. It is also not likely to grow very fast over the next few years, with the Government hell bent on following the principles which they have up until now.
I want to demonstrate that the Bill does of course show a long overdue growth in our somewhat fragile economy. There clearly is growth in the economy but in 2010, the Chancellor forecast that over this period, the economy would have grown by 9.2%. In fact it has grown by exactly half that, or 4.6%. Is it therefore any wonder that the Chancellor is short of some resources? I might add that if it is suggested that the economy now is doing well compared with other economies, first, it has risen from a very low base and, secondly, the United States and Germany have still both had growth rates over this period which have been far higher than those of the United Kingdom. There is not much to boast about there. It is also the case that the Chancellor is borrowing over this period £190 billion more than was planned and, as the Minister made quite explicit, the Chancellor is going to clear the deficit in 2018 when the proposition in 2010 was that it would be cleared by five years of coalition government. It is a pretty tawdry success that the Government are presenting to the House in this Bill.
Of course, we are all in this together, as has been emphasised on all sides. It is true that the top 1%, in order to be along with the rest and in it together, needed a tax cut which has been worth £3 billion while 7 million people who are at work are in poverty. That is the nature of it. I know that the Government constantly emphasise the employment figures but we are going to examine them more carefully. The nation knows the quality of the jobs that are being created. There are people who define themselves as self-employed, move out of the unemployment category and are living hand to mouth. That is why there is so much concern in the country about the constant use of food banks, and why on all sides there are indications that pressure upon ordinary people is very intense.
What is at the root of this? Quite clearly, it is that wages have continued to fall behind prices, and the Government know this to be so. Even this month, that has been confirmed for the most recent period. So people’s living standards have fallen over these five years. It may be that the Government think that because we now have a recovery—the slowest recovery for 100 years—people’s minds will wipe out the level of deprivation over these past years. They may not be right. If ordinary families are £974 worse off through tax and benefit changes than they were in 2010, these problems are deep.
Is the coalition completely unaware that in the past four years a massive stimulus has been given to the continuing creation of the unfair society, where wages stagnate and the resources devoted to the highest rewarded sections of our society continue to escalate? I know that from time to time it hits the headlines that some shareholders carry out a minor revolt against their chief executive but what continually goes on, day in and day out, is the widening of differentials between the pay of the super-rich—I am including people who work; I mean the chief executives of companies—and the average pay in their companies.
This growing inequality brings, as so much research now indicates, a clear problem of dissatisfaction in society, a sense of unfairness that may express itself in passive disillusion but may not be reflected at the ballot box in quite that way. The Government have opted for a low-wage, low-skill economy. That is what we have, with all these people working harder and longer for less, yet the Government pretend that they can congratulate themselves on the employment statistics that they represent. Surely the clearest indication of the Government’s limited success in this area is the decline in productivity and the problem of Britain being able to earn its way. Our balance of payments continually shows an increased deficit.
We are clear that this Budget and Finance Bill should have been based on much fairer principles than have been reflected in them. Hard-pressed families need help with their energy bills, which we have all seen rise rapidly and unfairly. Indeed, although the noble Lord, Lord Lawson, waxed strong on certain issues regarding energy, I do not think that he commented on whether he thought the public had been exploited by private monopolies in the way in which energy bills have gone up in recent years.
We will of course get rid of the dreadful bedroom tax. I am not sure that Members of this House are at all aware of the cost to families of very limited resources who are in real need and the misery that they suffer when they are told that they must give up the one room that they hold for a visitor or another member of the family, to give them some respite, particularly when it is concerned with the disabled, and the bedroom tax forces them into penury or having to move. We think that the ordinary earner also needs a fairer basic rate of taxation, and will attend to that.
Another area where we think there should have been much more emphasis in these past four years is housing stimulus. I understand the Minister’s role with regard to infrastructure and we applaud many of the initiatives taken in that area, but where is the support for the construction industry and the building of houses? Surely that has to be recognised as a priority, otherwise we are faced with a situation where the Government provide a token measure to help people to buy while house price inflation is rampant.
We believe that this Budget is a missed opportunity. The Government could have tried to get the people on their side, and they will pay the cost for not having done so.
Lord Deighton
My Lords, the phrase wide-ranging debate is often used in this House, but we can justifiably describe this debate as one of the widest-ranging. It ranged from the broadest macroeconomic issues and challenges to society to the very specific and detailed implications of the taxation of limited liability partnerships. I learnt a lot and I hope that noble Lords did too. Like many of the speakers, I pay tribute to my noble friend Lord MacGregor. I could not do it more eloquently than they have done, or with the same historical experience. It is clear that his contribution is enormously valued. I also thank the other members of the Economic Affairs Sub-Committee.
I shall try to address some of the questions, and given their breadth and technical depth, I am sure that noble Lords will grant me some poetic licence. I shall start with the noble Lord, Lord Davies, who summarised very well many of the contributions, so I shall not re-summarise them in exactly the same way as he did. As to our competing visions for an economic strategy, I tried very hard to determine the alternative economic strategy that was being offered. As I understood it, the objection to our economic strategy was that the economy has not grown quite fast enough. I do not think that that is an adequate basis for winning the hearts and minds of the British electorate in attempting to get back the keys to drive this particular car. I think that we also heard that one of the explanations for the strength of the recovery was the very low base from which we started. We all know why we had such a low base; I do not really need to revisit that. The work that this Government have done to stabilise the public finances and get the situation under control, so that we can focus on the key drivers of economic growth, is our major accomplishment. My noble friend Lord Lawson reminded me that I should have congratulated my boss the Chancellor of the Exchequer on sticking to his guns. I am not sure how many people would have done the same, given the extreme pressure of those early years of government when the depth of the recession really hit home.
I also have a very different view of the fairness behind this Budget and Finance Bill. The basis of the Bill is very clear. We are doing everything that we can to make this an extraordinarily attractive environment for businesses to grow, to create jobs and to improve their productivity—the very things that create value and drive the economy forward. The concept which I think the noble Lord opposite is not addressing is how you get this economy going. The Government are creating an environment in which businesses are growing and new businesses are starting up. Businesses from around the world want to come here. I have a long queue of investors outside my office every day from all over the world who want to come to this country because they think that it is the best place in the world to invest their capital. That is a result of the environment that this Government are creating.
The noble Lord focused hugely on fairness. This Finance Bill is all about fairness. There is a huge focus on making sure that people pay their taxes, and that focus is inevitably on people right at the top of the income levels. The core income tax measure is the progressive increase of the personal allowance, and there is no fairer way to benefit people at the bottom of the income chain. So what is driving this Budget could not be more focused on those combined goals of making sure that things are done fairly, but also of making sure that we have some growth, so that we have some real proceeds from that growth to distribute across the population.
I take on board some of the suggestions about things that need to be looked at and done better. I certainly agree that responsibility around executive pay is a big issue, and my personal view is that boards need to do their job as effectively as possible. It is certainly right to say that improving productivity will be at the heart of driving forward improvements in real disposable household income, which is what we are all looking for. The OBR tells us that, given what we have done with inflation and growth, we will see those lines cross this year. It has been a long hard path, but we are getting there. I also agree that a compelling strategy for improving the supply of homes is vital for this country. So although I disagree on many of the core approaches, there are two or three things in there that any new Government should redouble their efforts to attend to.
My noble friend Lord MacGregor asked absolutely the right question about the work of this House on the Finance Bill: does it add value? All I can say is that, having spent the weekend reading the report, and having listened to this debate, I am thinking a lot harder about the real issues and how we can do our job more effectively—whether that is about how the Treasury and HMRC work together, how we train our people, how we consult, or, in particular, how focused we are on improving tax simplification and administration. The quality of the work that my noble friend has overseen makes it easy to answer yes to his question.
I am in a rather strange hypothetical position, because normally when we are discussing such issues we are having a debate after which we could amend things, but I am now defending decisions that have already been taken, so no change will result from this debate. The fundamental difference between us is whether the consultation produced such different results that we needed more time to implement the system. When I looked into this with my officials, we were not in any way persuaded that spending another 12 months working through it would have resulted in a different outcome, and we were extremely keen to ensure that we could put this legislation into practice so that we could collect the money that needed to be paid. Indeed, as I have said before, many of the partnerships that had to change as a result of the measure had already made those changes. It may have been a pragmatic decision, but on balance we feel that we were justified in getting on with this.
The noble Lord, Lord Razzall, made the point about following case law rather than statutory provisions. Again, we felt that in order to administer the rules effectively, we needed the certainty that clear tests apply. The noble Lord, Lord Joffe, made some interesting observations about how much we should invest in HMRC in order to increase the yield. Since 2010 we have invested about another £1 billion in numbers of people and systems to help us collect revenue, so the management approach of evaluating the investment we need to make to enhance the yield is indeed a way in which we think about that challenge.
It is always fascinating to learn about the current perspective of my noble friend Lord Lawson on the economy. I am interested in those things that we can control, and therefore can do something about, but I shall not comment on monetary policy. It is dangerous for a Treasury Minister to do that, given the independence of the Bank of England. It is always good to revisit our discussion on banking reform. I agree that following through those things that the Parliamentary Commission on Banking Standards recommended is absolutely right. In particular, getting SME lending going is a key focus of this Government. On energy policy, to bring my own experience to bear, it is hard to think of another area where I personally spend more time in trying to think things through and make things work which have real economy implications than energy policy. I will certainly take on board with respect to shale and getting that whole industry moving whether the way the Government are looking at that is sufficiently focused and driven. At the moment, it is managed through the growth implementation committee, which the Chancellor chairs, but it is of course one of a wide number of topics. I have discussed with industry participants how we should follow through on that.
The noble Lord, Lord Razzall, talked about the challenges of keeping our focus on managing the deficit down. I acknowledge the simple point that our work is by no means done. We are still confronted by the same issues around priorities, and the same questions around having the right debate to ensure that we understand the implications of the choices that we will continue to be forced to make.
I agree with a specific point made by my noble friend Lord Wakeham and a number of noble Lords. The best role for advisers is to help us to understand and identify the unintended consequences of the changes and proposals we put in place. That is an extraordinarily valuable role. On rationalising, modernising and simplifying our existing portfolio of taxes, obviously to get the balance right between continuing to meet our tax yield objectives and making them operate more effectively is always something that has to be worked through. Personally, I am a big advocate of the simplest possible portfolio of taxation so that we do not have all the kinds of issues we talked about today—I will move on to address the comments of my noble friend Lord Flight later—which are in the main created by complexity and the perverse incentives you end up with when you fiddle around with a tax regime over many years.
My noble friend Lord Wakeham also referred to the formal review between HMT and HMRC that the committee recommended. I made those comments in my opening remarks, but it is kept continually under review. The independent Tax Professionals Forum also scrutinised the process. The Office of Tax Simplification looked at that and commented positively on how the two worked together. Therefore I do not by any means want to suggest complacency, but that is an ongoing process. I accept absolutely that everything we do could be done better. There is no situation in life where consultation cannot ever be improved. It is like communication—you can never have enough of it. However, we are well seized of the importance of that.
My noble friend Lord Flight, as ever, took on the difficult task of making the case for those who have participated in schemes to manage their tax payments. I admire him for that. He is certainly right that we need to be careful about the language and that there are tiers of how we should regard just how heinous the abuse or avoidance is. I could not agree more that we do not want to be in a position where we are creating retrospective acts, where we are left with anomalies which make it very hard for people to work out what to do. As regards taking money out of people’s bank accounts, if you look at the process that will be gone through by HMRC before that is done—I will not read out the details—we should take some comfort from that.
My final point on tax avoidance is my own personal view. I have always been a strong advocate in the Chancellor’s ear to pursue these changes quite aggressively. It is important that everyone who could potentially avail themselves of these schemes knows that they are being treated fairly. If you were in a position personally to be able to take advantage of them, you would not want to see other people in an equivalent position, who are prepared to be more aggressive, just paying less tax. There is a real fairness issue here. I think we have got the slant of what we are doing right—a whole regime of competitive taxes where we are rigorous in expecting people to adhere to them and there is no wriggle room for people with a more aggressive frame of mind to play the system. I like the way we are heading, though I know it creates some challenges.
In conclusion, I think we have taken some difficult decisions and resolute action to tackle the enormous debts we inherited. We are all agreed that the job is not done. The whole point of this Bill is to put us back on the right path. We are supporting enterprise, helping families and ensuring everybody pays their fair share of tax. I commend the Bill to the House. I beg to move.
Draft Finance Bill (EAC Report)
Lord MacGregor of Pulham Market
That this House takes note of the Report of the Economic Affairs Committee on The Draft Finance Bill 2014 (2nd Report, Session 2013–14, HL Paper 146).