Grand Committee
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Small Business, Enterprise and Employment Bill
(9 years, 3 months ago)
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The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, I remind the Committee that, in the event of a Division in the Chamber, the Committee will adjourn for 10 minutes from the sound of the Division Bell.
Clause 40: The Adjudicator
Baroness Neville-Rolfe
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, we come today to Part 4 of the Bill and the much debated topic of the Pubs Code and the adjudicator. The problems we are trying to address in the pubs industry have a long history. The imbalance in bargaining power between tied tenants and their pub-owning companies, and the difficulties that arise from this imbalance, have been well documented by the BIS Select Committee in four reports over the course of 10 years.
Part 4 of the Bill introduces a statutory Pubs Code and an independent adjudicator to enforce it, to provide much needed protections for the 13,000 or so tenants who are tied to large pub-owning companies in England and Wales. Furthermore, the other place voted to add to the Bill a market rent only option for pub tenants, meaning that pub-owning companies will be required to offer their tenants the right to go free of tie in certain circumstances. The tenant would then pay a market rent for the pub but would be free to purchase beer and other products from any source.
As I set out at Second Reading, the Government have listened to the decision in the other place and accept that there should be a market rent only option. The amendments I am moving today seek to make the provision workable and mitigate the potential unintended consequences. The amendments, which are split into three separate clauses for clarity, set out a clear framework for the market rent only option, make provision for the procedures needed to deliver it, and provide for the adjudicator to resolve disputes. Our amendments will provide tied tenants with the right to a market rent only agreement at a number of trigger points, including at a rent review; at a lease renewal; when there is a significant and unexpected price increase; or if a local economic event occurs that is outside the tenant’s control. Although prospective tenants will not have the right to the market rent only option, our amendments provide that they will have the protection of the parallel rent assessment—PRA—which will show them how their tied deal compares with a free-of-tie deal.
Although I have not yet had the pleasure of meeting him, I pay tribute to my honourable friend Greg Mulholland for his tireless campaigning on behalf of pub tenants. I would also like to thank noble Lords from all sides of the House for the constructive discussions we have had in advance of today’s debate and the perceptive questions they have raised with me. I can assure the Committee that the Government are committed to making the market rent only provision workable and legally robust. That is why we have brought forward these amendments, which are needed to ensure that the benefit to pub tenants can be achieved.
For example, the market rent only clause introduced in the other place provided MRO to tenants on entering administration. Rather than provide protection for tenants, this could hasten the route to company liquidation, which would certainly not be in the tenant’s interests. The Government’s amendments attempt to address such unwelcome effects, which I will cover in more detail as the Committee progresses.
There may be some differences of opinion on the detail of the Government’s new clauses, which the House will rightly want to debate, but I encourage the Committee to accept these amendments today to ensure that a workable framework is in place as the basis for further discussion on Report. The Government’s new clauses set out in the Bill the key principles of the market rent only option, and I am sure that we will debate these during the course of today. Our new clauses provide for the details of the market rent only process and market rent only triggers to be set out in secondary legislation.
For example, this includes the point at which the market rent will begin to be paid. I know some would prefer this detail to be set out in primary legislation but this would not allow for the consultation that is essential to get this right. There has been very limited consultation because of the genesis of this clause. I believe that that is a risky way to legislate. A full public consultation will help to ensure that the process works as we all intend. The use of secondary legislation for this purpose also allows some flexibility if a review later demonstrates the need for a change of process.
I know that a number of my noble friends and other noble Lords have tabled amendments to the market rent only provisions. I think it would be right to let them speak before I try to respond to the amendments.
Lord Berkeley (Lab)
My Lords, I am grateful to the Minister for that introduction. I have two amendments in this group and I am certainly not happy that they are in a group of 66 amendments. This must be about a record for Committee stage. It is interesting that amendments in this group have been put down by a number of different noble Lords, but there are five separate groups further on for amendments tabled by the noble Lord, Lord Hodgson. I am sure that he deserves such special treatment but I wonder why. I do not know whether any other noble Lord was consulted about this grouping—I certainly was not. I give notice that I would like to debate Amendment 90A separately. I do not know whether any other noble Lords will have a similar view, but I hope that that is acceptable.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I also have a number of amendments in this group. I think the answer to the noble Lord’s question is that these amendments are all about Clause 42 and the subsequent groups are about subsequent clauses. What we are doing here is debating the whole of Clause 42, rightly or wrongly. It may be too big a group but that, I think, is the background. I think other amendments to subsequent clauses form other groups.
The Government have said that they will accept the spirit of the amendments passed in the other place, but I am afraid that despite the Minister’s assurance—
Lord Whitty (Lab)
My Lords, before the noble Lord, Lord Hodgson, proceeds, the point made by my noble friend Lord Berkeley indicates a more serious procedural problem. It is not that these amendments are not serious, but they are specific. I also have some amendments in this group, but if I degroup them, a decision would have been taken on the Minister’s amendments before we reached the appropriate point in the text of the Bill.
We have a very new clause, inserted at the final stage in the Commons. The Minister quite rightly said that there has been limited chance for consultation on that. We have a huge amendment from the Government deleting an entire clause and replacing it. The noble Lords, Lord Berkeley and Lord Hodgson, and I, all have amendments to the original amendments. My noble friends Lord Mendelsohn and Lord Stevenson have amendments to the Government’s amendments. So, there is not only a large number of amendments, but it is going to be a very confusing debate.
That is not to say that we should not have the debate today. However, the way that this has been dealt with, and the fact that consultation since the Commons decisions until now has not allowed consultation with the bodies that represent tied landlords, has not allowed for significant debate with those in the Commons who pushed this amendment. We have a few weeks between now and Report stage for proper consultation to take place. I am very happy to have the discussion today because that will inform the Government, but at the end of that discussion it will behove all of us to withdraw our amendments and move them for a proper discussion on Report, which could have been preceded by some effective consultation between the Government and the various parties involved, both politically and industrially.
Although we can degroup this group, there is a rather more profound problem here. If all noble Lords agree to withdraw their amendments at the end of the debate, there is no great problem and we can have a sensible discussion over the next three weeks. However, if we proceed, we proceed as per normal. It would be sensible, even from the Government’s point of view, if we allowed ourselves a bit of a breathing space to have those discussions.
Lord Berkeley
Is my noble friend suggesting that the Minister should withdraw her amendments as well?
Lord Snape (Lab)
Before the Minister replies, I endorse and agree with the remarks made by my noble friends. On Second Reading, I intervened on the Minister’s opening remarks. I said:
“I am sure that the House will recognise how far the Government have moved on this”—
that is, the principle of consultation—
“and will welcome that movement. However, can she assure us that any future discussions will involve representatives of the tenants and will not be dominated by the pubcos?”.
The Minister replied as follows:
“My Lords, I can assure the noble Lord that we are always discussing these issues”—
I emphasise the word “always”—
“and changes with tenants—that is extremely important when you are making changes of any kind—and, indeed, they have helped us to get to the position that we are now in”.—[Official Report, 2/12/14; col. 1243.]
That is not the view of the tenants who I have spoken to. Indeed, most of them take the view that the position we are now in is thanks to the noble Lord, Lord Hodgson, and some of the pubcos.
Although we are grateful to the Minister for the sympathetic way in which she pointed out that there was a difficulty with some of the amendments in the group, we should return to the question of consultation. I hope that she will spend some time explaining to us exactly what consultation has taken place and with whom. Is it true, for example, that, despite the Minister’s promise on Second Reading, the consultation with the representatives of tenants consisted of an hour or so in the department? What consultation has taken place with the pubcos in the department and elsewhere?
I have a feeling, looking around at the Room, that a considerable amount of entertaining—if I can put it that way—has gone on over lunch. Perhaps the views of the pubcos have played a major role not only in the grouping of the amendments—about which we rightly complain—but the sentiments that the Minister expressed and, I fear, will express, about the postponement of proper legislation that was voted on in the House of Commons but seems to us by the amendment and the grouping to be being flouted by the Government.
I hope that the Minister can reassure us at this early stage, because if she cannot, I can assure her of a fairly long and drawn out Committee sitting here today, and that a considerable number of amendments will be tabled at Report on behalf of those who feel that they have a raw deal under the existing arrangements and cannot see it getting any better under the Government’s proposals.
Lord Cope of Berkeley (Con)
My Lords, I think we are still intervening on the speech of my noble friend Lord Hodgson on these procedural matters. I urge my noble friend not to withdraw all her amendments for the simple reason that I find it very difficult to unravel, from all the amendments tabled by the Government and by others, exactly where we are supposed to be at the end of the process that the Government wish. It would be helpful to write the Government’s proposals in full into the legislation at this stage, so that we and everyone else who is to be consulted in a short while can see exactly what the Government are proposing properly set out. No doubt then, at Report, some noble Lords will move their amendments, whether they are identical to or different from those on the amendment paper.
Lord Snape
I find it difficult to imagine that someone with such a distinguished record as the Deputy Chief Whip in the other place can confess to any confusion about the layout of the Bill and the amendments. Regarding him seeking clarity, it was my experience in the Whips’ Office—although not personally with him—that clarity was sometimes the last thing that Deputy Chief Whips ever sought. Indeed, I find it surprising—as I suspect the Committee will—that the noble Lord should make such an admission at this early stage.
Lord Cope of Berkeley
That is as may be, but I hope, if the noble Lord thinks that I have diverted from my previous course of action, that that will strengthen the force of the remarks that I make.
Baroness Neville-Rolfe
My Lords, I do not know whether it is appropriate for me to stand up before noble Lords start to talk about the amendments, but I am essentially, as noble Lords know, a practical person, keen to try to progress the Bill and to do the right thing with today’s business on pubs. I will respond to the point that has just been made on consultation and reassure the noble Lord, Lord Snape, that Jo Swinson, my friend in the other place, held a round table with pub companies and another with tenants, both for the same amount of time. Officials have also had discussions with people on both sides of the debate throughout, while always trying to be balanced and objective. Ministers, advisers and officials have also had several meetings with Greg Mulholland since Report in the Commons, although it would be fair to say that he is keen to keep his clause exactly as it is. So far, that has made progress a little difficult.
Lord Snape
I thought I heard the Minister say that she has not met Greg Mulholland. It is surprising that a Minister in charge of a Bill in your Lordships’ House has not got round to meeting the person responsible for a major amendment to that Bill, although she rightly paid him a compliment for the work that he has done. Is there any reason why she did not meet him?
Baroness Neville-Rolfe
The noble Lord makes a good point. The Secretary of State and Jo Swinson have been intimately involved in all this. I have now taken over the yoke in this House. The next thing I was going to say is that I held an open-door session yesterday. Noble Lords were invited. I was surprised that more noble Lords were not able to come, but that might have been a timing issue. I am keen to get to know all the views of the Committee on this important issue. I joined the House of Lords because it is an important revising Chamber. We have to look at these things and get them right. Our door will be open between now and Report.
Clearly this group of amendments is very large, but I have already said that I would like to listen to what is being said by noble Lords on their amendments before I respond and comment on what we should do with our amendments. We are being very constructive; we are trying to seek a balance and to do the right thing. If we could get on and get into the detail we may find that we can narrow down some of our differences.
Lord Hodgson of Astley Abbotts
My Lords, when I was interrupted a minute or two ago I was explaining that I had some amendments here and that we had some doubts still, despite my noble friend’s assurances about the workability of what is now proposed. I should say to the noble Lord, Lord Whitty, who I think asked the question, that I do not propose to move my amendments today; I propose to have them discussed. I suspect that that is what he expected me to say, but then I suspect that he was not putting his question to me.
At this point I remind the Committee, as I did the House at Second Reading, that until a year ago I was a non-executive director of one of the six companies covered by the proposed code. The group of which I was a non-executive director had five breweries, two large ones and three small, stretching from Cumbria to Ringwood in the New Forest. It owns some 2,000 pubs, of which about 500 were managed, and the balance were tenanted in various forms.
This is a bit of housekeeping. The Captain of the Gentlemen-at-Arms has told me that it has been suggested that I did not declare this interest at Second Reading. For the record, I draw the attention of the Committee, and indeed the House, to col. 1289 of Hansard on 2 December, the date of the Second Reading of this Bill, in which I declared in terms the interest that I just declared. It was further suggested by someone that I did not declare my interest at the beginning of my speech. That is perfectly true; I did not. I think that the Companion does not require you to make your declaration at the beginning of the speech. The beginning of my speech was not about pubs; it was about pre-pack administrations and about the Government’s procurement policies as they affect small companies, in which I had no interest to declare. When we came to the pubs, I made the declaration that I have described, so I hope that we can draw a line under that question.
I thank my noble friend and her team of officials for the time they have given to discussing some of the operational problems that it is feared may occur. I thank the Government, having listened to some of the arguments that my noble friend has just briefly outlined for the Committee, which include a complete rewriting of Clause 42, which, as we realise, is the essential heart of the new regime. The amendments, as we have heard, were tabled last Thursday night, and it is fair to say that, given only three complete working days since, all parties are struggling to understand the full implications of what is now proposed. My noble friend Lord Cope of Berkeley had a sensible suggestion to achieve some permanence that we can then discuss and amend on Report if necessary. I do not suppose that CAMRA will agree with much of what I say but it may be persuaded by some of the arguments, and I suspect it would agree that we are struggling slightly with the flow of information that has come so late in the day.
I have tabled a number of amendments to Clause 42, which form part of a strategic whole. Before discussing the amendments in detail, I shall take a few minutes to discuss the shape of the pub industry and how those amendments would be to its long-term advantage. I begin by making three things clear. First, these amendments do not—I repeat, not—seek to overturn the House of Commons decision to introduce a market rent only option, the MRO. I think that that is probably a mistake; time will tell, but it may accelerate pub closures. However, the Government have decided to accept the decision, so I want to move on from that point.
Secondly, the amendments are designed to help to keep pubs open. The sector is under pressure from a wide range of adverse tides. There seems to be a view that somehow pubcos want pubs to close. A landlord needs a tenant as much as a tenant needs a landlord. That is particularly true of the company with which I was involved, which brewed its own beer in integrated premises, and it is through its own pub estate that a large proportion, 25% to 35%, of the product is sold. A closed pub is of no use in this regard, and closure even for a short period can be disastrous. If I may use the noble Lord, Lord Stevenson, as an example, if he is in the habit of having a pint on the way home from work and his normal hostelry is the Crown but it closes for refurbishment, he will not cease having his pint but will go to the King’s Head, elsewhere in the high street. It may be that as a result of the Crown having closed for a bit, his permanent patronage will be shifted to the King’s Head. In the company in which I was involved, when we undertook refurbishment we wanted it to be as quick and painless as possible to avoid upsetting our regular clientele.
Thirdly, these amendments are designed to iron out some of the idiosyncrasies and unevenness that, if not changed, will seriously affect future investment in the sector and its longer-term health. I am afraid that it is not realistic to believe that individual free house operators will have access to the sums of capital that large companies have at their disposal.
I turn to the industry. As I have said, the Bill affects only six companies, unless the Government accept Amendment 69A, tabled by the noble Lord, Lord Berkeley. It is not surprising that the issue of hybridity has raised its head and has had to be addressed in Clause 70(3). The six companies fall into two categories: two of them brew beer as well as owning pubs, which they sell in part through their own estate. They also sell in supermarkets, through independent pubs, free houses, off-licences and so on. I will refer to these as the integrated model. The other companies are pubcos. They do not brew beer; they very often buy their beer in from breweries operated by their rivals. They are clearly more focused on the rental levels available in their pubs.
As I explained at Second Reading, this rather counterintuitive structure of pure pubcos came about because of a parliamentary decision on the beer orders in the 1980s, which prevented breweries from owning more than 2,000 pubs. The disinvestment programmes forced on them resulted in what have become known as pubcos. They resulted from a parliamentary decision, which many argue had a completely unexpected and unintended consequence. We need to make sure that we do not set out today on a journey that has similar unintended consequences. By the way, some argue that the way in which this weakened the brewers weakened the whole of British beer on the pub market and led to the rise of foreign lagers, which are sold in every pub in the country. If your Lordships go into a pub you will be faced with Stella Artois, which is originally Belgian, Fosters and Castlemaine from Australia, Grolsch from Holland, Kronenbourg and, more recently, Peroni. Most, although not Peroni, are brewed here under licence but not owned in Britain at all.
Those two types of companies have differently aligned interests and objectives, but I would like the Committee to remember a further differentiation between managed and tied pubs. Managed pubs, as the title implies, are run by employees of the company who are paid a salary with a bonus and other fringe benefits. They are quite different from tied tenants, who are essentially self-employed small businessmen. All the issues about beer pricing and other conditions of the tie are of no interest to the manager, who is in effect running a branch office. I am very grateful to my noble friend for having made it clear in moving her amendment that managed houses have no place in the provisions of Part 4.
As I said at Second Reading, people feel strongly about pubs; even if they do not want to go to them, they like them to be there. Their disappearance is resented for removing an essential part of what people see as a community. Just how strongly people feel about pubs, though, even I underestimated. It is not often, working away as a humble Back-Bencher in the decent obscurity of your Lordships’ House, that a single sentence in a 13-minute speech can get one simultaneously on to the front pages of the Daily Mail and the Daily Telegraph and described as an Islamophobe to boot. For the record, let me set my sentence in context.
I said that the pub trade in all its forms—tied, untied and free—faces very adverse tides, which are resulting in pub closures. The adverse tides, in which I fear that the tie plays only a marginal part, include cheap alcohol in the supermarket, with an average price of £1.13 per pint compared to about £3 in the pub, so that people drink at home; the rise in the consumption of other beverages not normally associated with the pub, such as wine; the rise in regulation including drink-driving, the smoking ban and new licensing laws; rises in costs, including council tax; and deep-seated socioeconomic changes, including the deindustrialisation of parts of Britain—I used the example of the carpet trade in Kidderminster at Second Reading—and the arrival of people whose faith forbids the drinking of alcohol. That last point is not in any way and was never meant to be a criticism, as I am a great believer in religious tolerance in every direction. However, it means that such people are, quite understandably, unlikely to be persistent frequenters of premises which, under Clause 65(3), are defined as ones in which,
“one of the main activities carried on at the premises is the retail sale of alcohol to members of the public for consumption on the premises”.
As a result of these trends, in which sectors of the pub trade are closures now taking place? From the publicity being given, it would appear that the conclusion is that nearly all the closures are taking place in the tied sector. The truth, I am afraid, is rather different. Mr Doug Jack, an analyst at Numis, the City investment house, says in a paper that the closure rate in the free-of-tie sector is more than double the closure rate in the tied, tenanted, leased sector. There is a multitude of reasons for this, all connected to the fact that tied pubs also tie the pub company into the pub’s success or failure. As part of the rent is paid through the beer, the pub company is motivated to drive up beer volumes, which is why pub companies invest substantial amounts in capital expenditure, tenant support and rent concessions when good licensees are struggling.
Lord Snape
If, as the noble Lord implies, the tie is not the principal reason behind the unhappiness of many tenants, perhaps I could refer him to the CAMRA report into the tie. Can he explain to the Committee why more than 70% of tied tenants feel that the tie is, to say the least, unhelpful to their business?
Lord Hodgson of Astley Abbotts
I do not say that the tie is perfect. In fact, I was about to say that the tie has had its imperfections. But I do not think the statistics that are produced by some of the pubcos show that there is the level of dissatisfaction that the CAMRA figures indicate. We can argue about the polling; no doubt the way you ask the question and who asks the question can move the figures around a bit. But I think the other side—the pubcos—would argue that actually the level of dissatisfaction among tenants is not as great as the CAMRA figures suggest.
Lord Snape
Again, can the noble Lord give us some examples? If CAMRA has got it wrong and he has got it right, perhaps he can explain to the Committee how he has come to that conclusion.
Lord Hodgson of Astley Abbotts
The noble Lord is very kindly almost making my speech for me. I was about to say—
Lord Hodgson of Astley Abbotts
I was about to say that in the 25,000 or so examples of tied tenancies, I do not doubt that there are examples of egregious behaviour by pub owners. Those need to be addressed swiftly and promptly. But I do argue, and I will provide at least two specific examples when we come to Amendment 82 on significant investment—I remember the noble Lord, Lord Snape, chiding me at Second Reading and asking me to produce them—that the tie can work well for all parties and can provide a cheap and effective way of creating a satisfactory, profitable small business. I do not want to see the creation of a regulatory structure that strangles the possible advantages that the tie can offer.
To compete for people’s leisure time and their leisure pound, pubs have to offer an experience that is valued by the chosen target market. The target market may be younger males with sport, TV and pub games; younger females want more of a wine bar; families want play areas for children; and cheaper meals attract the retired. But noble Lords will quickly recognise that setting out first to choose a target market and then to develop it successfully takes experience and knowledge. That back-up and support is what in good circumstances a pubco can provide.
Whatever type of pub you are running, running a successful pub is very hard work: long, anti-social hours; periods of the year when external events such as the weather dramatically reduce your level of trade—this evening, if the weather continues as it is, pubs all over the country will be empty; and a readiness to deal with, humour and enjoy the company of the great British public in all their diversity. By no means do we all possess the multifaceted set of skills required to be a successful Mein Host.
Lord Berkeley
Looking at the list of groupings, it appears that the first amendment in the name of the noble Lord, Lord Hodgson, is Amendment 69, which seeks to leave out Clause 41(6), which says:
“The Pubs Code may require large pub-owning businesses to provide parallel rent assessments”.
Is that what he has been speaking to for the past few minutes?
Lord Hodgson of Astley Abbotts
I hope I made it clear to the Committee that I was trying to give a bit of a tour d’horizon of how these amendments fitted into the future. I was trying to explain that the adverse tides, which I have just been talking about, are not part of the tie but are part of other, bigger issues. In a couple of minutes I will come to each of the amendments, of which Amendment 69 is the first.
I explained that running a pub was exceptionally hard work and many people coming into it, often as a second career, find that it is not as easy as it looks. Like all of us, they are inclined not to blame themselves but to look for somebody else to blame. In such circumstances, the owner of the tied pub can be a first, and relatively easy, target. A complaint sells itself well in the community and the local MP’s surgery. This does not just apply to pubcos; I have had correspondence since Second Reading from people with free-of-tie pubs which have fallen on difficult times. When they tried to close them they were prevented from doing so by them being listed as assets of community value, so they were left with a bit of a pub they could not sell and a pub which they did not want to buy.
Finally on this opening section, I draw the Government’s attention to what I call the nuclear option. This is not available to the integrated companies because, as I explained, they need the pub estate to sell their beer, but it is available to pubcos. The pure pubcos could react to this parliamentary focus on rent only by becoming property companies. They could cut their overheads drastically by removing all the pub support, such as business development managers. This would boost their profitability in the short term; in the longer term, they would sell the better performing parts of the estate to other companies while closing and seeking alternative uses for the rest. This nuclear option—and I have no idea how likely it is—could dramatically increase the rate of pub closures. The amendments in my name—the focus of the intervention by the noble Lord, Lord Berkeley, a minute ago—are designed, as a whole, to avoid a dogma-driven solution and instead create, with the MRO option, a balanced and flexible structure which affords the best chance of keeping pubs open in as many places as possible.
After that very long introduction, I will whip through the amendments in my name. Amendment 69 seeks to delete Clause 41(6). As my noble friend said, this proposes a system of parallel rent assessments. These might have been of value before the House of Commons amendment introducing the MRO and associated provisions. Given that change, parallel rent assessments are essentially duplicates of what is proposed elsewhere. I am not sure whether they are needed anywhere, but they are certainly not needed in connection with the MRO option. I hope that my noble friend will explain why they are still there and how they are supposed to operate within the confines of the Government’s proposed new clause to replace Clause 42.
The remainder of the amendments in my name are all concerned with Clause 42—which, as my noble friend has explained, it is proposed to remove. The proposed new clause definitely answers some of them, definitely does not answer others, and the impact in the remaining cases is unclear. I would be grateful for my noble friend’s help in bringing clarity to these points. Amendments 70 and 71 are covered because they are about tied and managed pubs and my noble friend has made it clear that managed pubs form no part of the new regime. Amendments 72, 73 and 74 are important because they concern integrated businesses that brew beer and sell it through their own estate. It must be logical for the Pubs Code to permit such businesses to require their tenants to stock their own brands of beer and cider. If, under the code, a new MRO tenant could immediately turn round to the pub owner and say: “I am not going to stock your beer any more: I am going to stock the beer of your bitter rival”, this would have a disastrous effect on pub ownership.
Lord Snape
Has the noble Lord reflected on the wording of Amendments 73 and 74? Does he feel that, as presently drafted, they restrain the sale of products other than beer, even if they do not stop it? I agree with the principle, but is he happy with the drafting?
Lord Hodgson of Astley Abbotts
Well, the focus in these pubs is on the beer—and possibly cider—because that is what is really essential to the brewers. That is part of their output. If they cannot sell their beer through the tied pubs, that might be cutting off 30% of their market.
Lord Snape
No, the point that I am seeking to make is that if the amendment is accepted, it appears to stop the tenant selling anything other than beer.
Lord Hodgson of Astley Abbotts
My wording is focused on beer and cider and not on other products at all. I think the clause is clear. It has to be read in conjunction with the fact that the MRO tenant can be clear that he is free to purchase those beers or ciders wherever he wishes, not necessarily through the brewery, so there can be no question of unfairness of pricing.
Lord Snape
I am sorry to keep interrupting; I am asking him to define his own amendments here. Brewers do not only sell beers. They sell soft drinks as well, which are often part of the tie. His amendments appear to stop them from doing that. That is the only point I am putting to him. To be quite honest, I think his amendments are daft anyway, but they appear even sillier when one reads them.
Lord Hodgson of Astley Abbotts
There are two parts to this. The question is whether the tenant is being forced to take supplies at a price higher than he can buy elsewhere. The key part is to ensure that, if the tenant feels that he or she is not getting the fairest price from the brewery, he or she can buy elsewhere. They can go to a wholesaler or other sources. That is his or her protection. A protection for the brewery is that it can insist that its beer be sold. A protection for the tenant is that the brewery cannot insist that the beer be bought from that brewery. It can be bought wherever the tenant wishes. The brewery has to compete for it and make sure that they offer the keenest price to the tenant.
After that exchange, I hope that my noble friend will be able to clarify and reassure me that the Government intends to provide certainty of supply, and that this provision will form part of the Bill. This is a very important amendment for the future of the industry.
Moving to Amendments 75, 76, 83 and 86, these are essentially drafting points to clarify the timing on when an MRO offer has to be made. I think the new clause addresses them but I hope my noble friend can confirm this.
Amendment 88 amends Clause 42(9)(b), adding at the end,
“provided that the requirement to enter into a new tenancy or lease if such tenants choose the Market Rent Only option shall not be considered discrimination”.
The purpose of that amendment is as follows. It would surely be unfair for the tenant to use the MRO option as a means to evade his obligations under his existing lease. A tenant may choose the MRO option, but having made that choice, he must then sign up for it and it should not be discriminatory for the pub owner to require him so to do. Further, in taking the MRO option, the tenant is electing to agree to a normal commercial lease as defined by the British Property Federation. That is to say, an MRO lease does not contain any special underlying legal features unique to the sector. It would be most helpful if my noble friend would give some assurance on that point.
Amendments 79 and 89 are about “significant” and “unfair” and potentially have a greater impact. They concern the events that can trigger the requirement to make an MRO option available. Clause 42(6)(b) requires the offer of an MRO option,
“when the large pub-owning business gives notice of, or imposes, (whichever is the earlier) a significant increase in the price at which it supplies products, goods or services”.
This wording appears to be replicated in subsection (6) of the proposed new clause. Amendments 79 and 89 propose to replace “significant” with “unfair”.
The question is, what constitutes a “significant increase”? Is it the right word anyway? The reasons given for the introduction of the Pubs Code revolve around the inequality of arms between the pub owner and the tenant. The Pubs Code is intended to ensure fair dealing between the two parties and give the tenant redress when unfair practices have taken place. The word “significant” is a general term, not a particular one. The Oxford English Dictionary defines “significant” as important and notable. There might be many reasons for there to be a significant, important and notable increase in the price of what the Bill calls a “product, good or service” supplied to a tenant.
Lord Berkeley
Has the noble Lord thought about what the word “unfair” means? For the pubco, it is probably different to what it means for the tenant. It seems to me to be rather more wishy-washy than “significant”.
Lord Hodgson of Astley Abbotts
I am delighted that the noble Lord, Lord Berkeley, said that. I am about to come to the definition of “unfair” in about one second. I am talking about the importance of the definition of “significant” as important and notable. The price of beer might rise sharply because of: the cost of raw materials, such as hops; governmental action on alcohol taxation following medical advice; or increased delivery costs following price rises or road tax changes. It is surely not right to potentially penalise the pub owners alone as a result of such events, which have equal impact on all parties.
By contrast, coming to the point made by the noble Lord, Lord Berkeley, the Oxford English Dictionary definition of “unfair” is: not equitable; “unjust”; not according to the rules; partial. In my view, this precisely matches the concept behind the Pubs Code. It is intended to deal with situations that are inequitable—that is to say unfair—between the two parties: the pub owner and the tenant. I hope that the Government will think again about this wording before Report.
I turn to Amendment 80, which concerns the other events that could trigger the requirement to offer an MRO option. This formed part of my noble friend’s introductory remarks. Clause 42(6)(c) requires an MRO offer on the sale of a pub. This would be quite unfair to pub-owning companies. Pubs, whether singly or in blocks, can be sold for perfectly legitimate reasons. So long as the tenant’s position is protected, as it would be, the identity of the owner really makes no difference to the tenant. If this paragraph were to remain in the Bill it would freeze up the market for pubs and so discourage investment.
The amendment also seeks to remove another trigger point at Clause 42(6)(d): that, if a pubco goes into administration, an MRO offer must follow to the tenants. I think that my noble friend addressed this point in her opening remarks. The same objections apply to this: provided that the tenant’s position is protected, he has no interest in the affairs of the pub owner. If this paragraph were to remain, it would have serious consequences for the industry. First, pubcos would find it much harder to borrow. From a bank or lender’s point of view, the fact that, on administration, the relationship of the pub owner could change with every one of its tied pubs would make lending significantly more risky and, therefore, less attractive, thereby reducing the flow of investment to the sector. Secondly, if administration was to occur, the position of the creditors would be significantly worsened as value could be destroyed by the uncertainties that would result from an MRO option. I understand that the Government are proposing to withdraw those paragraphs. I would like my noble friend to give that commitment.
Amendment 81 is also concerned with a trigger point: Clause 42(6)(e), which appears to form part of the proposed new clause at subsection (6)(d) and subsection (9). This also covers the emergence of trigger events. In the proposed new clause, the definition of a trigger event is drafted very widely and is likely to lead to a good deal of uncertainty in its application and interpretation. That is surely not to the advantage of any party in these circumstances.
We have the well established procedure that has been used to determine appeals against rateable value; that is, whether there is deterioration in the circumstances of a property. Paragraph 2(7) of Schedule 6 to the Local Government Act 1988 lays out the matters to be taken into account. They include,
“matters affecting the physical state or physical enjoyment of the hereditament … the mode or category of occupation of the hereditament … matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there, and … the use or occupation of other premises situated in the locality”.
This definition sets out the criteria for when a change happens to a business and a rating reduction can be allowed. It is a well used and well understood definition that could, with advantage, be used to define when an MRO option could be triggered. I hope my noble friend will reflect further on this before Report.
I come now to Amendment 82 and the points made by the noble Lord, Lord Snape. This is an important amendment and I do not think it has been addressed in new Clause 42. The amendment inserts into the Pubs Code:
“The Pubs Code shall offer an exemption from the Market Rent Only Option for a mutually agreed period in return for a significant investment by a large pub-owning business in that tenant’s pub”.
This would mean that if a pub-owning business spends a significant sum improving a pub, the Pubs Code would permit an agreement with the tenant for a period during which there would be an exemption from the MRO option.
Those who successfully proposed the amendment to Part 4 of the Bill in the House of Commons see the tie as universally malign—the point that the noble Lord, Lord Snape, and I discussed a few minutes ago—an arrangement without merit and having no benefit. But this is not true. I was challenged by the noble Lord, Lord Snape, at Second Reading to produce evidence to support the continuation of the tie in any form, and this I will now do, with a couple of examples.
If I may, I will take the Committee to the Black Bull in Mansfield. I should make it clear that the tenant, Janice Shaw, has given permission for me to use it as an example. When Janice Shaw took the pub on, it was trading at about £7,000 a week as a result of a lack of catering facilities, which resulted in strict food service times and a rather poor food offering. The brewery invested £100,000 in the pub. It addressed kitchen standards and capacity, doubling the size of the kitchen by extending it into the car park. In addition, the pub was redecorated, with new signage and fixtures and fittings. The result is that the turnover is up to £10,000 a week—an increase of £3,000 a week or £150,000 a year. The brewery has increased the rent by £5,200, from £32,800 to £38,000, and is making, as it wished me to remind the Committee, £6,000 more from increased sales of beer. So from Janice Shaw’s point of view, she has £150,000 of extra revenue while the landlord has £11,200 of extra profit. It is doubtful whether a bank would have funded this. It is a messy lend, being part construction work, part purchase of fixtures and fittings, and part redecoration. Of course, a bank would not have had the same vision and confidence as to the likely success post-investment.
My second example is the Crown Hotel in Southwell, Nottinghamshire. Anna Guise is the current tenant. She took on the Crown in 2005. Although pretty well run, the site had become tired, resulting in the consumer often becoming confused; little food was being sold; the reliance on the town centre drinking circuit was evident; and there was a need to change to a more balanced offer in order to appeal to wider consumer groups. Anna Guise tried to invest in the site but could not afford the necessary capital and the pub remained in decline. To support the operation, the brewery reduced the rent and Anna’s father supported her with regular cash injections.
The brewery invested £84,000 in November 2013 without requesting any rental uplift. The cap ex addressed both internal and external standards, modernising throughout. It developed the back bar to include coffee, wine and a more rounded offer. A new menu was introduced and food was served all day. The evening drinking remained but the message to the consumer was that the feel of the building had been improved and fresh signage was introduced. Post investment, decline has been reversed and there is now 39% growth. That has enabled her to plan for a brighter future for her pub.
The basic point is that integrated pubcos that wish to sell will not invest £100,000, or even £84,000, if there is no guarantee that they will be able to sell their beer and if, after the money has been accepted and an investment has transformed the pub, the tenant will be able to say that they want to change the basis of the contract. The amendment would permit—not require—a situation in which if significant investment has taken place, of the sort that I have just described, the two sides could agree a period during which the MRO option would not be available. Without this, pubco investment will be significantly reduced, and I hope that my noble friend can give some reassurance on that point.
Amendments 84, 85 and 87 are drafting amendments to Clause 42(8). Subsection (8) is concerned with the 90-day assessment period during which an independent assessor reaches a judgment on the terms of the no-tie agreement. It is important to be clear what happens during that 90-day interregnum. It must be made clear that the tenant must comply with the existing contract until the new MRO contract comes into effect.
Finally—no doubt much to the relief of the Committee—Amendment 89 is paralleled in large measure by Amendment 83A in the name of my noble friend Lord Borwick, concerning the rather unattractively named SCORFA—special commercial or financial advantages. I will leave my noble friend to address that and how it will fit into the MRO world post the break of the tie.
I recognise that I have thrown a lot at my noble friend in the last few minutes, although I hope that her officials were already aware of my direction of travel. It is important that all parties to the debate get clarity on the Government’s position. I am talking not about clarity on the broad principle—we all understand the MRO option—but rather on the more granular aspects of how the policy is intended to operate and what the consequences are likely to be.
Lord Berkeley
In this grouping, my Amendment 69A is the next one that is not a government amendment, so if it is convenient for the Committee I will speak to that and try not to delay the Committee too long with comments on the amendments from the noble Lord, Lord Hodgson. If I then have comments after the Minister has spoken, I am sure she will be willing to accept them.
I want to put on record that it is great shame that the Government have somewhat changed what was agreed in the House of Commons. I see the government amendments, and those of the noble Lord, Lord Hodgson, as putting the whole issue into the long grass, which is very sad. Rather than having the MRO option in primary legislation, which I thought was excellent—although obviously there is detail that we need to talk about—we could be left for many years with people opposing any secondary legislation that comes in and then debating it at that stage. Who knows what will happen then?
Amendment 69A is a probing amendment about why the Government, or the House of Commons, chose a maximum of 100 pubs rather than 500 pubs. I have had some useful discussions with St Austell brewery in Cornwall, which comes somewhere in-between. I have also talked to many of its tenants and others, and many who I talked to would be pleased to be able to renegotiate under the MRO. The family brewers, including St Austell, believe that they provide a much better and friendlier quality of ownership than the very big ones. I suspect that they are right in that.
Lord Hodgson of Astley Abbotts
On Amendment 80, if it were a retail outlet such as a high street store, there would be no reason why a company should not sell its retail store to someone else. Why should a brewery be any different?
Lord Berkeley
It is a question of what would constitute selling and what would be transferring it to a company in which the brewery had 100% or 99% of the shares. It is a grey area. The noble Lord may be right but I do not see that as a reason for having his Amendment 80 or any of the others. We can go on debating this.
I still think that Amendment 82, in the name of the noble Lord, Lord Hodgson, is trying to say that once the tenant has started the negotiation he has to finish it. That is very unfair on the tenant because, while he may have said that he wanted to start it, if he is not happy with the outcome it is surely reasonable that he would not have to conclude an agreement. The short answer is that he will not stay there long and will suffer severe financial hardship.
I could go on for a long, long time, but I have one last comment on Amendments 73 and 74. I did not really understand the noble Lord’s explanation to my noble friend Lord Snape. If his amendment would enable the tenant to buy his beer and other drinks at whatever price he chose from whomever he chose, why are we going through all the rigmarole of all these different adjudications? Just let him do it now. I am sure that I have it wrong, but it would be nice if at some stage the noble Lord could explain the amendment in words of one syllable.
Baroness Wheatcroft (Con)
My Lords, I speak in favour of my noble friend Lord Hodgson of Astley Abbots. First, given the in-depth knowledge that he has shown on the subject, I hope that he is a member of our Catering Committee because he would be an asset there. I shall speak briefly because this is complicated and there is a lot more to go. We need to spell out that if a tenant opts for a market rent only deal, there should be a completely new agreement between the tenant and the landlord, and that should take in everything, from investment to the length of lease—it is a new lease, effectively. We should spell out that there is freedom to renegotiate there.
On Amendment 80, I completely concur that, for the ongoing good of the business, it is important that an MRO should not be triggered simply by a sale or an administration. The Minister indicated that she saw things the same way, and I hope that we will hear that confirmed.
Lord Snape
My Lords, to respond to some of the amendments of the noble Lord, Lord Hodgson, I say in passing that although, at my request, he came up with some examples of landlords being happy with the tie, they did not seem to me typical of what takes place in the industry. I do not want to repeat to the Committee anything that I said on Second Reading, when I detailed some of the problems that my daughter and son-in-law have had. Their treatment by Enterprise Inns is a lot different from the cases outlined by the noble Lord when he moved his amendment. Similarly, on Second Reading, with the permission of a couple called Dawn and Michael Shanahan from the Bulls Head in Old Whittington near Chesterfield, I read out a letter showing how they had been treated, which, I am sure that the noble Lord would agree, is a lot different from either of the examples that he gave to the Committee this afternoon.
The fact that more than 70% of pubco tenants have expressed their unhappiness to CAMRA indicates that far more of them have been and are being treated as in the two examples that I gave on Second Reading than in the two examples that the noble Lord has given to the Committee today.
I thought that the noble Lord was seeking to intervene; he looked a bit restive. I thought that he was going to come up with even more examples of happy tenants, but there are not that many of them around. He has probably exhausted the lot of them with those two.
Lord Hodgson of Astley Abbotts
The noble Lord has provoked me enough. I was sent a book this thick by some of the pubcos containing responses from tenants. Have I leafed through it? Do I want to bore the noble Lord and the Committee by producing it? Certainly not, but a large number of tenants drawn from all around the country were explaining how satisfied they were with the way that the tie operated. The ALMR has written to Members of the Committee to say that the tie works for its members and that it supports it.
Lord Snape
The first question about that association, whatever it was he said, is: who is funding them in the first place? Let us leave that aside. The noble Lord tells the Committee that he has a very thick book of completely satisfied tenants. Again, is there some reason why CAMRA did not consult them? The figures are there. I will send the document across to him. Oh, he does not want it—he indicated dissent. If there is such a crowd of happy tenants up and down the country, CAMRA would surely have spoken to them. I hope that I take both sides of the Committee with me when I say that CAMRA is a trusted and respected organisation on these matters. The fact that it records a dissatisfaction figure of more than 70% indicates that the bulky document referred to by the noble Lord, Lord Hodgson, may not be as laudatory about the pubcos as he indicated.
Let us look at some of the amendments in the noble Lord’s name. It is impossible to read, from the Minister’s expression, whether or not she favours them. Sometimes it can be an advantage sitting on this side, as Ministers are not always as inscrutable as the noble Baroness. Given some of the obvious failings in these amendments, I cannot believe that the Government are about to accept them. The noble Lord has not told us why in Amendment 69 he wants to take out the parallel rent assessment, but I presume he—or those who have briefed him—has a good reason to do so.
Amendments 70 and 71 are concerned with the definition of a large pub-owning business as one with 500 tied pubs. I do not know whether the Minister can understand what the noble Lord is getting at, but I am afraid I do not and I find those amendments pretty confusing. I ask for clarification from the noble Lord on Amendments 73 and 74 because they seem to refer specifically and solely to beer, whereas we know that the tie includes lots of other products, including soft drinks. They are excluded under the terms of the amendment, presumably, and it would have been useful if the noble Lord could have expanded on that point.
On Amendments 75 to 82, it is interesting that the former editor of the Sunday Telegraph is in favour of denying MRO to existing tenants. She did not particularly say why but the newspaper has, sadly, sunk in its popular appeal since she left the editorship. It would have been helpful if she had given some reason why she feels that existing tenants should be denied MRO. If one combines those amendments with Amendment 69ZB, there would be neither code nor MRO for existing tenants. I am not sure whether the noble Baroness is in favour of that too, because she did not tell us. I can understand that the noble Lord, Lord Hodgson, and—I put this as delicately as possible—those he associates with might be in favour of excluding existing tenants from both the code and the MRO, but I am at a loss to understand why the Committee at large would wish to do so.
Amendments 84 to 87 are also in the noble Lord’s name. In Amendment 85 there is no time laid down for the period of negotiation between the tenant and the pubco. If a tenant is in financial trouble and the pubco knows it—and, of course, it would—dragging on the negotiations would mean that the tenant went under anyway, regardless of the final outcome. I am sure that was not the intention behind the amendments. If I have provoked the noble Lord to his feet again, I would be delighted to give way.
Lord Hodgson of Astley Abbotts
I understand that the noble Lord wishes to find fault with my proposals. The amendment relates to Clause 42(8)(e), which refers to,
“at the time of the three month assessment”.
The question is, where in the three months? All my amendment does is change this to, “at the end of the three month assessment”. All I wanted to do was to get clarity so that the tenant—presumably an MRO tenant—or the pub owner knows when the events actually happen. It must be in everybody’s interests to have clarity about the sequence of events and how everything fits together, whatever one’s view may be about the legislation as a whole. That is my only point.
Lord Snape
I am sorry that the noble Lord feels that I am out to find fault with his amendments. He should not be unduly sensitive. I was under the misapprehension that that is what Parliament is about: maybe I have got it wrong. I find fault with his amendments first because they do not do what he thinks they will—or at least I hope that they do not—and secondly because they are unfair, particularly to existing tenants. That is one of the reasons why I have taken the view that I have. I would like to know the Minister’s view on the amendment, particularly the question of denying the MRO to existing tenants. As far as Amendments 88 and 89 are concerned, if the Minister accepts them, she would be discriminating against existing tenants and I hope that she will reject them.
There is a considerable debate to be had on new Clause 42. I am not proposing to start that now. I hope that the Minister will reply to these amendments and bear in mind that as far as the general point of new Clause 42 is concerned, we would seek to have a substantial debate on its content aside from the amendments that we are currently discussing.
Viscount Younger of Leckie (Con)
My Lords, I start by saying how pleased I am to hear from my noble friend the Minister that the spirit and intention behind today’s debate in Committee is to have a general debate and to cover the large range of amendments. I wish, however, to speak to Amendment 82, which I call the exception clause to the MRO—or the clause to permit an exception, I should say, according to my noble friend Lord Hodgson. I support the amendment, which is in the names of my noble friends Lord Hodgson and Lord Ridley and the noble Lord, Lord Howard of Rising.
I declare an interest—perhaps a rather tenuous interest—as the scion of a brewing family. We owned Younger’s of Alloa, based near Stirling in Scotland, and my father—the late George Younger, the fourth Viscount—was a seventh-generation brewer. He started work in the vats before entering Parliament in 1964, still at the tender age of 32. His father—my grandfather—sold the company in 1961 to Tennent Caledonian. He was one of the first brewers—if not the first—to produce cans of beer with pictures of ladies on the outside, presumably with the intention of increasing sales. The Falkland Islands was one of the export markets.
Down to business. I support, as far as it goes, the intention of the Government in accepting the will of the other place to give tied tenants of large pub-owning companies the right to go free in certain circumstances. The devil is in the detail of the definition of “certain circumstances”. This requires further debate, which we are having today. I know that noble Lords are keen to ensure that the law ends up being robust. I believe that there should be a balanced market, in which large pub-owning companies have all the necessary reassurances that their support of and investment in pubs are viable, and tied tenants have a fair deal, however that might be defined, where there is enough flexibility for them to run their businesses and not be too restricted on purchase of supplies or price, for example.
I note that the intention is that the statutory code and adjudicator will address the imbalance of power in relation to the 13,000 tied tenants of the six pub-owning companies with 500 or more tied pubs. There is good intention behind the further protections given by the Government in the amended MRO clauses by the adoption of certain trigger points, which have already been mentioned by my noble friend the Minister: first, at rent review or five years after the latest one, whichever date is sooner; and, secondly, when the tenant renews their lease.
The two further trigger points that have been mentioned are: first, when there is a significant or unexpected increase in the price of the tied products supplied to the tenant; and, secondly, when an economic event occurs that is beyond the tenant’s control and has a significant impact on the tenant’s ability to operate the pub. I am aware that there will be a consultation on those last two triggers, which I welcome. But I am concerned that the Government may not be going far enough to reassure the pub-owning companies, and I ask my noble friend the Minister to consider a permit to have an exception from the MRO for a particular period of time in the case that a pub-owning company makes a significant investment in that pub. This is for the following reasons.
Pub-owning companies have to be shown that their investment will be secure, viable and provide a satisfactory rate of return over a period of time. In the south-east, for example, there have been investments of as much as £300,000 to £400,000 in pubs where the rate of return is calculated over a period of time—often a long period of time, well beyond five years. A trigger point, however well intentioned, creates a chilling effect. It may, at worst, stop an investment and, at best, it will cause the pub-owning company to lower the investment and perceived risk if the rate of return it needs to secure is over a shorter period because there is a trigger date looming. This is a clear unintended consequence which I am sure the Minister will have considered.
Having alluded primarily in my remarks to funds for developing or renovating pubs, which my noble friend Lord Hodgson also referred to, let us also consider another very important point for pubs: cash flow. Tied tenants are unquestionably grateful for the important financial support during fallow periods of sales, which typically occur for on-trade beer sales from January to late February and October to November each year. Without an MRO, the tied tenant is paying less rent, thereby lowering his annual fixed costs as he will be buying less beer from the company. Such fallow periods include periods when roads may be unexpectedly closed by the council or a snowstorm prevents custom. A trigger point that disfavoured the pub company could mean that there was less room for manoeuvre in negotiations.
Pub companies invest £200 million across the sector each year. Banks are not yet stepping up to the plate to support pubs sufficiently. They still perceive the pub sector as a risky bet when it comes to lending. A director of a finance company was recently quoted as saying that a considerable number of loan applications from viable SMEs were being declined by the high street banks because the application “fails to meet the criteria” or is “outside the bank policy guidelines”. We have all heard this in other, unrelated debates.
Lord Snape
Can the noble Lord tell us of any pubcos which are financially successful under the present arrangement? At present, business is as bad for the pubcos as it is for the tenants. No one is making a great deal of money.
Viscount Younger of Leckie
I thank the noble Lord, Lord Snape, for his comment, but I would like to make the point. The gist of my argument is that at the end of the day, the pub company has a choice about where it invests its money. It needs to be sure in investing its money—which it would obviously want to do to support each and every pub—that it is tied down to an amount for a particular period. The pubcos have their shareholders and their employees to think about in terms of that investment.
Lord Snape
I apologise for interrupting again. My point was in response to the noble Lord’s comment about the banks being reluctant to lend to SMEs. I presume he puts pubcos into that category. Is that not because the model has proved to be unsuccessful and, from a financial point of view, would amount to a very bad risk for the bank?
Viscount Younger of Leckie
We perhaps need to talk about individual cases, but it is generally perceived that because of the crisis in 2008, banks have changed their lending criteria. Naturally enough, many pubs are small businesses and they are suffering in the same way as other non-pub small businesses. I am making a general point about the banks’ ability to lend.
Lord Snape
I am sorry to interrupt the noble Lord for the third time. To take two examples—Enterprise Inns and Punch Taverns—the big pubcos have declared appalling financial results. They are selling off the pubs because they are in such a financial mess. It is not surprising in those circumstances that they find it very difficult to borrow money.
Viscount Younger of Leckie
I note the noble Lord’s point. I would like to illustrate some of the amounts that these pub companies invest. I mentioned earlier that they invest £200 million across the sector each year. One of the larger pub companies has estimated that, had the MRO been in place without an effective opt-out, the £30 million of capital investment which has taken place in the last 18 months would not have happened.
To illustrate how this investment affects individual businesses, another pub company recently invested £245,000 in one of their pubs in Nantwich in Cheshire. This investment created 10 jobs and took the turnover from £145,000 per annum to £330,000. A similar sum was invested in a pub in Wigan, which again boosted turnover from £250,000 to £345,000 and doubled the number of jobs. These are just two examples to add to the ones given earlier by my noble friend Lord Hodgson, of how tied pub companies invest in their estates every year to the benefit of both parties through the tied contract.
I conclude by saying that I hope the Minister has listened carefully to what I have said about the investment angle for pub companies, while not forgetting that we are talking about the livelihoods of tied tenants as well. That is just as important in terms of being fair.
Lord Berkeley
The noble Viscount, Lord Younger, has given two more examples to add those of the noble Lord, Lord Hodgson, of the happy tenants who have lots of money. He cited one company as investing £30 million in pubs which would not have invested if the MRO had existed. What assumptions is he making about the fair rent that would result from an adjudication under those circumstances? Is he assuming that the rent would stay the same or that it would go up to compensate for the profit that the breweries would no longer be making when they sell beer or soft drinks? The figure of £30 million is pretty meaningless without knowing on what assumptions it is based.
Viscount Younger of Leckie
I take the noble Lord’s point, but I spoke in support of my noble friend Lord Hodgson’s amendments on the grounds that there would be an exemption from the MRO.
Lord Hodgson of Astley Abbotts
The issue is that every company has a target return on capital. If it is to make an investment, it wants to make a return on capital and the company will set a target. The problem is that if you are going to invest your £30 million, you want to know what your return on capital will be. One issue that relates to return on capital is what will be the contractual relationship. Therefore, before you make your investment, you want to know what the end play will be, because that means that you can be assured—if it all goes well; it does not always go well—that you will get that rate of return on capital. That is the background to the figure that my noble friend is giving. Companies want to be certain that they have targets for the return on capital which they need to meet.
Lord Berkeley
With respect, “They would say that, wouldn’t they?”. I am glad that the cavalry has been brought in to help the noble Viscount, Lord Younger. The noble Viscount says that that £30 million would not be invested. “They would say that, wouldn’t they?”. We could do with some figures.
Lord Hodgson of Astley Abbotts
The truth of the matter is that every time an argument is produced to point out how pubcos operate as commercial enterprises, the noble Lord says, “They would say that, wouldn’t they?”. Capital investment budgets are set to be achieved, with certain target rates of return required to justify them. Otherwise the value of the stock—or the value of the company, if it is a private company—falls. If you do not have a rate of return on your investment higher than the cost of capital, the value of your business is falling.
You need to know what you are getting into, what your contractual relationships are and how long they will last. You cannot be certain, because, with the best will in the world—taking the example of pubs—some pubs do not do as well as one hopes. It does not work because the location is not right, the tenant is not right or the arrangements are not right. The idea is to hit the target. With the greatest respect to the noble Lord, he must understand that unless your rate of return on capital is higher than your cost of capital, you are destroying the value of your business.
Lord Berkeley
I am sorry, my Lords, but I will try just one last time. The rate of return could just as easily be calculated on the basis of the rent that the tenant will be paying once he has been through the process, because that will be fixed and the company will know it. That is the rate of return, whether the company likes it or not.
Viscount Younger of Leckie
Having been listening to my debate, I should conclude. I should answer the question appropriately. The clause is intended to provide an exemption which would allow an unspecified time for agreement to be drawn up because of the perceived investment to be given by the pub company.
Lord Whitty
My Lords, I have a number of amendments in this huge group. I should point out that none of them applies to Clause 41, which, strictly speaking, is what the noble Baroness’s amendment relates to, but I have a number that apply to Clause 42: Amendments 69ZC, 71A, 72A, 74ZA, 74ZB, 87A to 87C and 89ZA. However, in view of the way this discussion is going, and my earlier points, I hope the Committee will forgive me for straying somewhat wider. For the avoidance of any doubt, I have no interests to declare, ancestral or otherwise, except as a consumer—and even then, not in January, which is probably why I am in such a bad mood.
The Committee probably should be grateful to the noble Lord, Lord Hodgson, for explaining the structure of the industry and how it works, and those situations where the tied arrangement has worked very well for both sides, but it was an explanation that was really from the point of view of the large pubcos. He also explained the context in which they work—the economic context, the social changes and so forth—and that the whole industry is under some significant pressure. But my concern in this area is for those small businesses—and they are small businesses—of the tenants who are in tied or partially tied accommodation. This Bill is called the Small Business, Enterprise and Employment Bill; it is not called the big brewers’ restrictive contracts and exploitation Bill. Were it so, it might have been closer to what some Members of the Committee appear to be wanting.
The Minister and the Government have to recognise that the Bill we are dealing with, and Clause 42 as brought over from the Commons, is a result of a quite unusual political event and a quite unusual level of lobbying, if you like, on behalf of those small businesses we are talking about. Actually, in substantive terms, it is the first major defeat that this Government have suffered as a coalition. I think, therefore, that we should take seriously what the Commons have sent to us rather than trying to redraft virtually the totality of it, even though the Government, as the Minister has made clear, accept that MRO should be in there. I would also point out to noble Lords that this is not saying that this is the end of tied tenancies; it is simply putting those tied tenancies on a fairer basis. I know that there are those—I suspect my noble friend Lord Snape is one of them—who wish to abolish tied tenancies in total. But this is in a sense much more of a compromise position.
Lord Snape
I would be grateful if my noble friend would not portray me as being a raving left-winger on these matters. I am not seeking to abolish the tie completely; like most people, I just want a fairer system than we have at present.
Lord Whitty
In that case, my noble friend and I are on exactly the same point in the ideological spectrum—as ever. We are discussing these as amendments to the pre-existing text that we received from the Commons. Government Amendment 89A effectively rewrites that proposition from the Commons.
At Second Reading the Minister said on behalf of the Government that there were things that needed to be done to ensure that the proposition was going to be workable and did not have unintended consequences. I understand that, and that means there are parts of the noble Baroness’s amendment that I would be in favour of. But under the amendment as we now have it—and we have not had it for very long; the fact that we are debating it today puts us in some difficulty given that the consultation hitherto, as I said earlier, has been somewhat attenuated—the Government’s changes in detail do a number of things. They delay the implementation because whereas the proposition adopted by the Commons set the situation on the MRO in primary legislation, therefore bringing it into effect at the earliest point when the Bill came into law, we are, instead, reliant on the drafting of the code and the bringing forward of secondary legislation.
The Government’s amendments also change a number of the trigger points, thereby diluting the effectiveness of the MRO proposition. Amendment 89A changes the threshold because it confuses the issue of tied pubs with all tenanted pubs. The Pubs Code ought to relate to all relationships between the pubcos and their tenants, whether they are tied or not. The MRO relates to the tied pubs but the threshold of defining who this applies to should be the size of the company as a whole, which includes all sorts of tenancies. Restricting it to tied tenancies lays open the possibility of them ending one or two ties to get below the 500 mark. I do not suppose I could prove it in a court of law, but there are indications that some of the pubcos are looking to split their company structure so they would not hit the 500 mark for tied tenancies. We ought not to lay that temptation before them. The Government’s proposition fails to recognise that there is a distinction between how a Pubs Code—which I think we are all in support of—operates and the MRO option, which relates only to tied tenants. I hope, therefore, that my propositions do a number of things. They separate out the issue of the code from that of the MRO. The code is set out clearly in Clause 41 and, at the beginning of Clause 42, the MRO coming into effect is not dependent on the code. The amendments in my name would also change the definition of the threshold, although most of that comes up in a later group, in relation to Clause 66.
I do not like the procedure on this Bill because the Government have misjudged the mood, not just in the Commons and among those tied tenancies and other organisations which have pressed for this. They have succumbed unnecessarily to pressure from the larger breweries. There is no need for some of the changes to the proposition that we have received. There is, therefore, a need to reinforce those rather than go in the opposite direction, which the Government’s amendments are doing. What came to us from the Commons was not perfect, but the Government are proposing to make it worse. For that reason, we all need to take a step back and look at what we agree on in the original proposition, the amendments we are discussing today and the Government’s proposed complete redraft. We need to see whether we could, in discussion with all sides of the industry, come up with something closer to an agreement in time for Report or, possibly, send it back to the Commons and let them sort it out.
We are in an unfortunate position today. This is a complex group of amendments and none of us understands all the issues. Whatever comes out of this is going to be pretty unsatisfactory and not a good basis on which to go to Report at this point in a parliamentary Session. This does need sorting: it needs to be workable and I agree with the noble Baroness that we do not want to see unintended consequences. However, we need to be clearer as to what the consequences are that have led to the propositions in the Government’s redraft.
I hope that the Government take a step back and talk to everyone concerned. The easiest way to do that would be to withdraw all the amendments today. If the Government will not do that, we are probably in for a fairly rocky time between now and Report. If we have not met at least the overwhelming spirit of what the Commons decided, the Bill will be back in the Commons and we are in for ping-pong on the Bill. I cannot believe that the Government’s business managers really want that. There is a way to deal with this quietly and consensually. It may not work, but it might, and it would get the Government out of an awful lot of trouble. As usual, I am trying to be helpful to the Government, and I hope that they heed my words and those of my noble friends.
Lord Borwick (Con)
My Lords, I want to speak to Amendments 82A and 83A and thereby take in my noble friend’s Amendment 88. Amendment 82A concerns the amount of time for the negotiation of the MRO. In the original Bill, it was stated to be 21 days, which I think is too short. The difficulty for identifying a time for any negotiation is that the time required at the beginning of the process, when it is new to both parties, will be different to the time to produce a market rent in a negotiation in, say, five years’ time, when everyone knows what the rules are. When the lawyers are helping both sides with their arguments, it could take substantially longer than 21 days.
My noble friend may say that that will come out in the detail of the Pubs Code and the statutory instrument, but how will that time be judged? Will it change from the beginning of the period and a few years’ time?
Amendment 83A concerns the problem that under the Bill and the government amendments, existing tenancy agreements would continue. So the lease would continue in all respects other than in the rental. That brings up the difficult subject of SCORFA—an acronym standing for “special commercial or financial advantages”, and is designed not to flummox the great people of Hansard but to refer to all the advantages given to the pub tenant, all the way down to providing glasses, ashtrays and beer mats.
If the lease is being changed to rent only, it is unreasonable to leave the landlord, the pub owner, in the position of providing those benefits when he is not providing the rent. My noble friend may say that all those points will be dealt with in the statutory instrument that forms the Pubs Code, but it will be subject to consultation. What if the result of that consultation is a mass of people saying that it should not be included? If so, will we have landowners subject to a lease that is not right, where one important clause has been removed?
Surely my noble friend will agree that a matter as reasonable and important as this should be in the Bill and bring forward government amendments to deal with the issue.
Lord Stoneham of Droxford (LD)
My Lords, I worked for most of my life in a sector where we were often referred to as being in the last-chance saloon—the newspaper industry. It is perhaps a more appropriate analogy to make to the pub sector and its owners. Many attempts have been made to grapple with this issue. My noble friend mentioned four Select Committees. There have been unintended consequences in profusion as we have tried to deal with the issues over the past 10 or so years. We have to get it right this time and anticipate, where we can, any actions that could try to get round the intentions set by Parliament.
We are talking about small businesses. At its heart, what we are trying to achieve is to be in favour of free and fair competition. This means that ties must not create unfair pressures on individual publicans or give too much power to large companies. That is what this is about. When Parliament started to look at the whole beer industry over the last 20 or 30 years, it never anticipated the existence of pubcos. We can concentrate on them, but pubcos are already property companies that have overleveraged themselves—as, indeed, have many regional newspaper owners, as I know from experience. They are finding it difficult to survive and to invest. I will come on to that in a moment, because it is at the root of a lot of problems.
With their amendment, the Commons agreed to enshrine in law the principle that the tied licensee should not be worse off than a free-of-tie licensee. That is what the Commons laid down. I accept the concerns mentioned by the noble Lord, Lord Whitty, that we do not want to go down a route where this is watered down and put into a consultation period of 12 months, and then find, as we emerge from the long grass, that it has been watered down even further. That is my concern. There are a number of weeks still to look at this. As we move to Report our task is not to water down what the Commons decided but to improve the workings of the code and the Commons’ intentions, to enable our pubs to be more sustainable, able to be improved and invested in, and to protect community institutions run by enterprising and hard-working publicans.
Over the last few weeks I have been pleased to visit a number of pubs owned by Punch and Enterprise. One visit was at the instigation of the management of Punch. I have to say that no lunches were involved, but they knew the way to my heart: they arranged for me to see the pub that is the principal pub of Portsmouth football supporters. I also visited some tenants on their own as part of my due diligence looking at aspects of the Bill.
I will deal with a number of particulars that are being raised in the amendments. First, let us look at the threshold. There is a change from the threshold being “all pubs” to 500 tied pubs. As the noble Lord, Lord Whitty, indicated, the concern there is that it creates a distinction that might encourage companies to move tied pubs out of their remit so that they can get below the 500 limit. The original definition was, I think, based on the size of the company and the power that they are likely to have in the marketplace. There was also a concern to protect the smaller, family-owned brewery companies and their tied pubs. We are concerned about this change because we fear that it will provide an incentive for companies to reduce their number of tied pubs.
We also recognise that, in the leasehold model, there is a lot of movement between tied and non-tied pubs, where exploitation of market power can emerge. That is why it was thought important, in the original Commons clause, to link the two, so that the 500 threshold was across the board and not just related to the tie. The other aspect—there is a division here that the Minister should confirm—is that we are assuming that the 500 limit will be confirmed and can be changed, if necessary by affirmative action, if the response is that it is used to contrive ways round the threshold. However, the actual figure will not be enshrined in the primary legislation. I would like confirmation on that.
There are further issues on definition. The proposal is fundamentally to protect tied pubs but once the market rent option is exercised the tenant effectively will not be able to access the protection offered by this pubco. Someone said earlier that the rights of tenants will be preserved, but if they move from a company that is covered by the 500 threshold to one where it is not, they will lose some of their rights. We need to ask the Minister what her current thinking is in ensuring that some ongoing protection continues if a tenant moves to the market rent option.
We are concerned about the removal of the sale and the administration trigger points, as these are precisely the avenues that anybody trying to get round the legislation will go down. I also understand the concerns, particularly with the complication on the administration side—we all know it is a complex process—but speed is of the essence. We need to look at what protection is available to the tenant in sale and administration. If a company decides to sell and move a tied pub into another company that is below the threshold they will lose the market rent option right. Tenants will lose a right by that move. Is there some mechanism that can continue that protection after the sale for those tenants in that situation?
Similarly, on administration, I understand the complications. I have worked in that area at times in my career when companies—not my companies—have been in administration. I know that speed is of the essence and the complication of the MRO is an issue. Again, if somebody is a tenant in a company that goes into administration and moves into a company that no longer has the protection of the threshold, will they lose their rights? I think they will at the moment, but if we are to change the triggers we must look at that when we consider the reformed clause.
Another area in which concerns have been raised is the parallel rents assessments. When a tenant has the opportunity to go down the market rent option, the whole point of the parallel rent assessment is that it improves the information for the tenant in terms of helping him to make a decision as to his direction. Doing away with that for existing tenants needs to be looked at.
I turn to the amendment tabled by the noble Lord, Lord Borwick. I understand that there are two stages. There is a 21-day period when someone is trying to get agreement on the market rent option. If he goes down that route he has 90 days for it to be set and organised. But if we turn the 21 days into 90 days there will be a six-month period of uncertainty, which clearly is not acceptable. In the initial negotiating period both parties might agree that they are making progress and are moving towards an agreement but they cannot meet the 21 days, so they could mutually agree to extend the period. That would be quite normal in a legal process in business. That is another area that should be looked at.
Something I noticed when I visited those pubco pubs was that some publicans had investment or were about to have investment. They are the tenants who are most likely to be pleased and probably in line with this, but not altogether. We need some protection for investment in the sector. As we go down the route of the market rent option it will have to reflect the investment that has been made in the pub.
I assume also that if the pub has had an investment, some agreement will have to be made on exactly how that would be funded. The tenant might well want less of an increase in rent and more on the wet rent because that is a marginal cost, as opposed to a fixed cost. These are quite complex issues but there is nothing stopping protection where the market rent option is a possibility; if there has been investment, it would normally be reflected in the market rent that is set.
With those comments, while I did not speak in our initial debate, I say that I am concerned. I had access to the order of the amendments only at about 12 o’clock today, so trying to prepare how the hell one was meant to reply to this debate was difficult when one did not know what the order was. A lot is required in working out what the final Clause 42 should have in it. I shall listen carefully to what the Minister says but, as I imagine we have four weeks or so before we come back to this on Report, we will have to have a consultation on the detail so that we get this right.
Lord Mendelsohn (Lab)
My Lords, I want to clarify one thing in response to the comments of the noble Lord, Lord Hodgson, about my dear and noble friend Lord Stevenson of Balmacara, who is not in his place. He does in fact drink at the Crown; the alternative option is the Red Lion. They both happen to be privately owned, so we will leave that one there.
I am grateful to my noble friend Lord Whitty for helping us to focus on the context of this debate. There is little doubt that a small business Bill is the perfect location for these provisions. During the discussions we have had on supporting small business, all sides of the Committee have raised issues to ensure that small businesses are given the support to allow them to operate efficiently and to have the right level of protections and opportunities for commercial activity, employment, growth and development. In the area that we are addressing today, we are looking at issues of asymmetric information, imbalances of bargaining power, behaviour and commercial restrictions—all issues that we have discussed in different ways on parts of the Bill.
We believe that the Bill should be a key part of the UK’s growth requirements, to be achieved by allowing commerce and markets to flourish and addressing impediments to functioning and competitive markets. This is why we are keen to support it. Commercial change, innovation, transformation and adaptability are crucial for the UK. With all the good that there is within the UK pub sector—although there has also been some bad, which many colleagues spoke to so eloquently at Second Reading—it is a market that should see itself as being enabled by the proposed legislation and the measures that we are debating today. We certainly see the market rent only option in this context. It is a firm pro-business and pro-market principle that we are pleased to see in the Bill.
Labour has long argued for a market rent only option as the only way of guaranteeing the principle that tied tenants are no worse off than their free-of-tie counterparts. We have brought the issue to a vote in the Commons four times. Under the original Bill, licensees would merely have had the right to ask their pub company to show them how much their rent would be under a free-of-tie scheme. This was problematic, as all the information would be held by the pubcos; all the calculations would be crunched by their accountants and all the final estimates made by them. Even if they then revealed that the landlord would be better off free of tie, they would have had no legal right to demand this option.
The Government’s own response to a consultation on a statutory code, printed in June, concluded that,
“a mandatory free-of-tie option … is popular with many tenant groups and might arguably offer the simplest way of ensuring a tied tenant is no worse off than a free-of-tie tenant”.
However, for reasons known only to them, it took a new clause and a massive Back-Bench rebellion for the Government to come to what in our view was the right conclusion. Now that they are there, we are very pleased that they are working hard on how we can make this work. The proposed new clause puts the right principles back into the Bill. It delivers a mandatory free-of-tie option that allows publicans to buy their beer on the open market. The Business, Innovation and Skills Select Committee concluded that this was the only way to ensure that landlords would be no worse off than if they were free of tie, as it would force pubcos to offer tied tenants the best deals.
We are in a somewhat complex position. We have had amendments tabled very late and I saw the impact assessment only on my way into the Committee today. It is not simple and straightforward, and the lack of time to adequately identify where we are on all these matters has generated a great deal of examination and commentary. Some aspects were expected, but there is a great deal of concern about the approach in detail. I look forward to listening to the comments and explanations that the Minister is going to give. I expect she will have quite a bit to do today. We should make it clear that although we are supportive of the Government’s approach—
Lord Hodgson of Astley Abbotts (Con)
The noble Lord makes a very important point about what will be in the legislation and what will be in the code. This point was made by the noble Lord, Lord Whitty, and we are all concerned about it. If there are two sides to the argument, both sides are suspicious that consultation will mean that they lose out one way or the other. Have the Opposition reached a view on how much can be in the code and how much in the Bill, or are we still working that out?
Lord Mendelsohn
As I am pressed, there are a number of details where that balance is the issue we have to address. Perhaps we need some more comments from the Government in explanation of the current provisions. We are also looking for the direction of travel to help give us a real sense of what should and should not be.
As I said, although we support the Government’s approach, we take the view that some of their drafting has lost the strength and essence of the Commons amendment. We are keen to ensure that what is passed is workable and sensible and we are happy to work together on this. However, to be fully satisfied, we need to see an evolution on Report, in a couple of important respects. We are keen for an indication that the Government would show some willingness to consider changes. There is a very important need to provide detail and direction. There are some issues which should be dealt with in the Bill but others whose place is in secondary legislation. We will be looking for a strong indication of the direction of travel to provide us with the right assurances that we will be looking at the right sort of areas and issues at the next stage. There is also a requirement for clarity in what we would describe as “dual-use clauses” where the drafting suggests that a measure could be used for two diametrically opposed purposes. In that regard, it would be useful if the Government would give an indication of how it is used for one and not the other.
We understand the concerns of the many different parts of the industry that variously have particular and shared issues with the Bill as it stands. We appreciate their need for greater clarity to ensure that they can make decisions and reasoned evaluations. We have a great industry in this country and we expect that the legislation will make it greater. We have met with a number of companies and I have been impressed with their management. There will be some costs and adjustments to make, and listed companies with short-term expectations—hyped by banks’ analysts—will be put under particular pressure. As my noble friends have said, a number of business models were dubious to begin with.
Many of the managements of the companies I have spoken to will fare very well indeed under the new provisions. They are a very capable group, readily able to innovate and develop new, efficient and sound commercial operations, relationships and models. They are, indeed, doing so in the face of a number of factors which have hugely affected the industry over the last decade, including the amount of beer that is bought in supermarkets, the change in consumer tastes, substitutional competition and other sorts of regulation. It is right that their concerns are properly addressed: we may not agree with some of them but we are certain they should be properly considered and clarity provided as far as possible. I would be grateful if the Minister would set out her thinking on the future of the industry.
We would appreciate a fuller understanding on the issue of investment. Pubcos have come to us to say that they will be discouraged from making investments in their estate. We have tried hard to get a full estimate of whether that investment is income-generating or is just for maintenance, because these alternatives offer different returns on capital. This addresses my noble friend’s point that the property element of this is very different to the other commercial aspects. We have not had sufficient clarity on that but we take the point that we need to address this question.
For example, if a pub company were to redecorate a pub and install new aspects at a cost of £50,000, it would be reasonable to expect a return on that investment over time. The company’s view would be that it would be unfair for the tenants to go to a market rent only provision six months later. They say that this would discourage them from making the investment. They suggest that the pubco should be able to make it a condition of their investment that a contract of around five years would come into force and supersede the old one, so the tenant could go MRO only where the code had otherwise been breached. They would like this assurance in the Bill. Can a pub company reach an agreement with a tenant to establish a new agreement in return for an investment and therefore postpone a rent review for five years? Is that one of the provisions of the Bill? Could we provide some certainty on whether they have the scope to do that? Perhaps the Minister could address this matter in detail.
It would also be helpful to have clarity on allowing breweries that qualify as large pub-owning companies to require tenants taking the MRO option to continue to stock certain of their products. Organisations such as CAMRA have said that they are comfortable with this provision as a means of ensuring that the brewing pub-owning companies can continue to distribute their brands. Companies, understandably, are wondering what parameters are available to them now, and what is likely to be in delegated legislation. It would be useful all round if the Minister gave us a better sense of the Government’s direction of travel. For example, have they considered giving brewer pub companies the right to require that a tenant does not sell direct competitive products? Can the Minister provide a broader understanding of the nature and level of legal advice that the Government have taken on this, and of their expertise in evaluating the European competition considerations?
Similarly, what certainty do the Government intend to provide for brewers in Amendment 91ZA? Is it to ensure that they will have the right to require that an MRO tenant must stock their required beer and cider products? What is their evaluation of the argument that the brewers need the certainty that they will be able to require and enforce a stocking requirement as an integral part of the MRO lease offer? What are the Government expecting a stocking requirement to cover? Is it to specify the individual products to be sold, whether draught or bottled; does it include minimum purchase obligations, if necessary, to ensure incentives are made to sell its products and not those of a direct competitor; and would they require a tenant to prove that the stocking obligation has been met, given that the tenant is not required to purchase the specified products direct from the brewer or approved wholesaler?
There are some other areas worthy of consideration. We would appreciate some detail on the code and the adjudicator. The industry is interested in whether the Government’s view of the role and function has evolved since it was first introduced when there was no MRO provision, and whether it is likely to widen in scope in secondary legislation. It would also be very helpful if the Minister were able to indicate what lessons the Government have learnt from the current operation of the Groceries Code Adjudicator—which is not without some criticism—for how they will establish the Pub Code Adjudicator and the drafting of the code.
We are delighted that the MRO is now in the Bill, but we are also very aware of a need to strike a balance in the final legislation. Using the primary legislation to try and close every feasibly conceivable loophole while protecting tenants could put a straitjacket around the industry. Our amendments are designed to ensure that the legislation delivers on the intentions that we support but is not so restrictive as to cause harm to an industry we all want to see thrive. Some of our amendments are probing in nature to make sure that we have a clear sense about some of the detail. In this House we need to answer two questions—what should be in the code, and who it should cover—before sending the Bill back to the Commons. That is what these amendments intend to clarify.
Amendment 89AA is a probing amendment. This clause examines the provision that tied tenants can trigger an MRO only when changes specifically impact on their business as opposed to pubs in general, including managed houses, hotels and free houses. As it is currently written, if there was suddenly a global increase in, say, the price of barley, which was passed on to all licensed traders, the tied tenant could use this unforeseeable event as a trigger to go MRO if the price increase was passed to them. Is it the Bill’s intention that an MRO option could be triggered in such circumstances? What is the Government’s view of how “unforeseen events” would operate? Would this include actions by the Chancellor of the Exchequer? Does it mean unforeseen at the time of contract, or does “unforeseen” apply to things that would ordinarily be put in a risk register to establish potential risks that could happen to a business? Do “unforeseen” and a risk register become mutually exclusive? Does an unforeseen event have to have a particular impact and effect on all kinds of alcohol sales? Is this drafted so that if, for any reason, those in tied pubs were to be charged excessively more than free-of-tie and other tenants, tied tenants should be allowed to react against this specific treatment? We would be grateful for any indications on this.
We believe that Amendments 89AB and 89AC will remove ambiguity from the Bill and ensure that the trigger points can be activated only when all these specific criteria are in place. We are looking for an explanation of how the Government arrived at the current drafting.
On Amendment 89AD, we feel that there is a problem with the Government’s use of “level of trade” as a trigger point, which merely refers to how many pints a pub is selling and not to the deeper situation. For example, if a pubco increased its supply prices and the tenant felt that they could increase the price at which they sell a drink to the public because of local competition, their level of trade would remain static. However, their overall profitability could be fatally undermined. The amendment would ensure that the overall level of profit would be the key factor.
On Amendment 89AE, the idea that a transfer of title should be used as a trigger point was originally placed in the Bill for very good reasons—for example, in the case of a tenant who agreed to a tied contract for five years with a large pub company, but who found after two years that they were now the tenant of a smaller pub company that was not covered by the code if their pub was sold. However, if this power is given carte blanche it could stifle the pub sales market, which would not be sensible for the overall health of the sector, particularly where smaller companies could revive pubs in their local area.
Likewise, it would not be right for publicans to be stuck in a tie when their circumstances have significantly changed and they no longer have any of the protections of the code. This amendment would make it clear that transfer of title alone is not enough, but if such a transfer detrimentally affected a pub, the landlord should be able to assert his or her rights. We would be grateful for some understanding of how the Government arrived at the current drafting.
Amendment 89AF is in response to concerns raised with us by publicans and those in the industry. There is a feeling that there are ways that companies that we would all accept should be covered by the code could get around it as it is currently written. One such way is that a business owning 2,000 pubs could split itself into five smaller concerns, each of which would own fewer than 500 pubs, but to all intents and purposes the same ownership structure would exist. There may be myriad ways that lawyers—some clever, some just expensive—could exempt their clients from the code. However, as noted, we do not want the code to be so long and onerous as to paralyse the industry. We therefore believe that it would be right to create this power, which we hope will never need to be used, to act as a powerful deterrent against such egregious behaviour and ensure that the spirit of the code is always fulfilled.
In general, we are concerned that some of the drafting could create a situation where there may be ways to avoid the Bill’s intentions. We take these concerns very seriously. We do not feel in a position to prepare any amendments that would not be without flaws at this stage, but we would be very keen to work with the Government to ensure that any potential risks are addressed. We are keen to hear some assurances from the Government that they will look very carefully at these matters and their general approach to avoidance, and how they think those assurances could be met in the operation of the legislation, the code and the adjudicator. In particular, we are concerned about how the triggers will work and whether they will provide sufficient protection to small businesses. We want to be assured that the protections are there to stop triggers being used to game the legislation.
We also make a general point to urge that the new code is swiftly implemented via secondary legislation within 12 months of the enactment of the Bill. In short, we need to ensure, as the Bill progresses, that it secures the best of the existing model, reforms what is needed and eliminates bad practice. We understand that that is where the Government are on this. Some reassurances would be very helpful.
I hope that the Minister will forgive me for being so forward and will find the following suggestion useful. We think that the right way forward is to let the Government have their amendments today and return, after discussions with all parties, with amendments to those amendments to strengthen them in the light of these discussions. We hope that we can get a clear assurance on that and a strong commitment that that is what we will see in the Bill on Report. That would be useful reassurance at this stage.
Baroness Neville-Rolfe
My Lords, I thank all noble Lords who have spoken in a helpful discussion. When we saw the grouping we knew that it would be a marathon. I hope that noble Lords will forgive me if I make a lengthy 10,000 metre reply, so that the various questions that have been raised are answered.
I shall respond first to the noble Lord, Lord Berkeley, on timing, and secondly, to the noble Lord, Lord Mendelsohn, on his suggestion. I want to reassure the noble Lord that Clause 41 places a clear duty on the Secretary of State to introduce the Pubs Code within 12 months of Royal Assent. As government Amendment 89A sets out, this must include the MRO provision. The Government are completely committed to getting on with things and to swift implementation. I am also completely committed to open discussion in this House between now and Report. I will try to answer the points in this debate, but if I fail I would urge noble Lords to talk to me before Report, and I am sure that there will be further collective discussions.
I enjoyed the intervention of the noble Lord, Lord Mendelsohn, because he put today’s discussion into the context of small business policy where there is much consensus. I sense that he is trying to make progress. I agree that we should try to get the framework right today, if noble Lords agree, once they have listened to me, by agreeing the government amendments. Then we should discuss the issues and possible changes ahead of Report, including whether we have the right balance between the core Bill and the subordinate legislation, as he mentioned. We have thought about that quite a lot. I do not want to lose this important Bill, which would be a very serious unintended consequence, and timing is tight.
Before turning to the individual amendments, I thank my noble friend Lord Hodgson, who took the Floor for a long time, for bringing his knowledge of the industry to this important debate. He spoke of the impact of social change on pubs, which is an opportunity and a concern, and described a nuclear option, which is exactly what we want to avoid.
I now turn to Amendments 69ZC, 74ZB, 87A, 87B, 87C, 89ZA and 102B. I start by thanking the noble Lord, Lord Whitty, for his comments. We have certainly tried to listen to the other place and come up with provisions that achieve the objectives agreed, and to ensure that there is no avoidance in the system of the kind he described. These amendments set out the detailed definition of the market rent only option in the Bill. One effect is that the MRO will come into force on Royal Assent, before the Pubs Code Adjudicator existed. Market rent only and the protections it brings can work properly only if it is introduced with the code and with the adjudicator.
Clause 42, introduced in the other place, says:
“The Pubs Code shall include a Market Rent Only Option”,
so it would still require secondary legislation. The code must be introduced within a year, and under our Amendment 89A it must include MRO.
Secondly, and importantly, the amendment would not allow us to consult on the MRO process. As I have already said, given that it was introduced into the Bill only at a relatively late stage, it is incomplete in its design and it is important that we have some public consultation to ensure that the process works as intended. Following consultation, we will introduce the code by secondary legislation through the affirmative procedure.
Much of the detail of the triggers for MRO is more appropriate for secondary legislation. Clause 42 as drafted provides no detail on the terms of the new commercial tenancy and what an MRO-compliant tenancy would be. We wish to consult to get a stronger sense of what this constitutes and, similarly, what constitutes a “significant” increase in price and,
“an event outside of the tenant’s control … that impacts significantly on the tenant’s ability to trade”.
Companies and tenants affected by market rent only need the opportunity to comment on the process, not just the authors of Clause 42. The Government are committed to ensuring that MRO is robust and workable.
Turning to Amendments 75 to 78, 82A and 83 to 88, I am not convinced that these amendments are necessary. To respond first to the point made by the noble Lord, Lord Borwick, the market rent only clause introduced into the Bill in the other place outlines some of the process involved in obtaining a market rent only assessment and taking up the offer, but it does not set out a complete process of the kind he is seeking. The Government will consult on the detail of the process and set this out in secondary legislation. I have explained that there is a drop-dead date for the whole process.
Our intention is to follow the outline process in the Mulholland clause. So after the tenant requests a market rent only option, the first step will be for the pub-owning company to offer a market rent, which the tenant will accept or which will provide the basis for negotiation between the two sides. If the tenant and pub-owning company cannot agree a market rent only agreement within a certain period of time, the tenant and pub-owning company will jointly appoint and jointly pay for an independent assessor to determine the market rent for the pub.
Our amendments allow the code to stipulate that the existing agreement between the pub-owning company and tenant will prevail until the market rent only procedure concludes. To answer my noble friend Lord Hodgson, there is a power in government Amendment 89B to set out in the code that existing contractual arrangements remain in force until such time as the procedure comes to an end and the new market rent only contract starts.
If in the end the tenant opts for a market rent only agreement, this will constitute a new agreement between the tenant and pub-owning company. The terms of the agreement will need to be clear to the tenant before he accepts the offer. To be clear, at this point the pub-owning company can remove from the MRO agreement any special commercial or financial advantages—SCORFA—that the tenant was entitled to under the tied agreement. As I said earlier, we intend to consult publicly to ensure that the process works as intended.
On my noble friend Lord Hodgson’s Amendment 88 in particular, the only requirements for a lease to be MRO-compliant are set out in Clause 43(4). Other than this, it is up to the pub company to decide what the MRO lease or licence looks like. The pub company will be free to offer a new lease or tenancy without it being considered to be discriminatory.
Turning to Amendments 79, 81 and 89, in addition to consulting on the detailed process for MRO, we will consult on the detailed definitions of the trigger points for an MRO assessment. These will be set out in the statutory code, which is subject to affirmative resolution. Under our amendments the tenant would be entitled to the MRO option: at rent review; if the tenant renews their lease; when there is a significant price increase for tied products which was not reasonably foreseeable; and if an event occurs that is beyond the tenant’s control and meets the descriptors set out in the Pubs Code. The headlines would rightly be in the Bill but we need to set out the details in secondary legislation.
I confirm that the MRO trigger at the point of renewal applies to tenancy agreements that are protected by the Landlord and Tenant Act or which have a specific right of renewal clause in their tenancy agreement. Those tenants who are contracted out of the Landlord and Tenant Act will have the protection of the parallel rent assessment in any negotiations on a new lease at their existing pub. The trigger if there is a significant price increase which was not reasonably foreseeable at the beginning of the tenancy or at the point of a rent assessment would not include circumstances when a pre-agreed discount period ends.
By contrast, Amendments 79 and 89, tabled by my noble friend Lord Hodgson—
Lord Hodgson of Astley Abbotts
Can we therefore take it that the trigger points will not include the sale of a pub, provided the tenant’s position is protected, or a pubco going into administration?
Baroness Neville-Rolfe
My Lords, that is the proposal set out in the Government’s amendments.
Lord Stoneham of Droxford
Will the Minister confirm whether she is looking at any protection for people who, when a company is sold or goes into administration, move from a company that is covered by the threshold to one that is not?
Baroness Neville-Rolfe
My Lords, I hope I will cover that to the noble Lord’s satisfaction in a minute. I return to Amendments 79 and 89, which propose that only an unfair price increase would trigger the market rent only option. Our view is that this sets the bar unrealistically high. The purpose of this trigger point is to afford the tenant some protection if the pub-owning company increases the prices of its tied products significantly and unexpectedly, as this may have a large impact on the balance of risk and reward between the two parties. Similarly, the trigger of events occurring outside the tenant’s control is intended to protect tenants when the assumptions underlying their projected income and turnover change dramatically. We envisage that these events would include situations in which local economic factors impact on trade, such as the sad closure of a local factory. However, that would not include macroeconomic events such as a recession, or a change in the tenant’s personal circumstances.
Amendment 81 seeks to define events outside the tenant’s control by reference to the Local Government Finance Act 1988. However, that definition would not account for cases such as a change in local competition, which could have a significant impact on turnover. Public consultation on the specific phrasing of these triggers will help the Government to ensure that the trigger points are appropriately defined. In response to the noble Lord, Lord Hodgson, we expect to refer to the definition in the 1988 Act, but may need to expand on it. I have set out our thinking so far on the detail of the triggers and will come on to talk about administration and insolvency. We will consult on these but I am also happy to discuss further the ideas offered by the noble Lord, Lord Mendelsohn, before Report, if that would be helpful.
My noble friends Lord Hodgson of Astley Abbotts and Lord Howard of Rising have tabled Amendments 69A, 70 and 71 to set the threshold for the market rent only option at 500 tied pubs. I agree with them, and Amendment 91ZB would deal with this very point. As I think the Committee understands, this is intended to bring the threshold for MRO into line with the rest of Part 4 of the Bill. The Government do not have sufficient evidence of a problem in the free-of-tie pub sector to justify intervention there. Regulation of this market would result in pub tenants with commercial leases being treated differently from, and receiving additional protection to, other tenants with commercial leases. This difference is not justifiable on the evidence.
Conversely, Amendment 69A, tabled by the noble Lord, Lord Berkeley, seeks to amend the threshold to 100 or more tied pubs. Noble Lords will be aware that, after considerable debate in Committee, the other place voted to remove companies with fewer than 500 tied pubs from the scope of the Pubs Code and adjudicator. Those other companies expressed significant concerns about the requirements that complying with a statutory code would have placed on them. The Government listened carefully to the points raised and have decided to accept the will of the other place in terms of the cut-off.
I can reassure the noble Lord, Lord Berkeley, that the representative body for companies with fewer than 500 tied pubs, the Independent Family Brewers of Britain, has committed to continue funding the current industry dispute resolution services and to keep the industry framework code up to date. This will provide important protections for the tied tenants of family brewers, and seems a better approach than extending regulation to smaller operators such as St Austell Brewery in Cornwall—which he mentioned—or J W Lees in Manchester.
I also reassure the noble Lord that the Government have provided protection against avoidance of the code through changes in group structure. Clause 69(2) provides that any part of a group undertaking will contribute to the calculation of tied pubs for the purposes of the threshold. That means that the Pubs Code will apply to all parts of the group undertaking.
Lord Hodgson of Astley Abbotts
Again, I apologise for interrupting my noble friend, and I am grateful for the detailed response that she is giving. The example that she is giving about investment does not deal with the fact that beer is being sold. The beer companies want to sell their beer—25% to 30% of their beer is sold through their tied houses, their estate. If the legislation does not allow that, it knocks away a reason for investing. It is not sufficient to get a return on the capital—that is, the rent—it is also selling a product that they produce elsewhere in the group. That is, provided—to meet the point of the noble Lord, Lord Snape—that the tenant is free to buy it anywhere if he can buy it cheaper.
Baroness Neville-Rolfe
I thank the noble Lord for raising that point. There is a link to the stocking requirement, which I shall come on to talk about, as he suggests. I am not suggesting that investment is the easiest thing to deal with, because we all want investment in this important industry.
Perhaps I can mention a couple of final points before I move on from investment. One is my noble friend Lord Younger’s point about cash flow, which is a good point. If a tied tenant expresses an interest in choosing MRO, the pub company can make the argument about the benefits of the tie—for example, in managing tenant cash flow. That freedom will still exist. At that point, the tenant can choose to remain in a tied agreement. I am grateful to the noble Lord, Lord Mendelsohn, for entering the fray on this issue and suggesting a way forward on the question of securing pub company investment in pubs. I am happy to look at that further.
Further, enabling tenants to forgo the MRO in exchange for a promise of investment may risk intimidation of a pub in difficulty. That will probably not occur often, but it was a concern that we considered in trying to balance these things.
I turn to Amendment 89AA. I believe that it is designed to help to define a significant price increase in relation to a price increase that would trigger an MRO. It is important to get that definition right. It needs to be fair to pub companies and tenants alike. That is why the Government propose to consult on the definition and set the detail out in secondary legislation. I confirm that reference to wholesale price lists will be used in our consultation proposals for that definition.
Amendments 89AB and 89AC amend the MRO trigger for circumstances outside the tenant’s control that affect trade. The noble Lords opposite wish to confirm that all four of the conditions set out in subsection (9) of the proposed new clause in government Amendment 89A must be met for this trigger to be engaged. I can confirm that the current drafting of the clause delivers this effect.
Amendment 89AD relates to the same change of circumstances trigger and proposes to replace,
“an impact on the level of trade”,
with,
“an impact on the level of profitability”,
as the measure for that trigger. We consider that a focus on the tenant’s ability to trade addresses the key issues that affect the fair balance of risk and reward between pub company and tenant. The government amendments ensure that where changes in local economic circumstances affect tenant income, the protection of the MRO trigger will apply. To focus instead on profit would bring in issues such as rates, energy prices, wages and salaries. These issues could further impact on the income of the tenant but there is likely to be minimal impact. The amendments also introduce more complexity in terms of definition and measurement of a significant impact.
I believe that through Amendment 89AE, the noble Lords opposite are seeking to confirm that on the sale of a pub the other triggers for MRO would still apply. Where the new owner of the pub is covered by the code, then this is the case. Where the pub company purchasing the pub is below the threshold, the tenant will not have the MRO option but will have the protection of the voluntary industry code. This is consistent with the Government’s acceptance of the will of the other place to remove family brewers from the scope of our measures.
Amendment 89AF would introduce a power for the Secretary of State to provide an MRO trigger on transfer of title or administration in two specific circumstances. The first is if avoidance of MRO was the “sole or significant” reason for transfer of title or administration. The second is where,
“fewer than 500 pubs … are part of a group or have similar ownership to other companies”,
which own more than 500. I will deal later with the detail of the Government’s reasons for removing the transfer of title and administration trigger, but first I will focus on the specifics of the Opposition’s amendment.
We think it is extremely unlikely that the serious step of administration would be used to avoid MRO. No company considers insolvency lightly. Where a company is in financial difficulty, it will seek professional advice from an insolvency practitioner. It may be advised to restructure the business, which could involve selling off some parts of it. However, entering administration to avoid MRO would not achieve the objectives of administration, which is to rescue the business. For this reason, an insolvency practitioner would not recommend administration. It is also hard to imagine that pub companies would sell off high numbers of pubs purely to take themselves outside the scope of MRO and the code. Most of the pub companies in scope have over 1,000 pubs, so that would be a drastic step. I reassure noble Lords that where a tied pub is sold to another company covered by the code, MRO protections would continue to apply.
The amendment tabled would also provide a power to bring companies with fewer than 500 pubs into the scope of the code where they were part of a group or had similar ownership to other companies that cumulatively own more than 500 pubs. We share the noble Lords’ concern about the potential for gaming—for example, through the break-up of a pub company to avoid the threshold—but I confirm again that the Government have provided this protection in Clause 69(2). I am afraid that we are not clear whether there are companies with fewer than 500 pubs that have similar ownership to companies with more than 500. Nor, if there were, is there evidence that they should be brought into scope with reference to a concept of similar ownership.
Amendment 80, tabled by my noble friend Lord Hodgson, seeks to remove two of the trigger points in the MRO clause so that tenants will not have the right to MRO if their pub is sold or the pub-owning company goes into administration. The Government’s amendments should address my noble friend’s concern. In the case of the transfer of title trigger, the Government consider that other, more proportionate protections exist for tenants when their pub is sold to another owner, as any new owner would be bound by the tenant’s existing contractual rights. If the sale makes little difference to the pub, there is no problem. If it makes a significant difference to the trading position, another MRO trigger is already available—the trigger for circumstances outside the tenant’s control. The inclusion of the transfer of title trigger would have the unintended consequence of making the sale of pubs as going concerns less appealing to potential buyers, leading to fewer pubs and fewer pub tenancies. For these reasons, the Government wish to remove this trigger from the Bill.
The Government’s amended clauses also remove the trigger when a pub-owning company goes into administration. During administration, the company in administration may continue to operate. Tenants will continue to have their existing obligations towards the company in administration, and the company will continue to have its existing obligations to the tenants, acting through the administrator. If any of the other triggers for MRO are met during this period, such as if the company brings in a significant price increase, the tenant will still have the right to MRO. The primary aim of administration is to rescue the company, and this preserves jobs as well as value. Giving all the pub-owning company’s tenants the right to MRO at this critical point would be likely to reduce the value of the pub company’s estate. Pub-owning companies below the threshold are unlikely to buy the company’s pubs if the tenant could opt for the MRO option during the course of the sale. This would reduce the chances of rescuing the pub-owning company and could ultimately push the company into liquidation. Clearly, this would not be in the interests of the tied tenants, employees and suppliers of the former business and the creditors.
I want to clear up something which was raised by the noble Lord, Lord Snape. He expressed concern that the Government are trying to deny existing tenants the right to MRO. This is not the case. We have merely sought to remove two of the triggers to avoid unintended consequences that are detrimental to tenants. I should be happy to discuss this further with the noble Lord, as we are in the same place on objectives.
Lord Snape
I thought that it was the wicked noble Lord, Lord Hodgson, who was seeking to deny tenants this particular protection, not the Government.
Baroness Neville-Rolfe
Perhaps I can move on to further amendments.
The market rent only amendment introduced in the other place made provision to allow brewers who own tied pubs to require any tied tenants of theirs who elect to exercise MRO to continue to sell the brewery’s products, so long as the tenant may buy them from any source. Amendment 91ZA, which I am bringing forward today, provides in Clause 65 that stocking requirements, which satisfy the conditions in that clause, do not constitute a tie, so they can be included in an MRO offer. Under such a stocking requirement brewers can require their pub tenants to sell their products, limited to beer and cider. This focuses the measures on what pub-owning companies tell us are the products that concern them. Under Amendment 91ZA, the tenant must be able to buy this beer or cider from any source and be able to sell beer and cider produced by other companies.
I thank my noble friend Lord Hodgson for Amendment 69. I agree that the MRO provisions largely remove the need for the parallel rent assessment. However, the MRO option is available only to tenants with an existing tied agreement with their pub-owning company. As prospective tied tenants do not have the right to an MRO offer, we intend to retain the protection of the parallel rent assessment for them. This means that prospective tenants may request a parallel rent assessment, following rent negotiations with their pub company, upon paying a fee of £200. Together with the transparency provisions of the Pubs Code, this will ensure that prospective tenants can make an informed decision on whether a particular tied deal is fair and right for them. We also intend that those tenants who have contracted out of the Landlord and Tenant Act will have the protection of the parallel rent assessment in any negotiations on a new lease at their existing pub. This is because those tenants do not have a right to renew their lease and so will not have the right to the MRO option when they negotiate a further deal. I agree that the parallel rent provisions are no longer required for existing tied tenants who now have the MRO option, and Amendments 69ZA and 69ZB, which I have tabled, would deliver this.
I apologise for the marathon, but when I said that the Government were committed to MRO I really meant it. The government amendments before us are designed to make it workable. Unless we amend the clause, we risk ending up with an Act that is so anomalous and open to legal challenge that no Government, whatever their make-up, would be able to implement it effectively. Surely this is not the outcome that noble Lords are seeking. I urge the Committee to accept these amendments so that we have a legally robust foundation on which to build the continuing discussions ahead of Report. In the spirit of the discussion, I ask the noble Lord, Lord Whitty, who has the first amendment, whether he is now content for us to move the government amendments.
Lord Berkeley
Before we get to that, could the Minister please clarify what she said, quite a long time ago in a very interesting speech, about the timing of the introduction of the MRO? That has been changed in her amendments; the Bill says a maximum of one year. What is the actual timing? That is one of our big worries—that this could get kicked into the long grass.
Baroness Neville-Rolfe
I thank the noble Lord for raising that point. The confusion may arise because it is within 12 months of Royal Assent.
Lord Berkeley
If it will help the Minister to deal with this, I could speak for a little longer. I thank her for her comments generally in her necessarily long speech. She gave me a lot of comfort that what the Government are trying to do is the right thing. She prayed in aid the will of the Commons a number of times, and that is right. Of course, timing is one of those issues. I will be very pleased to hear what she has to say.
Baroness Neville-Rolfe
Before the noble Lord sits down and the noble Lord, Lord Whitty, takes the Floor, the answer is 12 months—but that is 12 months after the Bill comes into force. Apparently it will take two months for the Bill to go through to Royal Assent, so the maximum is 14 months. However, the message that I was trying to impart to the Committee is that we are determined to get on with this, push ahead and find workable solutions in that time.
Lord Whitty
My Lords, I am not sure that the Minister is procedurally correct to say that I have the first amendment. She has the first amendment in this group, which she can move at this point. Although mine is the first amendment on Clause 42, it is not the first one in this group. If she is asking whether she has said enough for me to roll over in relation to her own amendments, the answer is probably, “Almost, but with great regret”.
She has said that she is prepared to talk to all the parts of the industry involved, and she has done that in a very generous way. However, when she went through this clause by clause, there seemed to be fairly clear opposition to all the areas of concern that had been expressed by me, the noble Lord, Lord Stoneham, and my noble friends Lord Berkeley and Lord Snape. If she is prepared to say that all these things are open for discussion before we get to Report, I suppose that the sensible thing for me to do would be to say that I did not object to her clause. While I was clear on the conciliatory tone at the beginning, when it came to any individual item it seemed to be the firm position of the department to oppose it. However, it is not really my position to object at this point.
Baroness Neville-Rolfe
Okay. I welcome the lecture on procedure and apologise for not getting it right. As a new Minister, I am learning. The answer is yes, we are very open to discussion. What I was trying to do, I thought, was to be helpful in going through our thinking about why the various provisions were set out in the way that they were. I have already indicated that there are one or two places where I can see that the points made today would lead to further discussion. The answer is that we are open-minded and are keen to find a workable way forward, and are happy to do that in discussion in this House. I beg to move.
Baroness Neville-Rolfe
(a) ”
“(b) ”
Lord Berkeley
“( ) require pub-owning businesses to publish wholesale prices charged to their tied pub tenants.”
Lord Berkeley
I hope we can deal with this group of amendments a bit more quickly than the previous group because there are only two of them: Amendments 68T and 68U. I think they are quite important.
Amendment 68T comes from the Federation of Small Businesses research which found that 27% of licensees believed when they signed their agreement that the price they would be paying for beer and probably other drinks was going to be lower than the price they would have to pay in the open market. They claim that they were not given adequate pricing information as prospective tenants. CAMRA analysed the prices that licensees paid in 2013 and found that pub companies’ prices were 50% to 70% higher than wholesale prices. That is pretty incredible, and certainly reflects some of the comments I have heard from tenants—that they are lucky if they can cover their costs on beer, and they have to work 24 hours a day to make any return on food.
CAMRA hosted a round-table session for pubcos and licensees and I have a couple of quotes here. The first is from the tenant of a pubco-tied pub in Burnham—I do not know which Burnham; it does not say—who says:
“Price wise the difference is absolutely crazy. John Smiths is £133, but you can get it for £82 wholesale. Kronenbourg is £170, you can get it for £100. It’s not little amounts—it’s lots”.
The licensee of a pubco-tied pub in Berkshire said:
“If they’d said to me, ‘You do realise that you can drive to Rebellion brewery and buy your beer at £70 for 72 pints but we’re going to charge you £150’, then how many people would say, ‘Hang on a minute, that’s not right, is it?’”.
Those are two unhappy tenants. We have heard about a lot of happy tenants today from the noble Lord, Lord Hodgson, and a few other people. I think it would be a very useful thing if the pubcos were required to publish the prices that they charge tenants. That is Amendment 68T.
Amendment 68U is about guest beers. I agree with CAMRA that it would be very useful to see all tied pubs of any description have the right to have a guest beer. It should be defined as a beer that is either cask-conditioned or bottle-conditioned in order to ensure access to the smaller companies, and improve consumer choice. It would allow the tied tenants to stock a single cask from anywhere in the world at a freely negotiated price.
There has been a growth in small brewers in pubs. They obviously make enough money, otherwise they would not be doing it. I think that it would be a really good idea to have the ability to have one guest beer in every pub. If the tenants were allowed to buy that beer from whomever they wanted and at whatever price, it might also demonstrate to the pubcos that charging 70% extra for their beer was not the way to make friends either with their tenants or their customers. I beg to move.
Lord Hodgson of Astley Abbotts
In the situation envisaged under Amendment 68U, could the guest beer be provided by the brewery that owns the pub?
Lord Hodgson of Astley Abbotts
Under Amendment 68U, can the guest beer be provided by the brewery that owns the pub?
Lord Berkeley
Of course it could, but to some extent that defeats the object, because if it is a tied pub, the brewery is already supplying the beer. It would be for the tenant to decide; that is the point. If the tenant decided to do that and to have a monopoly with one brewery, that would be fine.
Lord Snape
I do not object, and I do not think my noble friend does either, to pubcos insisting that their tenants sell their own beer. His amendment states that they can buy that beer from any source, rather than from the pubco through the tie. I think I am correct. I do not know whether the examples he gave of the excessive price difference that tenants have to pay—the 50% to 70% that CAMRA revealed—are common, but I do not think even the noble Lord, Lord Hodgson, could defend that sort of gap. Could the noble Lord emphasise that this is not about preventing pubcos from insisting that the tenants sell their beer but about the source of that beer and the price that the tenants pay?
Lord Berkeley
My noble friend raises an interesting issue. It is quite reasonable that a pubco that has a tied pub with tenants requires the tenants to buy the beer from them. That is the reason we are going through this—so that tenants can get out of it if they do not like it. While they are in it, the fact that they are buying beer at a certain premium—50% to 70%—provides part of the profit to the pubco, along with the rent. We can debate which. It has always been my understanding that if the tenants choose to go down the route of getting away from being tied, then presumably the calculation of the rent—we talked about this earlier—will in part take into account the loss of profit to the pubco in no longer being able to sell the beer at this inflated price to the pub.
There is a balance to be struck here. The amendment would allow the tenant to buy another beer from somebody else at whatever price and it would not necessarily affect the relationship with the pubco. It could do, but that is for negotiation. I hope I have clarified that.
Lord Mendelsohn
I thank my noble friend Lord Berkeley for some excellent amendments. It is important to understand this in the context of the Bill. Amendment 68T addresses one of the big issues we have with information in commercial sectors, which works terribly to the disadvantage of small businesses. We think that very serious consideration should be given to this. Amendment 68U considers the opportunities to create market access for small businesses. That would be very useful and have many beneficial by-products, and would certainly trigger a great deal of capacity for small businesses to thrive in a sector with dominant market features.
I encourage the Government to look very sympathetically towards these amendments. There are issues with Amendment 68U. I did a quick calculation of what it might cost the industry; I do not think it is that much but I would be very interested if the Government came forward with whether or not they think there are any difficult parameters to it. I am not convinced that there are. It would be useful if the Government were to come forward very positively on this.
My noble friend Lord Whitty made a very important point in the previous group of amendments: it is nice to hear that matters will be taken seriously, but there was a great deal of anxiety on this side as we went through that group. As we get to other groups of amendments, such as the one beginning with Amendment 96ZB, we will look for greater assurances that these matters will be taken seriously. However, on small businesses, this is a very neat and useful group of amendments.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Lord, Lord Berkeley, for these amendments. In the spirit of collaboration, perhaps I can explain why we see them as problematic and see whether he agrees.
Amendment 68T would require pub-owning companies to publish wholesale prices. Even if that requirement was limited to alcoholic drinks, it would make public the details of a commercial financial arrangement between two parties to the world at large—including the pub owner’s customers, if I have understood the amendment correctly. It is important to stress that in this Part of the Bill we are regulating the relationship between tied tenants and their pub companies. At no point in our consultations has the need to publish wholesale prices emerged as a requirement to address unfairness. To do so would be an additional piece of regulation for the sector on top of the regulation we are introducing. In a few cases, pub-owning companies that we expect to be covered by the code already publish their wholesale drink prices online. Others publish those prices on a site with access restricted to their own tenants. Others do not publish them at all. On beer prices, tied tenants will tend to pay higher prices for their beer than from an outside wholesaler. That is integral to the tied deal. We recognise that transparency is important, and the Pubs Code already provides that transparency where it is needed—in the relationship between the tenant and the pub-owning company. As I said, the Pubs Code will require the wholesale prices to be provided to the tenant, as well as the current and relevant price lists.
Turning to Amendment 68U on guest beer, when the Government consulted on the issues and evidence that preceded the drafting of these clauses, we included questions about guest beer. The reasons for rejecting that option were clearly set out in our response to the consultation. Some will remember that I come from an all-male family of very keen beer drinkers, so I sympathise with the point, but while there was considerable support for the right to stock a guest beer, there were concerns about the potential for this to undermine the tied model by reducing the alignment of interests between the tenant and the pub company. This was because many tenants would select a draught lager as guest beer, which would typically be the biggest-selling beer. The proposal in the noble Lord’s amendment seeks to address this concern by stipulating that the guest beer should be limited to a brand of cask-conditioned or bottle-conditioned beer. I understand that. Unfortunately, this raises potential competition law issues. We are advised that restricting the guest beer to a particular type is likely to be contrary to EU competition law.
I hope that that background shows that the Government have considered the noble Lord’s proposition seriously and that, in the circumstances, he will agree to withdraw the amendment.
Lord Berkeley
I am grateful to the Minister and to my noble friends for their responses. On Amendment 68T, I think that putting the price of beer charged to a tenant in the public domain may be going a little bit over the top, but if it is published on a website and available to the tenant that is fair enough. However, this comes to the imbalance between a small business—and tenants are, after all, very small businesses—and the pubco. The fact that these people did not understand that the price of beer may not have been what they thought shows something about the unbalanced and bad relationships that some of these pubcos clearly have with some of their tenants. I am not blaming anybody but they are small businesses. Maybe we could have a think about that and have a meeting to discuss it before Report.
Amendment 68U deals with guest beer. I spent the morning at DG Comp in Brussels today. I cannot say I was talking about beer but I know the people there well and I can always check on that. There are important issues here but perhaps we could have a discussion about this too. I would like to see guest beers in some of the tied pubs and I think many others would too. What beers they are would depend on what kind of beer you like drinking. That is enough of that, at this time of the night. I am grateful for the Minister’s response and look forward to further discussions. I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
Lord Whitty
Lord Whitty
My Lords, this amendment is the first in my name relating to Clause 42. Clearly, I cannot press it today if the Government do not agree with it but I hope they understand that, in the discussions that the Minister has promised us, we will wish to return to all the issues that relate to the distinction between the Pubs Code provisions and those of the MRO. Subject to that, I will not press the amendment.
Baroness Neville-Rolfe
“Pubs Code: market rent option
(1) The Pubs Code must require pub-owning businesses to offer their tied pub tenants falling within section 67(1)(a) a market rent option in specified circumstances.
(2) A “market rent option” means the option for the tied pub tenant—
(a) to occupy the tied pub under a tenancy or licence which is MRO-compliant, and(b) to pay the market rent in respect of that occupation.(3) The Pubs Code may specify—
(a) circumstances in which a market rent option must or may be an option to occupy under a tenancy; (b) circumstances in which a market rent option must or may be an option to occupy under a licence.(4) A tenancy or licence is MRO-compliant if—
(a) taken together with any other contractual agreement entered into by the tied pub tenant with the pub-owning business in connection with the tenancy or licence it—(i) contains such terms and conditions as may be required by virtue of subsection (5)(a),(ii) does not contain any product or service tie other than one in respect of insurance in connection with the tied pub, and(iii) does not contain any unreasonable terms or conditions, and(b) it is not a tenancy at will.(5) The Pubs Code may specify descriptions of terms and conditions—
(a) which are required to be contained in a tenancy or licence for it to be MRO-compliant;(b) which are to be regarded as reasonable or unreasonable for the purposes of subsection (4).(6) Provision made under subsection (1) may, in particular, require a pub-owning business to offer a tied pub tenant a market rent option—
(a) in connection with the renewal of any of the pub arrangements; (b) in connection with a rent assessment or assessment of money payable by the tenant in lieu of rent;(c) in connection with a significant increase in the price at which any product or service which is subject to a product or service tie is supplied to the tied pub tenant where the increase was not reasonably foreseeable—(i) when the tenancy or licence was granted, or(ii) if there has been an assessment of a kind mentioned in paragraph (b), when the last assessment was concluded;(d) after a trigger event has occurred.(7) The Pubs Code may specify what “renewal” means in relation to a tenancy or a licence for the purposes of subsection (6).
(8) In subsection (6) “pub arrangements”, in relation to a tied pub, means—
(a) the tenancy or licence under which the tied pub is occupied, and(b) any other contractual agreement which contains an obligation by virtue of which condition D in section 65 is met in relation to the premises.(9) In this Part a “trigger event”, in relation to a tied pub tenant, means an event which—
(a) is beyond the control of the tied pub tenant,(b) was not reasonably foreseeable as mentioned in subsection (6)(c),(c) has a significant impact on the level of trade that could reasonably be expected to be achieved at the tied pub, and(d) is of a description specified in the Pubs Code.(10) In this Part “market rent”, in relation to particular premises at any time, means the rent which the premises might reasonably be expected to fetch at that time in the open market, on the assumption that condition B in section 65 continues to be met.”
Lord Snape
I will be extremely brief, as the Minister has dealt with most of the points that arose from the amendments. There is a nagging feeling that what we are going to approve now is not what the House of Commons actually wanted. The fact is that—surprisingly, at this stage of a Parliament—the Commons defeated the Government on a fairly basic principle with regard to this Bill.
At Second Reading, the Minister accepted on the part of the Government the will of the Commons and said, basically, that the Government would adopt the principles that the Commons had advocated with regard to pub codes and publicans. With respect, that is not what we are getting today; what we thought was there in the Bill has now become a consultative period and what will amount to secondary legislation. I put it to the Minister, and to the Committee at large, that at this stage of this Parliament what we are doing is not what the Commons wanted us to. I can see that questions will be asked at that end of the building about our procedures here.
We have only a short time before the general election on 7 May, after which there will be a new Government, of whatever political hue or hues. That will mean there is a considerable amount of time before consideration takes place and the Minister’s undertakings to the Committee today are brought into force. I put it to the Minister that before Report we should look again at the two Clause 42s, the old one and the new, and see if there are parts of the old one that really ought to be incorporated into the new one, if only to ease the feeling outside this place that whatever happens over the next year or 14 months will water down the agreements that we thought had been reached as a result of the Commons decision. It is unusual, to say the least, that a Government should be defeated on something like this.
I address my closing remarks to the noble Lord, Lord Hodgson, in particular: he should not think that the decision was arrived at because of pressure from CAMRA or any other body. I think that many Conservative Members of the other place looked at what was happening to their own local in their own town or village and decided that that was why they felt Greg Mulholland’s amendment ought to be accepted. I hope I can get some assurances from the Minister that there will be some discussions with other people before Report so that we can see some of the watering down that we perceive in the difference between the two Clause 42s being rectified.
Lord Hodgson of Astley Abbotts
Once again, the trade is under pressure and the noble Lord assumes that it is all due to the tie. I wish it were that simple. The fact is that there are real difficulties for our pubs, for the reasons that I have explained. Trying to put more pressure on one particular part of the industry will not help it, I fear.
Lord Snape
Again, I accept that, but the noble Lord must accept that when Back-Benchers rebel in the way that Back-Benchers rebelled in the other place on a piece of legislation such as this, those rebels share a great many concerns. I put it no higher than that. I asked the Minister for an undertaking that she will look again at the differences between the two clauses and see whether we can toughen up new Clause 42 in the way that I believe the House of Commons intended in the first place.
Baroness Neville-Rolfe
I am grateful to the noble Lord, Lord Snape, for raising that point. First, I emphasise that we have accepted MRO; I do not renege on anything that I said at Second Reading. The detail of legislation has to be right. Let us by all means meet; let us meet soon; let us look at new Clause 42 alongside the old Clause 42 and engage on the differences and why we have done things, in good faith, in the way that we have. I would be very happy to agree to that process and I am grateful for the discussion that has taken place today. We are trying to do the right thing here.
Lord Snape
I thank the Minister for that undertaking, and for the way that she has conducted the Committee so far. I did not even object to the noble Lord, Lord Hodgson, being present in the same room; we might teach him something about the pub trade that he does not know, although that is difficult to imagine.
Baroness Neville-Rolfe
“Market rent option: procedure
(1) The Pubs Code may—
(a) make provision about the procedure to be followed in connection with an offer of a market rent option (referred to in this Part as “the market rent option procedure”);(b) confer functions on the Adjudicator in connection with that procedure.(2) Provision made under subsection (1) may, in particular—
(a) make provision for the tied pub tenant to give notice to the pub-owning business that the tenant—(i) considers that circumstances are such that the pub-owning business is required to offer the tenant a market rent option, and(ii) wishes to receive such an offer;(b) require the appointment of a person (referred to in this Part as an “independent assessor”) to determine the market rent of the premises concerned in a case where the pub-owning business and the tied pub tenant cannot agree on that market rent;(c) require that appointment to be made by the pub-owning business and the tied pub tenant acting jointly or (where they cannot agree on a person to appoint) by the Adjudicator;(d) require the Adjudicator to set criteria which a person must satisfy in order to be appointed as an independent assessor;(e) specify that the determination of the market rent by the independent assessor must be conducted in accordance with provisions of documents specified in the Pubs Code;(f) where any document is specified for the purposes of paragraph (e), refer to the provisions of the document as amended from time to time.(3) The Pubs Code may make provision for—
(a) the tenancy or licence under which the tied pub is occupied, and(b) any other contractual agreement entered into by the tied pub tenant with the pub-owning business in connection with the tenancy or licence,as they are in force when a notice is given by virtue of subsection (2)(a), to continue to have effect until such time as the market rent option procedure has come to an end (regardless of whether any of the agreements would or could otherwise cease to have effect before that time).(4) The Pubs Code may, for the purposes of subsection (3), specify the circumstances in which the market rent option procedure is to be treated as having come to an end.”
“Market rent option: disputes
(1) The Secretary of State may by regulations confer functions on the Adjudicator in connection with the resolution of disputes relating to the offer of a market rent option.
(2) The regulations may, in particular, make provision concerning the resolution of disputes about whether—
(a) circumstances are such that a pub-owning business is required to offer a tied pub tenant a market rent option;(b) a proposed tenancy or licence is MRO-compliant;(c) a determination of the market rent of a tenancy or licence made by an independent assessor has been made in accordance with the Pubs Code;(d) any other requirement of the market rent option procedure has been complied with.(3) The regulations may, in particular, confer on the Adjudicator the function of determining the market rent of a tenancy or licence in such circumstances as may be specified in the regulations.
(4) Nothing in sections 45 to 49 applies in relation to provision made by virtue of section (Pubs Code: market rent option) or (Market rent option: procedure) but the regulations may include provision which is similar to that contained in or made under those sections.”
“( ) Any proposed changes to the Pubs Code must be subject to full parliamentary scrutiny and consultation.”
Lord Hodgson of Astley Abbotts
My Lords, after three and a quarter hours on the first set of amendments, I shall be exceptionally brief. I propose Amendment 90 and will speak to Amendments 92 and 96A. They are all concerned with the process by which any future changes to the Pubs Code will be brought about. At this stage they are probing amendments.
As we have found in our discussion over the past few hours, the operation of the Pubs Code is not without its controversial aspects, and this is a chance for the Minister to explain to the Committee how she sees those changes being reported on. Amendment 90 is concerned with the operation of Clause 43, concerning any review of the Pubs Code. It would insert the words:
“Any proposed changes to the Pubs Code must be subject to full parliamentary scrutiny and consultation”.
It is a pretty declaratory amendment, and I should be grateful to hear from the Minister a bit more about the detail of how she thinks that it will operate.
Amendment 92 concerns Clause 66, which defines a pub-owning business as being a landlord of 500 or more tied pubs. Can that figure be changed? When we get to Amendment 91D, I think that my noble friend Lord Howard of Rising will have something more trenchant to say on the subject than I have, but I think that it is important to learn how the Minister thinks that that figure could be changed, if it was to be.
Finally, Amendment 96A substitutes an affirmative order for a negative resolution procedure for the permission for the abolition of the Pubs Code under Clause 63(1)(c). As I said, at this stage, they are all probing amendments, but it would be helpful to the Committee if my noble friend could explain how she thinks that the changes to the code and ancillary aspects might take place in future. I beg to move.
Baroness Neville-Rolfe
My Lords, I hope that I can reassure my noble friend that the Pubs Code will be the subject of further formal consultation following Royal Assent. Furthermore, it will be a statutory instrument made under the affirmative procedure, and any future changes to the code will also be subject to that procedure. On Amendment 92, I reassure my noble friend that any change to the threshold for pub companies to be covered by the code must also be made by affirmative resolution, and must follow a review and full consultation.
On Amendment 96A, Clause 63 provides that the adjudicator can be abolished if, following a review, the Secretary of State is satisfied that the role of the adjudicator is no longer deemed necessary. It is only in the event of the Pubs Code having already been revoked and not replaced by the affirmative resolution procedure, as I have said, that the adjudicator would be abolished by the negative procedure. In those circumstances, the removal of the adjudicator is of course consequential on the abolition of the code, which would have been debated in both Houses. The adjudicator’s role is to enforce the Pubs Code; if Parliament has debated and agreed the decision to revoke the code, it seems entirely reasonable to abolish the adjudicator by negative procedure. I hope that this reassures my noble friend that he can withdraw his amendment.
Lord Hodgson of Astley Abbotts
I thank the Minister. I accept her explanation of all three amendments, and I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
Lord Berkeley
“Definition of market rent
The market rent shall be determined on the basis of the likely turnover and profit of the business of the pub, and shall not take into account any value to the pub owner of a change of use of the pub.”
Lord Berkeley
My Lords, this amendment concerns how the adjudicator takes into account the various financial factors relating to a pub when considering what its market rent should be. We have a lot of pubs where I live in Cornwall, some of them very lovely ones on the waterfront. I do not know how much money they make but there is a feeling that if they were sold for desirable waterside residences, of which there are already an enormous number, they could probably fetch a much larger amount of money than they earn for the owners at the moment as pubs.
That may or may not matter, but there is an issue here of what the role of the pub is in a small community. It acts as a kind of community centre. It may be where people congregate at different times of the day. It keeps village life going. It would be a great shame if the value of a pub on the open market, for retail or as a house, made it in the interests of the landlords to sell it and try to change its use.
There was another example in the Guardian last Saturday, in a nice article on pubs generally, given by someone who works for a company called Paramount Investments:
“In north London if I am selling a pub as a development opportunity I might be able to ask £700,000-£1m for something that as a pub I would only be able to get £350,000-£450,000 for”.
It gives other examples in Marylebone and other places where property values are very high, as they are in London. The problem is wider than London and Cornwall; it could be in many places where the property value is high. In this amendment, which obviously is a probing amendment so the wording might not be quite right, I am trying to propose that in assessing the rent no allowance should be made for a change in value due to a change of use that could be achieved if the pub were no longer a pub. I beg to move.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Lord for his amendment and I am looking forward to visiting some of his local pubs in Cornwall before long. To be brief, subsection (10) of the proposed new clause in government Amendment 89A makes it clear that a market rent is,
“the rent which the premises might reasonably be expected to fetch at that time in the open market”,
on the assumption that the sale of alcohol for consumption on the premises remains the main activity or one of the main activities of the premises. It is clear that the market rent is for the premises as a pub. I hope this reassures the noble Lord.
Lord Berkeley
I am very grateful to the Minister. The amendment came through after I went through all this. I am very grateful for her explanation and beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“( ) regulations under section (Market rent option: disputes),”
Baroness Neville-Rolfe
Lord Hodgson of Astley Abbotts
My Lords, I will speak also to Amendment 90C. We come to Clause 60 about levy funding. This brings us to the age-old question of who is going to pay for the regulatory structure now being set up.
Clause 60(1) says:
“The Adjudicator may require pub-owning businesses to pay in each financial year a levy towards the Adjudicator’s expenses”.
Pub-owning businesses are, of course, defined elsewhere in the Bill as having 500 or more tied pubs. I think the word “may” is a euphemism. “Will” require is undoubtedly the right way to put it—who else is going to pay?
I recognise that any pubco with fewer than 500 tenants falls outside the code, although I share the questions of the noble Lord, Lord Berkeley, over the logic of why a tenant of a pubco owning 500 tied pubs should be treated any differently from a tenant of a pubco owning 450 tied pubs. The noble Lord, Lord Berkeley, made a very fair point as far as that was concerned. But I can reassure him because the answer is that in quite a short period of time it will not be outside the code. It is inevitable that the MRO option and the Pubs Code generally will roll out over the whole pub sector. It may be unofficial but no small pubco or brewery will be able to resist the demands of one of its tenants who thinks that his rival on the high street who is owned by a large pubco has gained some competitive advantage. The small pubco or small brewer may resist for a bit, but in fairly short order they will have to concede or risk having some seriously disaffected tied tenants, on the basis that the tenants will say that if the brewer has nothing to hide, they have nothing to fear.
The code will become the standard for the industry, not just in the way the MRO option has to be offered but in a range of other factors that make up the tied relationship under the code. My argument is that those who use the code and are able to take advantage of it ought to pay for the system it establishes. So Amendment 90B leaves out “may require” and inserts the words “must require every”, and Amendment 90C changes the definition of those required to pay the levy to include all companies or breweries that operate tied pubs.
The levy, which will presumably be levied on a per-pub basis, would not cost the smaller companies much. The bulk of the costs of the new regulatory regime will be borne, quite rightly, by the larger tied estates. However, there is an important point of principle that those who benefit from a regulatory regime should contribute, however modestly, to its cost. I beg to move.
Lord Newby (LD)
My Lords, these amendments relate to Clause 60, which will enable the adjudicator to levy funds on pub-owning businesses to contribute to the adjudicator’s expenses, with the Secretary of State’s consent. Amendment 90B would change “may” to “must”, making the power a duty. We have had many similar debates on a number of subjects during my time in your Lordships’ House. I remember with affection the noble Lord, Lord Barnett, trying to get us to put “must” into various banking Bills, with no success. As I said then, and as I am sure the noble Lord, Lord Hodgson, realises, “may” in reality often means “must”. I assure him that in this case the amendment is not necessary.
The amendments would together require the adjudicator to impose a levy not only on the pub-owning companies in scope of the code but on any pub-owning company with tied pubs. I hear what the noble Lord says about the code becoming the industry standard for everybody, but that is by no means clear at this point. It is certainly not a requirement of the Bill. To the extent that pubcos not covered by the Bill did not use the code, this amendment would go against the “polluter pays” principle. The Government are clear that funding the adjudicator through a levy on pub-owning businesses covered by the Pubs Code is the right approach. The conduct of the large pub-owning businesses has led to the need for the adjudicator, so it is appropriate that they should cover the costs. This approach is in keeping with the funding of the Groceries Code Adjudicator by the large retailers in scope of the Groceries Code.
It would be unfair for companies such as the family brewers, whose tied tenants would not have the protections of the Pubs Code—at least initially—nor the ability to refer disputes to the adjudicator, to contribute to the levy. The representative body for some of these smaller companies, the Independent Family Brewers of Britain, has committed to continuing the current voluntary arrangements. This includes funding industry dispute resolution services to continue to provide protections for their tied tenants, so the amendment would require them to pay twice. The Government intend to fund the set-up costs of the adjudicator—but, once it has been established, it is only right that the expenses are met by that part of the industry whose conduct has led to the need for the adjudicator. The existing drafting of Clause 60 provides for this.
The amendments would also require the adjudicator to impose a levy every financial year. This would be the case even if, however unlikely, the money was not required that year—a situation which could arise if there was sufficient money left unspent from the previous year. It is therefore right to allow this flexibility for such circumstances. I hope that I have been able to persuade my noble friend that he should not press his amendment.
Lord Hodgson of Astley Abbotts
My Lords, my noble friend has brought us back to the extraordinary aspect of the parliamentary draftsmen, where “may” equals “must”. Who else in this country would believe that “may” equals “must”? He is quite right to remind us that this is one of the quirks of parliamentary draftsmanship. If, as he points out, the polluter should pay—and if the code becomes widely used by smaller companies below the 500 limit—all I would like to know is whether there is a possibility that, at that stage, the cost of the code could be extended to cover the people using the code, because that is the “polluter pays” principle that he referred to. I hope that the Government will think about that, but, in the mean time, and particularly given the hour, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“(5A) But condition D is not met if the contractual obligation is a stocking requirement.
(5B) The contractual obligation is a stocking requirement if—
(a) it relates only to beer or cider (or both) produced by the landlord or by a person who is a group undertaking in relation to the landlord, (b) it does not require the tied pub tenant to procure the beer or cider from any particular supplier, and(c) it does not prevent the tied pub tenant from selling at the premises beer or cider produced by a person not mentioned in paragraph (a).(5C) In subsection (5B), “beer” and “cider” have the same meanings as in the Alcoholic Liquor Duties Act 1979 (see section 1 of that Act).”
Baroness Neville-Rolfe
“(1) A person is a “pub-owning business” for the purposes of this Part—
(a) in the period beginning with the day on which the Pubs Code comes into force and ending with the following 31 March, if immediately before the Pubs Code comes into force the person was the landlord of 500 or more tied pubs;(b) in any subsequent financial year, if for a period of at least 6 months in the previous financial year the person was the landlord of 500 or more tied pubs.(1A) For the purposes of calculating the number of tied pubs of which a person (“L”) is the landlord, any tied pub the landlord of which is a person who is a group undertaking in relation to L is treated as a tied pub of which L is the landlord.”
Baroness Neville-Rolfe
My Lords, the tied model has long been part of our history. As my noble friend Lord Hodgson said, properly operated it can be beneficial to both pub company and tied tenant. However, as the Government made clear in their consultation response, the evidence has accumulated of problems of abuses of the tied relationship. In an online survey carried out in parallel with the Government’s consultation, 91% of more than 700 tenants identified the beer tie as the biggest challenge that they face. In the government amendments that I am moving we are focusing the market rent only option on the tied model, consistent with rest of this part of the Bill. All of this part will then apply to pub-owning companies which own 500 or more tied pubs.
In contrast, the MRO option inserted into the Bill in the other place would apply to companies with 500 pubs of any kind and one tenanted or leased pub. This would include free-of-tie pubs. As I have already said, the Government do not agree with that approach. There is some evidence of problems in the free-of-tie sector. Some free-of-tie tenants, for example, feel that their property insurance is too high. That is a common issue with commercial leases right across sectors. In the pub sector, by contrast, we have a large body of evidence of problems with tied pub agreements. The Government therefore wish to focus regulation where there is evidence of significant problems, not on the free-of-tie sector. I hope that the Committee will be content to support these amendments. I propose again to listen to noble Lords before responding to the other amendments in this group.
The Deputy Chairman of Committees (Baroness Stedman-Scott) (Con)
My Lords, I advise the Committee that if this amendment is agreed to it pre-empts Amendments 91A and 91AZA.
Lord Howard of Rising (Con)
My Lords, I wish to speak to Amendment 91D in this group. Its purpose is to remove uncertainty and so give smaller breweries a stable background in which to run their businesses. Helping small business is after all the purpose of the Bill. For these smaller breweries—indeed, for any pub company—to be successful in a declining market, it is essential that they make significant investment in their pubs. This necessary investment is not practical if they do not know under what rules they are operating. My noble friend mentioned changing the figure of 500 by affirmative resolution, but while change by regulation or order goes some way towards parliamentary examination it is, for practical purposes, a rubber stamp. Between 1950 and 2014, only 11 resolutions were rejected in the other place and only five in your Lordships’ House.
For that reason, if the Secretary of State can change the 500-pub definition to a different number by regulation, that will create uncertainty and severely restrict, if not halt, the investment necessary for the survival of the smaller breweries—which, by the way, generally speaking, have been increasers rather than closers of pubs. If noble Lords think that it is overpessimistic to say that investment will dry up, I remind them that under the last change in the rules governing the ownership of pubs many famous names, as my noble friend Lord Hodgson alluded to earlier, such as Whitbread, Bass, Scottish & Newcastle, Courage and Watneys have been absorbed by multinationals. It would be against the spirit of what we are trying to achieve today if a consequence was to contribute to the demise of small breweries.
Any change to the number of 500 should be subject to primary legislation. I urge the Minister to consider the amendment seriously so that those smaller breweries can continue to invest and create the prosperity necessary to maintain that part of the pub sector and help stem the decline of pubs.
Lord Whitty
My Lords, I have three amendments in this group which go in exactly the opposite direction of the noble Baroness’s amendments.
We could keep the question of definition to talks between now and Report. I do not want to go over the arguments that we had earlier, but to define the owners, the pubcos, to which this applies in reference solely to tied pubs runs the danger of those pubcos altering their tenancy arrangements so that they fall below the threshold. I assure the noble Lord, Lord Howard, that this provision is not intended to hit the family and small regional brewers. We know that the large companies have a range of arrangements with their tenancies and are defined by the totality of their portfolio. It is relatively easy, given the turnover of tenants, for the companies to switch from one form of tenancy to another. They would have a motivation to do so, in order to fall below a tenancy threshold related to tied accommodation alone.
This is one of the issues on which we should have further talks. It is possible that we would have a different tied-specific definition, but that would require other obligations being put on the pubcos so that they would not change the designation of their portfolio to get around this threshold. I suppose that it would be difficult to draft such clauses, but there is a real danger of them gaming this situation. We know that some companies are already contemplating breaking their structure up.
We need more talk about what the definition covers. In a sense, this is the wrong way to go about it, but I would hope that the noble Baroness would not press the amendment and would rather make it subject to the talks to which she has committed for the coming period.
Lord Hodgson of Astley Abbotts
The noble Lord, Lord Whitty, and I have taken common cause on various things but he will not be surprised to know that I cannot take common cause with him on this tonight. A managed pub, as I explained at some length in my opening remarks, has an employee. It is a totally different relationship. To say that pubcos could switch their estate from being tied to being managed would mean changing the whole basis of the employment. The fact is that they are employees with salaries and bonuses and fringe benefits. It is not possible to undertake the sort of gaming that the noble Lord is describing—in terms of switching from managed to tied—which is why managed pubs can safely be left out. The question of what the tie means is something which we have been discussing tonight, but managed pubs form no part of this because they have employees with all the applicable rights and responsibilities.
Lord Stoneham of Droxford
My Lords, the noble Lord, Lord Hodgson, indicates why this needs more discussion. He is right on managed pubs—I absolutely agree—but leased pubs do switch between leased and tied. That is why I was raising my point. The Bill looks very much at the tied part of the sector, but there is movement here which needs to be looked at. To say that any change in the number—once we have decided what that number is—should require further primary legislation and be subject to affirmative resolution is wrong because, as we have seen over the last couple of decades in this sector, people adjust to new legislation and they also sometimes try to avoid its objectives. The Minister, with suitable consultation through the affirmative procedure, needs to be able to make changes as necessary. The number could well be up or down, but it needs to be made appropriately. The prime issue is leased and tied pubs, not managed ones.
Lord Berkeley
My Lords, in this group is my motion that Clause 68 stand part of the Bill. This is an interesting clause, because it is called “Power to grant exemptions from Pubs Code”. If this is read one way, one could assume that every pubco will seek exemption by being specified. This is the usual business of what “specified” means. The word is mentioned eight or nine times in this short clause and then, at the end, it says:
“In this section ‘specified’ means specified in regulations”.
We have not seen the regulations, which is, I am afraid, quite normal in this House and has been for many years. What does “specified” mean? There are various exemptions, such as,
“the dealings of a specified pub-owning business …with their tied pub tenants… of a specified description”.
Does it mean that if they sell fish and chips rather than food they are going to be exempt? Does it mean that if they invite too many Members of your Lordships’ House out to lunch they are going to be exempt? Henry VIII would be proud of this clause and I am sure the Minister is equally proud of it. However, before we get much further we ought to have some explanation of what it means. Who would be exempt and under what circumstances? Why should there be any exemptions? I am sure the Minister will be able to give me some good explanations about why it is very important to have this clause in the Bill.
Lord Mendelsohn
My Lords, I have only a few points to make on these matters as the issues have already been covered quite well. However, I want to stress that these are highly important to our consideration of the Bill and we will look closely at the evolution of the Government’s thinking on them. We stand ready to work with the Government on these amendments and are content to move forward with them in the Bill, on the basis of there being discussion at a later time. However, we would be very concerned if there were no further changes.
We are concerned with how the thresholds are framed. We accept that the Government are focused on the pub-owning companies and we are highly supportive of that. We do not like the formulation that uses the phrase “tied pubs”. We believe there is an overwhelming case to use the terms we proposed—“tenanted” and “leased”—and we would like to see these in the Bill. We have some sympathy with the Government’s predicament on getting these definitions right, but we hope they are willing to show some flexibility on it. There is considerable concern that the situation can be gamed and that the provision of a power to the Secretary of State to vary the number of 500, and to grant exclusions, could be a serious and significant weakening of the Bill or a measure to ensure that anti-avoidance measures can be made more effective.
It is very important that there is a much clearer statement about what the dual-purpose clauses are and that what we put in the Bill is consistent with the work of the other place. It would be very useful if the Minister could give us much greater reassurance on that.
Baroness Neville-Rolfe
My Lords, I am grateful to my noble friends and to noble Lords for their amendments. We are, of course, happy to meet with noble Lords to discuss how these amendments work, the needs of small business and anti-avoidance. We agree with the noble Lord, Lord Mendelsohn, that reform should be about the tie. There is a difference in Committee this evening but a number of concerns have been expressed. These include the lack of draft regulations which, I am afraid, reflects the fact that MRO was a late amendment to this important Bill.
Having said that, perhaps I could talk a bit about the powers and then quickly address the amendments so that the Committee can understand where we are coming from, ahead of any discussions. First, any use of the power would need to be on the basis of strong evidence to justify the exclusion of a type of agreement or type of company. Without this evidence, it would be open to challenge. For example, if it were used to exclude one or two pub companies, it could be seen as a discriminatory use of the power and would lead to a high risk of successful legal challenge. Any attempt to undermine the principle of the legislation—that is, by exempting all pubs—would be an improper use of the power, as it would be subverting the will of Parliament.
Amendments 91AZA, 91BA and 91CA would include the free-of-tie market in the scope of our provisions. As I set out in my opening remarks, the evidence of the past 10 years, from the BIS Select Committee and the government consultation onwards, shows that the problems in the pub industry relate to abuses of the tied relationship. We do not have evidence of a problem in the free-of-tie or managed market.
Amendments 91A, 91B and 91C in the name of the noble Lord, Lord Berkeley, seek to lower the threshold to capture pub companies with 100 or more tied pubs. I have probably covered this ground adequately in our earlier discussions, and in the interest of time, if the noble Lord is happy, I will not repeat the points.
I should probably talk about the need for Clause 68; that might be helpful. It is an important clause, as it is the means by which we can ensure that the definition of a “tied pub” does not inadvertently capture a restaurant or hotel premises. We are already aware of a fish and chip restaurant chain that may meet the definition as set out in Clause 65, and it is possible that there could be other such cases. We would be happy to talk through that concern. We all think that we know a pub when we see one and we think we know the difference between a pub and a fish and chip shop, but increasing food consumption in pub, gastropubs and so on has made separation by legal definition more complex. Clause 68 provides a power for the Secretary of State to exempt a particular type of tenant or premises from the Pubs Code by secondary legislation so that only pub premises are in scope.
The noble Lords, Lord Stoneham and Lord Whitty, were concerned about pubcos turning tied pubs into free-of-tie pubs by coming under the threshold. The evidence that we have of abuse is in the tied market. As I said earlier, if pub companies turned pubs into free-of-tie pubs, their ability to exploit their tenants through the tie would be gone.
Lastly—and I am sorry because he spoke first—my noble friend Lord Howard championed small operators, which I was glad to hear, and queried the power of the Secretary of State to amend the threshold by way of secondary legislation. The Government are clear that the threshold we have proposed of 500 or more tied pubs is the right one, because it is designed to ensure that the Pubs Code and the market rent only option are targeted at the part of the market where we have a problem. However, legislation needs to be capable of responding to changes in the market that may come about in the longer term—for example, if new pub ownership models were to emerge that merited exclusion from all or part of the code.
I hope that we can agree the government amendments so that we have a base for further discussion ahead of, and on, Report. In view of the explanations I have given, I hope that noble Lords will not move their amendments.
The Deputy Chairman of Committees
My Lords, I must advise that if Amendment 91AD is agreed then Amendments 91B to 91CA will be pre-empted.
Amendments 91AA to 91AD
Baroness Neville-Rolfe
Baroness Neville-Rolfe
“(b) who is party to negotiations which have reached the stage of a provisional trading agreement for the prospective tenancy of a premises which are, or expected to be, a tied pub ahead of any final terms of the agreement being agreed.”
Lord Hodgson of Astley Abbotts
My Lords, Amendment 93 could be called, in shorthand terms, the “shopping around clause”. My noble friend the Minister may have spoken to this earlier; I hope that she will be able to reassure me in fairly short order that my amendment is no longer needed with the new provisions.
Clause 67, to which this amendment refers, defines inter alia the term “tied pub tenant”. It does so in respect of prospective tenants at subsection(1)(b), which says,
“who is a party to negotiations relating to the prospective tenancy of or licence to occupy premises which are, or on completion of the negotiations are expected to be, a tied pub”.
That is a very loose definition. An individual might make a casual inquiry—even by telephone—about taking on a tied tenancy but may be without any serious intent, at least initially, of eventually signing up. However, the pubco does not know that when the telephone call is received. As such, under this wide definition in the new regime, it will have to go through considerable administrative procedures at some cost at this early stage.
My Amendment 93 would narrow the definition to people who are getting close to signing up and making an arrangement by inserting the words,
“who is party to negotiations which have reached the stage of a provisional trading agreement for the prospective tenancy of a premises which are, or expected to be, a tied pub ahead of any final terms of the agreement being agreed”.
This has the effect of requiring serious administrative effort to be made only once the tenant has shown himself to be of serious intent. It in no way weakens his position; it merely ensures that he is likely finally to take on a tenancy before he qualifies as a tied pub tenant, with all that that implies under the code. I beg to move.
Lord Newby
My Lords, I hope that I can reassure my noble friend Lord Hodgson on this point. Evidence from the Government’s consultation in 2013 and correspondence we have received from tenants shows that many such prospective tenants appear to have been given insufficient information, or have even been misinformed, by large pub-owning companies about the pub that they are negotiating to take on. The Pubs Code will ensure that prospective tenants receive the information they need to make a considered decision on whether the deal they are being offered is fair and right for them.
I completely understand the concerns that my noble friend raised. As he said, we clearly need to avoid the situation where any casual enquirer is entitled to all the code’s protections. That would be unnecessary and onerous for the pub companies. At the same time, we need to ensure that prospective tenants receive the information promised by the code early enough in their negotiations with the pub company to influence their decision. That is why we have carefully phrased Clause 67(1)(b) to restrict these rights to those who are,
“a party to negotiations relating to the prospective tenancy”.
If there have been no negotiations, there would be no right to the details. The pub-owning company would not be in breach of the Pubs Code for failing to supply them. We will consult on the code before it is finalised, which will allow us to ensure that we will draw the line in the right place, in a way that takes account of the procedures that different pub companies use to recruit and take on new tied tenants. I hope that that gives my noble friend the reassurance that he seeks.
Lord Hodgson of Astley Abbotts
I am grateful to my noble friend. His remarks make clear that the Government have hoisted on board the danger of considerable administrative cost and effort for casual inquiries, which is the thrust behind my amendment. I should just like to get reassurance from outside that the “party to negotiations” carries the weight that he implied in his remark. If it does, I am more than content and, for the purposes of this evening, I am happy to withdraw the amendment.
Lord Hodgson of Astley Abbotts
Amendments 94 and 95 once again concern Clause 67, the definition clause—in particular, the definition of a tenancy in Clause 67(2). Amendment 94 would remove line 43, the words,
“includes a tenancy at will”,
from the provisions of the code. A tenancy at will is essentially a short-term informal agreement which imposes no timescale on either side. It would therefore seem illogical to impose the relatively heavy-duty encompassing arrangements of the code in such circumstances, which either side can abrogate at any time. For the same reason, Amendment 95 would exclude from the code short-term temporary agreements by the wording:
“The definition of tenancy … excludes temporary agreement where the tenant has occupied the same pub premises for less than twelve months”.
There are many reasons why individuals take on a pub under temporary agreements. For example, earlier I referred to the hard work and long hours required to run a successful pub. Some people find the experience not entirely to their liking and give up. Others, perhaps more wisely, decide to give the experience a try for a few months to see how it fits with their lifestyle and whether they really enjoy it. They do so under a temporary agreement. It surely cannot be logical to apply the administrative burden of the new regulatory regime in such circumstances.
There are those who argue that that will provide a loophole to evade the new regime—the noble Lord, Lord Snape, will no doubt be on his feet in a second. I accept the existence of that suspicion. The answer must be to draft the code or the primary legislation so that temporary agreements cannot last more than 12 months and that one temporary agreement with the same premises and tenant cannot follow another. That will give people the opportunity to dip their toe into the water and see how they like it, without having to go through a lot of administrative hassle. That is a simpler, better and less costly way to encourage tenants to come forward and see whether they like it without having to take on all the administrative requirements of the code. In that spirit, I beg to move.
Lord Snape
My Lords, I enter the debate with some trepidation after the way that it was introduced. I, too, will be very brief. I am grateful to the noble Lord, Lord Hodgson, for making my speech for me. He underlined the dangers of the amendment. Tenancies at will are where part of the problem lies. I go back to my daughter and son-in-law’s experience. They think that it must be wonderful to have a tenancy on a country pub with ivy round the door, great customers and all the rest of it. Of course, they will be treated very well by the pubcos. They will be looked after; their delivery will come on the proper day; lots of things will be done on their behalf. After a year, once they sign up, they will find out the reality of the situation. It is at that stage that many problems arise, despite the blandishments of the noble Lord, Lord Hodgson, so I hope that despite his honeyed words, the Minister will resist the temptation. I say to him: nice try but it will not wash, I am afraid.
Baroness Neville-Rolfe
My Lords, I thank my noble friend Lord Hodgson for his amendment on tenancies at will. I was very glad also to hear from the noble Lord, Lord Snape, given his great experience in the industry.
I agree with my noble friend that tenancy at will agreements are important in enabling pub companies to cover short-term gaps, to keep pubs trading in between tenants. They also allow the company time to complete due diligence on a new longer-term tenant. Temporary agreements can be useful to a prospective tenant as a trial run, prior to committing to a longer-term agreement. I have known ex-senior civil servants who have taken on pubs and found them quite a challenge.
In the other place, my honourable friend Jo Swinson committed to consider calls to exempt genuinely short-term agreements from the Pubs Code. These calls came from pub companies and some tenant groups. I can announce today that the Government will use the power in Clause 68 to exclude from the code tenancies at will and temporary agreements that do not extend beyond a certain limited period. This is to ensure that agreements that are meant to be temporary do not run on for long periods of time as a way of avoiding the code. This does not require an amendment to the Bill but, as part of the consultation on secondary legislation, we will consult on the length of agreements that should be exempted.
We have heard different views from stakeholders as to the length—including 12 months, as proposed by my noble friend—but we have also heard calls for six and nine months. Therefore, we will consult more widely on the length of any exemption period before bringing forward regulations. I hope my noble friend will feel able to withdraw his amendment.
Lord Hodgson of Astley Abbotts
I am very grateful to my noble friend for that commitment. I am not stuck on 12 months. All I think we should be trying to provide is a means for people to test out the possibility of becoming a tenant and, therefore, a reasonable period of time. It could be six or nine months; I am quite content about that. The important thing is we should have a regulatory-light opportunity for people to try it out and then if they decide that they want to make it their career, they get the full protections anticipated under the code. In those circumstances, I am happy to withdraw the amendment.
“( ) The definition of “tenancy” in subsection (2) excludes franchise agreements whereby no rent is paid by the franchisee and their share of the profit is unaffected by the price paid for tied products.”
Lord Hodgson of Astley Abbotts
My Lords, this amendment is concerned with the franchise of pub operations. I have remarked repeatedly during the past few hours that the point of weakness of the tie is where the interests of the two parties—the pub owner and the tenant—diverge.
That tension occurs in two places in particular. The first is the rent being charged for the tied premises. The belief or allegation is that landlords are insufficiently deterred from increasing the rent charged. I would emphasise that pubcos have an interest in avoiding pubs closing, particularly those that have an integrated model because they need the outlet for their beer, but undoubtedly the tension exists and, as I said, I do not doubt that some bad cases have occurred. The second point of tension is in the pricing of the goods that the tied tenant is obliged to sell. Again, the allegation is that the pub owner will push the sale price as high as possible. Again, there are arguments why this is not in the pub owner’s interests. Again, let me recognise that the conflict of interest exists.
Some pubcos, particularly integrated pubcos, have sought to address these twin challenges. They have done so by creating a business model based on revenue-sharing. Under such a model, both parties have an interest in maximising turnover. This business model is exactly like a franchise for McDonald’s, Pizza Express or Costa Coffee. Indeed, the agreements have been accredited by the British Franchise Association.
How does it work? The franchisee receives the property, fixtures and fittings, capital investment, and repair and replacement of the fixtures and fittings of the building. All his bills are paid, including rates and utilities. The only bills not paid are council tax and staff wages. He also has services such as training, marketing and business support—the SCORFA arrangement we talked about earlier—and he has products to sell. For this, the franchisee—the operator of the pub—takes a share of the income at the cost of a business fee of about £5,000, compared to the £250,000 that you have to pay for a McDonald’s franchise, for example.
The cost of the products to the franchisee is irrelevant because they are paid a percentage of the revenue of the pub. The goods are delivered to the site and the franchisee holds them on behalf of the franchisor—the brewer. The products are held on the sale-or-return basis. At no time does any cash change hands in respect of payment for the products. The franchisee and franchisor take an agreed share of the total income. The franchisee has the ability to set the retail sales price for the beer in the pub being operated. The pubco effectively supplies everything, with the franchisee then dictating the price to sell it at. The pubco shares the income and, on top of this, the franchisee also receives a profit share. Under the agreement, the percentages and shares of the profit are set out in the contract and cannot be altered.
It appears that this revenue-sharing franchise-type arrangement will still fall within the provisions of the proposed code, so Amendment 96 seeks to insert a new subsection into Clause 67, which is concerned with the definition of tenancy. It proposes that:
“The definition of ‘tenancy’ in subsection (2) excludes franchise agreements whereby no rent is paid by the franchisee and their share of the profit is unaffected by the price paid for tied products”.
This approach in the wording ensures a community of interest between the franchisor and the pubco. If the Government do not accept this amendment, or one like it, they will be singling out the pub trade for very discriminatory treatment. If the argument is that the franchisee has to sell a certain type of product, that is true—but if you hold a McDonald’s franchise, you have to stock Pepsi and are forbidden to sell Coke. Members of the Committee might liken it to walking into a Costa Coffee and asking, “Please can I have a Starbucks?”.
This revenue-sharing arrangement ends the possibility of divergence of interest between pub owner and tenant. It provides a useful model for future pub developments and I trust that the Government will either be able to reassure me tonight that it is not intended to include these or make the necessary changes on Report. I beg to move.
Lord Berkeley
I really cannot imagine how anyone would want to take a franchise like this. It is a variation on the old zero-hours contract, which we talk about. It could be a franchise with zero income and the hours being 24/7. Why should anybody want this contract? I will be interested to hear what the Minister says, but the pubcos must love it.
Baroness Neville-Rolfe
My Lords, I thank my noble friend Lord Hodgson for this amendment on franchises and the noble Lord, Lord Berkeley, for his intervention. Pub franchises are of course covered by these measures because they fall within the definition of a tied pub in Clause 65. I understand my noble friend’s argument that a pub franchise agreement based on a share of turnover, rather than a tied rent, can lead to a better alignment of interests between a pub company and a tenant.
However, there are other aspects of the pub company and tenant relationship that can lead to unfairness, in the same way as for more traditional tied pubs. The Pubs Code includes transparency protections for tied tenants to ensure that they are clear as to what they are signing up to. We believe that these protections and others in the code should be available for all tied pub tenants, including those with a pub franchise agreement. I can, however, provide some reassurance to my noble friend. If, as he says, price increases make no impact on the tenant in a franchise agreement, the MRO-only trigger for pricing will never apply to a franchise agreement. Should a franchisee exercise the MRO option the pub company will still be able to benefit from the stocking requirement, so the tenant could still be required to stock its beer and/or its cider. The pubs company’s obligation to provide services as part of the franchise agreement would of course fall away.
I am, however, afraid that we believe that to exempt franchises would leave a loophole in the legislation. Tied pubs could be converted to franchise pubs to gain exemption from the code. If pub franchise agreements seek to reduce some of the risks of the tied model for tenants by revenue-sharing, as my noble friend Lord Hodgson explained, we would welcome that. One would expect such agreements to be less likely to fall foul of the Pubs Code. In turn, one would expect those tenants to be more satisfied and less likely to request the MRO option. This is not a reason, however, for removing franchise agreements from the scope of the legislation where we remain uneasy about opening up a loophole. I appreciate my noble friend’s amendment but I hope that he will feel able to withdraw it.
Lord Hodgson of Astley Abbotts
My Lords, on a rather sour note, I am afraid that that was a very disappointing response. To say that it is a loophole, this arrangement with revenue sharing does not come within the tied tenancy arrangements, as envisaged. The tension in the tie is the rent you pay and the price you pay for the prize.
Lord Snape
I have never heard of one but I am sure the noble Lord can tell us.
Lord Hodgson of Astley Abbotts
There are probably 400 or 500. The idea is that it is a very easy way for a tenant to start in the pub trade and he shares the risk as he has a revenue-sharing arrangement. Unless the Government say that they will require McDonald’s and others to offer other people’s products, there is no argument for discriminating against pubs that are franchises as long as they have franchises that match what happens in McDonald’s, pizza franchise companies and the coffee companies.
It is just a way of driving the pubs into a corner and finding ways that they cannot live with. The arrangements are used frequently by many other industries, and if pubcos are to prosper they must be able to use similar new developments and not be trapped in what is essentially a framework that has existed for hundreds of years. It was an innovative idea by pubcos to get away from the problems that have bedevilled us all this afternoon. I shall come back on this strongly as it has been too quickly and too easily brushed aside. But, for tonight, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
Baroness Neville-Rolfe
““independent assessor” has the meaning given by section (Market rent option: procedure);
“market rent” and “market rent option” have the meanings given by section (Pubs Code: market rent option);
“market rent option procedure” has the meaning given by section (Market rent option: procedure);
“MRO-compliant”, in relation to a tenancy or licence, has the meaning given by section (Pubs Code: market rent option);”
““product or service tie” means a product tie or a service tie;”
“service tie” means any contractual obligation of a tied pub tenant to receive a service supplied by—
(a) the landlord of the tied pub or a person who is a group undertaking in relation to the landlord, or(b) a person nominated by the landlord or by a person who is a group undertaking in relation to the landlord;“stocking requirement” has the meaning given by section 65.”
“( ) In this Part, references to “rent”, in relation to a licence to occupy, are to be read as references to the fee payable in respect of the licence.”
Baroness Neville-Rolfe
Baroness Neville-Rolfe
“Fines on summary conviction in England and Wales: transitory provision
(1) Subsection (2) applies to any provision of this Act that provides that a person guilty of an offence triable either way is liable on summary conviction in England and Wales to a fine.
(2) In relation to an offence committed before section 85(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force, the reference to a fine is to be read as a reference to a fine not exceeding the statutory maximum.
(3) After section 1131 of the Companies Act 2006 insert—
“1131A Fines on summary conviction in England and Wales: transitory provision
(1) In relation to an offence committed before section 85(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force, in the provisions mentioned in subsection (2), “a fine” is to be read as “a fine not exceeding level 5 on the standard scale”.
(2) The provisions are—
(a) section 156A(7)(a);(b) section 167D(5)(a);(c) section 279D(5)(a);(d) section 853L(2)(a).(3) In relation to an offence committed before section 85(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force, in the provisions mentioned in subsection (4), “a fine” is to be read as “a fine not exceeding the statutory maximum”.
(4) The provisions are—
(a) section 790F(2)(b)(i);(b) section 790R(3)(b)(i);(c) section 1028A(11)(b)(i);(d) section 1032A(12)(b)(i);(e) paragraphs 7(1)(b)(i), 13(4)(b)(i) and 14(3)(b)(i) of Schedule 1B.””
Baroness Neville-Rolfe
Baroness Neville-Rolfe
Baroness Neville-Rolfe
Lord Mendelsohn
“( ) The Scottish Government may lay before Parliament legislation to extend provisions under Part 4 to Scotland.”
Lord Mendelsohn
My Lords, I guess that the least welcome comment would be, “It may be a one line clause but I have seven reasons for it”.
This is a very simple provision. Many Scottish Members of the other House, including members of the nationalist parties, voted to pass the code on the basis that the Scottish Parliament would have an off-the-shelf code to implement in their own jurisdiction should they so wish. This amendment ensures that this option stays open.
It is right that it should be for Holyrood to decide. It is a devolved matter for which they have responsibility. While it does not form part of the legislative consent memorandums under consideration by the Scottish Parliament on the measures in the Bill that the Scottish Government may be looking at, it was felt worthwhile to make this provision possible so that it would be plausible for them to do so in the circumstances that they so wished. There are many in Scotland who have reported that there may be some interest in this, and, again, that is not a matter for us. I am very pleased to see the noble Earl, Lord Lindsay, in his place. He and many others have been attuned to what is discussed there. If we amend this sensibly and well, we will be in a position to have something which, in the circumstances that the Scottish Parliament would think this is the right thing, they would be able to use. I beg to move.
The Earl of Lindsay
I am very much hoping that my noble friend will be able to reassure us that there are and have been instructive discussions with the Scottish Government on this point and that the dialogue with the Scottish Government has not come too late in the day for a co-ordinated cross-border approach, either via a Sewel Motion in this Bill or via parallel legislation introduced in Holyrood. Reassurance on these points is important in the context of this Bill, but it also has a wider importance.
Just last week, the Government published the document, Scotland in the United Kingdom: An enduring settlement, in which they stressed that it was essential that there was effective intergovernmental working and close collaboration between the United Kingdom and Scottish Governments. That statement restated an important recommendation from the Smith commission report, published in November 2014. That, in turn, restated a central recommendation of the Calman commission in 2009, on which I sat. This is the reason for my interest in my noble friend being able to reassure us that there has been timely, constructive dialogue between London and Edinburgh on this Bill and on this particular point.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord for his amendment and for giving me the opportunity to say something about the application of these measures in Scotland. I am delighted to hear from my noble friend Lord Lindsay. I have discussed this matter with him and the noble Lord, Lord Reid, outside the Committee. The measures in Part 4 of the Bill apply to England and Wales only, of course. This is because regulation of tied pubs is a devolved matter in Scotland and it is for the Scottish Government to make their own legislation. Should they decide to legislate, they would not need any additional powers to be conferred by the UK Government.
My honourable friend Jo Swinson has recently written to the Scottish Minister for Business, Energy and Tourism encouraging the Scottish Government to consider bringing forward their own legislation in this area. My officials stand ready to assist as necessary. We understand that the Scottish Government have been engaging stakeholders from all sides of the debate and are considering whether there is evidence for a similar intervention in Scotland. I hope that the noble Lord will, therefore, accept that his amendment is not required.
Before I sit down, as this is the final day of the Committee, I should like to take a brief moment to put on record my thanks at the end of what—for some of us—has been a dry January, which has rightly ended with us talking about beer. First, I would like to thank all the patient Chairs of our Committee and those behind the scenes: Hansard, the clerks and the doorkeepers who have helped ensure our debates run smoothly and finish on time. I am also very grateful to my noble friends Lord Popat, Lord Newby and Lord Nash, on this side of the House, for their support in steering this Bill through Committee, and to my noble friend Lord Stoneham for being so loyal an attendee.
Furthermore, I would like to thank officials from the nine government departments who have been here to support the Government: BIS, the Treasury, HMRC, the Department for Education, UK Export Finance, DCLG, the Cabinet Office, the Ministry of Justice and DWP. We even talked about Gibraltar on the day that the noble Lord, Lord Mendelsohn, went missing and I would like to congratulate him on the refreshing new perspective he has brought to our work. I would also like to say how glad I was to see the noble Lord, Lord Stevenson, back today. I know he has been ill and we have had great collaboration with him and his colleagues.
Most importantly, I thank the noble Lords opposite, and all noble Lords who have been involved in the Committee, for their contributions to our debates. We have scrutinised the Bill in full, with some good and thorough debate. I have welcomed the spirit of co-operation that has been apparent even today. This is a vital Bill because small businesses are the engine of Britain. This Bill will help them innovate, grow and compete in many ways—from prompt payment to access to Government contracts. I look forward to noble Lords’ support for the Bill in its remaining stages to ensure that it reaches the statute book this spring.
Lord Mendelsohn
My Lords, I thank the Minister for her reply. On our amendment, all I would say is that between now and Report we will have some indication of where the Scottish Government are going, and we may well return to it in due course. At this stage, we would be very interested to hear her response.
I say from this side a strong thank you to the Chairmen, doorkeepers, officials, Hansard, and everyone else who has helped with these proceedings, and to colleagues for being such an interesting group in getting to grips with the Bill.
This is done in a spirit of co-operation. There are many occasions in politics where we are at daggers drawn, and many on which we find common cause. Sometimes we are in the middle. This is one where we are rather more towards one pole than the other. Our biggest criticism of the Bill is that it does not go far enough, but it would be churlish to say that that is a reason why we should not give it a great deal of co-operation. In that regard, I thank the noble Lord, Lord Popat, and the Minister, the noble Baroness, Lady Neville-Rolfe, for their contributions to the debate. I hope that in the weeks we have, on some of the more interesting issues, we can continue that spirit of co-operation. I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
Baroness Neville-Rolfe
“( ) Section 13 (electronic paying in of cheques etc) comes into force—
(a) on the day this Act is passsed, for the purpose of enabling the making of regulations under section 89D of the Bills of Exchange Act 1882 (as inserted by section 13); (b) on 31 July 2016, for all other purposes.”
House of Lords
(9 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text
Schools: Faith Schools and Free Schools
(9 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Massey of Darwen
To ask Her Majesty’s Government what are the conditions which must be met before a new state-funded faith school or free school is allowed to be established; who sets and agrees the conditions; and how the conditions must guarantee a broad and balanced curriculum for pupils.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)
My Lords, the department sets out clear conditions in guidance and application guides for the establishment of all schools. All state-funded schools, whether faith-designated or not, must deliver a broad and balanced curriculum. This is a requirement of education legislation or of their academy funding agreement. Ofsted inspections place a clear emphasis on assessing whether schools are providing a broad and balanced education.
Baroness Massey of Darwen (Lab)
I thank the Minister for that response, but is he aware that a recent Ofsted report described a free school as follows:
“any teaching or learning going on at the school is purely incidental … Student achievement is weak … Standards are low …one of the worst schools”,
that they have inspected, and criticised bullying and discrimination? It seems evident that there must have been some lack of organisation in setting up that school. Is it worth risking children’s achievement and well-being for an educational whim?
Lord Nash
My Lords, we have a rigorous approach to setting up new schools. They will not all work. We have closed a couple of free schools, with a total number of 200 pupils. Although that is very serious for those pupils and their parents, that compares with getting on for a quarter of a million new free school places that we will introduce under the free school UTC and studio school programme. Of the 87 pre-warning notices that this Government have issued to academies, more than 60% have been to sponsors approved by the previous Government, so it is clear that setting up new schools is not entirely straightforward.
Lord Storey (LD)
My Lords, my noble friend has been a great proponent of British values. Does he agree that respecting and understanding other religions might find a route in ensuring that faith schools had a percentage of pupils from other faiths?
Lord Singh of Wimbledon (CB)
My Lords, I declare an interest as the director of the network of Sikh organisations responsible for the inspection of Sikh faith schools. The teaching of gender equality and respect for other faiths is obligatory in Sikh faith schools. Does the Minister agree that any school that fails to do that should be treated as a failing school?
Lord Tebbit (Con)
My Lords, the noble Baroness, Lady Massey of Darwen, spoke of the dangers of reacting to an educational whim. Will my noble friend assure me that he will not react to the educational whims of that extraordinary group of people who my right honourable friend Michael Gove rightly described as “the Blob”? They are an obstruction to education.
Lord Harrison (Lab)
Is the Minister aware that much of the recurring criticism of these schools is about the failure to deliver education on religion which encompasses all religions and those people who have none at all?
Baroness Hussein-Ece (LD)
My Lords, given the concerns recently raised by some free faith schools which have cropped up in recent years, is it not time to have a bit of an evaluation of faith schools and their place in our society rather than rolling out even more?
Lord Nash
Faith schools and church schools are an essential part of our school landscape. Church schools represent 34% of all schools and 25% of all pupils are educated in them. Church schools consistently outperform other schools and have a superb record of community cohesion. We want to provide parents with diversity and choice.
The Lord Bishop of Leicester
My Lords, does the Minister agree that “faith school” covers a variety of different kinds of institution? Church of England schools are not faith schools in the narrow sense of providing an education for people of just one faith. In places such as Leicester they provide a rounded education for the whole community, including many of other faiths who value highly what they have to offer.
Baroness King of Bow (Lab)
My Lords, will the Minister confirm that the only way to establish a faith school—like any new school—is via the free schools programme? Some of the problems that we have seen with faith schools are therefore evident more widely—namely, lack of oversight and lack of qualified teachers. As with the Al-Madinah free school and others, that lack of oversight and the presence of unqualified teachers have damaged the education of children in communities in Derby, Durham and Crawley, where free schools have had to close. I know that the Minister will say that many free schools are excellent, and he is right: free schools, like state schools, can be outstanding or inadequate. However, I hope he will agree that that is not the point. The point is that, unlike state schools, free schools can employ unqualified teachers and avoid robust scrutiny. When will the Government better protect and scrutinise the education of children in free schools?
Lord Nash
I point out to the noble Baroness that a faith school can be set up through the VA route, although very few are established in this way. I think I have already pointed out that our record of failure in establishing new schools is rather better than that of the previous Government. I am delighted that we are back on unqualified teachers because, if that is all we have to argue about, it clearly shows cross-party support for our education reforms. In fact, there are fewer unqualified teachers under this Government—only around 3% are unqualified. I am surprised that the Labour Party wants to restrict people from RADA or the Royal College of Music who may be able to teach for only a few hours a week in a primary school. I find it particularly surprising that the shadow Secretary of State for Education—it should be borne in mind that he is himself an unqualified teacher, went to a school which has many unqualified teachers, and failed to answer Jeremy’s Paxman’s question nine times—is quite prepared to send his own children to a school with unqualified teachers.
Asylum Seekers: Women
(9 years, 3 months ago)
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Lord Hylton
To ask Her Majesty’s Government whether they intend to consult Asylum Aid about ways to improve protection and fairness for women asylum applicants and support provided for those who have suffered gender-based harm.
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, the UK has a proud history of offering protection to those who need it, male or female. Home Office officials regularly meet with Asylum Aid and recently discussed Asylum Aid’s Protection Gap campaign and other practical steps that can be taken to further improve the management of asylum claims from women.
Lord Hylton (CB)
My Lords, I welcome the positive points in the noble Lord’s brief reply. Will the Government extend childcare to all women’s interviews, especially in London and Liverpool, where it is not available? Will they provide training on gender violence to interviewers and interpreters, as is already done for the police? Finally, will they explain to women applicants why choosing a woman interviewer or counsellor can be of benefit to them?
Lord Bates
I am grateful to the noble Lord for his question and respect his long interest in this area and his work with female refugees. On his first point, we are very much open to reasonable suggestions as to how childcare could be improved. There are some practical difficulties on some of the sites, particularly in central London. As for having female interviewers, that is a very good step and we want to make progress on that. There is some practical difficulty over interpreters. I will get back to the noble Lord on his other points, if I may.
Lord Morris of Handsworth (Lab)
My Lords, what steps are being taken to ensure that the children of detained asylum seekers have access to a rounded education, including attending the local schools?
Lord Bates
There was a change in policy as a result of legislation that went through your Lordships’ House, which said that children cannot be detained in immigration centres. Where they are in centres because their parents are there, they are more likely to be put into places such as the Cedars, which is a family-based centre where education is available on-site.
Baroness Hussein-Ece (LD)
My Lords, Women for Refugee Women’s recent report highlighted how women held in Yarl’s Wood detention centre were continually humiliated by male staff while they were dressing, showering and using the toilet. Given the ongoing reports of unacceptable treatment of women for some years in this establishment, is it not time to put a stop to women in these circumstances—female asylum seekers who have been raped, trafficked, tortured and subjected to FGM—being held in detention centres?
Lord Bates
We are very clear that all female asylum seekers should be treated with dignity and respect. It is also true that when the Chief Inspector of Prisons visited Yarl’s Wood and produced his report, he found that it was a safe and respectful place. We have seen the report that was prepared. It contained some very disturbing accusations and we have asked its authors to share the sources of that information with us so that it can be properly investigated.
Baroness Smith of Basildon (Lab)
My Lords, the noble Lord has tried to be positive in his response but these allegations are extremely serious. As the noble Baroness said, they often concern women who are fleeing sexual violence. The Government’s response to the allegations was to expect contractors, in this case Serco, to maintain the highest standards. Will the Minister accept that saying it does not make it happen? When the UN investigators are not permitted to go into Yarl’s Wood to see for themselves, that is something of a disgrace. Will the Government commit to a thorough, fully independent investigation into the circumstances at Yarl’s Wood as a matter of the utmost urgency?
Lord Bates
Certainly, as we have said, if the information is supplied to us, it will be investigated very thoroughly indeed. The circumstances there have been subject to regular investigations by Her Majesty’s Chief Inspector of Prisons. In relation to the UN rapporteur who asked to visit, that was a very last-minute request. We had set up a very detailed programme, including meetings with the Chief Inspector of Prisons and the Home Secretary, and had offered other meetings. We are open to further approaches in due course in the future.
Lord Harris of Haringey (Lab)
My Lords, is it not the case that in a number of instances the women who made these very serious complaints have been deported before they can speak properly to the investigators? Surely, that is not something that the Government condone.
Lord Bates
No, it is not, and that is why we want the information to be brought to our attention as soon as possible. We cannot act if it is not shared with us.
Care: Budget
(9 years, 3 months ago)
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Lord Clinton-Davis
To ask Her Majesty’s Government whether they intend to cut the care budget and, if so, by how much.
Baroness Jolly (LD)
My Lords, social care budgets are set by each individual local authority. This allows councils to work with their residents to decide how best to make their spending decisions, based on local priorities and needs. In 2015-16, the better care fund will provide £5.4 billion of investment into better integrated care, from 1 April 2015, based on joint plans that have been developed locally.
Lord Clinton-Davis (Lab)
Does not the policy which the Government have declared in the past hit, in particular, the old and the vulnerable? Is it not a fact that £1 billion is being removed from the care budget, revealing that the Government are determined at all costs, whatever the price paid by poorer people, to reduce the role of the state and to punish those who cannot hit back? Why instead do the Government not deal with the bankers in the same way? Are they not primarily responsible for the position we are now in?
Baroness Jolly
My Lords, I can speak for local authorities but not, regrettably, for bankers. The Government have made care a priority, which is why we have given an extra £1.1 billion to help protect social care services this year, on top of the additional funding in recent years.
Baroness Pitkeathley (Lab)
My Lords, whatever the size of the care budget, I think everybody would agree that the majority of caring responsibilities fall on the caring families. Over the course of the next Parliament, some 10.5 million people will start being carers. Is the Minister confident that the budget will be sufficient to provide them with the information and support they so desperately need?
Baroness Jolly
A lot of work has gone on in preparing local authorities to give assessments to carers for their needs and support, in exactly the same way as they assess the people they care for. The cost currently being factored in for that is £104.6 million—£31.3 million on assessments and £73.3 million on the provision of support.
Baroness Greengross (CB)
My Lords, a couple of days ago, Age UK published its scorecard, which shows that, despite rising numbers of older people and rising demand for services, the amount spent has fallen dramatically over the past few years. In fact, it has gone down by over 40%. There are some shocking figures, for example that half of the people who struggle to get into a bath or to wash do not get any help, and that one in three of those who cannot go to the toilet without help are not getting any help, and preventive services are going down. In the light of that, does the noble Baroness not think that, nationally, it is time for the Government to come in with some direction?
Baroness Jolly
The Government have been trying very hard to give direction. One issue that we have been trying to direct is integrated care, joining up care services. However, public finances are in a precarious position. The deficit is still projected to be over £100 billion. The report from Age UK is a very good and interesting read, but I discussed it with officials this morning and we could not follow some of the figures and ways of working from its results.
Baroness Barker (LD)
My Lords, will the Government extend the better care fund into future years in order to transfer resources from the NHS to social care, so that the number of people having to go into hospital can be reduced?
Baroness Jolly
Certainly, that is the Government’s aim, and we legislated to establish the better care fund, providing £5.4 billion from this year through to next year. Quite what happens thereafter will depend on the result of the election in May.
Lord Hunt of Kings Heath (Lab)
My Lords, is the noble Baroness seriously saying that the Government are not responsible for the funding cuts to local government and the consequent impact of a reduction in social care services? On the better care fund that she referred to for the next financial year, I refer her back to the King’s Fund quarterly monitoring report, which we discussed yesterday, which showed that 83% of NHS trust finance directors were not confident that the fund will be able to reduce pressure on A&E services. The better care fund is destined to fail.
Baroness Jolly
I think the noble Lord will expect me to disagree with him on that issue. A lot of work has gone in with local authorities, with the CCGs and with NHS trusts to try to ensure that that work succeeds.
Baroness Howarth of Breckland (CB)
My Lords, the noble Baroness will know that local authorities and health services that have already combined their services are still struggling. Indeed, on the radio today they said that they are doing their best but they cannot give the kind of service they want. I give only that example, but the noble Baroness will know of many others. Yesterday I asked her—and I ask again—how she can hold local government services to account on quality when they are all saying that, without proper funding, quality will fail. Can the noble Baroness answer that question today?
Baroness Jolly
I am sorry that I failed to respond to the question yesterday. Quality, of course, is monitored by the CQC. Certainly, it looks at all local authority and other care providers and, indeed, the NHS. As I said earlier, the Government make decisions about how much funding to put into community local government, the whole pot then goes down to local authorities and it is local decision-makers who decide how much money goes into which budget.
Lord Lexden (Con)
In this week that marks the 50th anniversary of Churchill’s death and state funeral, would we not do well to reflect for a moment on a few simple, eloquent words of his on this subject? In 1951, he wrote:
“The care and comfort of the elderly is a sacred trust”.
Must we not do all that we can in our time to meet that great man’s standard?
Baroness Jolly
I think that is highly laudable. However, the situation that we find ourselves in is that over the past five years we have had over 1 million more over-65s, and unfortunately that adds hugely to the care bill. So, I regret that we may not be able to meet some of Winston Churchill’s demands.
The Countess of Mar (CB)
My Lords, at the beginning of last month, I led a debate on the lack of a governance framework for social and health care. Has the noble Baroness taken time to think about what I said? She offered me a meeting but that has not transpired.
Baroness Jolly
I am sorry that my noble friend Lord Howe is not here because he and I discussed that issue together when he returned from his trip, and it was on his list of things to do, so I will contact his office about it. As regards governance, where local authorities and NHS trusts work together, one of the first things that they put down, if you like, is how the governance should operate between the two organisations.
Baroness Farrington of Ribbleton (Lab)
One of the complaints that the Minister must have heard is that her Government—who apparently are not responsible for bankers—are micromanaging what happens at local level, because they determine not only the size of the grant but spending targets. There is a terrible mismatch between those areas of the country which need to spend more than other areas and the targets and grant that those authorities are given. I cite my own city of Preston, and Lancashire, which are losing money and are areas of deprivation. Does the Minister agree that it is no good the Government saying that it is up to local authorities when they are controlling everything from the centre and that they should not wash their hands of it in public?
Baroness Jolly
My Lords, for as long we have had money distributed among local authorities and the NHS, there have been debates about the fairness of how it has happened. I live in a poor rural area and certainly we say much the same sort of thing.
Chilcot Inquiry
(9 years, 3 months ago)
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Lord Truscott
To ask Her Majesty’s Government what lessons they have taken from the conduct of the Chilcot Inquiry to inform the conduct of future inquiries.
Lord Wallace of Saltaire (LD)
My Lords, the Government are committed to learning lessons from the conduct of all public inquiries, including the Chilcot inquiry. Under the Inquiries Act 2005, each statutory inquiry is required to summarise lessons learnt for its successors; others are strongly encouraged to do so.
Lord Truscott (Non-Afl)
I thank the Minister for that reply. Does he agree that the Chilcot inquiry has proven itself wholly incapable of completing its work in a timely manner? Does he further agree that in future public inquiries should be judge led and time limited?
Lord Wallace of Saltaire
There is no necessary relationship between those inquiries which are judge led and those which are time limited. The noble Lord will recall that the Saville inquiry took 12 years. The question of timeliness is very difficult. I think that part of the problem for the Chilcot inquiry has been that the number of documents to be examined, then considered, then declassified and then in some cases to be negotiated on over access with an allied Government was much larger than was originally anticipated. It would probably have helped if a larger staff had assisted at that stage in the inquiry.
Lord Butler of Brockwell (CB)
My Lords, the terms of reference of the Chilcot inquiry covered everything that happened both politically and militarily between 2001 and 2009. Is not one of the lessons to be learnt that more consideration should be given to the breadth of terms of reference of future inquiries?
Lord Wallace of Saltaire
My Lords, I entirely agree with that. It is a huge inquiry, which is one reason why it has taken so long. Perhaps the noble Lord has seen Sir John Chilcot’s letter of 20 January in which he said that they had served longer on the inquiry than any of them had anticipated. It has been longer than they expected. One of the issues for the inquiry on historical child abuse currently being set up is that the number of cases over a very large number of years that it is being asked to cover is almost daunting for an inquiry of that sort.
Lord Hurd of Westwell (Con)
Can my noble friend give the House an assurance that when the report is finally published it will contain an adequate section explaining precisely what have been the difficulties and obstacles in the way of producing the report earlier?
Lord Wallace of Saltaire
My Lords, it is an independent inquiry, but I will ensure that that gets back to the inquiry itself.
Lord Morris of Aberavon (Lab)
My Lords, we are told that one of the reasons for the delay in publication is the issue of the Maxwellisation letters. Last week, the Government in their reply washed their hands of all responsibility and said that this was a matter for Chilcot. If it is correct that, after all these years, some of those letters have been sent out only in the past month or so, it would be utterly disgraceful. Is the committee still sitting, on how many days a week, and are the costs rising by the day?
Lord Wallace of Saltaire
My Lords, the Maxwellisation process is unavoidably a lengthy one. Noble Lords who served on the post-legislative scrutiny committee on the Inquiries Act last year—a particular special committee—raised the question of the length of time it took to carry through this process. There are issues of fairness and equity in making sure that those who may well be sharply criticised by a report should have the right to see those criticisms and comment on them before publication. That is the process that is now under way and, unfortunately, it does take some time.
Lord Ashdown of Norton-sub-Hamdon (LD)
My Lords, I am grateful to my noble friend Lord Trimble; he may not be, but I am. Will the Minister reassure the House that the Government understand that the delays in publishing Chilcot—whether justified or not—are eroding public confidence in the report and in the inquiry process itself? Even allowing for the fact that this is an independent report, is there really nothing that the Government can do to impart some urgency and immediacy to this matter?
Lord Wallace of Saltaire
My Lords, I have no doubt that the members of the inquiry are fully aware of the urgency. If I had been advising them, I would have put a limit on the amount of time to be taken to respond to these Maxwellisation letters. That is one of the issues that remains. But certainly one of the lessons learnt will be that we need to ensure that inquiries do not take as long as a number of inquiries—not just this one—have taken in recent years.
Lord Cunningham of Felling (Lab)
My Lords, is not the reality of the matter that public confidence in the report and its outcomes is being undermined, not by the delay in publishing the report, as the noble Lord, Lord Ashdown, claimed, but by the unfounded, unsubstantiated allegations that people are making?
Lord Wallace of Saltaire
My Lords, the purpose of inquiries is to restore public confidence, but it would be highly desirable if this report had been completed and published by now. There have been a number of reasons for the delay, and this is not the first time that an inquiry has taken, sadly, a lot longer than was originally hoped.
Lord Trimble
My Lords, in reply to an earlier question, the Minister referred to the numerous documents that had to be sifted and I am sure that he was absolutely right. Does he not agree with me that this is where having a good-quality counsel for an inquiry is essential? Am I right in thinking that Chilcot decided that he could do without such a person?
Lord Wallace of Saltaire
My Lords, I am not so sure that the quality of the counsel in this case was important. As I understand it, it was the sheer volume of documents that had to be sifted, a number of which were discovered to be relevant at a later stage of the inquiry, and then the whole question of what could be released. This is a very new kind of inquiry in terms of the amount of highly classified material—much of it relating to discussions with other Governments—that will be released.
NHS England: Major Incidents
(9 years, 3 months ago)
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Baroness Jolly (LD)
My Lords, I shall now repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Health to an Urgent Question in another place. The Statement is as follows.
“Mr Speaker, as you know, I am always happy to come to the House to discuss the NHS. However, today I feel that we have been brought here to discuss a local operational issue which, regrettably, the Opposition have tried to spin as part of their policy to ‘weaponise the NHS’.
As I said to the House earlier this month, a major incident is part of the established escalation process for the NHS, and has been since 2005. It enables trusts to deal with significant demands, putting in place a command and control structure to allow them to bring in additional staff and increase capacity. It is a temporary measure taken to ensure that the most urgent and serious cases get the safe, high-quality care they need.
The decision to declare a major incident is taken locally, and there is no national definition. We must trust the managers and clinicians in our local NHS to make these decisions and support them in doing so by ensuring that there is sufficient financial support available to help deal with additional pressures. The document that has been questioned this morning by the Opposition health spokesman was issued by the local NHS in the West Midlands. That was done to help their CCGs work with local NHS organisations to deal with the unprecedented pressures they have been facing this winter. As the chief operating officer of NHS England, Dame Barbara Hakin, said this morning, this was a local decision and neither the responsibility of Ministers nor the result of pressure by Ministers.
Let me finish by praising the NHS for coping well with the unprecedented pressures. Performance against the A&E standard improved to 92.4% last week, which is testament to hard-working staff, and this Government will support them, not try to turn their efforts into a political football”.
Lord Hunt of Kings Heath (Lab)
My Lords, I am very grateful to the noble Baroness for repeating that Statement, and I echo her thanks to the staff of the NHS and other agencies who are coping with such pressure at the moment. The noble Baroness said that there is no definition of a major incident. Can she tell me why there is no national definition of a major incident, given that the NHS is a national service and that we need comparators between different areas of the country? Can she also tell me why a head of operations at a major trust who received the NHS England guidance said it was designed,
“to effectively stop trusts from calling a major incident”,
and that consultants’,
“hands will be tied in most cases if they wish to call a major incident for capacity reasons”?
That sounds rather like news management by NHS England. Finally, can she confirm that, when the previous Government left office, the 98% target was being met?
Baroness Jolly
I shall take the noble Lord’s questions in reverse order. The 98% target was being met—up until probably the middle of November, we were hitting our target—but, from the middle of November through the cold Christmas and New Year season, demand was really very high. In 2013, NHS England produced guidance on such issues that would, clearly, have gone to all CCGs, trusts and interested organisations. It is up to local trusts, following the guidance, to make their own decisions about how appropriate it is to call an emergency. The noble Lord has an advantage over me; I have not seen the West Midlands document, so I am not sure exactly how that trust interpreted the guidance. I have not seen the document, so I cannot follow the trust’s interpretation, but from the Secretary of State’s Statement, he probably finds it difficult to follow.
Baroness Barker (LD)
My Lords, does the 2013 guidance that was issued to all trusts still stand? Is the purpose of that guidance not only to enable individual hospitals to signal to their CCGs that they are having a problem coping but to alert other hospitals in the surrounding area that there is a capacity issue which has to be dealt with on an emergency basis?
Baroness Jolly
I think that is right. The document produced in the West Midlands is the only one of its kind. Other areas have not done the same, so they would be relying on that document. Decisions like this affect the whole health economy, so not only would CCGs be involved but directors of public health, any other acute trusts within the area, community trusts, partnerships trusts, ambulance trusts and primary care organisations. It is an effort on behalf of them all to support a hospital or an A&E department that is in trouble.
Baroness Masham of Ilton (CB)
My Lords, is the pending ambulance strike a major incident? What information is being given to the public?
Baroness Jolly
I think that the last ambulance strike was dealt with quite effectively with the support of the military, who were driving and operating ambulances. My understanding is that the strike has been called off.
Lord Christopher (Lab)
The noble Baroness said she has not seen the document, but are the Government happy that such guidance should be given? I would have thought that declaring a major incident was a matter of judgment and common sense in the locality. To be issuing guidance seems a very risky thing to do. My second question bears upon the other side of the coin. Can the noble Baroness explain the logic of minor injuries clinics being open only in the afternoon? It is difficult to arrange to be injured only in the afternoon.
Baroness Jolly
No, I am afraid that I cannot explain the logic of that, but it does sound really rather bizarre, so I guess that you need to talk to the trust concerned. As to the guidance, that is of a very high level—it is just to give pointers to trusts about how to proceed.
Lord Harris of Haringey (Lab)
My Lords, can the Minister give us an assurance that Ministers did not express the view that it was too easy to call a state of emergency for NHS trusts. Can she give us an absolute assurance that special advisers did not convey such a message to those who might make those decisions?
Baroness Jolly
I was not party to any of the conversations in the department at that time. However, the safety of patients is absolutely paramount. Although emergencies like this one were called, they lasted only for hours rather than for days and days and effectively they allowed the local trust, which was in difficulties, to call in staff and talk to surrounding trusts to ask for their support to deal with what was a fairly time-limited situation.
Lord MacKenzie of Culkein (Lab)
My Lords, will the Minister help the House: is it right that one of the matters to be considered is the possibility of reputational damage to the trust if it declares an emergency? That is nothing to do with clinical decision-making locally. Consulting the duty officer of NHS England before declaring an emergency is nothing to do with local clinical decision-making either. Perhaps the Minister can help the House.
Baroness Jolly
As I have said, patient safety and quality of care have to be absolutely paramount. Certainly, under the old system, if an NHS trust decided that it needed in effect to blow the whistle, I imagine that one would have informed somebody in the old strategic health authority that that was happening. I imagine that a trust would out of courtesy inform the person with whom they normally work in their local branch of NHS England.
Counter-Terrorism and Security Bill
(9 years, 3 months ago)
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Baroness Sharp of Guildford (LD)
Amendment 103A is the first in a series of amendments relating to Part 5 of the Bill, which relate also to the Prevent strategy and its partner, the Channel programme. Part 5 seeks to make statutory for participants in these two programmes actions and duties that have until now been voluntary. That switch from co-operation to co-option raises a whole range of issues for those involved. The universities in particular are very unhappy, about both the threat to their autonomy and the conflict that this creates with their duties under other legislation to promote debate and safeguard freedom of speech.
The provisions in the Bill and its accompanying guidance also pose problems for other educational institutions: schools, further education colleges and sixth-form colleges, which provide for the younger—and arguably more impressionable—adolescent age group. Generally, there is considerable concern that these provisions may backfire and, far from helping to improve the present position, may well serve to make matters worse. To date, all these educational institutions have co-operated voluntarily and willingly with the Prevent strategy, accepting and developing it to suit their specific circumstances within the framework of their safeguarding policies. They worry that making these duties obligatory and pushing through this legislation with relatively little consultation will not only leave teachers and administrators with a considerable bureaucratic burden, but will also alienate those on whom those burdens fall as well as those whose activities it seeks to monitor.
In this context, Amendment 103A is a probing amendment; I am not suggesting that this wording is in any way appropriate. Essentially, it seeks to draw attention to the lack of clarity in the terminology used in the Bill and, in particular, in the draft guidance, which was issued alongside the Bill. The Bill itself is very careful to use the term “terrorism” and the duty specified in Clause 21(1) is,
“to prevent people from being drawn into terrorism”.
Clause 33 states that,
“‘terrorism’ has the same meaning as in the Terrorism Act 2000”,
which is a definition that has been around for some 15 years, so presumably the courts are reasonably happy with it. The definition of “terrorism” in the Terrorism Act 2000 relates to the “threat of action”, which involves violence against people and property, endangers lives, constitutes a serious risk to health or safety, or seriously disrupts an electronic system. It is less clear, and more subjective, what “being drawn into terrorism” —the words used in the Bill—means. The difficulty arises from the draft guidance that was issued.
The guidance makes it clear that the purpose of the legislation is,
“to exclude those promoting extremist views that support or are conducive to terrorism”.
In turn, paragraph 5 of that guidance defines terrorism as,
“vocal or active opposition to fundamental British values, including democracy, the rule of law, individual liberty and mutual respect and tolerance of different faiths and beliefs”.
Further, those caught by Clause 21(1) are required to assess how far their students or pupils are at risk of being drawn, not only into violent extremism, but,
“non-violent extremism, which can create an atmosphere conducive to terrorism”.
An article in Times Higher Education suggested that that could apply to those using non-violent techniques such as sitting in a road to block the passage of equipment to be used for exploring fracking. As the Joint Committee on Human Rights pointed out, the terminology is so vague as to leave much discretion in the hands of the police and other members of the local panels being set up under Chapter 2 of this part of the Bill, whose task it is to decide whether those reported as being drawn into terrorism, or vulnerable to being so drawn, should be put on a support programme. I have a great deal of sympathy with the Association of School and College Leaders, whose briefing to us pointed out that the lack of legal certainty over definitions of terms such as “extremism” will make it extremely difficult for schools and colleges to know whether they risk being in breach of this new duty. The association remarks:
“A number of members had received the Prevent training in their schools and colleges, and while some found it helpful, others found that it was so vague in respect of what to look for that they felt even less confident about the duty after going through the training”.
It seems very difficult for us to impose these duties on such a wide body of institutions if there is such uncertainty over what this duty involves. I beg to move.
Baroness Hamwee (LD)
My Lords, Amendment 103B in this group is in my name. Widespread concerns have been expressed about Prevent becoming a statutory duty, and it has been suggested that Clause 21 be left out of the Bill. My preference would be for it not to become statutory, but I recognise that the Government have thought about that carefully and come to a view. I declare an interest as one of three joint presidents of London Councils, the umbrella organisation for the London boroughs. Like others, it is concerned.
I have two main, and rather different, points to make about the amendment. It would mean that the duty would not apply to any of the specified authorities—those listed in Schedule 3, and any more that are added,
“unless the Secretary of State has laid before Parliament a report regarding the operation of the duty”.
I shall come back to the term “operation” in a moment.
My first point is to ask whether imposing the duty is appropriate to all specified authorities, and for all the functions of those authorities. My second point is about funding, particularly in the case of local authorities. As my noble friend has said, authorities will have a statutory duty, as set out in Clause 21, to “have due regard”—and in talking about activities leading to terrorism, she has identified an important issue. My amendment would require each authority to be considered separately. The authorities are different, and they operate differently. That is why I have used the term,
“the operation of the duty”.
The scheduled authorities range from local authorities through a great variety of educational institutions, the police, prisons, health services and health service providers. Even if the duty is appropriate for a higher education institution—we will be paying a good deal of attention to that aspect today—is it appropriate for a primary school or a nursery school?
Of course, preventing people being drawn into terrorist activities is immensely important. However, I wonder whether our great arts institutions, which get a lot of public funding—although not as much as most of them would like—have more opportunity than a nursery school does to deal with this issue. A nursery school may have a responsibility, but it is a responsibility to make kids aware of the difference between violence and talking about things. That is much more important than closing off the issues.
I do not think it is enough to say, as I suspect the Minister may suggest, that there will be a proportionate light touch, because having the duty creates work and bureaucracy, and requires record-keeping. The Secretary of State will have the power to issue directions and, in the case of educational institutions, Ofsted will apply them. As has been suggested to me by some of those concerned—especially by those from the Muslim community, although my concerns are not limited to that—the records may then show that there is disproportionate criticism of schools in areas with a large Muslim population. That will give the alienating message—I believe “alienating” was the term my noble friend used—that we are concerned about.
I suspect that others will talk about the principle of applying a statutory duty to local authorities, as distinct from a function and a power, as has been the case, and would be the case. I want to ask my noble friend about services that are contracted out by local authorities, as many services are. If an authority is in the middle of a contract, it cannot change it; it certainly cannot change it unilaterally. How should it deal with that? New and renewed contracts would have to tie organisations into the new duty. That is in part why I have used the term “operations”, because I am unclear how this will work in practice.
Lord Judd (Lab)
My Lords, I am sure that a great many of your Lordships are involved in higher education and universities. I am a very committed member of court at Lancaster and Newcastle universities and an emeritus governor of LSE, having been a governor for 30 years.
This amendment obviously relates very closely to the next group. Therefore some of the things that I will say on this amendment will have application to the next group.
I beg the Minister and his colleagues to treat this matter very sensitively and not to come to any absolute conclusions before they have heard the existing reservations. The concept of the autonomy and freedom of the university is fundamental to our concept of higher education, and to the model of our university lives which is held out to the world and makes it so attractive to students, including postgraduate students, from all over the world. Whatever the Government’s intentions, they must be very careful that what is proposed will not be widely perceived as formalising matters to the point of turning the university into an agent of government. How can we have statutory responsibilities of this kind without beginning to suggest that universities must act for the Government in this respect?
Of course we want the co-operation and good will of the universities in this matter and of course there is a desperately dangerous situation in which we live, and I accept that those dangers are not diminishing. However, this makes the battle for hearts and minds more important than ever. It makes the winning of a real commitment to freedom and to the things that we stand for and are trying to defend in our society more important to leaders, not only in this country but across the world. Within a university, that is best achieved in the context of free discussion and debate. That is the whole point. This matters because unacceptable extremist ideas can be approached face on and argued out. Sensitive potential recruits for extremism can see that there is a better way. Do we feel that we are engaged in a battle for hearts and minds or do we not? If we see that that is the only lasting hope to win this battle, everything else that we do is just putting fingers in the dyke. The fundamental issue is to win the good will and the conviction of people across the world to a better way. That can happen very much—I will not say best, as that is a big claim—within our universities. This is a tremendously important issue that concerns the whole fundamental concept of the university, how it is seen and the atmosphere in which it operates.
When the noble Baroness introduced the amendment, she referred to the rush and to the failure to have proper consultation. I forget which American statesman said that the difference between an academic and a politician is that an academic argues for a conclusion while a politician has to argue for a decision. I see the potential hazards of this business of consultation in this sphere. However, if there are anxieties—they do seem widespread—there has not been adequate consultation, and that is a serious matter. Whatever is proposed, it will be strongest if it has the good will of the universities rather than all the reservations and anxieties that have been expressed by them.
For all these reasons, I commend the amendment of the noble Baroness and ask the Minister—I do not want to embarrass him but he is a thoughtful and considerate man, and I have great regard for him—to think very carefully with his colleagues before insisting upon their proposals exactly as they are.
Lord Harris of Haringey (Lab)
My Lords, I am slightly bemused by this grouping because it contains two very different amendments. Both seek clarity but the second amendment, spoken to by the noble Baroness, Lady Hamwee, raises the issue of whether the operation of the various duties can be delivered, given the resources that have been made available.
The material produced by London Councils highlights my concern that the Government are underfunding what they want to do regarding counterterrorism. The concerns of London Councils are simply that, given the duties being placed on those councils—which will be magnified across the country in other local authorities—the sums of money that the Government propose to put aside for counterterrorism are inadequate. I am also aware that the money being made available to the police service is considered by many to be inadequate.
In a Written Answer sent to me today, the Minister tells me that it would be completely inappropriate to say what sum of money has been made available for the counterterrorism police network. That is a slightly puzzling Answer because the reality is that the sums of money flowing to the counterterrorism network, in practice, go though the Metropolitan Police accounts and end up in papers put before the London Assembly. The figures are ultimately in the public domain, although they might take a while before they emerge.
My understanding is that the counterterrorism police network has suggested that implementing what the Government expected would—given the current stage of threat—require something like an additional £30 million a year. Again, my understanding is that the sum of money being made available—although I appreciate that the Minister can neither confirm nor deny this because of the position he has taken—is rather less than that. In fact, my understanding is that it is less than one-third of the sum required. Therefore, clarity about whether it is practicable to operate and bring these matters to fruition is important, which is presumably the purpose of the amendment of the noble Baroness, Lady Hamwee.
The amendment of the noble Baroness, Lady Sharp, also seeks clarity on what people are trying to prevent. I have a feeling that she is widening the definition of what authorities are required to prevent. Asking them to prevent people being drawn into terrorism is one thing; asking them to prevent people being drawn into,
“activities which may lead to”,
terrorism broadens the definition beyond all recognition.
Baroness Sharp of Guildford
I should point out to the noble Lord that I said that it was merely a probing amendment and that the wording was not appropriate.
Lord Harris of Haringey
I am not criticising the noble Baroness and I appreciate that all Liberal Democrat amendments are probing amendments, because that is the nature of their position.
The point that I am trying to make—it would be helpful if the Government could clarify this—is that although there is a definition of terrorism, I suspect that the definition of activities “leading to” terrorism is much broader. That could draw some things into the definition because people then have to make a subjective judgment as to whether something is an activity that under certain circumstances, not necessarily present, might lead to terrorism. Some clarity from the Minister on that would be useful.
However, that does not alter the general point that the noble Baroness, Lady Sharp, highlighted, which is the importance of public authorities having a clear understanding of what they are required to do and what they are supposed to be preventing.
Baroness Warsi (Con)
My Lords, I will speak to both these amendments, although it may well be that much of what I have to say relates to amendments that will follow. However, I have some general points that will also relate to the debates we are going to have later today.
When the Government bring forward something on a statutory basis, there are two very clear questions that we need to ask: is it absolutely needed, and are we sure that what we are implementing works? The concern that I have in relation to the former of those questions—and I am sure that it will be dealt with in future amendments—is whether we are absolutely clear that it is necessary to introduce Prevent on a statutory basis into the various statutory bodies that we are speaking of in this Bill, including nurseries, schools and universities.
However, I want to focus more on whether we are sure that what we are implementing is working at present. There have been concerns about the Prevent and counter-radicalisation programme for a number of years. There has been a view that it is being done badly, and reports going back as far as five or six years, from 2009 onwards, have consistently argued that the quality of Prevent work is questionable. Indeed, in some cases it has been said that the Prevent work itself has further alienated communities rather than deradicalised them. In those circumstances, it is important for a full review of Prevent to be done before we place it on a statutory footing.
The second concern in relation to Prevent is that, up to now, it has been ideologically rather than evidence based, and the basis on which Prevent work is done has been much questioned. There have been reports from the intelligence service’s behavioural science unit as to whether the linear theory of ideology leading to extremism and then violent extremism can actually be supported. It is a shame that the noble Lord, Lord Evans, is not in his seat today, because I think he would have been able to shed more light on that.
The third issue is definition, which has already been referred to today. What definition of extremism are we working to? A definition has now been provided in the guidance, which has been labelled the Prevent definition, but noble Lords may be aware that there are a number of definitions of extremism currently in government working documents. For example, the definition in the extremism task force paper after the tragic killing of Drummer Lee Rigby is different to that in the Prevent guidelines. It is incredibly dangerous to be stepping into the realms of a statutory basis for a Prevent programme that is going to rely on a definition of extremism that is not entirely defined and clear within all government departments, considering that many of the these statutory bodies will be accountable to different government departments.
My final point is that one of the challenges in relation to Prevent, and indeed in relation to what we are trying to do through the Counter-Terrorism and Security Bill, is how far British Muslim communities are on board. How far are they taking ownership of this work and how far do they feel that this work is genuinely being done to tackle radical violent extremists? Noble Lords may be aware that there was a sliding scale within government to define how far somebody was beyond the pale. If you were so extremist, we would not speak to you; if you were slightly more extremist, we would not take you as partners; if you were slightly more extremist than that, we would not fund your organisations. Nowhere is that made public. Nowhere are we aware what that would look like. Now we are talking not just about groups, organisations and individuals whom we do not engage with or take as partners or fund, but individuals who are not going to be allowed to speak, for example, on any university campus. It is important that we make sure that a proper consultation takes place with the British Muslim communities as to how this will work in practice.
The reason why I raise this is that, as noble Lords may be aware, at the weekend I wrote an opinion piece about what I described as a policy of disengagement— not just by this Government but by the previous Government—with British Muslim communities. More and more individuals and organisations have been defined as beyond the pale and are no longer engaged with. My concern is that a programme, which clearly requires the support of the communities within which it will mainly be operating, is being put in place without clear engagement or consultation with those very communities. The programme will be working in an ever closing space and without a very clear evidence base. For that reason, I have concerns.
Baroness Hussein-Ece (LD)
My Lords, first, I apologise to the Committee that I have not spoken before. However, I was present at Second Reading for the majority of the opening speeches, and I was present in the Chamber for much of the Committee stage on Monday, as I am today. I should like to speak briefly in support of the two amendments in the names of my noble friends, and I very much support what my noble friend Lady Warsi has just said.
I wonder whether, when he responds, the Minister could shed some light on why early years education has been included at all. I do not think that anyone has mentioned it yet, but I find the inclusion of early years education here very puzzling. Are we really looking for signs of radicalisation among nursery school children? I do not think that we have had a proper explanation of this and I would welcome one from the Minister.
There is a danger of alienating British Muslims in what is being proposed in relation to further education and university establishments. British Muslims are very well represented in universities, with some 50% now attending higher education. Is targeting universities and placing Prevent in the setting of a statutory duty really the right way to go about supporting the education and aspirations of young British Muslims who are keen to move on in their lives and careers and to integrate, or does it risk alienating whole communities, as has been mentioned by noble Lords around the Chamber? I have real concerns about that. There is also a danger in drawing conclusions about things that are said in universities. We all know that things are said in all sorts of wild situations—there can be debates on all sorts of subjects—but can that be equated automatically with radicalisation? Are we clear what we mean by that?
It is worth going back to something that I consider to be very important. The Minister has said on a number of occasions that the best way of tackling radicalisation and potential terrorism is by engaging with the British Muslim communities and other communities, working with them on an equal footing at the grass-roots level and not by employing a top-down approach. I fear that some of what is being proposed risks alienating people and driving them away, rather than encouraging them to engage in the way that we would want. To date, we have not had any evidence of any consultation or of how Prevent has worked historically. Those of us who have been involved in working with communities in the UK know how much in previous years—under this Government and the previous Government—the Prevent agenda polarised communities. It became a byword for the state spying on communities, not engaging with them, as my noble friend Lady Warsi has just said. It could be counterproductive. We need more evidence of engagement and consultation. We need to know how these so-called panels are going to work and whether they will be inclusive—not top-down and government led but community-led panels that will produce results.
I would appreciate it if my noble friend could respond to some of these points because they are at the heart of what we are trying to get to. If we cannot and will not engage but we go for the top-down approach—which may look very good in the headlines—will it work in practice? Will it achieve what we want it to achieve in terms of preventing terrorism?
Baroness Uddin (Non-Afl)
I, too, hesitate to speak, not having been able to take part in the Second Reading debate, but I have taken considerable interest and have listened to much of the debate today. Today I am rather inspired and I hope that the Committee will forgive me for making a few comments, particularly about Prevent. I am inspired by the noble Baronesses, Lady Hussein-Ece and Lady Warsi, and would like to comment as someone who was involved in some of the Prevent work post-9/11 with Tony Blair’s Administration.
It is interesting and insightful to hear the noble Baroness, Lady Warsi, talk about her experience of how community organisations have been dissected into what, who and where it is acceptable to speak and consult. The Labour Government had a good track record in beginning the debate and consultation with the community—widely, not just within the confines of discussing radicalisation with the Muslim community but making sure that they worked across all the different communities, including the churches, synagogues and Gurdwaras. They worked with all the communities to ensure that Prevent was being discussed as something that was of mutual interest for everyone. Of course that was a long time ago, and the Labour Party lost its way particularly after—I do not know if I dare to mention her name—the right honourable Hazel Blears took responsibility for Prevent. We slightly lost our way in terms of consulting the communities.
I want to say something about the work that was done on Prevent because of the kind of discussion that we are having now about whether there should be statutory duties to report young children, and then moving on to those of a greater height, age and experience at university. I was with about 20 university students at the weekend. They were asking what the Government were suggesting. It is becoming difficult to even be allowed to think; they were saying, “Think now before it becomes illegal”. You can imagine the kind of discussion and concern that has erupted, particularly among university students. I worry about what we do in terms of preventing radicalisation and taking that to such an extent that free discussion and free thinking are completely against the law. I urge the Minister to rethink, as was suggested.
Right across our land, some extremely good work has been done over the past 10 to 15 years to prevent so-called radicalisation. That kind of work has been completely ignored by the current coalition Government, which is disappointing. Now we have very little dialogue with any of the big organisations that not only represent the Muslim community but work across it. I urge the Government to rethink before we embed Prevent, which is dreaded and hated with equal measure. To say that it will become the law of our country is unbearable and unthinkable. There is an enormous place for discussions with the community.
I have also read the article written over the weekend by the noble Baroness, Lady Warsi, in which she commends some of the points made in the letter sent by Eric Pickles to Muslim organisations. Overall the principle of the letter and the comments made in it are probably okay, but the context is not: it was targeted at 1,000 mosques, which I do not think is exactly appropriate. To the best of my knowledge, mosques are not where many of the radicalised movements have erupted. Also, the letter ignored many of the good organisations that are working in this country; their comments and contributions are not being taken on board, and they are not being consulted. That does not bode well for this important legislation, which will impact on a very specific, targeted community. We have to be very cautious about digging in our heels in our response. It has already been said that we should not jump into passing hasty legislation just because of one or two incidents. This is the time for reflection.
Baroness Brinton (LD)
My Lords, I want to make a couple of brief comments on Amendment 103A. I echo my noble friend Lady Warsi’s comments about a review of the Prevent strategy, for all the reasons that others have spoken about. We also need to look at where different approaches have been taken. I think I spoke at Second Reading about Watford, but what I did not say is that Watford took only the community money; it did not take the surveillance money. Actually, Watford was the one place in which, on the Sunday after the Paris shootings, the traditional march in honour of the birth of the Prophet became a march in honour of those who had died. Members of the community other than those of the Muslim faith joined in that march. That is where community work through Prevent is at its best. My worry is that we have not seen a proper survey of Prevent, although it has been in operation for the best part of a decade.
I return briefly to Amendment 103A. My noble friend Lady Sharp said that the reasoning behind this probing amendment might seem slightly contradictory, but it seeks to get to some word definitions. There is a further problem around definition: the Bill itself talks mainly about “terrorism” while the statutory guidance talks about “extremism”, but the balance between the duty on extremism versus terrorism is quite distinct. I certainly cannot marry up the clauses in the Bill with some of what is set out in the guidance. I would be grateful if my noble friend could help with this as well.
Lord Scriven (LD)
My Lords, I apologise to the Committee for not having taken part in the Second Reading of the Bill, but I was out of the country. I wish to speak to this amendment because I was the leader of Sheffield City Council at the time when the Prevent strategy came in. I think that we may be going down the road of repeating past mistakes. When Prevent was brought in, it was not statutory but it was driven by a lot of central guidelines. It became clear to me and many council leaders that these central guidelines were not appropriate to our communities. The community of Sheffield is very different to the community of Bradford just down the road. The complexity of dealing with something like radicalisation requires a deep and thorough understanding of the community and context within which people work. Statutory guidance will mean that flexibility will go and straitjackets will come in because someone at a top-down level will decide that they know, from Whitehall, what is best for every community in this country
The noble Baroness, Lady Warsi, made a very strong point. Until we know what actually works, how can anyone write evidence-based statutory guidance? Work has been done on this internationally. Rik Coolsaet, an expert at the University of Ghent, who used to be the adviser to the European Commission on Radicalisation, said very clearly that we do not yet know internationally what does or does not work on a deradicalisation strategy. Exactly what is going to be evidence-based in the statutory guidance? I asked a Written Question, which was responded to on 26 January:
“how many public bodies as defined in the Counter-Terrorism and Security Bill do not meet the provisions of the Prevent duty guidance consultation document, according to each category of public body”,
but the Minister was not able to answer. The Government do not know. This is a really important point: if we do not know exactly what is happening out there already, if we do not have an evidence base for what works, how can we say to public bodies, which understand the context of their locality far better than anybody else, “You have to do this to prevent people from radicalisation or extremism”?
Furthermore, it is important to understand that where the best international examples exist—noble Lords have already given two examples, particularly that of Hayat—it is not on a statutory basis nor via a statutory body but it is a community, bottom-up approach that is dealing with this, in not just a sensitive but an effective way. While I do not for one minute doubt the genuine and important reasons why the Government have started on this road, I believe that it will have unintended consequences that will not help the problem but could mean that statutory bodies at local level will have to deal with a greater and more difficult problem. I therefore ask the Minister: what evidence base will go into the statutory guidance which will help, and can he guarantee that it will be contextualised for the different and varied communities around this country?
Baroness Brinton
I would like to add to that last point and ask the Minister for an evidence base post-2009, because much has happened in the university and college sector since that date. It would be helpful to know this, given that his letter to those of us interested in this issue referred only to incidents before 2009.
Baroness Smith of Basildon (Lab)
My Lords, I will speak briefly to these amendments, because the main debate on guidance will take place under the fourth group, where we have nine amendments relating to guidance and direction on Prevent. I noted the comment of the noble Baroness, Lady Sharp, that she did not intend it to be a perfect amendment. What she highlights—and what has come out of this debate—is the lack of clarity. I think that will come out through a number of debates today on the groups looking at the specified duties that the Government have placed on Prevent. There is a lack of clarity in how it works in practice and what the full implications are; that is where some of the confusion will lie. I think the Minister will respond to some comments now, but I think similar issues will be raised when we have the debate on guidance in the fourth group. I know it is difficult to arrange groupings, but I was sorry in many ways that the noble Baroness, Lady Hamwee, degrouped her amendment from that main one. I can understand that, because of the specifics of what is in effect a sunrise clause, although we have not perhaps discussed the reason for that in quite the same way.
I will make a brief comment on Prevent rather than speak in detail, because I want to speak about it in the later group, as I said. Criticisms have been raised of Prevent, but we need to be positive, see what works and ensure that we can make it better in the future. As the noble Baroness, Lady Uddin, said, in the point that I did agree with her on, it was a Labour Government who set up Prevent and we are committed to it. However, we are committed to making it successful and effective; there is no point in something that causes alienation in communities when the whole purpose of it is to have engagement with communities and cohesion across communities. I look forward to what the Minister has to say on these specific amendments. I am sure that our debate today, on a range of issues, will tease out a lot of the detail that is missing from the legislation and the Government’s explanations so far.
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, I begin by apologising to my noble friend Lady Sharp for not being in my place for the first minute or two of her remarks. I am grateful also to my noble friend Lord Ashton for briefing me on the remarks that she made, which I will try to address. I will put some general comments on the record in relation to these amendments. As the noble Baroness, Lady Smith, has mentioned, I dare say we will return to this in subsequent groups, but there are some particular issues here which I take it are about trying to get definitions and workings on the record. I will then deal with some of the specific issues which have been raised.
I will outline the broad objectives of the Government’s Prevent programme. Prevent aims to stop people becoming terrorists or supporting terrorism, and deals with all kinds of terrorism. It targets not just violent extremism but non-violent extremism, which can create an atmosphere conducive to terrorism and popularise views which terrorists exploit. Prevent activity in local areas relies on the co-operation of many organisations to be effective, but currently co-operation is not consistent across the country. We have seen people being radicalised sufficiently to want to travel to Syria and Iraq from many places which did not realise that radicalisation was an issue for them. New threats can also emerge quickly, and the steps which authorities take to comply with this duty will enable them to be spotted, and acted on, quickly. The new duty created by Chapter 1 of Part 5 will improve the standard of work on the Prevent programme across the country. This is particularly important where terrorism is a concern, but all areas need to understand the local threat and take action to address it. We will issue guidance setting out the type of activity that specified authorities should consider in fulfilling this duty.
I turn now to the individual amendments. Amendment 103A is a probing amendment that seeks to focus the scope of the duty on preventing people from being drawn into “activities which may lead” to terrorism, rather than simply “into terrorism”. The process of radicalisation is complex, as a number of noble Lords have mentioned; it is not simply a case of taking part in certain activities. There will be background factors, such as an individual’s failure to integrate, disrupted childhoods or growing up in an extreme subculture. There could be influences which push an individual towards a terrorist group such as family, friends, extremist ideological material et cetera. Individuals need to be receptive to the terrorists’ messages: for example, they may be disillusioned with previous beliefs or be naive and lack ideological knowledge to counter the terrorist ideology that they are being exposed to.
The effect of the amendment would be to apply the duty only to activities which may lead people into terrorism. The duty, as currently drafted, includes these activities in its scope, but this amendment would limit it to cover only these activities. These activities would need to be defined, but this will be difficult, if not impossible, to do, because the activities themselves may not draw people into terrorism—as I have said, it is a combination of factors which draw people into terrorism. The Government are determined to make the implications of the Prevent duty as clear as possible for those affected. This includes being clear about what is expected of specific authorities under the duty, so comprehensive guidance, on which we are currently consulting, will set out how we expect authorities to comply with the duty. Amendment 103B would prevent the duty applying to specified authorities until a report on the operation of the duty had been laid before Parliament.
Baroness Brinton
If universities are already implementing much of what the Government rightly think needs to happen and even if some of us are not stepping fully up to the plate, where does that place the absolute need that the Government identify for a duty on universities, which is much harder on every single institution and every member of staff, not just in universities but in colleges and schools? Would it not be better to arrange for it to be one of the things that HEFCE or OFFA looked at as part of a universities contribution each year?
Lord Bates
The point that the noble Baroness makes about HEFCE is a very good one. Depending on the outcome of the consultation, it may well be the body which reviews this matter. It is important at this point that we get the terminology correct. It is a duty to have regard to the guidance available. That is quite distinct from being as prescriptive as some people have suggested we are being.
The noble Baroness, Lady Uddin, to whose work on the Prevent programme I pay tribute, and my noble friend Lady Hussein-Ece talked about the lack of work with local communities to target radicalisation. Challenging and tackling extremism is a shared effort. The Government have a role in leading this and ensuring that communities where extremists operate and organisations working against extremists have the capability to confront it themselves. Through Prevent, we are supporting community-based projects in 30 local authority priority areas where we fund a dedicated Prevent co-ordinator, alongside work with communities and partners in a further 14 supported areas where we support projects only. More than 180 projects have been approved since 2011, reaching more than 55,000 people. This year, we are supporting more than 80 projects. That is an example of what we are doing at the moment.
A number of noble Lords have referred to nurseries, which I acknowledge is an issue. My noble friend Lady Hussein-Ece and others were concerned about the message being sent. I understand that the Government have a job to do in getting the message across in a balanced way. Nurseries, schools, universities, FE colleges and prisons all have guidance in place to safeguard those in their care—that is a given. Such protection might be from child sexual exploitation; for example, in a nursery, something may give rise to a belief that some abuse is happening. Most people will have in place some system of guidance and say, “What do we actually do with that bit of information when it comes to our attention. Who do we pass it on to and how do we act upon it?”.
Baroness Uddin
Does the Minister agree that social services’ statutory guidance on responding to child sexual abuse or exploitation has evolved over decades, and that, even then, there has been malpractice or things that have gone drastically wrong and we have not always been able to protect children? How does the Minister envisage this new phenomenon of identifying those who may give some indication of predisposal to radicalisation? How does guidance take on board the identification of someone in a nursery or a school? If somebody said, “Actually, I hate Muslims”, is that person prone to radicalisation? If they were to say, “I hate Christians”, is that being prone to radicalisation? At what point is an investigation triggered? I speak as a former social worker in a child protection office. I know the trigger mechanism when someone is said to be vulnerable and what happens: a whole series—a whole plethora—of professionals are called in. We know that that is not an established practice at the moment, so how does he envisage managing this?
Lord Bates
In many ways, that is demonstrating what the Government are seeking to do in putting this on a statutory footing. We are saying that, at the moment, all that is being done is on a patchy basis. It is not formally and independently evaluated, a point that was made to the effect of, “How do we actually see how this is working? Which part of the Prevent budget is actually well spent?”. Of course, we do not know the answer to that at present. It is hoped that, if it is on a statutory footing, we are saying to all universities, “Listen, we want you to raise your game to the standards of the best, and where there is some evaluation of how institutions are performing against that criteria we will be able to measure the effectiveness of it”.
I am conscious of the time that I have been speaking; we are going to be returning to these issues in subsequent amendments, but let me deal with some of the issues of definition, because that was particularly what we wanted to focus on here. When we talk about extremism, we are talking about,
“vocal or active opposition to fundamental British values, including democracy, the rule of law, individual liberty and mutual respect and tolerance of different faiths and beliefs”.
Calls for the deaths of members of the British Armed Forces are also included. My noble friend Lady Warsi was no doubt part of the process that actually generated these definitions. With due deference to her, I appreciate that they are terribly difficult to arrive at, but that is the basis on which we are working.
When we talk about terrorism, we are talking about an action that endangers or causes serious violence, damage or disruption and is intended,
“to influence the Government or to intimidate the public and is made for the purpose of advancing a political, religious or ideological cause”.
Again, definitions will always be a matter of argument and dispute, but those are the definitions of extremism and terrorism by which we are working.
On radicalisation, we are talking about,
“the process by which a person comes to support terrorism and forms of extremism leading to terrorism”.
Safeguarding is,
“the process of protecting vulnerable people, whether from crime, other forms of abuse or being drawn into terrorism-related activity”.
To complete the definitions, which I want to put on the record, vulnerability,
“describes factors and characteristics associated with being susceptible to radicalisation”.
Baroness Warsi
I can perhaps help my noble friend. I do not dispute the definition of terrorism, the definition of radicalisation or the definition of vulnerability. I completely agree with him that those are the definitions that—certainly the one on terrorism—have been tested for many years. The definition that matters in this debate is the definition of extremism. There are many definitions of extremism that currently exist within government. If somebody were to stand up and say, “I am going to blow myself up and cause you harm,” it would be pretty obvious that they were a terrorist, and not the kind of person whom we would want speaking at a university. The grey area is the area around extremism, which is the one that needs to be properly defined with a single definition and some clarity as to what that means. At the moment, the definition as it stands in terms of British values, for example, includes opposition to the British value of democracy. There are many people who oppose democracy; there are people who have alternative views on that: does that mean that they are never allowed to express those views in universities, as part of an open discussion on these issues? That is where the grey area is.
Lord Bates
I accept that, and there will be ongoing work, but I wanted to put on record the current working definitions. They have to be kept under review. When we are talking about extremism, of course, we recognise that at present Universities UK—which covers 75% of higher education institutions—actually has an extensive document, running to some 50 or 60 pages, that provides guidance to universities on how they should deal with people with extremist views, particularly extremist views from right-wing, racist ideologies that need to be tackled. For example, the National Union of Students has a “no platform” policy for extreme right-wing organisations on campus and has a system of guidance by which that policy is implemented.
Lord Judd
I am sure the Minister will agree—this is not either/or—that it is a matter of winning the war and not just the battles, although the battles are crucial to winning the war. That is the point about the university context. It is the whole environment, the whole perception and the whole atmosphere that matter. Will the Minister accept that some of us are genuinely afraid that if this is got wrong and it is perceived as too heavy-handed, to say the least, it could press people towards extreme views?
I always have in mind a conversation I had with a police officer working on the front line of this issue. He said that this battle is crucial among militants with street credibility who may even have toyed with nasty things, but have not done them. Those are the people we have to win back, and if we are pushing them away from us so that there is no communication and no possibility for dialogue and winning back, how are we helping our war?
Lord Bates
Of course, many of us subscribe to the view that one of the greatest forces against extremism is the freedom of speech that exists within universities so that people’s radical views can be challenged, and should be challenged, in an open way. Nothing being brought forward today says that the Government are going to tell any university who it should invite to speak. Nothing is going to tell any university who it should have on its faculty or in its student body. That is for the university to decide. All we ask is that at a time of national alert on issues of terrorism universities have due regard to their responsibility to the challenges and vulnerabilities of their institutions and the students who are in their care. That is where we are coming from on this. On the great sweep of what the noble Lord said, I fully endorse it.
Lord Phillips of Sudbury (LD)
The Minister just, for the second time during his winding up, referred to the phrase “having due regard” in Clause 21 of Part 5 as if to placate those who are concerned by the directions which are still out for consultation. Is the reality not that Clause 25 gives the Secretary of State power to make directions with regard to any of these matters and then to follow that up by a mandatory order? If that mandatory order is breached there are serious punitive consequences, so is it not a trifle inadvertently misleading to refer again and again to this merely having “due regard to”?
Lord Bates
My noble friend has great legal expertise in the terms being used here. We are saying that, clearly, if you put anything on a statutory footing—even to “have due regard to” the guidance—then there must be a consequence should you fail to have due regard or are found not to have due regard; and that that must be specified in the legislation. That is all we are doing here. I am sure we are all of the view that such a measure would be used only in extreme circumstances. We fully expect that all universities will do what the best universities are doing already, which is to have their systems and procedures in place for this. As I have said, I am very conscious that we will be returning to this in further groups; but in the mean time I would be grateful if my noble friend might consider withdrawing the amendment.
Baroness Hamwee
My Lords, before my noble friend responds, I had degrouped that amendment from my, rather than from anybody else’s, amendments. In replying, my noble friend the Minister has relied a great deal on Clause 24 on guidance. However, that does not seem to me to justify the ability of Parliament to consider, authority by authority and function by function, the application of this duty, which is a much more significant duty—on that I am very much with my noble friend Lord Phillips—than the words “due regard” in everyday speech might suggest. If I were to see Hansard by the time we reach Clause 24 today I might think that my noble friend had given me quite a lot of material to press my amendments to that clause, because he has said an awful lot that supports what I am arguing should go on to the statute book. We will come to that, but I wanted to make it clear that my point is about Parliament’s role in this; it is not about consultation on guidance.
Baroness Sharp of Guildford
I thank the Minister for his response to my amendment and other noble Lords who have participated in this very interesting debate. It was supposed to be a relatively minor probing amendment to clarify the definitions and to make the point, which I think still needs to be made, that where there is not clarity in definition, it leaves a great deal to the judgment of those expected to implement these duties. That in itself poses problems, both for those in the process of implementing them and those who, perhaps further down the line or on the panel, will have to make assessments about those seen to be vulnerable to terrorism. And what does “being drawn into terrorism” mean? There are problems here for those who need to interpret the legislation.
We have had a much wider debate than just about definitions. It has been a very interesting debate about, as I said in my introduction, whether the Prevent strategy should be statutory. I am very much of the view taken by my noble friends Lord Phillips and Lady Hamwee, that in fact the subsequent clauses—24, 28 and 30—make the whole business of being statutory fairly rigorous.
The effectiveness of the Prevent programme, whether we need to review it, whether it is sensible that the programme should be statutory, or whether we should not continue to rely on the voluntary participation of the institutions are all questions that we will undoubtedly come back to, both later today and on Report. For the moment, I beg leave to withdraw my amendment.
“(f) an academic function of a university or other further and higher education institution”
Baroness Lister of Burtersett (Lab)
My Lords, in moving this amendment I will speak also to Amendments 105, 107, 109 and 115 on behalf of the Joint Committee on Human Rights, of which I am a member. The amendments give effect to the recommendations made in our pre-legislative scrutiny report. Amendments 107 and 109 would exclude higher education institutions from the new statutory duty to,
“have due regard to the need to prevent people from being drawn into terrorism”,
although I suspect that the amendments in the name of the noble Lord, Lord Pannick, would do so rather better. Amendment 104 excludes,
“an academic function of a university or other further and higher education institution”,
from that duty. Amendment 105 makes it clear that the Prevent duty is subject to the duty contained in the Education (No. 2) Act 1986 to uphold freedom of speech, covering staff, students and visiting speakers. Amendment 115 requires that when issuing guidance and giving directions, the Secretary of State should have regard to the principle of academic freedom as contained in the Education Reform Act 1988, which includes a duty,
“to ensure that academic staff have freedom within the law to question and test received wisdom, and to put forward new ideas and controversial or unpopular opinions”.
These amendments may be technically deficient, but as they are for now probing amendments, I trust that the Minister will bear with me.
Recommendations stem from the JCHR’s conclusion that,
“because of the importance of freedom of speech and academic freedom in the context of university education, the entire legal framework which rests on the new ‘prevent’ duty is not appropriate for application to universities”,
and from our observation that its relationship to universities’ existing duties with regard to freedom of speech is not clear. I have some sympathy with concerns about other parts of the educational sector, but following the JCHR report I will confine my remarks to HE institutions and will focus in particular on the question of academic freedom, therefore inevitably touching on some of the points already made. In doing so I declare my interest as an emeritus professor at Loughborough University.
Ministers have emphasised their commitment to academic freedom of freedom of speech, which I welcome. In a letter of 20 January to the JCHR, the Minister, James Brokenshire, pointed out that this freedom comes with a duty to ensure that it is within the law. Exactly. Given that, it is not clear why the Prevent duty has to be put on a statutory footing—moving from co-operation to co-option, as the noble Baroness, Lady Sharp, so pithily put it. Universities are already required to operate within any law that circumscribes freedom of speech. At last week’s packed meeting, addressed by the Minister and Mr Brokenshire—I thank the Minister for arranging that—we did not receive a convincing explanation. I suspect that the purpose of the meeting was to reassure noble Lords; my impression was that it had the opposite effect.
Since then, the JCHR has received the Minister’s letter, in which he set out why the Government believe that the application of the duty to universities is a matter of enormous importance. He cited the proportion of people convicted of al-Qaeda-associated terrorist offences who had attended an HE institution—the implication, presumably, being that their HE experience helped to lead them there. He acknowledged that some students arrived already radicalised or are radicalised by external influences, while suggesting that others can become influenced by non-violent extremism at university but later move on to violence. That seems to reflect the kind of linear, conveyor-belt theory of the journey to terrorism, which is challenged by many experts in the area and which was questioned earlier by the noble Baroness, Lady Warsi.
There are two main areas of concern, which have sometimes been conflated: visiting speakers policies, and the free exchange of ideas that lies at the heart of the relationship between lecturers and students. With regard to visiting speakers, it is unclear how the new duties sit alongside the duty in the 1986 Act not to use beliefs or views as grounds to refuse access to premises. We shall look later at the draft guidance, so I will not go into that now, apart from coming back, in a moment, to the question of definitions.
Baroness O'Loan (CB)
My Lords, I have put my name to Amendments 104, 105 and 115, which seek to protect universities and other further and higher education institutions from being bound by this part of the Bill in the context of an academic function and protection of freedom of speech, and to Amendments 107 and 109, which seek to exclude from Schedule 3 to the Bill certain universities and other colleges in England, Wales and Scotland. I do not think that this provision applies to Northern Ireland. I hope that the Minister will correct me if that is not the case.
The Bill seeks to put the Prevent programme on a statutory footing and I suspect has a greater impact than the Minister is willing to recognise. I have read carefully the letter which the Minister wrote to Members on making universities subject to the duty, which included a lot of statistics in relation to the number of people convicted of al-Qaeda-associated terrorist offences. I make one observation in relation to those figures. They do not necessarily indicate that the students were radicalised at university. There is evidence of terrorist organisations using universities to develop young people to be significant terrorist leaders because terrorism requires not just snipers and bombers but leaders, managers, logistics, procurement and all sorts of things, and that is the kind of skill you can pick up at university, so I think the issue is much more complex than is suggested.
Looking at Prevent on its own, the definition of terrorism includes non-violent terrorism, as the noble Baroness, Lady Lister, said. I am a member of the Joint Committee on Human Rights and the problem as I see it is that these amendments are designed to address a threat to freedom of speech and all the consequences that would follow from that. I will speak of those consequences, in part from my experiences as a chair at a university, albeit an Irish university, and as a former university academic. I taught for 20 years in a university. During that period, we had several terrorist bombs. We lived daily with the terrorist armed threat, particularly in relation to our students who were members of the security forces and the police. It is profoundly important, as we contemplate the unintended consequences that might result from this clause, that we do not politicise our universities in a way which would make them the target of attacks such as that on Lee Rigby and other attacks, such as bombings and suicide attacks. I do not say that to be scaremongering, but because it is profoundly important that we recognise that the war that is being fought against democracy is a war which is changing its tactics. There is a lot of evidence that it will move much further on to our territory.
The function of a university in educating its students includes the provision of safe space in which students can debate and discuss very sensitive issues. My experience has been that, very often where issues are particularly sensitive, students can almost be afraid to engage with them. They need that space and the recognition that it is right to engage with these issues. I think of my experience in trying to teach constitutional law to students in Northern Ireland. One half of the class sat on one side of the room and the other half sat on the other side of the room and there was to be no meeting of minds about what I was trying to teach them. There was a terror of articulating any views lest that be taken back to somebody and consequences might follow. It is vital that students develop the confidence to address and to challenge issues, to test propositions, so that they can take a greater part in the debate within and without the university and, when they leave university, in constitutional governance.
That is where we are now in England, Wales and Scotland. We need people who have been exposed to challenging argument and have the capacity and the confidence to think and to articulate views which are the product of reasoned judgment rather than bias and prejudice. Although we may think we know what we are talking about when we speak of terrorism, some of yesterday’s terrorists are today’s world leaders. What does that mean for our understanding and what does it mean for those in universities who contemplate non-violent political action against democracies or systems of law in other countries which they are articulating in their own university? Are they to be regulated by the universities because they may be perceived as possibly supporting terrorism? How will the universities know the answer to that?
We have to ensure space in our universities for debates. The JCHR says in its report that,
“universities are precisely the places where there should be open and inclusive discussion of ideas. Broad terms such as ‘extremist’ or ‘radical’ are not capable of being defined with sufficient precision to enable universities to know … whether they … risk … being found to be in breach of the new duty”.
The JCHR talks of the inhibiting effect of the Bill as,
“lecturers and students worry about whether critical discussion of fundamentalist arguments, or of the circumstances in which resort to political violence might be justified, could fall foul of the new duty”.
The noble Baroness, Lady Warsi, spoke very articulately on the definition of extremism. It is not an exclusive definition. It refers to opposition to British values, including democracy and the rule of law, but it is not exclusive. Universities will have to work out what other values are included in this definition. Even the chief constable of the Greater Manchester Police, Sir Peter Fahy, has expressed concern that this will leave too much discretion to the police when they are trying to deal with very difficult situations. In effect, the Bill will force them to make decisions when they are conducting policing operations which are more political policy decisions than operational policing decisions. That analogy also applies to universities.
The National Union of Students, echoing calls by Universities UK and others, notes that any statutory guidance applying to universities needs to appreciate the particular freedoms of speech appropriate to an academic context, including allowing students and staff to speak freely on controversial issues. That needs to be retained in order to prevent the chilling effect on university campuses whereby people become wary of discussing difficult issues. Ignorance, prejudice, discrimination and unfounded fears can be the unintended products of restricting freedom of speech. Paradoxically, they can play their part in encouraging individuals to the cause of fundamentalism and even violence. We have seen that across the world.
Baroness Buscombe (Con)
My Lords, I will speak to Amendments 104, 105, 107, 109 and 115, to which my name has been added. I also speak as a member of the Joint Committee on Human Rights. Much of what I feel about these amendments has already been articulated by Members opposite who are also on that committee. I also thank the Minister and his colleague from another place, the Home Office Minister James Brokenshire MP, for the meeting on 15 January. It was clear when we met to discuss this very issue that there were serious concerns, particularly among the academic community. In the letter in today’s Times that has already been referred to this afternoon, there is reference to a concern that the proposed measures could be counterproductive, leading to mistrust and alienation. The difficulty is that a considerable degree of alienation already exists among some young people well before they attend higher education. This alienation is too often caused by separation by their parents at a very young age from fully, or in some circumstances even partially, socialising with their peer group of other faiths and cultures. The truth lies, I believe, in what different people perceive to be the meaning of integration and until we make much more effort in that regard, such that young boys and girls are allowed to grow up fully and freely socialising in our towns and cities whatever their faith, we will continue to have a serious problem—a problem we have been largely in denial about for years for fear of upsetting people in the faint hope that integration will just happen. This is also one reason why I am vehemently against faith-based schools which may allow and even encourage separation rather than integration.
Universities create for many the first opportunity for a natural separation from home, giving young people the freedom to socialise beyond their comfort zone. University life provides a catalyst for encouraging free speech and strong, open debate away from cultural and religious restraints. All that said, I understand that the Government are genuinely trying to find practical ways of countering terrorism and extremism because, as the Minister in a letter dated 27 January informed us, a significant number of individuals who become radicalised at some point attend university. This therefore provides a window of opportunity to prevent those vulnerable to extremism from that pathway during their time at university.
Part of the difficulty here lies in what is in the Bill. It appears too restrictive and prescriptive and does not take account of some of the practical difficulties of implementing these measures without attacking academic freedom, together with certain legal obligations. The Prevent duty guidance offers some help although, as my noble friend has already stated, these measures are very much in draft form and we all await the imminent outcome of the consultation. It is difficult to debate this subject fully without reference to that outcome but I agree with the Minister, who refers to some aspects of the duty guidance in his recent letter. For example, in paragraph 66 there is a suggestion that those who are going to make a speech or give a talk at a university should give:
“Sufficient notice of booking (generally at least 14 days) to allow for checks to be made and cancellation to take place … Advance notice of the content of the event”,
and so on. It is very prescriptive.
If noble Lords will bear with me, I shall give an example of a different subject to illustrate why such prescription just does not work. Four or five years ago, I chaired an Oxford Union debate regarding animal rights—a very different subject. I well recall approaching all the speakers an hour or so before the debate was due to commence to get a feel of what they intended to say to make sure that I could manage the debate, given that it is a controversial subject. One of the speakers, Heather Mills, was due to speak, alone, for the motion. She had in the past been known for making quite controversial statements. Heather did not give much away, and certainly not the fact that part-way through her speech her sister would leap forward on to the stage and produce from under her large woolly jumper a laptop showing a short, very violent film of an animal cull. A mini riot ensued among speakers for and against the motion, together with some of the audience, in spite of my best and extremely vocal efforts as the chairman. It became apparent that some members of the audience were not students of Oxford University at all; they were seasoned animal rights campaigners and activists, and absolutely content and keen to make trouble.
I make that point as a good example of where freedom of speech and freedom to offend were such a positive, as they produced a lively exchange of views among the audience, many of whom, having listened and watched and been genuinely appalled by the behaviour of those on one side of the debate, were almost all entirely turned off the animal rights movement.
However, there is another side to this issue and it is why I reference that experience. I must admit that, as an outside guest at the university, I was rather amazed, particularly given the subject matter, that there was nowhere to turn and no one to turn to when the situation became uproarious and extremely unpleasant. Therefore, I believe it is right to ensure that there is a mechanism for managing incidents and to recognise that universities, while allowing academic freedom, have a strong, albeit subtle—that is the important point—role to play in managing these events. Indeed, as proposed in the draft Prevent duty guidance, I could have done with a mechanism for managing incidents, even though the debate was very much on campus.
My message to my noble friend the Minister is that he should do all he can to reassure all those concerned that nothing in the Prevent duty guidance will restrict legitimate debate or academic research, that the Government are genuine in their view that universities’ commitment to freedom of speech represents one of the most important arenas for challenging extremist views and ideologies, and that therefore the Government support the existing duty in the Education (No. 2) Act 1986 on universities to promote freedom of speech. Will my noble friend also take note of the work of the National Union of Students in encouraging dialogue between different faith and belief groups? As the NUS states in its briefing on the Bill, which it has sent out today, it helps student unions to understand their responsibilities under charity law and ensure that they have strong procedures in place so that the risk from extreme and external speakers is mitigated.
I say that in particular to emphasise that there is a general acceptance that work has to continue. How that work is done is the challenge. I hope that, following consultation on the Prevent duty guidance, the “how” will become clearer and go some considerable way to allay genuine concerns. Therefore, I encourage the Minister to seriously consider accepting Amendments 104 and 105, which would give reassurance on the face of the Bill in support of academic freedom and freedom of speech.
Lord Macdonald of River Glaven (LD)
My Lords, I put my name to Amendments 110 and 112, along with the noble Lord, Lord Pannick, and I declare an interest as the warden of Wadham College, Oxford.
Under the terms of the Education (No. 2) Act 1986, universities are under a statutory duty to,
“take such steps as are reasonably practicable to ensure that freedom of speech within the law is secured for members, students and employees of the establishment and for visiting speakers”.
The Act goes on to say that this includes the duty,
“to ensure, so far as is reasonably practicable, that the use of any premises of the establishment is not denied to any individual or body of persons on any ground connected with … the beliefs or views of that individual or of any member of that body; or … the policy or objectives of that body”.
Universities are required under this statute to have a code of practice in place to facilitate the discharge of these important duties. We might contrast the terms of that statute with the relevant clauses of the Bill and the proposed guidance associated with it.
It is very easy to understand why Parliament should have passed those parts of the Education Act. It was to underline not just the importance of free speech as a public good in itself, but to highlight its particular relevance—its inescapable importance—to institutions of higher learning. That is to say, you cannot have one without the other. Noble Lords will remember the context in which that legislation was passed. Speakers were being howled down in some of our universities, to the shame of those institutions. Some were being refused facilities to speak—the so-called “no platform policies” that some institutions adopted, again, to their shame. An institution that shouts down a speaker with unpopular views or bans arguments that cause offence is not really a university at all: it is an intellectual closed shop. That is something very different and much less attractive.
Under the proposed guidance accompanying this Bill, which universities will be under a duty to have regard to in discharging their new policing obligations—for that is what they are—academics must devise processes to exclude from those universities people who intend to speak or give presentations in a way that may be guilty in some way of exhibiting traits of what the guidance terms “non-violent extremism”. The definition of non-violent extremism has already been drawn to the attention of the Committee. I suppose in the sense of non-violent extremism, it must, if we extract it from the proposed guidance accurately, be,
“vocal or active opposition to fundamental British values, including democracy, the rule of law, individual liberty and mutual respect and tolerance of different faiths and beliefs”.
It is those things that must be banished from British universities.
The patent lack of understanding in this Bill about how universities work—and some noble Lords have already alluded to this—becomes very clear when one considers the processes that the guidance mandates our universities to follow in order to discharge their new speech-policing obligations under the Bill. They are to be found in the guidance. The proposed guidance states that, in order to comply with the duty,
“all universities should have policies and procedures in place for the management of events on campus and use of all university premises”.
The guidance goes on:
“We would expect the policies and procedures on speakers and events to include at least the following … Sufficient notice of booking (generally at least 14 days) to allow for checks to be made and cancellation to take place if necessary … Advance notice of the content of the event, including an outline of the topics to be discussed and sight of any presentations, footage to be broadcast etc … A system for assessing and rating risks associated with any planned events, providing evidence to suggest whether an event should proceed, be cancelled or whether mitigating action is”,
to be contemplated or required.
Lord Phillips of Sudbury
I am sorry to interrupt my noble friend. I was under the impression that the noble Lord, Lord Bates, indicated in his letter dated 27 January that the Government would now withdraw paragraph 66 from the proposed guidance. It might save an awful lot of consideration in this Chamber if that is indeed the case.
Lord Macdonald of River Glaven
If that is the case, no doubt my noble friend the Minister will make that clear.
The greater point is that universities are not places of surveillance in the sense intended in this Bill, and they cannot become so without fracturing what is best about them. As far as I can tell, no concern at all appears to be expressed in the legislation or in the guidance that what is being proposed is a form of institutionalised censorship with academics at its heart.
If the guidance means what it says, and we must assume that it does, it calls into question a situation in which people in British universities would not be allowed to argue, with Plato perhaps, that democracy is flawed. It is not a crime to argue that democracy is flawed. No one in a British university could deliver a lecture that evinced a lack of respect for someone else’s religion. It is not, thank goodness, a crime in this country to demonstrate a lack of respect for someone else’s religion. Perhaps no one in a British university would be allowed to decry individual liberty in favour of, say, collective empowerment—a notion with a long intellectual pedigree. Again, it is not a crime to express that view in the United Kingdom. Obviously, the point is not whether noble Lords agree or disagree with any of these propositions, or whether any noble Lord would wish to advance any of them—for my part, I would not particularly. The question is rather whether we have really reached a state of affairs in this country in which it is now necessary for a senior politician, even a politician as senior as the Home Secretary, to be granted the power to influence, by power of direction if necessary, what can and what cannot be said in a university in the absence of any crime being committed. That is the point. This legislation seeks to control not only violent extremism but also speech in universities even where that speech is not otherwise a crime. This is its central failing and it is the reason I have put my name to the amendments tabled by the noble Lord, Lord Pannick.
The role of surveillance and control is one that is entirely inimical to the purpose of a university as we have understood it, which is to analyse, to explain and to discover. In that sense, open debate is the lifeblood of an institution of higher learning. Of course, as noble Lords have recognised, universities do not have immunity in the face of the criminal law—and they should not be immune to it. Indeed, like everyone else and every other body, they have existing obligations under anti-terrorism legislation, including the obligation to disclose to the authorities information they have about terrorism activities. But no one is suggesting that they are failing to discharge those obligations, and this Bill neither defines nor seeks to address any such failing. That is because there is none.
Let me conclude by pointing out one striking omission from the proposed guidance that is to accompany the Bill. Nowhere within it is there any attempt to explain how its terms are consistent with the entirely appropriate and laudable legal obligation placed upon universities to secure freedom of speech. There is no attempt to square that circle. This may be because no one in the Home Office considered the Education Act properly before deciding to legislate for our universities in this way, or it may be because it is simply obvious that the freedom of speech duty mandated in the Education Act is in conflict with the Bill, so any attempt to argue that they can coexist is doomed to failure.
These proposals may spring from the best of intentions. They doubtless spring from a desire to do something, perhaps anything, about the real problems we face around radicalisation. However, in practice they will inevitably undermine the place of freedom of speech in our universities. They are wrong in principle and they are unworkable in practice.
Baroness Brinton
My Lords, I have added my name to Amendments 112A, 112B and 112D. I shall start by speaking to those amendments and then to the others in the group. It is a matter of serendipity that I follow my noble friend Lord Macdonald because Amendments 112A, 112B and 112D try to address the exact points that he has raised and insist that the two duties must be examined together in order to balance the right to freedom of speech. I defy officers of universities and colleges to achieve that and I think that it would be a tall task for civil servants. One of the reasons I have been keen to table these amendments is that, as a senior university administrator, I have sat with two codes of practice and two different sets of statutory guidance which are completely in conflict with one another. We have to make it clear to those who will try to deliver the legislation on the front line exactly how it would happen. That is why the first part of the amendment talks about the recognition of the duty on free speech and the second part makes it clear that any guidance must be produced in the form of a single document so that staff do not have to trawl through parallel sets of guidance and codes of practice to try to find out which trumps the other.
I hope that the amendment is straightforward and simple, but it is included in a group which seeks to tackle the absolute, fundamental problems around the duty and how it conflicts with the duty on freedom of speech. I want to make two points. The first goes back to the Education (No. 2) Act 1986, which many noble Lords have quoted. Clause 43(4) states,
“(including where appropriate the initiation of disciplinary measures) to secure”,
those rights, but that is a two-way right, and universities have certainly used it where there might be either radicalisation or something close to the infringement of personal liberties or, worse than that, the possible incitement of a crime. On 20 September 2013, the Guardian reported that a number of our universities and students unions across the UK had banned the song “Blurred Lines”, a song that is degrading to women and which encourages rape. That demonstrates that the current boundaries for freedom of speech are well understood in our universities and are applied by them and by the student bodies. I come back to this. I do not understand why we need a duty when it is absolutely evident that this is already working in practice. I repeat my request for specific recent examples of where this has not succeeded and has not been followed through.
The other point I want to make on academic freedom moves away from the purist freedom-of-speech argument. Much of our debate has been about societies, students and academies talking outside the normal framework. Recently I was talking to a postgraduate student who is working on Middle East peace studies. He and his colleagues have just completed a module in a Masters course on suicide bombers. How free will they be to access information on that issue and thus actually help this country and the wider world to understand what motivates these people to become so radicalised that they are prepared to give up their lives? Would accessing videos online to try and understand the linguistic and pedagogic emotions behind those decisions be caught as radicalisation, would it require a special exemption in order to have that debate, or would it just be banned completely? We need to understand how the pure academic freedom to research would be affected by this duty.
Baroness Kennedy of The Shaws (Lab)
My Lords, I shall start by mentioning that I, too, serve on the Joint Committee on Human Rights—I am afraid that a whole flurry of us are getting involved in this debate. There certainly was a real consensus within the Joint Committee that applying this duty to universities would be detrimental to freedom of speech. We have been most concerned about it. One of the things that I think we have all now acknowledged is that freedom of speech is an absolute value to higher education. To interfere with that or to create a chilling effect is something that we should step back from. I endorse entirely all that has been said by others on this subject and want to add one or two things.
I have acted for a number of people involved in failure to fulfil their responsibilities in the criminal field, where they have not informed on those who seemed to be involved in terrorist activity. The duty to inform is real. The universities are very conscious of it, as are the student bodies. The concern that seems to be at the base of this—and which the public would want to see being at the base of this—is that, if you were to hear that people are planning and plotting things, there is a responsibility to do something about it. That already exists in law. It is the further steps that are involved in this that worry people.
Like the noble Lord, Lord Macdonald, and the noble Baroness, Lady Brinton, and others, I am involved in higher education, and I have been for some time. I too am the head of an Oxford college. Oxford University senior administrators have written to heads of house, such as Lord Macdonald and me, expressing their concern about this part of the legislation. This is partly because, as the noble Baroness, Lady Brinton, has said, it is almost impossible for us to oversee it sensibly. For example, in Oxford it would be hard to count the number of meetings that take place in any one week across the college structure and the whole of the university. I cannot imagine what the numbers might be. The noble Lord, Lord Macdonald, and I talked about the possibility of doing a review to see what the number was. We are certainly talking about hundreds. The same would be true in Cambridge and in universities around the country. The autonomy of student unions to invite their speakers quite independently of the governance of the university must not be forgotten.
I speak from my experience as a lawyer who has acted in the criminal courts in this field during the Irish Troubles, but most particularly in recent years around the recent phase of terrorism. I acted in the case that came to be known as the Crevice trial; the fertiliser bomb plot. I acted in the transatlantic bomb plot where seven young men were put on trial for trying to blow up aeroplanes. I have acted for a number of the different wives of men involved in terrorism in relation to their duty to report. I have acted for a boy who was groomed while he was on the internet in his bedroom in his parents’ house. I have acted for those who were involved in trying to dispose of evidence in the aftermath of the 7/7 bombings in relation to 27 July 2005. So I have acted in a whole series of these cases and I can honestly say that my experience is that these are not people who were radicalised in universities.
Radicalisation does not go on in universities. By and large I am talking about young men and it is about friendships and networks of friendship where people learn from each other and pass books and material to each other. It is not about closing down what happens in universities. It is really about what happens in our communities. So the work that is already going on in communities is probably the stuff that needs to be strengthened. All I urge is take a look at the real evidence of this. It is not enough to tick a box and say, “Some of these boys went to university, some of them were on access courses”. Many of our young around the country are going to university, but these boys were not radicalised because they were university students, in the way in which we think of university students. I see noble Lords nodding. That really has not been the case.
I go back to my concern about the chilling effect, which has been described by others. There is also the deterioration of trust effect, which is very important in the relationships between those who teach and those who learn. The other thing is that I spend time with the students in my college. I have them in regularly to gatherings. I do a regular meeting with sets of 12 at a time. We have discussions; they talk about all these things that are being described, some of them by the noble Lord, Lord Macdonald. They debate things such as, “Is democracy so wonderful, when it is bought wholesale by donations to political parties and where the small people do not get a voice? Is it right that religion can be denigrated?”. They want to debate things such as, “What is the point at which people are entitled to take up arms?”. I remember when I was president of SOAS, the School of Oriental and African Studies, there would be incredibly vital debates and arguments about the circumstances in which someone was entitled, as Mandela was in his time, to take up arms against the state. When is it appropriate? That is how young people learn about the nature of our society. It is where they learn and hear the counter arguments to some of the things that they feel seem so obvious to them.
This is not, by and large, where your radicalised young person is giving voice to his views. That is happening in the café down the road. It is happening in the kebab shop. It is happening in people’s rooms, but it is not happening in the universities in the way that somehow is imagined by this part of the legislation. I urge against it and ask that the bit about universities is taken out, because we are interfering with one of the most important freedoms that should be protected in our society.
Lord Pannick (CB)
My Lords, Oxford is well represented today. I declare an interest as a fellow of All Souls College. I find this a genuinely difficult issue. I am supportive of the Government’s general objectives in Part 5; far more supportive, I think, than some of the speakers who have addressed noble Lords this afternoon, particularly in the earlier debate.
It seems to me that the starting point has to be that there is a disturbingly large number of people out there who are prepared to take violent action for ideological and religious reasons. There is an even more disturbingly large number of people who are prepared to encourage or to condone such violence. For me, the most shocking part of the appalling events in Paris were not the attacks on the journalists and the kosher supermarket by deranged Islamists, it was that a minute’s silence for the victims was unenforceable in many French schools, because of sympathy for the murderers and their supposed cause from students and, presumably, their families. This demonstrates, I think, that in France there is an alarming failure to understand the basic principles of a liberal democracy; a democracy which protects the freedom of religion—rightly so—of those who refuse to recognise the basic rights of others.
My starting point is that the Government are rightly determined to prevent such developments here; developments which breed religion-inspired violence. Having said that, I share the concerns which have been expressed this afternoon about the impact of these provisions on freedom of expression and academic freedom in universities. My concern is very similar to that of the noble Lord, Lord Macdonald of River Glaven, and the noble Baroness, Lady Kennedy. It is that the duty which the Bill will impose is very difficult to reconcile with the very idea of a university whose primary role is to encourage academic debate and dissent. I think that a code which can be enforced by legally binding directions is far too blunt an instrument in the context of a lecture hall or a seminar room. If you try to wear a policeman’s hat and an academic gown at the same time, you are unlikely, I think, to perform either task adequately.
The Minister’s helpful letter to noble Lords on this issue makes the point that academic freedom is not absolute, even in a university. The Minister is absolutely right: the law already restrains freedom of speech, in universities as elsewhere, through the law of defamation, restrictions on threatening or abusive words or behaviour, and prohibitions on support for proscribed organisations. Universities have no exemption in that context, but this Bill would impose duties that are far more extensive and far more destructive of basic academic freedom than anything which is contained in current law.
I would prefer universities to be excluded from Part 5, but would be much reassured on this difficult subject if the Government would support Amendment 105, in the name of the noble Baronesses, Lady Lister of Burtersett, Lady O’Loan, Lady Buscombe and Lady Sharp of Guildford, or something like it. Their amendment would write into the Bill the protection for freedom of speech currently contained, as your Lordships have heard, in Section 43(1) of the Education (No. 2) Act 1986. I note that, in the Minister’s letter to noble Lords, he says that the duty under the Bill,
“is in no way designed to cut across the importance of free and open debate”,
particularly in universities. Good, I am very pleased to hear that. But then let the Bill say so expressly, to provide reassurance to the many good people in universities and elsewhere who are very concerned, and rightly so, about this issue.
Lord Hope of Craighead (CB)
My Lords, I entirely support the points that have been made by all noble Lords who have spoken in favour of these amendments. I have a rather particular point to make about wording, which I do as a former chancellor of the University of Strathclyde, which of course is in Scotland.
Clause 41(1) makes it clear that Part 5 of the Bill applies to Scotland as well as to England and Wales—it does not apply to Northern Ireland, as the noble Baroness, Lady O’Loan, said. However, this gives rise to a problem about drafting. One has to be absolutely sure when one refers to legislation—as, for example, Amendment 105 does, along with Amendment 108 and others—that the legislation referred to applies to Scotland as well as to England and Wales. The problem with Amendment 105—which I entirely support in principle—is that Section 43(1) of the Education (No. 2) Act 1986 applies only to England and Wales, and does not apply to Scotland. The right to freedom of speech, and all the points that have been made in favour of the exercise of freedom of speech and about the difficulties of enforcing measures of the kind that we are talking about and so on and so forth, have just as much power and effect north of the border as they do in England and Wales. If Amendment 105 were to be agreed with the form of words which it has at the moment, it would create difficulties north of the border. That could be cured very easily by simply taking out the reference to,
“the duty in section 43(1)”,
of the 1986 Act, and substituting the words “the need to ensure that freedom of speech is maintained”. Freedom of speech in Scotland is deeply ingrained in the law of the country by, for example, Article 10 of the European Convention on Human Rights. One of the features of the 1986 Act is that it was passed some years before the Human Rights Act 1998 was enacted. Nowadays, you look to the convention rights in the Human Rights Act to see whether you have a right that you wish to assert. It is certainly true that Section 43 goes rather further and is quite detailed about the nature of the duty, but I have searched as best I can through the legislation in Scotland and, so far as I can see, there is no equivalent provision in either the education Acts or the university Acts in Scotland, which cover the same field.
Baroness Manningham-Buller (CB)
My Lords, I start by declaring an interest as the chair of the Court and Council of Imperial College and by agreeing with the very clear concerns expressed by my noble friend Lord Pannick about this whole area. The widening circles of support for this pernicious ideology are a concern for us all. I also pick up the question put by the noble Baroness, Lady Warsi, to my noble friend Lord Evans of Weardale, in his absence, about there being many routes to terrorism. I am out of date on this subject, but there is no one, single route by which a young man or woman turns up as a terrorist—there are many different routes.
I therefore fully understand the Government’s concern in this area and their wish to address it. However, I also support the very powerful remarks made by the noble Lord, Lord Macdonald of River Glaven, with which I agree. I am afraid that it is a profound irony that we are seeking to protect our values against this pernicious ideology by trying to bar views that are described, too vaguely, as “non-violent” extremist but which fall short of incitement to violence or to racial or ethnic hatred—which is already forbidden by law—or indeed of the other legislative constraints on universities, which other Members of the Committee have mentioned. This is potentially in conflict with the university’s existing obligations to protect free speech, something we are all concerned about. The voicing of these opinions, some of which have been mentioned, such as those against the rule of law, democracy, civil society, women’s rights and so on, is of course often offensive and insulting to people. But we have been reminded only recently that we have a right to insult and we should avoid double standards here.
These opinions need to be exposed, challenged and countered. As the Minister said when referring to universities in his very helpful letter yesterday, to which my noble friend Lord Pannick extensively referred, they are,
“one of our most important arenas for challenging extremist views and ideologies”.
Quite so, and it is safer to challenge them in a university, if they arise there, although I agree with the noble Baroness, Lady Kennedy of The Shaws, that it is not all happening in universities. Much of it is happening in bedrooms, online and so on.
So this is difficult. My instincts are very often in support of the Government on these sorts of subjects, knowing that countering terrorism is not straightforward. However, the doubts that I expressed at Second Reading about putting Prevent, whatever its importance, on a statutory footing, in particular with regard to universities, have not been assuaged by anything that I have heard today. This work is going on now, and we really need a proper review of what has been achieved so far that is evidence-based. We have heard statistics, but we have not heard what they really mean. Prevent needs to be conducted with sensitivity, proportionality and care, and I fear that making it statutory in universities will jeopardise all three.
Lord Hennessy of Nympsfield (CB)
My Lords, I shall say a few short words in support of this group of amendments. I pay tribute to the Minister for the courtesy and care that he has brought to the conversations and for the correspondence that he has shared with several of your Lordships.
I declare as interests my professorship at Queen Mary University of London and my membership of the Royal United Services Institute Independent Surveillance Review. I have not been reassured about the practicalities of what the Government are proposing with regard to universities, on which I spoke at Second Reading, and I share the anxiety of many other noble Lords about freedom of speech within a university’s walls. I listened carefully to the Government’s case, but I am not persuaded that we need to shift from a voluntary approach to compulsion. By all means, strive to bring those universities which are laggardly up to the standards of the best; but we need to keep sharp what we already have—the scalpel of quiet, bespoke relationships between the authorities and the universities, rather than the mallet of legislation, however laudable the Government’s motivations in furthering the Prevent strategy.
I have to admit that the prospect of certain vice-chancellors being in the dock for contempt has a certain delicious attraction to it—although, I hasten to say, not my great friend and boss, the principal of Queen Mary University of London, Simon Gaskell. Universities must be very wary of overpleading that they are a special case—they genuinely must. None the less, the statutory road is not the path to take, as mapped out in Part 5 of the Bill. The defence of the realm is the first duty of the state—the first call upon the state—but here I think the state is in danger of overreaching and taking a step too far, even given the magnitude of the very real terrorist threats that we are facing.
Baroness Sharp of Guildford
My Lords, my name is attached to quite a number of the amendments in this group. I am not going to repeat the arguments that have been put very ably by other noble Lords. I merely add that it is vital that there is the opportunity for open debate and discussion of radical and extremist views in our universities and in other educational institutions in this country so that they can be challenged and the views refuted. It seems to me that the great danger in shutting down this debate is that it goes underground. It goes to the internet and social media, which we know are of vital importance in influencing those who are susceptible to these sorts of views. That issue is just as important for schools, further education colleges and sixth-form colleges with 15, 16 and 17 year- olds. If universities were to be excluded from this legislation, serious consideration would need to be given to the exclusion of other educational institutions as well.
Lord Renfrew of Kaimsthorn (Con)
My Lords, this has been a radical debate in the profound sense of getting to the roots of things. We have been talking about the open society and its enemies, and the Government have rightly identified the enemies of the open society as armed terrorists. But who are the friends of the open society? Clearly, we are speaking about free speech and academic freedom. I think that the Government, in seeking to constrain the enemies of the open society, are wrong if they take steps that constrain free speech and academic debate. The debate this evening has very much highlighted those difficulties.
The noble Baroness, Lady Kennedy of The Shaws, spoke of the difficulties of administrating these procedures if they were passed into law. They would indeed be difficult to administer in a university. I fear that they would not be very well administered in most universities if universities were invited to apply them, because the sort of bureaucracy that can develop in a university would be ill suited to the task. So I feel very strongly that another approach has to be found, and there is a very strong case for excepting universities, as has been argued so well. I declare an interest as a former master of Jesus College, Cambridge, and a former professor. Universities are places where free speech should flourish and should be constrained as little as possible.
This year is the 200th anniversary of the Cambridge Union Society. That may be a small matter in these grand considerations, but I cannot see how a society like the Cambridge Union Society could flourish with the constraints applied to it in the draft guidance, some of which were mentioned by my noble friend Lord Macdonald of River Glaven. Therefore, I very much support the amendment and I hope that the Government will give it very serious consideration, because very high principles are at stake and, indeed, at risk.
Lord Elystan-Morgan (CB)
My Lords, I shall speak briefly to Amendment 104. In so doing, I declare a past interest, as I was for 10 years a president of a Welsh university and the chairman of its management council.
I shall deal first with a technical constitutional point that is not a thousand miles away from the matter raised by the noble and learned Lord, Lord Hope of Craighead. Universities and higher education in general in Scotland and Wales are, of course, devolved functions. Therefore, one could easily react in a rather crude and barbaric way and say, “This is not a matter for Westminster to intervene in”—although I certainly do not take up that argument.
Nevertheless, one should bear in mind that there are conventions in existence in the relationship between this House and the devolved assemblies. This is the Mother of Parliaments, and it stands to reason that it has the sovereign authority to cancel or amend in any way that it wishes any area of devolution that it has endowed upon it. But it will not do that and does not intend doing that wrongly. We have the Sewel convention in Scotland and a similar convention in Wales to the effect that such interference will not take place save in the most unusual—if not unique—circumstances. It would take place when either the devolved assembly requests that it should happen—the point essentially raised in relation to Section 43 of the 1986 Act by the noble and learned Lord, Lord Hope—or there is a situation that is utterly unique. One can imagine one or two where there would be justification for such action.
It is clear to me that another principle overwhelms that; for although higher education has been devolved to Scotland and Wales, counterterrorism has not. That surely must take precedence in every way because it involves the security and, at the end of the day, the very existence of the state itself. I raise the matter not to show off any understanding of constitutional matters but to raise a point in relation to what should happen in this unique situation where we have a devolved function being clearly brought under the microscope of Westminster. The Bill accommodates that possibility very clearly in Clauses 23 and 25. In Clause 23, it is in relation to adding an authority to the list in Schedule 3; in Clause 25, it is in relation to giving a direction. However, the Bill states in each case that there has to be consultation between the Home Secretary and Welsh Ministers, and that is the point that I seek to raise.
Lord Hannay of Chiswick (CB)
My Lords, I shall certainly not repeat what has been said—I am sorry; has the noble Lord not finished? I thought that he had.
Lord Elystan-Morgan
My Lords, I have a little to go.
Perhaps I may end in this way. The motivations of the Government are probably very decent, proper and understandable, but the way in which they are going about them is extremely naive and in many respects barbaric. Let us imagine that, before a person can speak at a university, notice for 14 days has to be given. A sketch of the content of that speech has to be produced. Just imagine how three people, all of them now dead, would react to that were they alive. One would be Bertrand Russell; another would be Bernard Shaw; a third would be a 30 year-old Winston Churchill. Do you think that they would have accepted the invitation? Do you think that they would have felt themselves bound by that stricture? It is a situation which, at best, is ridiculous and, at worst, can be extremely dangerous and counterproductive.
Most Members of the Committee will have heard at some time or another quoted the immortal words of John Philpot Curran, who in 1795 said, if I remember rightly:
“The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt”.
We can, by overemphasising vigilance, destroy the very thing that we seek to protect.
Lord Hannay of Chiswick
I shall not weary the Committee by using all the arguments that have been so well advanced by noble Lords on all sides. They have been much more eloquent than I could possibly be. I support the amendments proposed by my noble friend Lord Pannick and Amendment 104 because I do not think that the Government have made a very convincing case for moving from a voluntary to a statutory basis. They are quite right in wishing to see all higher education institutions taking the Prevent strategy seriously and co-operating with it but they have not given any evidence that this voluntary approach—reinforced perhaps by a bit of naming and shaming—cannot bring everyone voluntarily within this framework. They have said little about the efforts they have made to do that, except to admit, which I very much welcome, that the majority of universities are actually doing this already. Therefore, I do not think that the case has been made for moving from a voluntary to a statutory basis.
There is a bit of a mixture in this grouping, ranging from a carve-out for universities and other proposals that fall short of that, which would leave universities within the Bill but would mitigate the problems from it. I hope that the Minister will address some of the other amendments—Amendments 105, 112 and so on—which would achieve that mitigation. It is extremely important that that should appear in the Bill.
Finally, I have a point to make about the guidance. The consultation on the guidance with universities, if I understand it rightly, concludes at the end of this week. Frankly, that guidance is pretty horrifying. It has caused a great deal of the concern that has been expressed around this Committee by the nature of its prescriptive detail, its intrusiveness and the absolute impossibility for most universities to carry out these provisions. Next week, on Report, the Minister could make clear in the most formal way the changes to the guidance that will be introduced before it is promulgated. I hope that the Minister will take that seriously. If he cannot agree to remove universities from this Bill, which would be my preference, he should accept some of the amendments that would mitigate the effects of it, make quite clear that the guidance will be radically altered and explain how it will be altered. He should explain, above all, some of the points that he put in his letter about the positive things that the Government are happy to continue to see happening in universities and not just give a long list of the negative things that they are going to try to clamp down on. I hope that can be taken to heart before we come back on Report.
Lord Brown of Eaton-under-Heywood (CB)
The amendments here fall into two distinct categories. There is the root-and-branch objection to the whole idea that higher education institutions should be brought into Part 5 of the Bill and the proposal that they should be carved out, to use the expression of the noble Lord, Lord Hannay. Then there are the amendments that seem to massage various provisions within Part 5 as it presently exists so that it becomes, apparently, compatible with the explicit statutory duties already placed on those institutions to promote free speech, freedom of expression, academic freedom and so on. Like the noble Lord, Lord Hannay, I very strongly support the first category, the root-and-branch objection. It seems to be a matter of the first importance that, for universities and higher institutions, nothing short of the express provisions of the criminal law—or, no doubt, the long-established principles of defamation—should operate as an inhibition on the freedoms that are here in question, which really are core values that go to the very heart of effective university life in a liberal democracy. It is small wonder that so little enthusiasm has been voiced in the Committee today in support of anything approaching Part 5 in its present form.
The Lord Bishop of Chester
I will speak very briefly as we come to the end of this debate. As I was listening to it, I realised that there is a whole area to which we have not referred but which is entirely relevant; that is, religious institutions and places of religious instruction and education. Those are missing from the Bill. The application of the Bill to universities will have very uncertain benefits and be extremely impractical to apply in as much as universities are independent institutions. They do not always appear so to the heads of those institutions when they deal with Governments but they are independent institutions. That is a really important feature. Most of the authorities listed here are not independent in that way, although other educational establishments are included.
At some point, we need to stop beating about the bush and see that, alongside the guarantee of freedom of religious speech in our country, and the charitable status of those engaged in different religious practices and education, there is an obligation that should be stated in law. Why not? There is simply an area missing from the Bill as we have it. When the Minister replies, I wonder whether he would be willing at least to comment on the fact that, among all these authorities that are listed, places of religious instruction and education are simply not mentioned.
Baroness Berridge (Con)
My Lords, I rise as the last member of the Joint Committee on Human Rights—a long cast of players—to make representations in relation to this amendment. As noble Lords will be aware, the Joint Committee’s report recommended removing universities from the ambit of the Bill. However, I take on board the points made by the noble Baroness, Lady Sharp, about those in institutions for 15, 16 and 17 year-olds. I am grateful to the Minister for continuing to engage with the Joint Committee on Human Rights since we published our report. I have no doubt that what was presented to us was that there was a problem going on on campus, with certain groups holding extremist ideologies being given a platform and not being challenged on their views.
I wish to build briefly on the points made by the noble Lord, Lord Macdonald, in relation to the ambit of the criminal law here. Our response to some of these problems has obviously been to take terrorism offences and expand the ambit of the criminal law further and further down to preparatory-type offences, which we never would have envisaged 20 years ago. For instance, Section 1 of the Terrorism Act 2006 concerns the encouragement of terrorism. Section 1(1) states:
“This section applies to a statement that is likely to be understood by some or all of the members of the public to whom it is published as a direct or indirect encouragement or other inducement to them to the commission, preparation or instigation of acts of terrorism or Convention offences”.
Offences such as that are designed to go further down the chain and to catch preparatory-type offences. That offence might just apply to printed published statements. I have not had the time to double-check that.
If one remembers that one adds on to all these preparatory offences the group of offences called “inchoate offences,” which are attempting to do that offence, conspiring to do that offence or inciting to do that offence. That takes the ambit of the criminal law a long way down in terms of the statements that we are talking about in this House. It has not been made clear to us what views this is aimed to prevent being expressed on our university campuses that are not within the realm of free speech, as offensive and as contrary to British values as some of us might think those views to be, but are outside the ambit of the extensive criminal law.
Finally, in relation to the point raised by the right reverend Prelate, I had assumed that religious institutions were somehow caught by the definitions of educational institutions. It is noteworthy that General Synod has an exemption under the Bill. In relation to the trust that has not been built up, perhaps because this is fast-track legislation and there has not been extensive consultation, somehow there is now concern among some in the church community that Clause 21 would require the vetting of speakers at carol services that take place on university campuses. I am not sure how one gets from Clause 21 to thinking that that might be a risk, but it indicates to me that more trust needs to be built through consultation if we are to have a clause of this nature.
Baroness O'Neill of Bengarve (CB)
I declare two interests, one as chair of the Equality and Human Rights Commission, which is thinking a lot these days about the right to freedom of expression and the challenges to it, and as a university teacher of some 40 years who has quite often not had her lectures drafted very much ahead of having to deliver them. That is a reality of academic life. I heard what other noble Lords have said about the ways these clauses could be counterproductive, but what is missing is positive thought about the ways in which universities have, not always with success but often, opened the minds of their students and countered radicalisation by the only long-term, effective method which is to discuss juvenile claims, hopes and aspirations that reveal hidden horrors within them. It is only speech that can defeat evil speech, and I hope that we will give far more thought to the positive measures that universities can take before we try in such an abstract way to construct forms of regulation that are likely to provoke what they seek to prevent.
Baroness Smith of Newnham (LD)
My Lords, I am also an academic who tends not to write speeches in advance. I had not planned to speak this afternoon and I did not speak at Second Reading, but I feel it is important to mention something I did last summer which fits very much with one of the anecdotes we heard earlier from the noble Baroness, Lady Buscombe.
I was doing a training session for parliamentarians from another country, a private event, and I was trying to explain to them the merits of the legislative process in the United Kingdom. After a while, one of them said, “I know what we need to do; we need a revolution”. I said, “Could you explain what you mean?”, thinking it was a term of speech. No, they really meant that they wanted to overturn their Government. Clearly, I was not in any way trying to incite terrorist or any other activities to overthrow the state, and I was slightly afraid that if anyone had been listening in, they would have thought that I was leading the wrong sort of class.
If we are engaged in free speech in universities, things can happen. There can be discussions and the idea that somehow the Government should be trying to impose duties on academics to say in advance what they are going to say, and to censor in advance what outside speakers are going to say, is very malign. I am very supportive of the amendments, and like the noble Lord, Lord Pannick, I am not opposed to Part 5 and Schedule 3 in total. For local authorities and other organisations that are clearly state organisations, imposing a duty may be appropriate, but for higher education institutions, it is fundamentally wrong.
Baroness Smith of Basildon
My Lords, it should be no surprise that this debate has lasted as along as the debate on Monday on 17 new clauses around communications data retention. Perhaps that is an indication of the knowledge, concern and experiences of noble Lords here today. This has been a long debate. It has been a healthy and very well informed debate. The Minister may feel slightly embarrassed that he has found no friends for the Government’s position during the debate. It would be wrong to caricature the debate as people not wanting to avoid individuals being drawn into terrorism. That is very clear. I concur entirely with the noble Lord, Lord Pannick, who made clear why that is so important and the dangers of terrorism. I hope that no one would caricature this debate as showing that any noble Lord is not committed to ensuring that that is avoided at all costs and that action is taken.
I am not convinced of the need to pull universities out of Part 5 completely, but the reason there is very great concern is that the provision seems poorly drafted. It has created serious concern about the duties and responsibilities on universities. The issue is around free speech, which is what I want particularly to address because the Minister has an opportunity to win widespread support from your Lordships’ House and to respond to the eloquent and important points that have been made and to address the heart of the concerns. He will have heard them raised at Second Reading. They were reinforced tonight.
My noble friend Lady Lister said that her amendment may be technically deficient. It may be technically deficient, but she was very clear in what she was saying about her concerns about what could be seen to curtail free speech, proper debate and controversial debate within universities and higher education establishments.
The noble Baroness, Lady Buscombe, who is not in her place, made an important point about the consultation on this. It does not help debate in your Lordships’ House to be discussing guidance which is still open for consultation and which was not available at all in the other place. It was published after the other place debated this issue. We have had sight of the consultation, which will not close until the end of the week. The Minister recognises in his letter the concerns that have been raised. That letter was written only yesterday, which is why a number of noble Lords who have spoken about the duty regarding giving advance notice of speeches have not had time to read it. This is not the way we should establish guidance. This is not the way we should be debating legislation. In a later amendment, we will propose that because of the delay in the guidance and its importance, it should come back to both Houses and be subject to an affirmative resolution of both Houses before it can be accepted. It is completely unacceptable for us to be discussing this issue in such an abstract way.
I thank the Minister and his colleague in the other place, James Brokenshire, who tried to address a number of the issues raised by noble Lords in the helpful briefing he gave a couple of weeks ago, but I fear that that briefing raised as many questions as it answered. One issue has been raised again tonight. If the Minister is able to answer it, it would be very helpful in understanding the debate. A number of noble Lords referred to the work ongoing in universities under the Prevent programme and the arrangements being made. The noble Baroness, Lady Brinton, gave a helpful example regarding the banning of a particular song which shows that universities are fulfilling their duties. A question raised at the briefing has been raised again today and my honourable friend Diana Johnson has been asking questions on this in the other place. We have not had an answer. How serious it is for those universities which the Minister says are not complying with Prevent? He said that most universities are complying with Prevent, which implies there is ongoing work which is successful. He wants to bring the other universities up to the same level, but how many are we talking about? Are most universities complying? Is it a few? Is it 50? We have no idea of the scale of the problem which he has indicated to us that makes this legislation necessary. It would be helpful if he could say something about that.
Lord Bates
My Lords, it has been an excellent debate, which I will reflect on. The noble Baroness should not be so pessimistic and think that we are not going to reflect on this or that the notes simply say, “Resist”. That might have been the case under the previous Government, of which she was a member, but in the enlightened spirit of co-operation that is now engendered in Whitehall, that is not the case here.
In introducing this amendment, the noble Baroness, Lady Lister, referred to the meeting that we had on 15 January. I am a born optimist—mine is the blood group “B positive”—and I take the view that if we explain and people understand what is actually in the provisions, they will feel less chilled by them. The meeting was very well attended—in fact, it was the best attended and most interesting Peers meeting that I can remember. Of course, it provoked a lively debate and I reflected very carefully on it. One of the outcomes was the letter that I chose to send out last night, which has been referred to by a number of noble Lords, who have pointed to the restatement of the fact:
“We are firmly of the view that universities’ commitment to freedom of speech means that they represent one of our most important arenas for challenging extremist views and ideologies”,
simply because of that; and that we fully support,
“the existing duty in the Education (No 2) Act 1986 on universities to promote freedom of speech”.
I went on to reflect on the point, which a number of noble Lords have referred to, about the practicalities of how that is done. As several noble Lords recognised, even Ministers might struggle in giving speeches 14 days in advance; that might be pushing it a bit too far. I said that certainly we wanted to make sure that the requirements were less onerous —although, given that we are in a consultation phase until 30 January, I did not want to prejudge what the outcome was going to be.
Let me make one point that I think goes to the heart of where we are in this debate. External Speakers in Higher Education Institutions is another bit of guidance, provided by Universities UK and in operation at present. It says that actions that institutions take might include:
“Requesting a script or précis from the speaker outlining what they intend to say and requiring them to sign an undertaking”—
we are not going that far—
“acknowledging that their speech will be terminated if they deviate from it … Briefing the chair in advance of the event, making clear that they have a responsibility to ensure that no speaker or other person present at the event infringes the law; this briefing could highlight the circumstances under which they must stop the event, issue warnings to participants on their conduct or request the withdrawal or removal by stewards (or the police if necessary) of the person(s) concerned”.
That is pretty heavy stuff. It is in Universities UK’s guidance for external speakers that is already in place and applies to the 75% of universities which are part of that element.
Before I make specific remarks on the issues that have been raised, I turn to the Prevent duty under Part 5. When people were having these freedom of speech arguments in the context of universities, I do not think that we necessarily envisaged the type of situation that we might now be in and the level of threat, which is severe, that we now face and which gives rise to this legislation. Under Prevent, as was in many ways acknowledged by the previous Government, as well as dealing with the law and prosecution, you must engage in discussion with these groups and challenge their views. That was where Prevent came from and that is where we are going. Schedule 3 provides that this will apply to local government, criminal justice—probation, prisons—education and childcare, health and social care, and the police but people are proposing that universities should be exempt. These might be areas where there is some difference. I am trying to be straight with your Lordships about where the differences might arise between us.
Baroness O'Loan
How does the Minister envisage universities engaging with these groups to help them to see the error of their ways—it was envisaged that they might go into communities and talk to groups—without in some way being at risk of breaching the guidance which is implicit in this draft law?
Lord Bates
I will try to go on to explain about the guidance to the noble Baroness. I recognise her academic experience, which is particularly relevant, in teaching constitutional law in Northern Ireland; that must have particular relevance to what we are talking about here, and I listen very carefully to what she has to say. We are not seeking here to curtail or limit but to say that the institution should have guidance in place. Particular individuals should be responsible, a bit like what is described in the Universities UK guidance, but the institution ought to have some procedures and safeguards, if only for good order on the campus, when these matters are being discussed or when controversial matters are raised.
Baroness Warsi
I am sorry to cut my noble friend off in mid-flow. He may be aware that that kind of guidance led to a chilling effect within government on engagement with community groups. Many individual groups were not considered to be extremist groups and never passed the test required for them to be defined as such, but a question mark was raised over them. Even though no specific guidance was issued, that question mark was enough for individual Ministers, civil servants and departments to stop engaging with them. People were so concerned about being seen as being on the wrong side of the argument on these issues, that even where they would not have fallen foul of the guidance they were concerned that they would fall foul of opinion. Therefore that had a chilling effect, so the issue the noble Baroness raises is important. It may mean that they do not fall foul of the guidance—and this is only guidance—but it will have a chilling effect as regards engagement.
Lord Bates
I accept that my noble friend had lead responsibility for that, and she has far more experience in this area in formulating and delivering policy than I have. However, I am simply responding to the question which addressed where this code of practice is going as regards higher education institutions. I was simply making the point that in a sense it relates to the organisation and preparedness of institutions to deal with the safeguarding of organisations, the security of students, and just being aware. I was asked by the noble Baroness, Lady Brinton, to give some examples of the relationship the inspectors who currently engage on the Prevent programme—the regional co-ordinators —have with higher education institutions. They are often contacted and asked about particular speakers. Most institutions found it very helpful to have someone they could go to and ask for guidance on whether special procedures needed to be put in place for a particular person.
Baroness Brinton
I was trying to make the point that it would be helpful to have an example of where the existing codes of practice guidance are failing, which requires the draft legislation we are looking at today.
Lord Bates
Yes; and I suppose that that comes from evidence. I accept that that evidence is not in the marshalled form in which the noble Baroness and the Committee might like, but it is certainly there in the evidence from the regional co-ordinators of the Prevent strategy, who say that some institutions simply do not comply and show no willingness to comply with guidance in the Prevent programme which is there already. Some do that very well; others have a willing heart, but are not doing it correctly. That is why, if this is put on a statutory footing and inspected externally, which is the Government’s case, we will have better evidence on which to measure the effectiveness of how this works on the ground. However, I will put some remarks on the record as regards these amendments.
The amendments in this group, in the name of a range of noble Lords, including members of the Joint Committee on Human Rights, seek to remove higher and further education institutions from the scope of the duty altogether, or severely to curtail the application of the duty to those institutions, whether through legislation or the statutory guidance. I recognise the strength of feeling in the Committee on this issue, and I, along with my ministerial colleagues, listened carefully to the helpful and constructive debate we had on this issue at Second Reading. I hope that it will be helpful to your Lordships if I set out why we believe that the inclusion of higher and further education institutions under this provision is so important.
Lord Pannick
If the intention is that the Prevent duty should, as the Minister just told the House, sit alongside academic freedom and freedom of expression in universities, why not say so on the face of the Bill, so that it is absolutely clear?
Lord Bates
That is in my next paragraph, if the noble Lord will let me come to it.
However, I can equally understand the trepidation of many in your Lordships’ House, and I have heard the strength of feeling on this matter. On that basis, I will commit to considering this matter further, and to discussing it with my ministerial colleagues, before Report, in order to identify whether it would be possible to provide some additional comfort to noble Lords, and to the education sector itself.
This has been a very wide debate, with some 20 speakers. Many have made very specific points and asked very specific questions. I am conscious that this is the second group of amendments within six weeks to cover Prevent, but—
Lord Hannay of Chiswick
Could the Minister perhaps extend the period of reflection with his colleagues to cover the issues in the guidance, which have given rise to such concern, as well? I am talking particularly about overprescriptive guidance. The Minister addressed some of those issues in his letter of last night, but by no means all of them. As the period for consultation will have expired by this weekend, will he undertake to consider—no more than that—what he will be able to put on the record on Report to make it clear that the guidance to be issued will be very different from the draft guidance that went into the consultation?
Lord Bates
Well, yes, I am happy to say that we will continue to keep the whole thing under review. That is the whole point of the consultation. I accept that the fact that the consultation concludes on 30 January may cause some difficulties. However, all the points debated today and at Second Reading are very much part of that consultation. I shall certainly go as far as I am able towards providing what might be described as an additional “first draft” type of review of the guidance, as a result of the responses that have been received so far. About 160 comments have been received, in addition to the debates that we have had.
I was about to say that a substantial number of points have been raised in the debate, and I can go through them. My noble friend Lady O’Cathain, who happened to catch my ear during the intervention by the noble Lord, Lord Hannay, asked me not to miss out the point made by the right reverend Prelate the Bishop of Chester about religious institutions. There is a point here, which we took into consideration, about what is a private matter, such as religious faith and worship, and what is a public matter—that is, a public matter in public institutions of education—and about comparing the two duties and thinking about whether we should extend our guidance into those institutions.
That was one of the reasons why my right honourable friend the Secretary of State for Communities and Local Government, Eric Pickles, decided to send the letter that he wrote to mosques and other religious institutions, recognising the importance of faith and urging them to play their part in the community-wide desire to keep our society safe.
The Lord Bishop of Chester
My Lords, I am grateful for those remarks, but I think that advocating the idea that the distinction is essentially between private and public will not work in the longer term. Religion is too powerful a force, and spills over beyond the private. Indeed, in one sense universities are private institutions: they are completely legally independent of government, and one of the reasons why they flourish in this country is that, even though the relationship is close, that position has been maintained. I simply make that point, and hope that at some point further thought will be given to how one can get beyond simply relegating the religious to the private sphere—because that does not really work.
Lord Bates
Having been on the receiving end of mass campaigns by people who are deeply upset at the state daring to encroach on the sacred territory of religious groups, I think that we should bear in mind the notion of, “Be careful what you wish for”. We do have to be careful here, because there will be people who say, “Hang on, this is the state going one step further than it should into a private realm”. None the less, I shall reflect further.
Baroness Berridge
While the Minister is speaking of reflection, will he reflect further on the issue for charities? Under the previous Government there was a unit within the Charity Commission designed to look at the financial structures and compliance of various charities. It was discovered that a lot of extremism could be found when one looked, first, at the numbers: the finances revealed organisations that were charities to which we needed to pay close attention. We are not giving the Prevent duty to trustees of charities, who may arguably count as public. Yet the public fund an awful lot of charitable work through gift aid and so on. Surely the logic would be to extend the duty to the charitable sector. It is there to provide public benefit: that is the test that we have for charities. The unit seemed to be quite a good one. I think the Charity Commission had to decrease it, but has now increased it again, because looking at the numbers, at what trustees are up to, and at who they are connected to through the charitable structure, gives us some great information about what is actually going on.
Lord Bates
I accept the point that my noble friend makes about charities. That is the reason why the Charity Commission has taken robust action against some charities that are not fulfilling that public duty. We will certainly look at that further.
I am conscious that this has been a long debate and I have given a commitment to reflect on it. Specific questions were raised. If they are not addressed in discussion on subsequent groups of amendments, I give an assurance to write to your Lordships ahead of Report. Given that important commitment which I wanted to get on the record—namely, that in relation to some of the amendments, particularly Amendments 105, 112A, 112B and 112D, I would very much like to reflect on the debate that we have had—I hope that the noble Baroness and other noble Lords will feel able not to press their amendments at this stage.
Lord Phillips of Sudbury
My Lords, the Minister made a remark earlier that went to the highly contentious issue which at least half a dozen noble Lords have raised relating to paragraph 66 of the guidance. It says—I quote from the letter that the Minister wrote yesterday—that,
“we note the difficulties of requiring all visiting speakers to submit their presentations in advance, and … we will be making changes to that text in the … guidance”.
There is no equivocation there. The Minister says that that will be changed. Earlier in his speech, he said that he would look at this and consider the response to the consultation. There is a big difference there and it is very important to a lot of people here to know what the position is.
Lord Bates
Normally I go beyond what I am instructed to say by my patient Bill team who work behind me, but on this occasion, I think that I am probably behind them in that the letter says in terms that we have heard enough already to reach a judgment on the practicalities of the provision in paragraph 66 and that we will rework that, notwithstanding the answer which I accept that I gave to the noble Lord, Lord Hannay, earlier, that we would reflect on the issue and did not want to prejudge the consultation. I suppose that we have prejudged the consultation in that particular regard because we do not want what we consider is the important issue of keeping the universities within the broader statutory provision to be, as it were, misunderstood or challenged on relatively small procedural matters which could cause alarm and are many miles away from where the principal focus of our efforts should be.
Baroness Lister of Burtersett
My Lords, I thank the Minister for his characteristically good-natured and considered response, which I shall discuss in a moment. I thank all noble Lords who put their names to my amendments and the many noble Lords from across the House who supported them. I cannot remember many debates in your Lordships’ House where not one noble Lord has spoken in support of the Minister, although many have rightly emphasised how much they support what the Government are trying to achieve in terms of preventing terrorism. We have had perspectives from Northern Ireland, Wales and Scotland. I thank the noble and learned Lord, Lord Hope, for pointing out the deficiencies of Amendment 105 and how we can put that right. We have heard important arguments of principle that go to the heart of what a university is about and have pointed out how we could undermine the very values that we are trying to protect. As I said at Second Reading, I call these values of democratic citizenship. There is nothing uniquely British about them, but they are values that we probably share. We have also heard important arguments regarding practice, where noble Lords have pointed out that there seems to be a lack of understanding of how universities work, and that the practical implementation of the measure would be counterproductive, not least in pushing underground some of the debates with which we need to engage.
Before I discuss the Minister’s very helpful finale, so to speak, I wish to make a couple of points. He pointed out that Universities UK had itself issued guidance which is rather similar to the guidance that everybody has decried as being much too prescriptive. However, the fact that no one, not even Universities UK, seemed to know that it had included the relevant measure suggests that probably most universities simply ignore that bit of it because it is so obviously fatuous. However, the big difference is that if a university fails to comply with that guidance, the Home Secretary will not issue a directive against it and it will not find itself in court. There is a huge difference between the advisory guidance that Universities UK issues and statutory guidance related to the Bill.
A number of noble Lords asked about the lack of evidence on how many universities are failing to comply in this regard. The Minister said that he accepted that the evidence has not been marshalled but that there are institutions that do not comply. Noble Lords who are academics would not accept that as evidence. Evidence has to be marshalled for it to constitute genuine evidence; otherwise, it is anecdote.
I very much appreciate the Minister saying that he will go away and reflect on the debate, but am slightly worried because he talked about the new Prevent duty sitting comfortably alongside existing statutory duties to uphold freedom of speech and academic freedom. The whole point is that it sits uncomfortably beside those duties. I am worried that we may be talking about some kind of parallel universe. I am not a lawyer so I may make a fool of myself when I say this, but the existing duties in the 1986 and 1988 education Acts are themselves subject to other laws which restrict freedom of speech, as I said, so I do not see why there is a problem in making the Prevent duty subject to those duties because they are circumscribed. Therefore, I do not understand the noble Lord’s argument on that. When he reflects on the debate, I hope he will think seriously about that, because if the new duty is not subject to those duties, it will not meet the concerns expressed so powerfully in your Lordships’ House—concerns which are based on noble Lords’ experience. I hope it will be possible to discuss this issue informally, although we clearly do not have an awful lot of time before Report, given the fast-track nature of this legislation. I welcome the fact that the Minister is prepared to think further about this and beg leave to withdraw the amendment.
Lord Ashton of Hyde (Con)
My Lords, before we move on to the next amendment, perhaps I may suggest, for the aid of noble Lords planning the rest of their evening, and given that we have a lot to get through, that it might be worth while getting some sustenance. I have discussed this with the usual channels and the plan is that we will debate the next group of amendments and then adjourn the Committee for 30 minutes. We would like to continue and try to complete the Committee stage tonight.
Schedule 3: Specified authorities
Amendment 105A
Lord Rosser
“A unitary authority.”
Lord Rosser (Lab)
My Lords, Clause 21 places a general duty on specified authorities, defined as,
“a person or body that is listed in Schedule 3”,
to have a general duty to have due regard, in the exercise of their functions,
“to the need to prevent people from being drawn into terrorism”.
Included among the specified authorities on which this general duty is placed are local authorities. The types of local authorities covered are listed in Schedule 3. They include a county council or district council in England, the Greater London Authority and a London borough council. What Schedule 3 does not appear to include is unitary authorities in general. The purpose of this amendment is to invite the Government to clarify which local government unitary authorities are covered by Schedule 3 and which are not, and the basis of that decision.
Two examples of unitary authorities which do not appear to be included in Schedule 3 are Thurrock and Southend in Essex. Clearly, Essex County Council is covered by Schedule 3 and will have the general duty placed on it under this Bill to have due regard to the need to prevent people from being drawn into terrorism. That duty will not apparently also be placed on the Thurrock and Southend unitary authorities. Is it the intention, to use Thurrock and Southend as examples, that the responsibility will rest with the county council rather than the unitary authority? If so, why, and how will the arrangements work in this situation within the areas of the Thurrock and Southend unitary authorities? On which local authority, or local authorities, will the duty in Clause 21 lie in our major cities in England outside London, such as Birmingham and Manchester?
The consultation document on the Prevent duty guidance asks the question as to whether there are additional local authorities that should be subject to the duty to prevent people from being drawn into terrorism. Perhaps that means that the Government have some doubts about whether the list of local authorities covered by Schedule 3 is as extensive as it might be. In their factsheet on the Bill, the Government give us an example of what steps local authorities should take to meet their Prevent duty in the Bill. The example given—one that the Minister referred to in an earlier debate—is that local authorities should ensure that publicly owned premises are not used to disseminate extremist views. Does that mean only in local authorities covered by Schedule 3 and not in those that are not covered by Schedule 3?
It also appears, subject to what the Minister is going to say, that while not all local authorities are covered by Schedule 3 on the duty to prevent people being drawn into terrorism, under Clause 28 each local authority must ensure that a panel of persons is in place for its area to ensure support for people vulnerable to being drawn into terrorism. That would appear to be a bit of a contrast.
I hope I have made it clear that the purpose of this amendment is to seek clarification on which unitary authorities are and which are not covered by Schedule 3 and the reasons behind that decision. I await the Minister’s response. I beg to move.
Baroness Hamwee
My Lords, the world of local government, in its kaleidoscopic way, is changing at the moment with new groupings of authorities, such as the Association of Greater Manchester Authorities. Although the duty is expressed as a duty on each individual authority, will the Government be open to authorities seeking to find ways for neighbours to provide services to fulfil the duty? This has only just occurred to me, but it seems that one should be open to practical ways of dealing with this sort of thing.
Separately, I ask whether my noble friend is able to address my points about the contracting-out of services, which I raised in the first group of amendments. I do not know whether he has any notes on that. It is mentioned in Amendment 106 in the Minister’s name, which caused me to go on a hunt for Schedule 36A to the Education Act. That is only about education and there are many other services which are contracted out. I asked London Councils whether I was barking up the wrong tree in worrying about this. Its answer was that I was not and that this is something worth pursuing.
Lord Harris of Haringey
My Lords, I suspect that my noble friend’s amendment highlights the fact that this is a list which has been cobbled together with some speed and that perhaps, in trying to ensure that all the bases were covered, the normal diligence of the Home Office has fallen apart. As to the specific point about unitary authorities, my noble friend Lord Rosser suggested that perhaps a county council could act on behalf of a unitary authority. The very point about unitary authorities is that you cannot do that. That would raise some very interesting and wide issues so I assume that that is a simple omission. Regarding the list on criminal justice, while I assume that the duty is placed on the individual institutions, there is nothing said more generally about the role of headquarters bodies or contracting bodies like the National Offender Management Service.
There are a couple of other possible anomalies that the Minister might want to address. I note that community health councils, which still exist in Wales although they have been long abolished in England, are listed, but that the successor of the successor of the successor bodies for community health councils in England, Healthwatch organisations, are not included. Will community health councils in Wales have a Prevent duty that does not apply to the bodies which now fulfil many of those functions in England? Finally, I do not see the Ministry of Defence Police in the list of police organisations.
Lord Bates
My Lords, I can say in advance that I will probably be writing to both my noble friend and the noble Lord on their points. As extensive as the briefing is, I am afraid that it has not pre-empted those two points of contracting out or the Ministry of Defence Police.
I will move the government amendments in this group shortly but first I will respond to Amendment 105A in the names of the noble Lord, Lord Rosser, and the noble Baroness, Lady Smith—the Opposition Front Bench. This amendment would add a unitary authority to a list of specified authorities in Schedule 3 on page 47. This is an issue that I have discussed with her previously. I am pleased to assure her and others in your Lordships’ House that this amendment is unnecessary. Unitary authorities are already covered by virtue of a county or, more commonly, a district council. On that basis, I hope the noble Lord will feel able to withdraw the amendment. I can see a quizzical look from noble Lords on this but we say that whether it relates to a county or district council in England—that is, a person carrying out the function of an authority mentioned in Section 1(2) of the Local Government Act 1999, by virtue of a direction made under Section 15 of that Act—the provision would catch all. Noble Lords will have to take the word of our counsel on it. It would be a pretty easy amendment to make if we were wrong, and we would be happy to correct it; but we feel that unitary authorities are covered under the existing wording.
There are a number of government amendments in this group, regarding bodies listed in Schedules 3 and 4. Schedule 3 specifies the authorities subject to the duty to have due regard to the need to prevent people being drawn into terrorism. Schedule 4 specifies the persons who are subject to the duty to co-operate with panels established by local authorities to provide support for people vulnerable to being drawn into terrorism.
Amendments 106, 108, 111 and 116 to 118 will ensure that the appropriate authorities are subject to the duties, and that there are no gaps or inconsistencies. Amendments 106 and 116 add persons who are appointed by local authorities under certain delegated functions related to education functions. This ensures appropriate coverage of the duties. Amendments 108 and 117 add a person specified by Welsh Ministers in respect of a direction made in respect of a Welsh local authority’s education functions. This amendment ensures a consistent approach.
Lord Scriven
Where do GPs, as part of the health service, fit into the system?
Lord Bates
I am thinking on my feet. The legislation mentions a community health council in Wales, a local health board or NHS foundation trust.
Lord Bates
That was a good try but I am clearly in need of that break. Rather than answer now, I shall add my noble friend honourably to the list of the three Members to whom I shall write with clarification. However, inspiration has just come to me. Of course I knew the answer. GPs are not covered by this provision.
Lord Scriven
If it is a function across health professionals and health services, the proportion of people who come into contact with an acute trust is significantly small. Why have the health service and GPs been excluded from the duty, yet consultants who see the minority of patients have been included? What is the significant difference in order for the Government to be making that delineation of clinicians?
Baroness Hamwee
My Lords, if the Minister is going to come back to us on various points, perhaps he can include something on patient confidentiality.
Lord Bates
As I sat down to take that intervention, further inspiration came to me on this matter. We are consulting GPs on their role in this, and we will have regard to the important points relating to patient confidentiality to which the noble Baroness referred.
Finally, Amendments 119 to 122 would allow the Government to make changes, through regulations, to Schedules 3 and 4 at any time after the Bill is granted Royal Assent, and before such time as the rest of this part commences. The amendments ensure that, in the event that there are additional bodies to which the Prevent duty should apply or which should be partners to Channel panels, then those bodies can be added to the appropriate schedule with as much notice as possible before the duties on them commence. This is clearly in the best interests of those bodies because it will give them time to prepare. This has particular relevance to the addition of Scottish bodies. The Government have made clear that it is our hope and intention that Scottish bodies will become subject to the Prevent duty, and we are currently discussing this with the Scottish Government.
We still wish to make the changes to the schedules as soon as possible after Royal Assent, and to have the duty commence for all specified authorities in England, Wales and Scotland at the same time. Therefore, I invite the Committee to agree these government amendments and trust that, in the light of my earlier clarification, the noble Lord will feel able to withdraw the amendment.
Lord Rosser
I thank all noble Lords who have taken part in this debate. I am left feeling somewhat lonely. I think that I am the only noble Lord who has spoken in this debate who is not actually going to get a letter. I appreciate that the Minister was repeating the legal advice that he had been given—I do not doubt that advice—but having apparently found out that the reference to:
“A county council or district council”,
covers unitary authorities, it would be helpful if he were able at least to quote other legislation in which a reference to a county council or district council is meant to include a unitary authority. I am sure it exists; this is not a challenge. I assume from the advice given to the Minister that there must be examples in other legislation where that is the case. It would be helpful if there could be a note on that, or at least some communication to make that point.
Lord Rosser
I thank the Minister. I no longer feel lonely; I am going to get a letter as well. The question has also been raised as to why the consultation asked:
“Are there additional local authorities that should be subject to the duty?”.
I appreciate that parish councils are not mentioned but I hardly imagine that they are going to be covered by the duty; therefore, bearing in mind that unitary authorities are covered, I am not sure exactly which local authorities people might suggest could be included. However, I am not inviting the Minister to send me a letter covering that question. I am grateful to him for his reply, and I am sure that other noble Lords are grateful to him for his willingness to respond to the queries I have raised. I beg leave to withdraw the amendment.
Lord Bates
“A person who is authorised by virtue of an order made under section 70 of the Deregulation and Contracting Out Act 1994 to exercise a function specified in Schedule 36A to the Education Act 1996.”
Lord Bates
“A person who is specified in a direction made in relation to the exercise of a local authority’s functions given by the Welsh Ministers under section 25 of the School Standards and Organisation (Wales) Act 2013 (anaw 1) (including that section as applied by section 50A of the Children Act 2004 or section 29 of the Childcare Act 2006).”
Lord Bates
Baroness Hamwee
“( ) Guidance issued under this section shall in particular deal with equalities issues.”
Baroness Hamwee
My Lords, Amendment 112BA is grouped with a number of other amendments, most of which relate to Clause 24. The amendments in this group in my name and those of my noble friends have been tabled to enable me once again to raise issues about equalities and concerns about discrimination.
It has been put to me that Prevent is regarded as a security prism through which all Muslims are seen and that Muslims are suspect until proved otherwise. The term “siege mentality” has also been used. We have discussed the dangers of alienation arising from the very activities that should be part of the solution, not part of the problem, and of alienation feeding violence. I have said to the Muslim organisations that have contacted me, and I think I have said in the Chamber, that because the current context for this legislation is the war in Syria and since most Britons, not all, who are drawn into fighting there are Muslims—I am not saying that they come from the same ethnic background; that is, of course, quite different—it is inevitable that Muslims will make up the great majority of those who are the subject of, or some might say subjected to, the provisions of this Bill.
We have laws about equalities and they apply to this legislation as to every other piece of legislation. I doubt that much can be done in legislation to address the concerns I have just summarised but what can be done should be done: in legislation, in practice and in providing safeguards against discrimination. Transparency is a very important tool and it occurred to me today that, the more transparency there is about how these provisions are operated, the more ammunition—if that is not an indelicate word in the context—the Government can give themselves to counter those concerns.
I have mentioned the current context. The counter- terrorism strategy and policy of course are also directed to dealing with other extremism manifested in violence—for instance, right-wing extremism. I am told that freedom of information requests for basic statistics about Prevent are routinely denied on the basis of national security. It seems to me that we should be looking for ways of providing information that do not endanger security. For instance, I wondered how many individuals are in a programme because of anti-Semitic violence. Over the last day or two, I have been pondering what it would look like if one substituted “Jewish” for “Muslim” in the briefings and descriptions we have had. The issue is not just how I would see it as a Jew—not a very observant Jew but one who is aware of her background and heritage—but also whether other people, who might be resistant to some of the points I have been making, would see things differently if it were a different group interposed in that way. I think that if this were aimed at the Jewish community or communities, I might feel targeted rather than protected. I say all that by way of some introduction and can go through the specific amendments fairly quickly.
I said earlier this evening that I think—although I am going to have to read the debate to check—that the Minister in his answer on the first group implied more support, at least for the thoughts that lie behind these amendments, than I suspect he is going to articulate now and he also implied more consultation than the clause spells out. The clause deals with revised guidance as well as the first issue of guidance. If one accepts the Minister’s point about how well the Government have conducted the process so far for the purpose of the argument, nevertheless the issues I am raising will be important for the revision of guidance as well.
The first of my amendments, Amendment 112BA, states:
“Guidance … shall in particular deal with equalities issues”.
I think that that speaks for itself.
Amendment 112BB would insert that there must be consultation with,
“the specified authorities subject to the guidance”,
as well as with, as stated in the Bill, the Welsh and Scottish Governments. The clause then goes on to include the very wide catch-all—although it could be a very narrow “catch-few”—of,
“any person whom the Secretary of State considers appropriate”.
It must be right for those who are going to be the subject of this guidance to be consulted.
I then take that a stage further with Amendment 112BC by providing that, before responding to that consultation, a specified authority should,
“consult its local or other relevant communities”.
It comes pretty naturally to most local authorities to consult their own communities when they are proposing to do something, although not always. However, I do not just mean residents as a kind of amorphous bunch. There are communities within communities. We are all members of more than one community, and the specified authorities can identify their communities as they see fit under what I am proposing.
The next of my amendments, Amendment 112CB, relates to Clause 24(7), under which the Secretary of State can make minor revisions to the guidance without going to Welsh and Scottish Governments if the,
“Secretary of State considers that the proposed revisions … are insubstantial”.
I would like to see that as an objective test so that it could be challenged—in other words, I would like to change this subsection so that the consultation provisions have effect unless they are insubstantial.
Amendment 112DA is an amendment to Clause 25. It must be the case that authorities have the opportunity to make representations before directions under this clause are given—this being the clause which takes us to the sanction for failing to comply with the duty. I would hope that that would be automatic. It is perhaps a matter of general law but, again, I think that it should be spelled out.
Amendment 112F also relates to the directions clause provisions. It would insert that the Secretary of State should report to Parliament on any direction given. Giving a direction in this way is a pretty substantial action, and I think that it should be reported to Parliament with the reasons for it.
I hope that I have covered everything that is in my name. My noble friend tells me that I have, so I beg to move Amendment 112BA. As I do so, I realise that each of the amendments is on what might be thought to be a small point but, in my view, they amount to trying to find a way of addressing concerns which are clearly very real in the minds of those who have been looking at this legislation.
Baroness Brinton
My Lords, I should like to speak to Amendments 112C and 112E, which are in my name. I start by apologising to the Minister. I am sorry that I could not manage to get to his meeting last week. I know that my noble friend Lady Hamwee expressed my concerns and I am grateful for the Minister’s letter on some issues which has been referred to considerably since we started today’s session.
These two amendments are important and my noble friend Lady Hamwee ended on that point. After going to war, the right to curtail freedoms is one of the most important decisions that a Government have to take. The one thing that is missing at the moment on some of the key directions, particularly on guidance and on where the Secretary of State gives a direction to an authority, is any sense of accountability and transparency.
I shall take the amendments in order. Amendment 112C says that if guidance is issued,
“the Secretary of State must lay before Parliament … the proposed guidance or proposed revisions”,
and it should be done by an affirmative instrument of both Houses. As I have said on earlier amendments, guidance also needs to be combined into one document with any other parallel guidance that will ease matters for those having to use it. The duty in the Education Act 1986 is absolutely clear and I believe that the guidance has been brought forward in haste. The Commons has not managed to see the draft guidance and the consultation does not end until tomorrow. I am grateful to my noble friend for some of the changes that he has made but I see nothing in his letter that relates to this issue of transparency and accountability to Parliament. It is important on such a sensitive issue that goes to the heart of the freedom of people in this country that Parliament at the very least should have the right to examine any changes that the Secretary of State wishes to lay.
Amendment 112E asks for the same scrutiny for the Secretary of State should she or he direct under the terms of this provision. It is important that we as Parliament understand how and why an appropriate authority has failed, partly so that we can amass the evidence that my noble friend talked about earlier, but also because we as Parliament need to know exactly what is happening. Amendment 112E also provides that:
“A copy of any such report must be sent to—
(a) the Chair of the Joint Committee on Human Rights;
(b) the Independent Reviewer of Terrorism Legislation; and
(c) any other person whom the Secretary of State deems appropriate”.
It is also important that the relevant sector sees what is going on so as to understand the issues, a point made by the noble Baroness, Lady Hamwee. The three bodies mentioned also deal with some of the wider issues around terrorism, freedom and liberties. It would be inappropriate for them not to comment before such matters were discussed in Parliament.
Baroness Berridge
My Lords, Amendment 112E is in my name and I join the noble Baroness, Lady Brinton, in her reasoning for it. Clause 24(8) states:
“The Secretary of State must publish the current version of any guidance issued under this section”.
However, Clause 25(1) states that,
“the Secretary of State may give directions to the authority for the purpose of enforcing the performance of that duty”.
The directions will be known to the Home Secretary and to the body in receipt of them but there is no requirement for the wider public to be made aware of the nature of these serious directions that could curtail freedom of speech. One could predict that they might be the subject of a freedom of information request but these directions should be known wider than that. I agree with the outline of Amendment 112E that Parliament, in the absence of a written constitution, is the guardian of such liberties. Producing a report to Parliament enables the matter to be scrutinised. As a member of the Joint Committee on Human Rights, I believe that that committee could scrutinise the directions under this provision. This is a particular executive power that we exercise and it is appropriate that the provisions in Amendment 112E should be made.
Baroness Sharp of Guildford
I have added my name to Amendments 112C and 112E. It is important that the fine print of the duty is spelt out in the guidance. It is extremely important that this should be put in the public domain and scrutinised by Parliament. I very much endorse the provisions of Amendment 112C. Similarly, in relation to the Secretary of State giving directions, it is important that this is transparent and in the public domain. Including such a report would actually be after the event. The scrutiny is not before the action but after it. Nevertheless, it brings the matter to public notice. It is vital that this is scrutinised by Parliament. I very much like the notion that a copy must be sent to the chair of the Joint Committee on Human Rights. That is appropriate given the interest that that committee has shown in these provisions.
Baroness Lister of Burtersett
My Lords, the concerns that were expressed in earlier debates about the draft statutory guidance underline just how important it is that that guidance is the subject of proper parliamentary scrutiny. Indeed, the Joint Committee on Human Rights, which has just been referred to, has recommended that the Bill should be amended to require the guidance to be approved by affirmative resolution of each House. I want to ask one specific question about the guidance. I do not know whether this is my bid for a letter but it would be good to have the answer in Hansard. The guidance sets out what is expected from student unions and societies in relation to the Prevent strategy, including making clear the need,
“to challenge … extremist ideas which are used to legitimise terrorism and are shared by terrorist groups”.
Both Universities UK and the National Union of Students have questioned how this is compatible with student union status as independent legal entities. My noble friend Lady Kennedy of The Shaws made reference to this in passing but did not actually pose the question of how it is compatible. The NUS also points out that student unions are already regulated by the Charity Commission so it could be awkward if they had to be accountable to two different bodies. I would welcome an explanation of this either now or, if that is not possible, in a letter. How do student unions fit into this and how will it be possible for universities to apply the guidance to bodies which are independent of them?
Baroness Smith of Basildon
My Lords, clearly we have returned from our break reinvigorated, although I suspect that when noble Lords saw the words, “House adjourned for pleasure” while they ate with indecent haste, they might have wondered about the term “pleasure”. We will all claim some indigestion later.
I shall speak to all the amendments, including our Amendment 112CA. Yet again these amendments highlight the concerns around making sure that something is effective in practice, that the necessary checks and balances are in place, and that the reporting procedures will ensure that it is working as it should. Our amendment reflects a point made by my noble friend Lady Lister, which is that the guidance should be subject to the affirmative resolution procedure. That is important because the guidance we are discussing and which we will rely on is now out for consultation, and that consultation has not been completed. I think that the noble Lord has been both wise and helpful in pre-empting the consultation responses in his letter sent last night to noble Lords. It goes into some of the changes that can be made. However, the importance of the consultation is such that it is going to inform the guidance, which in turn will indicate to specified authorities what is going to be expected of them. I appreciate that noble Lords have pointed out in earlier debates that it is not prescriptive, but the role of the guidance will be crucial to how the specified authorities can ensure that they do not find themselves subject to a direction from the Secretary of State, which is quite a significant move. We should not underestimate the importance of the consultation and the guidance.
We are not going to see the guidance until the Committee stage has finished, so there will be no real opportunity to discuss it as we would like. Moreover, I do not know whether the Government are going to issue a formal response to the consultation. Indeed, the consultation itself had not been issued when the other place considered this Bill, and that is why we think it would be a sensible and practical move for the guidance to be considered by both Houses under the affirmative procedure. This has the support of Universities UK and million+.
Part 5 sets out a new duty which has a very wide range. It relates to schools, universities, prisons, the police and some public companies exercising a public duty. We had a long debate earlier about higher education. I also appreciate that recently there have been cases in Tower Hamlets and Birmingham which highlighted the need to bring schools within the Prevent agenda to see how it could be of positive assistance to them, although the Minister is probably very aware of the fact that we need further information on how that will work in practice.
However, I am struggling to understand why nurseries have been included in the list and how they are going to operate this. The noble Baroness, Lady Hussein-Ece, raised the same point earlier. We all know that young children say things that they do not understand and they do not mean. A young Muslim friend of mine was absolutely horrified when her nephew came home from school playing with an imaginary gun and saying that he was going to fight in Iraq. He does not know where Iraq is and he had no idea of what he was saying. He did not hear it at home, but somehow he picked it up. What would be the duty of the nursery when he said that? My nephew at the age of four caused great embarrassment to my younger sister when on a train back home one day he asked the German man sitting opposite him: “Are you a Nazi then?”. Where did he pick that up? One thinks of “Raiders of the Lost Ark”. Children say things that are inappropriate; that they do not mean or understand. I wonder how that fits in with the Government’s Prevent agenda and the duty that they are going to place on nurseries.
I declare an interest because my mum runs a preschool. It was a Church of England voluntary preschool; it is now state-funded under the Labour Government’s plans to provide nursery provision for three and four year-olds. It is Ofsted inspected. If I have to tell her that she now has a further duty to have due regard to ensure that her three and four year-olds are not drawn into terrorism, I wonder how she will respond and what the responsibility will be to ensure that she fulfils that duty. I joke slightly, but this is a serious matter. I do not understand how the Government expect people to fulfil that duty.
I have read the guidance and would be interested to know how many nurseries, preschool providers and childminders had access and would have known to respond and understood what there is. If the noble Lord is able to say at the end of the consultation how many responses there were from those providers, it would be interesting to get a sense of the legitimacy of the consultation.
If the concern is about parents, it is important for the welfare of a child that nursery staff have a very trusting relationship with parents. We should not take any action which undermines that. The Minister nods and I am sure that he understands the point I make. Why are nurseries included and how will the measure work in practice?
There is nothing in the guidance, it seems to me, that looks at the issue of online radicalisation. If you look at the risks of being drawn into terrorism—a point which has been made today by a number of noble Lords—the only route is not through university, as seems to be indicated in some of the documentation that we have seen. What action is proposed to counter radicalism, recruitment and grooming online? There is a significant case for far more to be done to tackle online grooming, extremism online and social media—all these different routes. This does not seem to be catered for in the guidance that is out for consultation.
Another point that has been raised, but is worth repeating when talking about the duty and parliamentary scrutiny, is the need for the Government to give further clarity on what is meant by extremism. Which definition should be used? I turn to the detail of the amendment. Clause 24 gives the Secretary of State the power to issue guidance to specified authorities about the exercise of their duty. The consultation ends on Friday. The Bill was semi-fast-tracked. We have not had the opportunity to benefit from the consultation results. I found the consultation documents quite narrow—as did other noble Lords—in how they expected people to respond. Without those responses it is absolutely essential that Parliament, not the Secretary of State, has the final say in how that guidance should reflect the responses to the consultation. Otherwise, all we are doing in the clause is to provide an enabling power for the Secretary of State. Given the impact that this will have, we think that such scrutiny from your Lordships’ House and from the other place is important.
Over the past week or so we have had discussions with various Muslim representative groups, the Muslim Council of Britain and MEND regarding their concerns about the Bill and particularly the Prevent duty. It is worth putting on record that in many cases we see that Muslim community groups and youth organisations have been among the most vocal in condemning extremism and extreme violence and in pointing out that the action of barbaric groups such as ISIL are not representative of the Islamic faith whatsoever. I would not want anything that goes out from the Bill or from the debates that we have today to undermine our acknowledgement of that.
We have to ensure that we continue to speak to those communities about their experiences and work together to try to counteract the issues that divide us. There is far more that unites us than divides us and the Prevent strategy is not going to work unless we have that interfaith and all-faith and no-faith understanding. It is because the Opposition support Prevent that we want it to be effective and proportionate. The guidance that the Secretary of State is going to issue will be crucial in this. That is why we believe it is so important that it has parliamentary approval.
Lord Bates
My Lords, I am grateful to the noble Baroness for moving her amendment and to other noble Lords who have spoken in this debate. It may be helpful if I put on record a couple of points relating to the consultation on the guidance first.
The Bill was considered at Second Reading in the House of Commons on 2 December. It had three days in Committee—9, 15 and 16 December 2014—and then two days on Report, on 6 and 7 January. Third Reading also took place on 7 January. The draft guidance that we are considering today was deliberately published in mid-December so that it would be caught in part of that consultation process. It was certainly there, although as reflected in the Official Report in the other place, it was not given the same level of scrutiny that it has had in your Lordships’ House. That may have been to do with its availability, because people had not studied it in great detail or perhaps because other organisations and higher education institutions had not quite flagged up their concerns at that point, but that has been addressed now. Moreover, of course, subject to your Lordships granting the Bill a Third Reading, the amendments that there will be in this area will be considered in another place. I agree about the importance of parliamentary scrutiny, and this Bill has benefited immensely from it.
Before I go into the prepared remarks on the amendments themselves, I will just try to deal with a couple of issues. The noble Baroness, Lady Lister, asked whether the duty applies to the National Union of Students. The duty does not apply to student unions and societies, but institutions should have regard to the duty in the context of their relationships and interactions with student unions and societies. This requires clear policies about what activities are allowed to take place on campus. Policies should set out what institutions expect of student societies in relation to Prevent. We expect student unions and societies to work closely with their institution and to co-operate with the institution’s policies.
My noble friend Lady Berridge asked why the directions are private. The power to give directions will be subject to multiple layers of protection, including judicial oversight and that of the Prevent oversight board, on which my noble friend Lord Carlile provides independent representation. A direction would only be issued as a last resort and only after all other means of ensuring compliance with the duty had been exhausted. A decision to make a direction can be judicially reviewed, and if it is contested, it would come before a court to be enforced. All of these judicial processes are of course matters of public record. I also emphasise that the direction would only be likely to be made in order to ensure that the right policies and procedures are put in place according to the guidance in the institution. This is not designed to impose decisions in respect of individual cases and decisions that have been taken in those institutions. We do not feel the need for a level of transparency that requires all directions—of which there will be very few—to be made public in the way suggested.
As for definitions of extremism, we touched on this earlier, but, for the record, the definition that we are working with is,
“vocal or active opposition to fundamental British values, including democracy, the rule of law, individual liberty and mutual respect and tolerance of different faiths and beliefs”.
Calls for the death of British Armed Forces are also included.
The noble Baroness, Lady Smith, referred to the situation in nurseries and asked why they were covered. In the comprehensive list of the institutions covered, nurseries are included because they are public areas and the Government can inspect what happens in them as they are covered by certain government standards. There have, for example, been cases where individuals decided to travel to Syria and had actually taken children with them. That might be something. For example, a child might have mentioned that that was going to happen. That could be relevant to safeguarding the child. In all these things, I am conscious of something that the noble Lord, Lord Ramsbotham, was always fond of saying, which is that a failure of common sense is a failure of the rules, and we are expecting, in these circumstances, that common sense will prevail.
Baroness Smith of Basildon
I think that the noble Lord is making a good fist of it but it is not very convincing. He thinks there might have been a case or there could be a case where a child might let slip in a packed nursery that someone is going to Syria and that he or she could be taken with them. What we have here is a duty being placed on the staff of that nursery. Unless it is clear-cut what that duty is going to be and how it is to be undertaken by the staff, I struggle to find a good explanation for why it is in there. I hope that the paper arriving for him is enlightenment, and I will give him an opportunity to read it, but so far his explanation is not really very convincing. It is quite an onerous duty to be placed on staff, involving training, costs and so on. If he is able to offer any further enlightenment on why and how, I would be very grateful.
Lord Harris of Haringey
My Lords, while the Minister takes the opportunity to read fully the piece of paper that has just arrived, it seems to me that the argument that he is putting forward is about essentially providing a duty to support the Pursue function rather than the Prevent function. Of course, in a nursery and various other places information may emerge that could actually be important in terms of pursuing, preventing or interdicting a particular terrorist act. That is slightly distinct from what we are talking about here, which is preventing people from going down the road of becoming terrorists. The examples that the Minister has given have been more about the Pursue end of the counterterrorism strategy rather than the Prevent end.
Lord Bates
In that case, it is probably the fault of the rather poor example that I gave rather than the actual guidance as it is. Essentially, it says to a responsible person within any nursery, “There is a general Prevent review where we are trying to prevent people from being drawn into terrorism”. The responsible person would want to know, “What does that mean for us? If we had a circumstance where that came to light, what would we actually do? Who would we report it to? If we had any concerns, what would we do?”. The fact that that procedure is written down and that somebody has actually thought about what that procedure would be complies with the guidelines. It is the duty to have due regard to the guidance.
The amendments in this group relate to a number of matters concerning the duty itself and the guidance to be issued under it. I begin with the amendments that deal with parliamentary scrutiny of the guidance, which were tabled by the Opposition and my noble friends. Amendments 112C and 112CA would require that the guidance may be issued only subject to parliamentary approval. The Bill already provides that the Secretary of State may consult before issuing guidance. That consultation has been running for six weeks and closes on 30 January.
This public consultation has provided ample opportunity for interested parties to scrutinise and influence the guidance. The final guidance will have benefited from extensive consultation and expert input, including contributions to debates in your Lordships’ House.
The approach that we have taken to this guidance is not uncommon. I note that the Delegated Powers and Regulatory Reform Committee did not recommend any additional parliamentary scrutiny of the guidance in its report on the Bill. I take this opportunity to thank the committee, and particularly my noble friend Lady Thomas of Winchester, for producing its report so efficiently in order to support your Lordships’ scrutiny of this legislation. In view of this, and although we of course value the importance of parliamentary scrutiny, the Government do not believe that it is crucial for the guidance to be subject to parliamentary approval.
Amendment 112BA would require the guidance to “deal with equalities issues”. I assure my noble friend Lady Hamwee that this is an issue that the Government take extremely seriously. In drawing up the final version of guidance, we will certainly consider any equalities issues that have arisen since we published the draft for consultation. Of course, many of the specified authorities will already be subject to the public sector equality duty in the Equality Act 2010. I hope she is reassured that her amendment is not necessary in the light of these considerations.
Amendments 112BB, 112BC and 112CB would further increase requirements to consult on the guidance. I assure your Lordships that the Secretary of State will of course consult specified authorities before issuing guidance that affects them. As I have said, we are just coming to the end of a full public consultation on the guidance. However, it will not always be necessary to consult all specified authorities in all cases. For example, there might be a case where part of the guidance relating to just one sector is to be revised and it would not be appropriate to consult all specified authorities on such revisions.
Amendment 112BC would require specified authorities to consult their local or relevant communities. This might be good practice in some cases. However, the duty is on the specified authority, not their relevant communities, and this consultation would impose additional costs. There might also be cases where it would not be appropriate to consult communities. For example, in making amendments to the guidance to the prisons sector, it might not be appropriate to consult the prison population. As such, we consider this to be a matter best left to specified authorities to consider and to decide.
Amendment 112CB would remove reference to the Secretary of State as being the person who should decide whether a revision to the guidance is insubstantial. The amendment accepts that insubstantial changes should not require consultation and that someone must make the decision on whether a change is insubstantial. It remains the Government’s view that the decision should fall to the Secretary of State, given her responsibilities to Parliament. This is consistent with standard practice on this type of issue.
I shall now respond to the amendments that relate to the Secretary of State’s power to issue directions. Amendment 112DA would make the power to issue a direction subject to the specified authorities having the opportunity to make representations. Amendments 112E and 112F would require the Secretary of State to issue a report to Parliament after making such a direction.
I reassure your Lordships that a number of safeguards are already built into this direction-making power that make these amendments unnecessary. The legislation makes clear that the power can be used only where a specified authority has failed to discharge its duty to have due regard to the need to prevent people being drawn into terrorism, in the assessment of the Secretary of State. This narrows the circumstances in which the power could be used. The decision to issue a direction to bring about compliance could then be judicially reviewed, following the normal principles of such reviews.
Further, the direction is enforceable only by application to a court for a mandatory order. The court would not exercise its discretion to issue an order if it felt that the direction had been issued unreasonably. Of course, court decisions stand to be appealed against.
The Government would consider using the power only where other efforts to address the failure had been exhausted. The decision to recommend that the Secretary of State issue a direction would have been considered in detail by the Prevent oversight board, on which, as I have already mentioned, my noble friend Lord Carlile sits as an independent member. There would also have been detailed discussions with the specified authority beforehand, including the opportunity to make representations at that stage.
This debate has been an insightful introduction to the consideration of the Prevent duty. I hope that my remarks, in which I have been able to expand on previous statements, may reassure noble Lords. In that regard, I invite them not to press their amendments at this stage.
Lord Harris of Haringey
Before the noble Baroness, Lady Hamwee, makes that decision, I revert to the question of what it is that is being required and one of the reasons why that might imply that it is better to have more consultation about it. One of the reasons why some of the previous Prevent programmes failed, and fell into disrepute with the communities concerned, was that they were not seen as about preventing people from going down the road to become dangerous, violent extremists. Rather, they were seen as being programmes that put a series of spies in the camp and were about reporting individuals to the authorities for action to be taken against them. Speaking personally, I am all for mechanisms that identify people who are a danger to the rest of us and make sure that appropriate steps are taken, but this was perceived as being the authorities intervening and getting the data. We are going to come to this subject in a minute, but when I questioned the Channel panels as to why the intelligence services were not specifically listed as an agency involved in that, the argument given at that stage was that it was because it would make it look as if the Channel panel process was part of a process of ratting on individuals to the authorities.
It is important to get this guidance in a form where the communities understand that it is not about pointing the finger at individuals in a way that might lead them into trouble with the authorities, but is a way of supporting individuals and preventing them going down that road. That is why this distinction of whether this is about “prevent” or “pursue” is so important, as is getting public and community buy-in to the way in which this is enforced.
Baroness Hamwee
My Lords, my noble friend might not be too pleased to know that I was scribbling quite a lot during his reply, but he will be pleased to know that I can hardly read what I have written. However, I am sure that this is something that we are going to want to come back to next week. It strikes me that a lot of this debate has been on the premise of what the situation is here and now. Even with the reassurance that my noble friend Lord Carlile is so heavily involved in this, I do not suppose that he is going to want that to be for ever and a day. There might come a time when he finds other things that he will apply his energy to.
Leaving that aside, I made the point earlier that what we are talking about here is not only the guidance that we will see fairly shortly. The noble Baroness said that we will not see it until after Committee; in fact we will not see it until after the end of the Bill or even, as far as I understand it, until after enactment. There is also the question of revisions to the guidance, which is surely going to have to be changed; it is very unlikely to be exactly what is required in its first incarnation. It is the sort of guidance that needs time for individual organisations to have their own internal discussions and for umbrella organisations to trickle down the consultation—
Lord Carlile of Berriew (LD)
I am grateful to my noble friend for allowing me to interrupt her. The Minister, during the course of his speech a few moments ago, mentioned the Prevent oversight board on a number of occasions and kindly referred to my involvement. Does he agree with me that, if the Prevent oversight board is to have a realistic oversight role, it should meet reasonably often; it should be able to choose what it reviews from time to time; and it should be heavily involved in the quality control of Prevent schemes around the country rather than, as at present, meeting very rarely and not really carrying out a great deal of detailed scrutiny?
Baroness Hamwee
I am not sure whether that was a question for me; I assume it was, although it seems to be beyond the amendments that we are dealing with here. In making that point, though, I think my noble friend is pointing to the breadth, depth and complexity of this issue and to the need to keep everything under review and to be open to making changes as it becomes apparent that they are needed. This sort of guidance needs time for those who are affected to trickle down consultations, sweep up the responses and reflect back—perhaps this goes to my noble friend’s point as well—experience on the ground.
Like the noble Baroness, I mentioned nurseries in the first group and said rather more about the bureaucracy involved, which would be inappropriate for small organisations such as the nurseries, pre-schools and primary schools that we are talking about. It is about the substance as well as the bureaucracy. I was reminded by her anecdote of the six year-old son of a friend who was being visited by a German family. The child came downstairs going—I do not know how Hansard can reproduce this—“Rat-a-tat-tat”. He was asked, “What are you doing?”, and replied, “I’m killing dirty Germans”. That is exactly the same sort of experience, but how should one react to that?
On the individual amendments rather than the generality, I am glad to hear that the Government will consider equalities issues. What the Minister was given to read was that the Government will, “consider any equalities issues that have arisen since we published the draft for consultation”. There will be issues, I think. I will not get into a discussion at this time of night on the philosophy of consulting the population of prisons, although I think there is quite an interesting debate to be had about that.
Under my Amendment 112CB, the Secretary of State would have to take the decision about whether or not proposed revisions to the guidance were substantial, but that should be by an objective test, not a subjective one.
In summary, I come back to two words: transparency and safeguards. I will of course consider the detail of what my noble friend said, but it is quite clear to me that, with perception being so important as well as reality, we have to reduce the opportunity for incorrect perceptions as well as everything else.
Lord Bates
“Monitoring of performance: further and higher education bodies
(1) In this section—
“monitoring authority” has the meaning given by subsection (4);
“relevant further education body” means the governing body or proprietor of an institution in England or Wales that—
(a) is subject to the duty imposed by section 21(1), and(b) is subject to that duty because it is an institution at which more than 250 students are undertaking courses in preparation for examinations related to qualifications regulated by the Office of Qualifications and Examinations Regulation or the Welsh Government;“relevant higher education body” means the governing body or proprietor of an institution in England or Wales that is subject to the duty imposed by section 21(1) because it is—
(a) a qualifying institution within the meaning given by section 11 of the Higher Education Act 2004, or(b) an institution at which more than 250 students are undertaking courses of a description mentioned in Schedule 6 to the Education Reform Act 1988 (higher education courses).(2) A relevant further education body or relevant higher education body must give to the monitoring authority any information that the monitoring authority may require for the purposes of monitoring that body’s performance in discharging the duty imposed by section 21(1).
(3) The information that the monitoring authority may require under subsection (2) includes information which specifies the steps that will be taken by the body in question to ensure that it discharges the duty imposed by section 21(1).
(4) The “monitoring authority” for a relevant further education body or a relevant higher education body is—
(a) the Secretary of State, or(b) a person to whom the Secretary of State delegates the function under subsection (2) in relation to that body.The Secretary of State must consult the Welsh Ministers before delegating the function under subsection (2) in relation to institutions in Wales.(5) A delegation under subsection (4)(b) must be made by giving notice in writing to the person to whom the delegation is made if—
(a) that person is Her Majesty’s Chief Inspector of Education, Children’s Services and Skills or Her Majesty’s Chief Inspector of Education and Training in Wales, and the function is delegated in relation to relevant further education bodies;(b) that person is the Higher Education Funding Council for England or the Higher Education Funding Council for Wales, and the function is delegated in relation to relevant higher education bodies.(6) Otherwise, a delegation under subsection (4)(b) must be made by regulations.
(7) The Secretary of State must publish any notice given under subsection (5).
(8) Regulations under subsection (6) are to be made by statutory instrument; and any such instrument is subject to annulment in pursuance of a resolution of either House of Parliament.
(9) In this section—
(a) “institution in England” means an institution whose activities are carried on, or principally carried on, in England, and includes the Open University;(b) “institution in Wales” means an institution whose activities are carried on, or principally carried on, in Wales.
Lord Bates
My Lords, with the leave of the House I will take Amendments 113 and 114 together. Throughout our debates the Government have made it clear that we will rely on existing monitoring regimes for the relevant sectors. That remains the case. Although publicly funded further education is monitored by Ofsted, no such regime currently exists for all higher or private further education. We have asked the higher and further education sectors about monitoring of the Prevent duty as part of the consultation on the draft guidance, which has been undertaken in parallel to the passage of the Bill. I am pleased to say that in the discussions we have had, the sector has been broadly supportive of a limited regime, such as the one we are proposing.
Universities are not inspected. Rather, they are currently subject to limited monitoring and assurance regimes that apply to quality of provision and to accounting for the use of public money. Those regimes are based on risk and are designed to be proportionate and not burdensome. The overwhelming view expressed in the discussions so far has been to agree that a monitoring regime for this duty should be one that is both recognisable to the part of the education sector to which it is being applied and proportionate to the duty being placed upon the sector. We have achieved that with these amendments.
The amendments will allow the monitoring authority to require the provision of information by relevant education institutions to assess compliance with the duty. Information that institutions might be asked to provide to monitoring bodies could include details of risk assessments relating to how students might be at risk of being drawn into terrorism, policies and procedures on speakers and events, and on IT. We fully expect an institution to co-operate with the monitoring authority. However, there may be rare cases where the institution does not co-operate and, in such cases, where the monitoring authority has exhausted all other options to address the failure, the amendments allow the relevant Secretary of State to make a direction.
This is a serious step that we would not like to see taken unless it is strictly necessary. For that reason, the amendments allow for a monitoring authority—for example, when not satisfied that an institution has adequate provisions in place to comply with the duty—to request information about steps that the institution plans to take to ensure that it discharges its Prevent duty correctly. We expect this to be sufficient to avoid the use of direction in all but the most serious cases.
If an institution has failed to provide adequate information about compliance with the duty in spite of repeated approaches by the monitoring authority, we would expect any direction necessary to be given by the appropriate Secretary of State. That means the Secretary of State for Business, Innovation and Skills in England, not the Home Secretary and, for institutions in Wales, we expect it to be the Secretary of State for Wales, in consultation with the relevant Welsh Ministers. The amendments allow for the relevant Secretary of State to undertake monitoring or to delegate the function. We do not envisage that the Secretary of State will actually undertake this function, but it is important to explain the technical reason for including this possibility.
We may wish to consider whether the Skills Funding Agency is an appropriate monitoring body for part of the sector and if, in consultation with the further education sector, we determine that it is, then we would technically need the Secretary of State to deliver that function. That is because of the proposed legislative changes to abolish the office of chief executive of skills funding in the Deregulation Bill, which will mean that the Skills Funding Agency will become part of the Department for Business, Innovation and Skills and will operate through the powers and duties of the Secretary of State.
Going forward, the department with responsibility will work with the monitoring bodies and, once they have been confirmed, we will work with the sector to draw up a monitoring framework that sets out more explicitly how we expect to monitor compliance with the duty. I beg to move.
Lord Hope of Craighead
My Lords, I think I understand the purpose of the clauses from the explanation that the Minister has very helpfully given. He will not be surprised to hear that I have spotted that there is no mention of Scotland in either of these two clauses. As I mentioned earlier, if one looks at Clause 41 one sees that Part 5 of the Bill applies to Scotland as well as to England and Wales. Therefore, as far as I can judge, all the other clauses in this part are carefully designed to apply to that jurisdiction as well as to England and Wales. It is very strange that no mention is made of Scotland in either of these clauses or in the noble Lord’s explanation of their purpose. I may be wrong, but the equivalent bodies exist in Scotland to enable a similar system to be carried out. Is it simply that under the normal conventions, the Government have been unable to secure the agreement of the Scottish Government to these clauses, and will come back at a later date—perhaps before Third Reading or possibly in the other House, if this has to go there —or is this a deliberate intention not to apply the monitoring system to Scotland? If that is the intention, I would be very interested to know why that decision was taken.
Baroness Lister of Burtersett
My Lords, I have a few questions concerning the role of HEFCE as the appropriate monitoring body. I was slightly surprised when I heard that it would play that role. What expertise does it have as primarily a funding body—albeit, I accept, with some wider governance oversight? Is there not a danger that the chilling effect will be that much greater if compliance is policed by the funding body?
Will the Minister also explain how HEFCE will regulate those HE institutions with which it has no formal funding relationship? Finally, I understand that reference to “the Secretary of State” means the Home Secretary. However, Universities UK argues that it is inappropriate for HEFCE to be given directions by the Home Secretary; there is the whole question about the independence of universities anyway, but in so far as there is such a relationship, normally HEFCE has a relationship with BIS, not with the Home Office. I would therefore appreciate the noble Lord’s reflections on those questions, because I know that there are concerns in the HE sector about the role of HEFCE— I do not know what its own view is on that.
Lord Bates
My Lords, I am grateful to noble Lords for their questions. I will first deal with the questions from the noble Baroness, Lady Lister, on HEFCE. As the noble Baroness will be aware, that is one of the questions we specifically ask on page 21 of the consultation:
“Do you agree that the Higher Education Funding Council for England is the appropriate body to monitor compliance with this duty? … Are there other higher education regulatory bodies that should be involved in monitoring compliance?”.
In many ways the short answer is that we are consulting on that. That was one of the reasons why when I introduced the government amendments I said that in certain cases we nominate the Secretary of State for Business, Innovation and Skills as the designated person for these purposes. I hope that addresses that point.
I turn to the point mentioned by the noble and learned Lord, Lord Hope, on Scotland, which he raised in the previous context as well; as I have stated, it is our hope and intention to add Scottish bodies to Schedule 3 in due course. At such point we could look at making consequential amendments to this clause to make it applicable to Scotland. The other one relates to Northern Ireland. On the application of free speech in Scotland, which was referred to previously—I take the opportunity because the notes happened to arrive together—this part of the Bill applies to England, Wales and Scotland, but as yet no Scottish bodies are listed in Schedule 3; I made that same point earlier. However, we will look carefully at the wording used, to ensure that it applies equally across all territories, so the basic answer is what I already said in this regard.
Lord Hope of Craighead
Is it the intention to make further amendments by statutory instrument rather than by primary legislation? Obviously, if we had to come back with an amending statute, that would take time and be a rather laborious business. I wonder whether a better precaution would have been to put some kind of structure into the Bill at this stage, as is done elsewhere in this part, on the assumption that a number of Scottish authorities or institutions will be added to Schedule 3. But if it is possible to do it all by order the problem disappears, because that can be done quite simply.
Lord Bates
Perhaps I could reflect on that a little more and then return to it. Of course, there is still parliamentary time for further consideration of the Bill, and for Scottish bodies to be named and listed. We would be happy if that happened in time for them to be included on the face of the Bill. I shall consider further the noble and learned Lord’s point.
Lord Bates
“Power to give directions: section (Monitoring of performance: further and higher education bodies)
(1) Where the Secretary of State is satisfied that a relevant further education body or a relevant higher education body has failed to comply with a requirement under section (Monitoring of performance: further and higher education bodies)(2), the Secretary of State may give directions to the body for the purpose of enforcing compliance.
(2) A direction under this section may be enforced, on an application made on behalf of the Secretary of State, by a mandatory order.
(3) The Secretary of State must consult the Welsh Ministers before giving directions under subsection (1) in relation to institutions in Wales.
(4) In this section “relevant further education body”, “relevant higher education body” and “institution in Wales” have the same meaning as in section (Monitoring of performance: further and higher education bodies).”
Lord Phillips of Sudbury
“Impact Report
(1) Before the provisions of this Chapter may come into force in respect of the specified authorities set out in Schedule 3 under the heading Education, child care etc., the Secretary of State must prepare a Report on the potential direct and indirect impact howsoever of this Part on the specified authorities affected, on those attending the same in whatever capacity, and on society generally.
(2) In particular the Report shall assess the impact referred to in subsection (1) in relation to the cultural and financial consequences.
(3) The Report shall also specify comparable legislative arrangements in other Member States of the European Union, the United States of America and the countries of the Commonwealth.”
Lord Phillips of Sudbury
My Lords, Amendments 115A, 118A and 123 stand in the names of the noble Viscount, Lord Hanworth, who is a professor at the University of Leicester, the noble Lord, Lord Hannay of Chiswick, who is pro-chancellor of Birmingham University, the noble Lord, Lord Norton of Louth, who is a professor at the University of Hull, and has had to go back at this hour in order to meet his students in the morning, and myself—and I was for 11 years chancellor of the University of Essex. It is no surprise, therefore, that this group of amendments addresses what we take to be the severe inadequacies of Part 5 of the Bill in so far as it relates to schools and universities. We have no view to express on, for example, the issue of prisons in relation to Part 5. Part 5 is made up of a strange bag of entities, and we believe that universities and schools deserve particular and different treatment.
We well understand that the issues the Government are grappling with in the Bill are of extraordinary difficulty—they are damned if they do and damned if they don’t. The only thing one can say, in the light of the debate today, is that as far as I can recollect not one single person has spoken in favour of Part 5, and nearly everybody has addressed their remarks to its treatment of universities and schools—much more of universities than schools, it has to be said.
I pay tribute to some of those who have tried to assist us in our work—Universities UK, the National Union of Students and the Association of School and College Leaders. A number of us also had a useful communication from the Muslim Council of Britain, which is particularly concerned about the unintended effects on Muslim communities.
One thing that has been universally remarked on, although in different language—it is manifestly true of the impact of Part 5 on universities—is the extraordinary complexity, bureaucracy and cost that it will impose on educational establishments. I shall come to those in a little more detail when I go through the amendments.
The other thing that has come through again and again is the absence of adequate preparation for the Bill, and for this part in particular—an absence of remotely sufficient fact or evidence to justify the huge change in regime that will afflict universities if the Bill goes through unamended. It is also striking that the consultation, too, seems to have been highly inadequate. I think that the Minister referred to 160 responses. I do not know how many universities there are, but there are a lot more than that, let alone higher education authorities and thousands of schools. Indeed, I hope that the whole population is interested in the fate of our universities consequent upon the well intentioned but, we believe, severely misguided measures in this part of the Bill.
If it were not for the factor of realpolitiks, I and, I think, other supporters of these three amendments would wish to see universities taken right out of Part 5. However, we are not arguing for that because, as I say, we are trying to be as pragmatic and concessionary—if I can use that word—to the Government as possible, understanding that they would have to bear the brunt of public unrest if, in a week’s time, some terrorist event were to take place in our blessed islands.
Amendment 115A is headed, “Impact Report”, and would require the Secretary of State to,
“prepare a Report on the potential direct and indirect impact … of this Part”,
of the Bill on universities and schools, and the impact,
“on those attending the same in whatever capacity, and on society generally”.
The amendment follows that up by saying that the report must assess the impact in relation particularly to the “cultural and financial consequences”. I stress that the cultural consequences are even more important than the financial ones. I noted that in the course of this very revealing debate a great number of noble Lords focused particularly on culture, including the noble Lords, Lord Judd and Lord Hennessy, and the noble Baronesses, Lady Kennedy of The Shaws and Lady O’Neill of Bengarve.
The third aspect of the impact report that we want to see the Government prepare before universities and schools can be brought under this part of the Bill is a comparable study of legislative arrangements in other member states of the European Union, the United States of America and countries of the Commonwealth. My noble friend Lady Hamwee referred to the regimes in Germany and Denmark, which deal with the issues we are confronting. I think she said that, as far as she was aware, neither of the sets of requirements was statutorily compulsory.
Amendment 118A deals with Chapter 2 of Part 5 and Amendment 115A deals with Chapter 1. Chapter 2 of Part 5 concerns the local authority panels and the whole edifice of district council and county council panels, with their police reports and panoply of partners, and a whole range of stuff about that. I totted it up and I think that Part 5 covers 12 pages of the Bill and a further 39 pages in the draft guidance, so we are dealing with a huge corpus of new statute law because the guidance will be statutory.
Amendment 118A states that,
“the Secretary of State must prepare a Review of the workings of the existing voluntary ‘Prevent’ strategy”.
Again, it is striking that there are no adequate facts or evidence on which to base any reliable new regime. I call in aid a Written Answer to my noble friend Lord Scriven in which the good noble Lord, Lord Bates, said, inter alia:
“The Government does not hold information about the Prevent policies and processes of all the authorities on which the duty would fall”.
That is not a basis on which to bring forward legislative impositions—for that is what they are. It would be folly for us to go ahead without requiring the Secretary of State to produce a sufficient review so that Parliament, when it comes to consider Chapter 2, will have at its back enough information, fact and evidence to enable it to reach the right decision. Amendment 118A also talks about the review dealing with the effectiveness and shortcomings of the present Prevent strategy.
Viscount Hanworth (Lab)
My Lords, my name is also attached to the amendments in this group and I strongly support the remarks of the noble Lord, Lord Phillips.
One of the most arresting testimonies that I have heard recently concerns the way in which the alienation and radicalisation of young British Muslims has been related to a rising tide of Islamophobia. It would be wrong to suggest that the existing Prevent strategy is grounded in Islamophobia, but there are clear indications that it has added to the sense of alienation. In other words, the strategy has already become counterproductive. By placing the strategy on a statutory basis and by mandating acts of surveillance on the part of various public institutions, the damage that has already been done is in danger of being exacerbated. The danger can only be averted if the Prevent agenda is pursued with sensitivity and with a light touch and if it is subject to careful and ongoing parliamentary scrutiny. Amendment 115A and the other amendments with which it has been grouped seek to ensure that there will be some scrutiny at the outset. I observe that these amendments are conformable with Amendments 112C and 112E, which concern the need to review the guidance on subsequent occasions.
The consultation document titled Prevent Duty Guidance gives an indication of what might transpire if the strategy were unleashed in an unbridled manner. It has the potential to give rise to an era comparable to the post-war era of anti-communist persecution in the United States, known as the era of McCarthyism. The document describes a duty to prevent people from becoming terrorists and a duty to challenge terrorist ideas. These duties will be imposed on specified institutions: hospitals, schools, prisons, young offender institutions, universities and local authorities. The intention is that the Secretary of State should have the freedom to specify the duties that will be incumbent upon each category of institution, without submitting them to parliamentary scrutiny. Little regard has been given to the potential within the institutions for fulfilling such duties. Nevertheless, it is proposed to establish an inspection regime that will determine whether the duties are being fulfilled. If they are not fulfilled, then it is proposed that penalties may be imposed.
Specially appointed agents may be assigned to the institutions to ensure their compliance with the statutory obligations. We are told that the specified institutions must demonstrate evidence of productive co-operation with local Prevent organisations, the police and local authorities. Those in positions of leadership must ensure that the staff of their institutions implement their Prevent duties effectively. To this end, they will need to ensure that the staff are appropriately trained.
People suspected of being involved in terrorist-related activities must be reported to the police. If I understand correctly, terrorist-related activities are deemed to include non-violent extremism, which would make the category very wide and ill-defined. All the activities in fulfilment of the duties must be recorded, and reports of compliance must be made available on request.
These provisions are quite sufficient for the creation of a totalitarian police state. If that sounds far-fetched, that it is only because, in view of the nature of British society and its ingrained resistance to tyranny, such an outcome seems unimaginable. However, I suggest that our complacency in itself is not a sufficient protection against tyranny. Instead, we need to ensure that our legislation does not sanction such dangerously oppressive powers. To fulfil the various injunctions of the statutory Prevent strategy, the institutions will need to establish specialised units. The Home Office will be charged with monitoring all the resulting Prevent activity and ensuring that every specified institution has a suitable inspection regime.
An immediate concern is the expense that would be entailed in even a partial fulfilment of the agenda of the statutory Prevent programme. In this connection, I can speak of what I have experienced within the university environment. There are already precedents that provide ample warning of the deleterious effects of centrally directed inspection regimes. I have in mind the quality-assurance regimes to which universities have been subjected since the late 1980s. These have entailed considerable expense. They have pre-empted the time of lecturers and others, who have been required to provide extensive documentation of their activities and to submit reports to demonstrate compliance with the nostrums of the regimes. They have inhibited flexibility and innovation and imposed a heavy workload. This is exactly what we should expect from a centrally imposed, statutory Prevent agenda. The superfluous compulsory training courses that it mandates and the reports of compliance that will be demanded are aspects that are all too familiar to those who have served in universities in recent years. The injunction that lecturers should spy upon their students will subvert the essential relationship between staff and students. It will make it difficult for those charged with the pastoral care of students to discern what is actually happening in their lives. The injunction that all visiting lecturers should submit their material to prior inspection is absurd and unworkable; others have already commented on this point.
Finally, I should say that there is no evidence that I am aware of to suggest that the existing voluntary Prevent programme has been effective in averting terrorist outrages. Instead, this has been achieved by careful police work that has depended on the close co-operation of the Muslim community. To an extent that cannot be determined, it has been assisted by covert—that is to say, non-intrusive—surveillance and cyber-intelligence. It is these aspects of the counterterrorist strategy that need to be enhanced. A statutory Prevent strategy will be of no assistance in either connection.
Lord Bates
My Lords, I thank my noble friend for moving the amendment and giving us the opportunity to consider the important issues that he has raised. I agree with him that it is quite proper that the Government undertake reviews of policy and strategies from time to time to ensure they remain relevant and effective. The Government comprehensively reviewed the Prevent strategy in 2011. Since then, we have kept the various elements of the strategy under review. This has been part of regular business and in particular part of the annual report on our counterterrorism strategy, Contest, which is laid before Parliament. In the light of that, we have expanded the Prevent priority areas to reflect the changing threat, prioritised those that we feel are most effective and increased guidance and support for the voluntary Channel programme. In addition, the Prime Minister’s extremism task force was established in the wake of the murder of Drummer Lee Rigby,
“to identify any areas where the current approach was lacking”.
That task force reported in December 2013, just over one year ago. One of its conclusions was that delivery of Prevent should be put on a statutory footing in areas of the country where extremism was of most concern. The duty outlined in Clause 21 does just that. It does not limit itself to specific areas of the country. As the subsequent geographical spread of travellers to Syria has shown, such travellers can come from areas beyond those of most concern and listed under the current arrangements for Prevent.
Reviews of strategies can take many months to complete. It would be wrong in our view if we were to ignore the findings of the extremism task force and delay the implementation of this important duty in order to carry out yet another review. Should such a review take place at some point and recommend, in the light of actual experience of the implementation of the duty, that changes be made—for example to the authorities listed in Schedule 3—then the Government would be able at that point to lay regulations amending that schedule, which would need to be approved by both Houses.
Regarding the report to be provided prior to commencement, we have already published impact assessments on the measures in the Bill. As for the comparable legislation in other countries, the UK’s efforts in the field of Prevent are considered by most of our allies to be several years in advance of where they currently are.
I say to the noble Viscount, Lord Hanworth, who spoke on this, that when we are talking about a duty that is effectively about the upholding of democracy, tolerance and respect for others I do not think it is in any way appropriate to draw upholding those values akin to a totalitarian approach. I know that he was trying perhaps to provoke us into some further response. What we are talking about here is how, as a free liberal society, we react to a growing threat from within our society from people who seek to challenge those very basic freedoms and who pose a serious risk through potential violence to individuals, be they on campuses or in wider society. That was why when we had an extensive review of the Prevent strategy—which was launched in 2010 and, I think, published in 2011—it took the view that we should focus on national security as the priority of Prevent. That is why the Prevent programme has changed to being one of safeguarding and protecting people’s liberties in our society. I think that is right. It is kept under review, as I have tried to outline to my noble friend, and there are opportunities caused by that systematic review for Parliament to consider the progress of the strategy as it moves forward. In the light of that, I wonder if he might feel able to withdraw his amendment.
Lord Hannay of Chiswick
My Lords, the Minister will not be surprised to hear that his response is a little disappointing on this matter—predictable but disappointing. If the Government are not going to move in the direction suggested by these amendments and by some of the others that we have discussed, will the Minister register that it becomes ever more important that next week we hear from the Government not the full detail but some of the ways in which they intend to improve the guidance that they give to higher education institutions, to make it more positive and clearer about the Government’s support for our higher education institutions, which are some of the best in the world? We also need to hear from the Government their determination to allow some of the fears that have been expressed by those who have put forward a lot of amendments today to be met in some respects.
I hope that when the Minister reflects on this—as he agreed to do when we debated the previous group—he will think about how he can come forward on Report with clear and precise indications of areas where the Government are going to improve the guidance following the end of the consultation. I understand that it will take much longer to produce the full guidance, but I think that having that clear indication on the record will be helpful in our further consideration of the Bill.
Lord Bates
Obviously I am sorry if the noble Lord feels that the response was not adequate. The amendment was trying to say that there should be some regular means of assessing the effectiveness of the measure and its impact on higher education institutions. I was trying to set out several existing mechanisms by which that reporting and accountability to Parliament could take place. In relation to the other point, I said earlier that in a sense, as a first stage, my letter of yesterday was a step down the path towards what I hoped he would find was a fuller response regarding how this might work. I shall look to take further steps as we move into Report and Third Reading in this House.
Lord Phillips of Sudbury
My Lords, I thank my noble friend the Minister, but I am afraid that I shall be even less complimentary than my co-signatory to the amendment, the noble Lord, Lord Hannay. I believe that my noble friend gave us no new facts at all. We have had extraordinarily little by way of evidence or factual backing for this. For example, his letter, which he put in the Library yesterday, refers to two students—one, I seem to remember, a Swedish student and the other an American student—who had been influenced at their universities. There was nothing about English students. We have had nothing about the cost to universities, direct and indirect. He has not attempted to deny, because it is undeniable, that it will be a heavy bureaucratic burden, as my noble friend Lord Hanworth said. If we are acting responsibly, we really need to know these things before we plunge in. It is no good saying that there will be a report next year. It will then be too late to reverse the compulsory legislative nature of this measure, destroying the hugely valuable voluntary basis upon which the Prevent strategy currently takes place.
Lord Bates
All the way through, we have tried to say that we envisage a light-touch duty to have regard to systems which will already be in place. I do not imagine that there is an academic institution in the land or in the world that does not have policies for the welfare of its students, for risk assessments, for online safety and for the conduct of meetings. Therefore, I expect that we are talking here about, if necessary, a small addition to what is already happening in existing institutions.
Lord Phillips of Sudbury
I thank my noble friend for that but I have to disagree with him. He talks about a small addition to the present state of affairs. The universities are telling us loud and clear that it is not a small addition; it is a massive new addition. Before we make this decision, some attempt has to be made to find out the cost to government. I think that even the present voluntary panels in the counties cost £26 million a year. That will be but chicken feed if the universities are subject to this new regime with this vast statutory guidance.
I will leave it at that for tonight, but I hope that my noble friend will endeavour to come back at Report, as the noble Lord, Lord Hannay, suggested, with something a great deal more satisfactory by way of background to the need for this than we currently have. Perhaps we can have a conversation before then, but the time is terribly short. I beg leave to withdraw the amendment.
Baroness Hamwee
Baroness Hamwee
My Lords, Amendment 115AA takes us back into Chapter 2 and the Channel programme. Clause 28 deals with local panels for assessment and support. The Bill provides that a chief officer of police can refer an individual to a panel. I was requested to raise the first of my amendments in this group by London Councils to allow local authorities as well as the police to make direct referrals in order to access specialist support for individuals who are identified as vulnerable to being drawn into terrorism. London Councils is concerned that the provisions might have the effect of limiting the access of public bodies other than the police to a key source of support. It gives as an example a teacher who may spot a pupil who has been accessing extremist materials and refer that pupil to the local authority under the school safeguarding policy. The local authority might conduct an assessment under safeguarding and child protection legislation, agree that the pupil is vulnerable to radicalisation and decide that the sensible next step would be for the case to be considered by the panel in order to access appropriate support.
London Councils is also concerned that, as drafted, an unbalanced relationship between the police and local authority would be created. The local authority of course would chair the panel. Another concern is that cases that come up before a panel are “deconflicted” by the police to ensure that the person concerned is not subject to an active investigation before a support plan can be put in place. I would be grateful if my noble friend could respond to that offer from local authorities to be even more active.
Amendment 115AB takes us to what the support plan would include. It returns to points that I have already made about discrimination, grassroots, bottom-up and perceptions. I suggest a reference to people,
“who will be consulted in keeping the plan under review”,
in order to ask about the role of the local community, religious leaders, the family and so forth and how they will be recognised.
Amendment 115AC is about the support that the panel may put into place. We are told that it must consider reference to a provider of health or social care services. Those are not the only services. I seek to add the words “or other”; for instance, housing. I know that Ministers have referred to Jobcentre Plus and so on. There are a number of other services which might be appropriate for an individual. I do not whether counselling would come within local care, but certainly that is also one which should be considered.
The last of my amendments in this group is Amendment 118ZA. It would amend Clause 32, which is about indemnification. We are told that the Secretary of State may agree to indemnify a support provider against reasonable expenses. I think that that should be “shall”. We have already more than touched on necessary expense and good investment but nevertheless there is concern about the expense of the sorts of programmes we have been discussing today. The authorities that will be required to undertake these various duties and activities will be very stretched to find the money for them and questions of prioritisation will arise. If I can be told that “may agree to indemnify” actually means “shall” in the odd way we sometimes seem to go about drafting legislation, that is fine, but I am certainly looking for some sort of reassurance. I beg to move.
Baroness Sharp of Guildford
My Lords, I have added my name to Amendment 115C in this group. We have tabled this amendment because a number of organisations and members of the education profession have raised with us the issue of how far the provisions in Clause 28 will become counterproductive by destroying the relationship of trust between teacher and student. At their crudest, the duties being laid on the professionals concerned might be described as “snitching” on their pupils. The noble Lord, Lord Harris, who is not in his place at the moment, talked about spies in the camp as well as the perception of these provisions. I should like to quote from a recent edition of Times Higher Education:
“The draft legislation also proposes processes of referral for students considered at risk of succumbing to radicalisation. Universities will be required to train all staff who have contact with students to recognise what Brokenshire”—
the Minister in the Commons—
“called being ‘withdrawn and reserved, and perhaps showing other personality traits’. Where these traits are identified, the university must refer the student to a panel set up by the police and the local authority. The panel will oversee and administer a safeguarding programme which may include referral to the health services”.
There is obviously a balance to be struck here. We have all agreed in our debates that the Bill addresses serious problems, but there is also considerable worry that these requirements will destroy important relationships between teachers and students. The Association of School and College Leaders has talked about how the lack of certainty over the definitions of terms such “extremism” will make it difficult for schools and colleges to know with sufficient certainty whether they risk being found to be in breach of the new duty. The association states:
“The proposed powers to the Home Secretary, particularly with no parliamentary oversight, could have serious negative consequences for the curriculum and/or pastoral functions of schools and colleges”.
The association goes on to say:
“The implied duty to report children and young people ‘at risk’ to the police for referral to the Local Panels is problematic because schools and colleges may be unwilling to sacrifice relationships and trust on the basis of suspicion or may go to the other extreme and try to cover themselves by reporting every risk”.
These uncertainties and ambiguities will apply as much to other professions, especially those in the NHS and mental health services. There are real worries that making these duties statutory, instead of the present voluntary co-operation which gives room for judgment and flexibility, will result in a risk-averse and inflexible system which, rather than helping, has the reverse effect of alienating the students and making them more susceptible to extremist propaganda via the internet and social media. This is a very worrying issue which should be taken seriously. It strengthens the case for the implementation of Part 5 of the Bill being delayed until the authorities have had a chance to consult more widely and consider the possible unintended consequences of what is being proposed.
Lord Rosser
My Lords, we have one amendment in this group, Amendment 115AD. Its effect is to give the Secretary of State statutory responsibilities in supporting local assessment and support panels exercising their functions under Clause 28 by requiring the Secretary of State: to provide guidance—rather than it being optional—on the exercise of the panel’s functions; to provide a list of approved providers for de-radicalisation programmes; and to ensure that the approved providers are subject to monitoring.
Under Clause 28, each local authority must ensure that a panel of persons is in place for its area with the function of assessing the extent to which identified individuals are vulnerable to being drawn into terrorism. That panel, whose chair has to be the responsible local authority, must, among other duties laid down in Clause 28, prepare a plan in respect of identified individuals whom the panel considers should be offered support for the purpose of reducing their vulnerability to being drawn into terrorism.
The effect of Clause 28 is to put the voluntary programme for people at risk of radicalisation, in operation since 2012 and known as Channel in England and Wales, on a statutory basis alongside the rest of the Prevent programme. Local authorities will not need to establish a new panel if there is already one which carries out the functions set out in Clause 28. The reason for taking this step is stated in the Government’s impact assessment as being to secure effective co-operation from multi-agency partners and ensure that good practice can be recognised, shared and applied between areas using common practices to further improve implementation of the programme. However, while the Government are putting these statutory duties on local authorities in respect of the panels, there appear to be no similar provisions to ensure that they are supported by central Government. Indeed, the Government’s factsheet on the Bill also states that there will be no extra funding for councils and local areas.
Under Clause 28, a chief officer of police must make the referral of an individual to the local support panel. As provided for in the Bill, local support panels have to assess the individual’s risk of radicalisation and tailor a support package to address those risks. The issues are complex and the current guidance cites, I think, 22 vulnerability indicators that may lead to a Channel referral. The panel must weigh up these factors and tailor a support package which could have any number of elements. In some areas the panels could be addressing issues that they have not faced before.
There is a need for the Home Office to support local panels by providing an approved list of support providers who are able to give the specialist interventions needed to address the specific issues facing the individual in question and to approve the list of support providers to help ensure effective support packages and value for money.
The panel is also tasked with assessing the progress that the individual makes. However, it does not necessarily have the ability to assess the quality of support provided by other agencies, which is why the Home Secretary should also be required to assess providers, as set out in the amendment. I suspect that the Minister will say in response that the Secretary of State and the Home Office already do much of what is laid down in this amendment, but frankly that rather misses the point. Since the responsibilities and duties of local authorities in respect of the local panels are now being placed on a statutory rather than a voluntary footing under the Bill, it is only right—if we are talking about a true partnership between central and local government on supporting people vulnerable to being drawn into terrorism—that the responsibilities of central government in respect of the functioning and effectiveness of, and support for, the local panels should also be placed on a statutory rather than an optional footing. That is what this amendment seeks to do, and I hope the Minister will feel able to give a sympathetic response.
Lord Carlile of Berriew
My Lords, I will just say a few words in relation to this group. Best practice as I have observed it around the country has involved local authorities doing more or less what is set out in the provisions in this part of the Bill. Indeed, in the London Borough of Waltham Forest, for example, I have witnessed a meeting of exactly the kind described here. However, the practice has been very varied around the country. Some local authorities have done almost nothing, and it is absolutely clear that the most important work can be done, and needs to be done, at least under the aegis of local authorities. I therefore commend the provisions.
However, one or two things have been said during the course of this short debate which are particularly important. I will just focus on one of them, a remark by my noble friend Lady Hamwee about housing. Housing providers—which obviously does not just mean councils—have a huge amount of corporate knowledge about what is going on in large social housing projects. I have heard housing managers give an almost flat-by-flat or house-by-house description of activity which might be of concern in relation to Prevent and other aspects of counterterrorism policy. Before the Bill reaches its final stages, I ask my noble friend to consider whether there should be a reference to housing in these clauses.
The other point is about the police. It is of course right that the police should be involved in this activity, however there is a danger of exaggerating the role that the police play in Prevent. Of course the police should draw it to the attention of the relevant authorities—including the local authority and those involved in education, housing and so on—when they have detected concerns about the danger of radicalisation. However, we should not allow ourselves to be trapped in the position of believing that the police are the lead agency, or even a lead agency, in counter-radicalisation. It is when the police are overinvolved that communities become suspicious in the way that was mentioned earlier—perhaps with a degree of hyperbole—by the noble Viscount, Lord Hanworth. I simply ask my noble friend to keep in mind that there needs to be perhaps a little more flexibility than appears to be in the clause which the amendments in this group seek to amend.
Lord Ashton of Hyde
My Lords, this debate has allowed us to consider matters relating to the duty to create local panels to support people vulnerable to being drawn into terrorism in Chapter 2 of Part 5. I will start with my noble friend Lady Hamwee’s amendments. With many of them, this is really a question of practicality. We are seeking to continue the Channel programme, which has been operating now for nearly three years, in a way that is practical but effective.
Amendment 115AA would enable a local authority to refer an individual to a panel in addition to the police officer. I am pleased to reassure my noble friend Lady Hamwee that anyone can refer an individual who may be vulnerable to being drawn into terrorism for assessment, including the teachers to whom my noble friend referred. But, crucially, the police are responsible for co-ordinating activity from partners, and only the police may refer an individual to a panel. That is because the police carry out the initial assessment of an individual who has been referred and gather information from local partners to determine whether the individual is suitable for assessment by the panel.
My noble friend Lord Carlile asked whether the police were in danger of being overinvolved in this process. I remind the Committee that the Channel programme is entirely voluntary and that nobody needs to be in it who does not want to be in it. Different considerations apply to a voluntary programme from the other ones that we talked about earlier that are compulsory. To add a provision for a local authority to undertake a referral to a panel would create an unnecessary duplication of effort, as it would then also need to carry out the initial assessment and information-gathering phases. Of course, the police and the local authority are the two members of the panel ex officio, so they would be, of necessity, in close contact.
Amendment 115AB would have the effect of including in the support plan a list of people who have been consulted and who will be consulted in keeping the plan under review. I hope that I can give my noble friends some comfort on this point. In practice, those consulted on the support plan are the panel members. Proper records will be kept on the outcomes of the panels’ deliberations. We will ensure that the process and approach for support plans, and the records kept following these panels, are addressed in the statutory guidance underpinning this duty.
Amendment 115AC would add other providers that the panel must consider in cases where the individual is not vulnerable to being drawn into terrorism. We expect the panel to consider all forms of support on a case-by-case basis using its expertise and to refer an individual to the most appropriate support service, including housing and Jobcentre Plus, as my noble friend Lady Hamwee mentioned. The local authority housing function—my noble friend Lord Carlile mentioned housing—should be included in the panels. The local authority housing function should be covered by the membership of the local authority, but we can certainly ensure that this is emphasised in the guidance.
Lord Carlile of Berriew
I have listened carefully to my noble friend and there is one important lacuna in what he just said. A lot of social housing is no longer in the hands of local authorities. There are massive housing associations, particularly around London, which have taken local authority housing stock into their hands. I believe that the biggest landlord of social housing in London now may be the Peabody trust, which owns billions of pounds’ worth of property. Can we be sure that we are not going to just take local authority housing into this and that it will be possible to include other social housing? I think that is very important.
Lord Ashton of Hyde
I certainly take my noble friend’s point. I believe that the panel can include anyone who the local authority thinks is suitable, but I will take that back just to confirm that what I said is correct. As I just said, as the panel consists of local experts from such service providers, who will be very much aware of the services available locally, we do not consider it necessary to include in the Bill a list of all the services that the panel should consider. However, the process and the other forms of support to be considered will be detailed in the statutory guidance.
Amendment 115C would expressly rule out a disclosure that would jeopardise a relationship of trust between a practising professional and an individual concerned who has been referred to the programme. We do not seek or wish for the provisions of the Bill to undermine any such relationship. It is made expressly clear that the co-operation duty does not entail disclosures which would contravene the Data Protection Act. However, the 1998 Act includes certain lawful grounds on which information—which is not restricted to electronic information—concerning a person vulnerable to being drawn into terrorism could be shared.
Lord Rosser
The Minister has given the reply that I indicated I thought would be forthcoming—namely that what I have asked about is already being done. However, the question is: if the Bill puts the functions of the local authority and the local panels on a statutory footing, why not also put the requirements that the Secretary of State is expected to meet on a statutory footing, even though that may be being done anyway?
Lord Ashton of Hyde
The reason that we want to put this on a statutory footing—which was recommended, incidentally, by the Government’s extremism task force—is to enhance the engagement and co-operation of partner agencies and to ensure that best practice is adopted. I know that the noble Lord asked as well about funding for Channel. We are not expanding Channel. It is already a national programme across England and Wales, so we do not consider that it needs more funding.
Lord Rosser
The point that I was raising was not about funding or querying why the local panels would be put on a statutory footing. My query was: if the local panels are being put on a statutory rather than a voluntary footing—which we are not arguing about—why not also put the requirements that the Secretary of State will be expected to meet on a statutory footing as well, rather than putting those on an optional basis? That is what is provided for in the Bill, but the Minister is reiterating that the Secretary of State does anyway what I am seeking to put on a statutory basis. Why not put that on a statutory footing in the same way as the activities of the local panels will be put on a statutory rather than voluntary footing?
Lord Ashton of Hyde
There is a reason why we want to put the local authorities’ duties on a statutory footing. If the Secretary of State is doing everything that the noble Lord wants her to do, I do not see any particular benefit in putting that on a statutory footing. However, rather than going backwards and forwards on this, I am prepared to take this matter back. If there is more information that I can provide to the noble Lord, I will do so.
All providers are bound by a service level agreement with the Home Office that sets out the terms and conditions of their appointment, including conduct. In addition, as part of their co-ordination role, the police regularly review progress made against any interventions commissioned. Any misconduct will be treated seriously, with the option of terminating an agreement with a provider. It would be unusual—and we think unnecessary—to provide for these matters in the Bill.
Finally, I would like to address my noble friend’s Amendment 118ZA, which seeks to ensure that the Secretary of State must indemnify a support provider against any costs and expenses incurred in carrying out functions as a provider. I would like to reassure noble Lords that the costs for each case would be considered and, where the case was deemed appropriate, those reasonable costs would be indemnified. However, there might be some cases where it would not be appropriate to indemnify costs. One of the key reasons for resisting making the indemnification clause a blanket duty, required in all cases, is that it is included in the Bill to plug a gap that might not arise in all cases. The gap is the absence of reasonably priced insurance in the open market for risks that might arise for intervention providers. Depending on the precise nature of the support the provider is giving, there may or may not be sufficient availability of cover in the market. The intention behind Clause 32 is to allow the Secretary of State, only where a provider cannot get adequate cover, to step in with an indemnity. We do not want the Secretary of State to have to indemnify if a product is available on the market. The Secretary of State should therefore have discretion to decide which costs or expenses would be indemnified, but, as I have said, it is the intention that reasonable costs would be indemnified.
I hope that my responses have addressed the concerns raised by these amendments during this debate, and on that basis, I invite noble Lords not to press the amendments.
Baroness Hamwee
My Lords, the reference to insurance leaves me—I have to confess—rather bemused. That was not at all what I thought this clause could be about. However, I will not take time expressing my bemusement. The Minister started his response by using the terms “practical” and “effective”. Those are criteria for me as well. Unfortunately, as it happens, I am not wholly convinced that we identified the same ways of arriving at that conclusion.
I am particularly grateful to my noble friend Lord Carlile for expanding the point about housing. Of course, he is absolutely right: local authority housing supply is minuscule, almost disappearing. However, the role of housing providers in this area can be very significant. I will think about the detail of the Minister’s response and perhaps come back to it. For now, I beg leave to withdraw the amendment.
Baroness Hamwee
“( ) Guidance issued under this section shall in particular deal with equalities issues.”
Baroness Hamwee
I will try to move this amendment in under one minute, and not only because the Chief Whip is here. The amendments in this group more or less replicate, word for word, amendments made in respect of the Prevent programme. This part of the Bill is about the Channel programme. The Minister has been stressing the importance of guidance—which makes me think that my amendments are important. I simply invite him at this point to make any further or different comments or responses to those which he gave when I moved and spoke to similar amendments earlier this evening. I was just under a minute, I think. I beg to move.
Baroness Brinton
The noble Baroness has set a racing example, and I, too, will try to be extremely brief. My name is on Amendment 115B, which repeats the request found in two earlier clauses in the Bill through my amendments that when the Secretary of State issues or revises guidance she should make sure that Parliament has sight of an affirmative instrument in both Houses. I repeat, for the third time, I think, today, that where guidance is in parallel with other guidance, it should be issued as a single document.
The principal reason for this amendment is exactly the same as that for the other amendments: the Secretary of State has taken to herself and her successors a right to take decisions on guidance on sensitive issues. It is extremely difficult to assess which people are vulnerable to being drawn into terrorism. I am sure Parliament would want to have sight of this guidance and be able to review in future. As with my other comments, I hope that the Minister will be able to provide some reassurance that Parliament will be able to assess the guidance before it is given.
Lord Ashton of Hyde
My Lords, we have had a very brief debate on this part of the Bill. I am grateful to my noble friends for tabling this amendment. I fear that I may not be able to satisfy them. Amendment 115B seeks to make the guidance under the duty in Chapter 2 subject to approval under the affirmative procedure. Noble Lords should be aware that Channel is already an established programme across England and Wales and those who participate in the programme follow existing non-statutory guidance. The Channel programme has been in place since April 2012.
The current guidance for local authorities’ panels is being amended, in consultation with those involved in the programme, and will be reissued on a statutory basis. Guidance of this sort is not routinely made subject to parliamentary scrutiny, and the Delegated Powers and Regulatory Reform Committee has not recommended that it should be in this instance.
Amendment 115AF seeks to ensure that local authorities are consulted on any guidance issued for panels. Amendment 115E aims to ensure that partners of panels, or their representatives, are consulted before any guidance is issued. I can assure noble Lords that local authority panel chairs, panel members and police practitioners are being consulted about the revised guidance. Panel members invited to a meeting are likely to be those panel partners who have shared relevant information in relation to a referred individual and therefore will also be consulted at a local level. The consultation process will ensure that the views of all relevant stakeholders are taken account of and that the guidance is meaningful for those to whom it is issued. Their experience and expertise is invaluable in achieving this.
I hope that reassures my noble friend and that she will withdraw her amendment.
Baroness Hamwee
My Lords, I suspect that as with the equivalent group on the previous provisions, we may want to come back to these issues. I beg leave to withdraw the amendment.
Lord Bates
“A person who is authorised by virtue of an order made under section 70 of the Deregulation and Contracting Out Act 1994 to exercise a function specified in Schedule 36A to the Education Act 1996.”
“A person who is specified in a direction made in relation to the exercise of a local authority’s functions given by the Welsh Ministers under section 25 of the School Standards and Organisation (Wales) Act 2013 (anaw 1) (including that section as applied by section 50A of the Children Act 2004 or section 29 of the Childcare Act 2006).”
Baroness Berridge
“Part 15AFunding of terrorism: looting of cultural artefactsPanel and report
(1) Within three months of the passing of this Act, the Secretary of State shall appoint a panel to examine and report on the funding of terrorism through the looting and sale of cultural artefacts.
(2) The areas to be examined by the panel shall include, but shall not be limited to—
(a) the prevalence and scale of the funding of terrorism around the world through the looting and sale of cultural artefacts;(b) the extent to which looted cultural artefacts are sold in, or transit through, any part of the United Kingdom;(c) ways in which the practices in paragraph (b) can be reduced, including the possibility of placing a strict liability on United Kingdom auction houses in respect of the provenance of any cultural artefacts they sell; and(d) the treatment of any cultural artefacts seized by the United Kingdom authorities, including the involvement of British museums and galleries.(3) The report of the panel shall be laid before both Houses of Parliament.”
Baroness Berridge
My Lords, I rise to speak to Amendment 118B. First, I thank the charity Walk of Truth and its founder, Tasoula Hadjitofi, who drew this matter to my attention.
As I mentioned at Second Reading, it is clear that one of the streams of funding for IS in Iraq and Syria is the sale of looted religious and cultural heritage—anything from ancient coins to frescos literally hacked out of church walls. Due to the obvious difficulty of accessing IS-controlled territory, much of what we know is from reports by news outlets. Given the time, I will mention only one. In November 2014 an article in Newsweek quoted the executive director at Iraq Heritage, Aymen Jawad, as saying:
“By some estimates, these sales (of ancient artefacts) now represent ISIS’s second largest source of funding. One of its biggest paydays recently came from looting the ninth century B.C. grand palace of the Assyrian king Ashurnasirpal II at Kalhu, which is now called Nimrud … Tablets, manuscripts and cuneiforms are the most common artefacts being traded, and, unfortunately, this is being seen in Europe and America”.
Most of the reports indicate that these stolen treasures are finding their way into or through London. The news reports are confirmed by UNESCO, which has now alerted museums, Interpol, and the World Customs Organization to be vigilant,
“over objects that could come from the current looting of Iraqi heritage”.
The amendment requires the Home Secretary within three months of the Act to appoint a panel that would look carefully at this issue and specifically at the mens rea required for the offence under the Customs and Excise Management Act 1979. At the moment, the offence is committed, by auction houses and others, only where there are reasonable grounds to suspect that the goods were removed—in the case of Syria, for example—after 9 May 2011. I question whether that is sufficient, bearing in mind the current context.
The panel could investigate whether the UK should copy Germany’s law that will oblige dealers and collectors to present an export licence for where the object is coming from, in order to receive an import licence for any ancient artefact. The panel could also report on whether or how many stolen cultural and religious artefacts are coming through London. It could collate data on this matter, including how many cases the proceeds of crime unit of the Metropolitan Police is currently dealing with, which I presume has operational responsibility for this matter. Whether any artefacts have already been seized by the police and what happens to those artefacts would also be considered by the panel. If they have seized items, are the museums and galleries in London involved in helping to ensure that the artefacts are kept in conditions to preserve them, not only as criminal evidence but also to preserve their condition so they can one day be returned to Iraq or Syria? These items may require much more specialist handling than the colloquial “bagging up of evidence” to avoid contamination.
This panel would not be costly and would provide Parliament and the Government with much-needed data and recommendations to deal with the atrocious fact of stolen cultural heritage, which needs to be preserved for the time when Iraqis and Syrians can return to their homes and to the cultural heritage that should exist for them at that time. I beg to move.
Lord Renfrew of Kaimsthorn
My Lords, I certainly support the intention behind the amendment. My noble friend the Minister may well say in his reply that some of these issues are already covered by the Dealing in Cultural Objects (Offences) Act 2003. It is certainly the case that it is illegal to sell in this country cultural objects that were illegally exported from their country of origin after 2003. However, there are many new dimensions and my noble friend is right to draw attention to them. The scale on which terrorism is being funded through the sale of such artefacts gives cause for concern. I am not sure that many artefacts of this kind are being sold in this country now, but many will be in transit. As they may well be sold in the future they could still command a good price in the market.
I draw attention to one point. Proposed new subsection (2)(c) would require the examination of,
“the possibility of placing a strict liability on United Kingdom auction houses in respect of the provenance of any cultural artefacts they sell”.
This is not the occasion for a long debate on these matters. Some of them were raised in amendments during the passage of the Coroners and Justice Act 2009, although they were not carried. They placed an onus on auction houses in particular to be more transparent about vendors because auction houses are not obliged to declare for whom they sell such objects and somebody selling privately on the open market is not obliged to declare from where the objects came. There is a real problem. Indeed, there have been cases recently where auction houses have offered for sale objects which, it turned out, did not have a respectable provenance and had emerged on the market by shady means. It is therefore time to place an onus on the auction houses to check the provenance of the artefacts and to be assured that they left their country of origin legally after 2003, which would comply with the Dealing in Cultural Objects (Offences) Act. However, there is at present no onus on auction houses to be clear about the source of their objects. That is a glaring loophole, and that is why I support the amendment.
Baroness Brinton
I will speak to Amendment 118B but will not repeat the points made by my noble friends Lady Berridge and Lord Renfrew of Kaimsthorn. I want to remind the House of the scale of this problem and that it is a key funding area for Islamic State. A flash stick recovered after a courier was killed last year revealed that $36 million of goods had been taken from one town alone in Iraq. If you scale that up, and understand that each item can be sold for between $20,000 and $50,000, one begins to understand where IS’s money to resupply itself with weapons comes from. In addition to the provenance arguments and making sure that auction houses deal with appropriate items, there is a real issue of funding terrorism that needs to be addressed as well.
Lord Ashton of Hyde
My Lords, I am grateful to my noble friend for tabling this interesting amendment and for giving due warning at Second Reading that it might be coming. It allows us the opportunity to give due consideration to the looting and sale of cultural artefacts. Of course I agree with all noble Lords who have spoken that this is a relevant issue in the context of the terrorist threat, given that such sales are often used as a source of finance for ISIL and others, as noble Lords have said. I hope that I may be able to give some reassurance.
I should stress that this is a global issue, on which all states need to respond together. That is why the United Nations Security Council adopted Resolution 2195 in December 2014. This calls on all states to prevent and suppress the financing of terrorism. In particular, the resolution highlights the fact that terrorists can benefit from a plethora of activities, including through the sale of artefacts. It also recognises that defeating terrorist fundraising requires a global effort.
My noble friend’s suggestion of a further examination of this issue is timely. The UN resolution already requires the Secretary-General to submit a report to the Security Council outlining efforts to address the threat of terrorists benefiting from a range of transnational organised crime, including the sale of artefacts. Notably, the report will contain recommendations to strengthen member states’ capability in relation to this issue. Rather than commission a separate report at this time, the UK will carefully consider the findings of the UN report and take appropriate action as necessary.
In addition to this, the United Nations Office on Drugs and Crime established an intergovernmental expert group on protection against trafficking in cultural property. In January 2014 that group finalised guidelines for crime prevention and criminal justice responses with respect to trafficking in cultural property and other related offences. Again, the United Kingdom has actively been involved in this work.
Amendment 118B proposes that a panel be appointed to explore looting and sale of antiquities for the purposes of financing terrorism and report on that subject. I hope that I have given my noble friends some reassurance on why such a requirement is unnecessary, given the UN work in this area and in light of our wider work on the issue.
As I have said, all states, including the UK, are required to stop terrorist financing, including through the sale of artefacts. The UN Security Council resolution makes it clear that there will be a report on efforts to counter the financing of terrorism-related crimes, including the sale of artefacts, which will include recommendations on how member states can strengthen their capabilities. I must stress that the UK takes the funding of terrorist organisations through any means, including through the sale of artefacts in the UK, very seriously. Instances of terrorist financing in the UK will be investigated by the police.
The UK already assesses how we can reduce all instances of terrorist financing and countering terrorist financing features in the Government’s counterterrorism strategy, Contest. The Government continually assess how best to disrupt the financing of the activities of terrorists, whether through the sale of antiquities or by other means.
Auction houses are required by law to report any suspicions of terrorist financing relating to high-value goods to the National Crime Agency. I can confirm to my noble friend Lord Renfrew that there is no suggestion that any UK companies or auction houses have been involved in terrorist financing through the sale of artefacts. Additionally, Part III of the Terrorism Act 2000 already makes it illegal to make funds available to terrorists or to enter into an arrangement that will result in funds being made available. Where there are suspicions of terrorist financing, it also creates various reporting obligations for the regulated sector, including auction houses, which are subject to criminal sanction in the event of non-compliance. Therefore, we do not see the need to impose an additional strict liability on auction houses, given that they are already obliged to raise terrorist financing suspicions with the authorities. I hope I have reassured your Lordships that the UK already has a very robust response to this important issue and plays an active role in what needs to be an international approach. I welcome the opportunity to put our work on this issue on the record and I am grateful to my noble friends for providing the chance to do so. In the light of the extensive work that already goes on in this area, I hope that my noble friend will feel able to withdraw her amendment.
Baroness Berridge
I thank my noble friend the Minister and welcome what he said about the UK Government’s response to the UN report. This was an exploratory amendment around this issue but it served to distil matters. Although my noble friend stated that there is no evidence of current terrorist funding through auction houses in London, the evidence that I have received matches the comments of my noble friend Lord Renfrew. Items appear in the catalogues of auction houses in London, but when an auction house is phoned and asked whether it is certain of the origins of a particular artefact, that artefact disappears from the sale catalogue. So, clearly, through our suggestion of a panel, we have distilled the issue. As my noble friend stated, there is concern about the provenance of artefacts offered for sale here in London. I hope that my noble friend the Minister will meet us to discuss this specific issue as greater onus needs to be placed on auction houses in this context. I beg leave to withdraw the amendment.
Lord Pannick
“Independent reviewer of terrorism legislation
In section 36 of the Terrorism Act 2006, for subsection (1) substitute—“(1) The Secretary of State must appoint a person to review and report on the operation, effectiveness and implications of—
(a) counter-terrorism legislation; and (b) any other legislation or power to the extent that they are applied for counter-terrorist purposes.(1A) “Counter-terrorism legislation” in subsection (1) means—
(a) the terrorism Act 2000,(b) the Anti-terrorism, Crime and Security Act 2001,(c) Part 1 of the Terrorism Act 2006,(d) the Counter-Terrorism Act 2008,(e) the Terrorist Asset-Freezing Act 2010,(f) the Terrorism Prevention and Investigation Measures Act 2011,(g) Part 2 of the Justice and Security Act 2013, and(h) Parts 1 and 2 of the Counter-Terrorism and Security Act 2015.””
Lord Bates
I apologise to the Committee and to the noble Lord, but I thought that it might be helpful to him if I put on the record some comments on his amendment, which the Government have carefully considered. I hope that that might be helpful to the noble Lord.
Lord Bates
My Lords, it is getting late. I am very grateful to the noble Lord for moving this amendment and for raising this very important issue.
The two amendments before us are slightly different in wording but are designed for the same purpose. Both amendments would insert a new clause into the Bill which would amend the statutory remit of the Independent Reviewer of Terrorism Legislation and, in some respects, would amend the reporting arrangements for those Acts falling within his remit.
I am aware that the essence of these amendments reflects a recommendation made by David Anderson in his last annual report on the operation of the Terrorism Acts, and echoed by the Joint Committee on Human Rights in its recent report on the Bill. It is, however, right that the Government think carefully before making what would be very significant changes to a long-standing and highly effective oversight role. The primary purpose of the independent reviewer role is to provide assurance to the public on the operation of UK counterterrorism legislation. It is important that we do not dilute this core function and that there is clarity about what is subject to the independent reviewer’s oversight.
Nevertheless, I can see that there is some force to the argument that it is a little perverse that while the independent reviewer is able, and obliged, to look at certain Acts of counterterrorism legislation, other equally relevant pieces of counterterrorism legislation are outside his remit. The Government have reflected on this issue, and will continue to do so in the light of this evening’s debate, to consider whether it might be possible to make some changes on Report to address this concern. Were we to expand the independent reviewer’s remit, it would, of course, raise questions about the capacity of the independent reviewer. Even someone with such a voracious appetite for work as David Anderson has limits. In part, the Privacy and Civil Liberties Board, which we are coming on to, is designed to increase the support and capacity of the independent reviewer. I will give further thought to whether it would be appropriate to give him greater flexibility to set his own work programme and concentrate on those areas which he believes are most deserving of scrutiny or most topical.
I give your Lordships a very clear assurance that the Government will consider these points extremely carefully, and very urgently, and I hope that we may be able to find some way to meet the points which these amendments seek to address. I invite the noble Lord to reflect on those comments.
Lord Pannick
I am very grateful to the noble Lord. That is extremely helpful. Of course I have no intention of pressing the amendment. I look forward to hearing what he says next week on Report. I ask him to reflect not only on the recommendation of the Joint Committee that the remit of the independent reviewer should be expanded but also, as the Minister mentioned, the other part of the Joint Committee recommendation—paragraph 7.8 of their report—that the Government should make available to the independent reviewer resources necessary to perform his task effectively. In particular, David Anderson has explained that it would help considerably if he were assisted by a security-cleared junior counsel. That seems a very good idea to me. I do not think that the provision of such assistance would need statutory authority, but I hope that the Minister can reflect on that. Other noble Lords may wish to intervene in relation to this debate.
Baroness Hamwee
My Lords, I am glad to hear what the Minister has said. Reference has been made to the Work Programme. My amendment extended beyond the remit to the question of the frequency of reporting, which is a point that the current independent reviewer raised. Less frequent reporting on some matters will free up time to focus on others, responding of course to the current situation. There is also the question of specific statutory powers for access to classified information and to gather information. He has said that he has not had a problem but that he feels that it would be appropriate for the matter to be dealt with in statute. I wanted to ask that those points be among those that the Government are considering and, like others, I look forward to seeing the amendment on Report.
Lord Carlile of Berriew
My Lords, I will add a few words of support for what has been said by the noble Lord, Lord Pannick, and my noble friend. I feel very grateful to my noble friend the Minister for taking the initiative in this group of amendments. David Anderson has set out very clearly and correctly the additional support that he needs and the programme of work that it would be in the public interest to have in his hands. The Minister seems to agree, provisionally at least, with David Anderson’s representations as articulated by the noble Lord, Lord Pannick, in particular, and I feel that we can now await next week with some confidence.
The Deputy Chairman of Committees (Baroness Morris of Bolton) (Con)
My Lords, if Amendment 118F is agreed to, I cannot call Amendment 118G for reasons of pre-emption.
Amendment 118F
“(1) The Secretary of State shall by regulations made by statutory instrument establish a body to—
(a) provide advice and assistance to the persons appointed under—in the discharge of their statutory functions;(i) section 36(1) of the Terrorism Act 2006;(ii) section 31(1) of the Terrorist Asset-Freezing etc. Act 2010; and(iii) section 20(1) of the Terrorism Prevention and Investigation Measures Act 2011,in the discharge of their statutory functions;(b) review the operation, effectiveness and implications of the Anti-Terrorism, Crime and Security Act 2001, the Counter-Terrorism Act 2008, the Counter-Terrorism and Security Act 2015 and any other law or prerogative power to the extent that it relates to counter-terrorism;(c) consider whether such legislation contains appropriate safeguards, is proportionate and remains necessary;(d) review intelligence-sharing guidance and practice to the extent that it relates to counter-terrorism and the functions of the Board; (e) make recommendations to any public authority about the exercise of its statutory functions relating to the prevention of terrorism;(f) undertake inquiries relating to counter-terrorism when invited to do so by the Home Secretary, the Treasury or the Secretary of State for Northern Ireland, or on the initiative of the Board;(g) encourage good practice in the prevention, investigation, detection and prosecution of terrorism; and(h) provide advice and assistance to Government on the development and implementation of policy relating to the prevention of terrorism.”
Baroness Smith of Basildon
My Lords, I will also speak to Amendments 118H and 118J. I welcome the Minister’s statement in relation to the previous debate on the amendment of the noble Lord, Lord Pannick. I hope that that will be reflected in his comments on this group of amendments, which also impact on the work of the independent reviewer and the Government’s proposals for a Privacy and Civil Liberties Board.
One reason that I brought forward these amendments is to get some concrete proposals to try to improve this part of the Bill, but I also want to understand the thinking behind the Government’s proposals and how they expect them to work in practice. This was first announced in July, when the Government brought forward the DRIPA Bill. When that was debated, there were no details on the board other than what it was to be called. My understanding is that, since then, there has been considerable debate within the Government about what the role, remit and make-up of the board will be. The original proposal, that it should replace the independent reviewer, has wisely been dropped. However, on 17 December last year, the Government launched their public consultation on establishing a board—another consultation, which does not end until tomorrow. Will that report be available when we discuss this issue on Report?
The Government said that purpose of the Privacy and Civil Liberties Board was to support the work of the independent reviewer of counterterrorism, but the how, why, where and who of what will happen is where the lack of clarity remains. What is clear is that both inside and outside your Lordships’ House the whole role of the independent reviewer attracts enormous respect and credibility regarding the way in which he undertakes his work. We extend those comments to the previous holder of that position. However, that is not to say that the work could not be improved or enhanced.
In the previous debate, the noble Lords, Lord Carlile and Lord Pannick, commented on the recommendations made by the independent reviewer on how he could better undertake his work. He provided suggestions in his report on the operation of the terrorism legislation in 2013. He repeated those points in evidence to the parliamentary committee. His comments on how he thinks he can enhance and improve the role of the independent reviewer seem thoughtful and worthy of serious consideration by the Government.
While I therefore agree with the Government and welcome their direction of thought on examining ways in which that role could be supported and enhanced, the Government need to provide more detail and a convincing case for why the establishment of the new Privacy and Civil Liberties Board is the right way forward. The impact assessment produced by the Government, which was published after the independent reviewer’s recommendations were published, makes it clear that the Government did not consider any of those recommendations when deciding to proceed with a new board. The policy options that were considered, including any alternatives to regulation, were:
“Option 1—do not establish a privacy and civil liberties board”,
and,
“Option 2—legislate to provide … a Privacy and Civil Liberties Board”.
The options suggested by the independent reviewer of how to improve his work included having a junior counsel work with him who was security cleared, but that was not even considered when the Government brought forward their proposal for such a board. That is disappointing and perhaps the Minister can say why. I am not saying that he should automatically take on board and accept anything that the independent reviewer says that he wants, but those issues should have been considered in the round when looking to improve and enhance the work of the independent reviewer. The question of whether to have a board and the options that he put forward should all have been considered together.
The consultation produced by the Government on establishing such a board quotes the independent reviewer. While admitting that the independent reviewer thinks that a board would be best served by an individual operating part-time, the consultation quotes him as saying that,
“a board, if properly constituted, could bring advantages”.
Although that quote is correct, it is shame that it is not presented in its proper context in the consultation document. He said that in the context of the Government’s proposal, as it was then, to replace the independent reviewer with a new board. In the rest of the quote, which the Government did not put in their consultation document, he said:
“In short, such a Board if properly constituted could bring advantages: but”—
this is the bit missing from the consultation document—
“the wrong decisions could substantially diminish the value that is offered by the current arrangements, particularly if there were any reluctance to share classified information with a larger and more varied group. If the proposal is progressed, I would suggest that it requires the most careful scrutiny”.
It is disappointing that that comment was not included in the consultation document in the interests of completeness. I therefore ask the Minister: does he consider that the representation of the independent reviewer’s opinion in the consultation document is entirely and wholly accurate and in context? Does he consider that this enabling power, which is what Clause 36 is, provides the adequate scrutiny that the independent reviewer suggested?
Some of the background to our amendment is to ascertain exactly what is required of the board. As I say, the clause is essentially an enabling power for the Secretary of State. It could be a very broad power in determining and deciding the role and functions of the board, the salaries of the board and the administrative support it needs—which, if you look at the impact assessment, you will see is quite a sizeable bureaucracy in the age of austerity.
Baroness Hamwee
My Lords, I have Amendments 118G and 118K in this group but I want to say on Amendment 118J that I take the noble Baroness’s point about the impact on communities. The point has been raised with me as well and rightly so.
The first of my amendments in fact builds on the consultation paper. Under the section headed “What would the … Board do?”, it sets out in bullet-point form a number of core objectives. In most of the cases it uses the terminology that the subject of the consideration is,
“sufficient to meet the threat and adequately take account of privacy and civil liberties concerns”.
I think that I would prefer to see the word “properly” rather than “adequately” take account of privacy and civil liberties concerns. It is essential that that aspect is set out in the consultation paper, and I would hope to see it spelled out in the remit for the board in the statute as well. If it is not there, it is not there, and it will be difficult for the board to pursue that. My amendment is quite mild in that it seeks to provide advice to Ministers on that aspect of legislation. I have used the word “adequately” to reflect the consultation paper, although, as I said, I would prefer proper account to be taken of those concerns by that clear purpose being put on the face of the Bill.
My other amendment is about the chairmanship of the board, to which the noble Baroness referred. My amendment would give flexibility around whether the independent reviewer should chair the board. Mr Anderson has made his views clear about this being a possible diversion of his time and energy. I have a lot of sympathy with that, and the JCHR also took the point. The independent reviewer could still have an extremely central role in determining membership and the work programme without being the chair. I am not saying in this amendment that he—or, in future, she—should not chair the board; I am leaving it open for further consideration.
Lord Thomas of Gresford (LD)
I have an amendment in this group. It may be a miserable little amendment suitably to be looked at at 11.20 pm. It says simply that any regulations under the clause should be by way of affirmative resolution.
Perhaps I may say something a little more widely about the group. When I looked at Clause 36, the first question that came to my mind was: what is it for? You do not get very much out of the wording. It seeks to provide advice and assistance to the independent reviewer. Why and for what purpose? Then we look at what the regulations are to contain. They may include provision about,
“particular things that the board may or must do”.
This lack of clarification about the purpose of the clause is reflected in the amendments tabled by the noble Baroness, Lady Smith, and my noble friend Lady Hamwee.
I was quite interested in Amendment 118F because it contains provisions which I think would have shocked to the core the Home Secretary in the previous Government—the thought that these wide-sounding provisions should be given to a board. On the other hand, my noble friend stresses that this should be about privacy and civil liberty concerns. I think that if it were about privacy and civil liberty concerns, we would understand a little more about it. However, as it is, the lack of clarity about what it is for means that we are about to have the anvil dropped from a large height by the noble Lords, Lord Pannick and Lord Carlile. I trust that we will hear a little more in clarification from the noble Lord in reply.
Lord Pannick
From a modest height, I am very concerned that Clause 36 will undermine the essential role of the independent reviewer. The current holder of the post, David Anderson, and his predecessor, the noble Lord, Lord Carlile of Berriew, have achieved a remarkable degree of success. They have commanded the confidence of the public and of the NGOs that have expertise in this area. They have also commanded the confidence of the intelligence services and the Government. To command the confidence and, indeed, the respect of all these different constituencies is a deeply impressive achievement. However, that confidence and respect have necessarily depended on the personal independence, integrity and judgment of those who have performed this role. The job cannot be done by a committee. The clause is silent on whether the independent reviewer will share all the secret information with the board. If so, there is a real danger that he will not, in practice, be given such free access to confidential information in the future. If he is not to share the information with the board, I cannot see how it can do much to advise and assist him.
My other concern is that Mr Anderson, as has already been mentioned, has limited time to devote to the primary task of reviewing counterterrorism legislation. The very last thing that he needs is a committee structure that will inevitably use up his finite time which would be far better spent on the front line on essential activities of reviewing the operation of the relevant legislation. For all the reasons that have already been given and for these reasons, Clause 36, certainly in its current form, is a very bad idea. I hope that the Government will fundamentally reconsider it in the limited time before Report next Wednesday.
Lord Carlile of Berriew
My Lords, I absolutely agree with what has just been said by the noble Lord, Lord Pannick, and the reasoning behind what he said. However, I recognise that the Government are determined to pass something like Clause 36. In looking at Clause 36(1), if there is to be some kind of board to provide advice and assistance to the Independent Reviewer of Terrorism Legislation, then so be it. But the only part of Clause 36 that has been really thought through is subsection (1), which merely gives the power to establish the board. It is important to be fair to the Minister and to recognise that the Government are not setting up the board by this provision, which enables the creation of regulations only if such regulations are made to set up the board.
I have a few issues that need to briefly be considered before we deal with the principal question of whether the clause should remain in its present form. I absolutely agree with the noble Baroness, Lady Smith, that the title is inappropriate. If the title were appropriate, Mr Anderson, surely, would be retitled the Privacy and Civil Liberties Reviewer. But of course Mr Anderson would not accept that because that is not what he is. It is completely illogical to have an Independent Reviewer of Terrorism Legislation and a board assisting him entitled the Privacy and Civil Liberties Board, whose prime aims are neither privacy nor civil liberties. I beseech the Minister, who is a sensible, realistic and charming man—if I may say so—to recognise that what is in the tin should be described accurately on the tin. Many who are involved in this field of work have been perplexed by this title; apparently it has some attraction to advertising and branding people.
I would like to hear my noble friend say that yes, the Government do want to have a board, albeit possibly under another title, and that it can be formed—that is, regulations could form it. But I ask my noble friend to recognise that a great deal of work is still to be done. That work cannot be done while this Bill is before this Session of Parliament. I ask him to recognise that the work will take many months and possibly even longer. It may be that the regulations will never be made because we have not yet reached the point at which we are ready to describe a board that would have some utility in the life of the Independent Reviewer of Terrorism Legislation.
Perhaps I may close my evening here with a couple of words of Latin. I would say to my noble friend: please, festina lente.
Baroness Manningham-Buller
My Lords, it is late, we all want to go home, and the end is in sight. This grandly titled panel is a tail stuck clumsily on a donkey. Someone has grabbed an American idea and stuck it into the Bill. What is it for? Others who have spoken have asked exactly the same question, and I think that we would all be concerned if the role of the Independent Reviewer of Terrorism Legislation was damaged or corroded in any way.
I congratulate the Opposition on nobly suggesting some flesh to put on this bony tail of the donkey with a number of things that they think might be worth discussing, if the board ever was to convene under a different title. It is all pretty vague stuff. What do the Government think the board will do? They have had some suggestions from the Opposition. How will the members be chosen, what will be their powers, and—a point raised by the noble Lord, Lord Pannick—what access to classified information will they have? No doubt all that is clear to the Government, but it is certainly not clear to me.
Lord Butler of Brockwell (CB)
My Lords, I have sat through the Committee debates without opening my mouth until this late stage, but if even now I can help to save the Government from expenditure on some quite unnecessary bureaucracy, it will have been worth while.
I am actually astonished that this Government, who have been so draconian in their cull of quangos and unnecessary bodies, should come forward at this late stage of the Parliament with a proposal of this sort. However, it is not just that I think that it is unnecessary. I agree with the noble Baroness and the noble Lord, Lord Carlile, that it is damaging. At Second Reading I said that I feared that this was the fifth wheel on a coach which at present operates very satisfactorily. Even if that were not so and it could be shown that the body has some utility, I must point out to noble Lords how unsatisfactory it is to include this clause in the Bill in its present state. It is an empty shell. It empowers the Secretary of State to do anything she likes by way of functions, appointments and procedure, including amending any primary legislation—a Henry VIII clause par excellence.
The contents of the statutory instrument, now non-existent, are to be determined as a result of consultation. It has been pointed out that that consultation is not due to end until 30 January. There is no prospect that we will have the Government’s conclusions on these important matters about the board before the Bill passes into law. The only firm provision in the Bill is that the independent reviewer should chair the board. The noble Baroness, Lady Hamwee, moved an amendment even to modify that and make it flexible. Moreover, I understand that the Government may have already changed their mind about it. That only serves to illustrate how completely undecided the Government are about this body.
I would submit to noble Lords and to the Government that it would be much better to remove the clause from the Bill at this stage and to do the further work which the noble Lord, Lord Carlile, has described, and which is extensive. If, after the election, the next Government wish to come forward with a board with its functions and its contribution very much better defined, and after consultation with the independent reviewer, that would be the time to make provision for a board of this sort.
Lord Bates
My Lords, this has been a good debate and I am grateful to noble Lords for their amendments. I, too, must not be tempted at this late hour to drift off the core message before me. I was tempted, when the noble Baroness, Lady Manningham-Buller, talked about camels and donkeys—
Lord Bates
Perhaps I was thinking of the aphorism that a camel is a horse designed by committee.
Lord Thomas of Gresford
May I ask if it is apposite to call the independent reviewer a donkey?
Lord Bates
Indeed, not a donkey, nor a camel, though he certainly does more than the work of both, which I guess is the point which is being made to all of us here—that is a serious point about how we support a highly effective individual in a highly effective office to do his duties more effectively. I will seek to address some of the specific points on my way through, but I give notice that part of my instructions, should I race past it on page 11 of my speaking notes, is that we will be returning to this on Report. I hope that that will provide some comfort to noble Lords as they consider what to do with their amendments at this stage.
Clause 36 is a very important clause, as it should be. It is right that as the legislative landscape changes, we pause to consider the safeguards and oversight arrangements we have in place for counterterrorism laws, to ensure that we are getting the balance right between responding to these threats and the protection of civil liberties.
Few would question the exemplary job David Anderson QC is currently doing as the Independent Reviewer of Terrorism Legislation, or the contribution of his predecessor. I totally take on board my noble friend’s injunction to make haste slowly and the fact that we should ensure that there is a robust independent scrutiny of some of our most far-reaching counterterrorism powers. We should be proud of the long-standing, very effective and transparent system of independent oversight that we have in the UK, but we should not rest on our laurels.
Clause 36 provides for the creation of a board which will support the independent reviewer of terrorism legislation. As our legislative armoury necessarily increases, there is also an increasing demand for the review of particular aspects of counterterrorism legislation, and that this is a substantial task for one individual to undertake. David Anderson has himself made clear that he is operating at the very limit of his capacity and that there is a need to reform the independent reviewer’s role. It is intended that the board will provide support in the discharge of the independent reviewer’s statutory responsibilities, but also that the board will produce reports and advice to the independent reviewer, expanding the capacity and breadth of experience available to our oversight arrangements, and enabling a greater range of matters to be subject to review.
It may be helpful at this point to deal with Amendments 118F to 118J which go to the heart of a very important issue, in the same way as other amendments, in seeking to set out particular matters on which the board will report.
Clause 36 provides for regulations to be made which will be subject to the affirmative procedure and which would set out the precise detail of the board. Among other matters, these regulations will make provision about the appointment, membership and particular functions of the board. I fully expect that a number of the issues covered within these amendments may be appropriately dealt with in those regulations.
We are approaching the end of the public consultation period on 30 January, as the noble Lord, Lord Butler, pointed out. The Government will consider carefully the outcome of that consultation prior to bringing forward the regulations setting out the details on how the board will operate. Of course, it is important that the comments of your Lordships in this debate and at other stages of consideration are also considered as part of that consultation.
However, I am mindful that a number of views which have been expressed in this House—
Lord Butler of Brockwell
My Lords, the Minister said that we would return to this on Report. He will presumably acknowledge that it is completely impracticable that a Report stage starting on Monday should be able to take into account the results of the consultation.
Lord Bates
That may be two different elements. It is certainly our intention to return to this issue, perhaps with a little bit more detail at that stage on how this is going to operate, whereas the full responses of the consultation will, of course, take a little longer to put in place and therefore the regulations that accompany them will also necessarily be a little bit later. It is right that in setting the board up we make clear how it will operate alongside the independent reviewer. The Government are giving careful consideration to this important point, and I hope we can return to this matter on Report, in order to deal with the substance of the concerns previously expressed by David Anderson and your Lordships on this specific issue.
David Anderson has been kept informed of the development of these proposals, and we take seriously his views on these matters. He will have a key role in determining what work the board will undertake and precisely how it will support his role. It is right that the board’s statutory remit be drawn in line with that of the role it is designed to support. Indeed, I want to assure your Lordships that, in making changes to this important area, the Government will not do anything to diminish the existing arrangements. We will, of course, continue to work closely with David Anderson in refining the details of how the board will operate. However, in my view, we should not unduly prescribe in this Bill the tasks that the board will carry out, so as to ensure that it is flexible and that it will be helpful to and genuinely enhance the capacity of the independent reviewer’s role.
I hope also that I can reassure my noble friend that Amendment 118K is not necessary. An important feature of Clause 36 is that it provides that the board will be chaired by the independent reviewer, ensuring that the reviewer role will continue to provide the vital scrutiny that it has done over the past 35 years. This will also ensure that the work of the board complements rather than duplicates—much less rivals—the very important work of the independent reviewer. I understand that David Anderson has welcomed this aspect of the clause.
I hope that I can deal swiftly with Amendment 118H, which proposes to change the board’s name. The name of the body must reflect its purpose—I appreciate the suggestion of a Ronseal test, if you like, so that it does what it says on the tin—and the Government would assert that this is very much the case here. We have been clear that the consideration of privacy and civil liberties interests in our counterterrorism legislation and policies will be a key object of the board. The board will seek to offer further assurance to the public that careful, independent scrutiny is being given to the UK’s counterterrorism powers to ensure that we are getting the balance right and that our legislation and policies have due regard for civil liberty and privacy concerns in the face of the threat to the UK. It is right therefore that the name of the board reflects this.
Finally, I turn to Amendments 118L and 118M, which stand in the name of my noble friend Lord Thomas of Gresford. The Bill very properly provides that the regulations to establish the Privacy and Civil Liberties Board should be subject to the affirmative resolution procedure. That is right and proper given the significance of the issues. However, if minor changes to those regulations were to be required in future—perhaps in the light of experience based on the initial operation of the board—it would seem unnecessary, and not a good use of Parliament’s time, for all such revisions to be subject to the full affirmative resolution procedure.
As your Lordships will be aware, the Delegated Powers and Regulatory Reform Committee considered this Bill, and published a report on 15 January. The committee, having considered all the issues carefully, did not make any recommendation for change in respect of Clause 36, and I suggest that this Committee should accept that position. In the light of that explanation, and with the assurances that we will return to this on Report, I invite the noble Baroness to consider withdrawing her amendment at this stage.
Baroness Smith of Basildon
My Lords, I am grateful to the Minister. He says it gives us comfort that we will return to this on Report, but unless we know what we will return to on Report, there is not much comfort there. I will not detain the Committee at this late time, but he did not answer my question about why the recommendations of the independent reviewer were not considered when the Government were looking at what to do to support the reviewer. He also did not answer my question about the Government’s selective quotes from the independent reviewer in the consultation document or my question about the independent reviewer’s appointment to the board. Most importantly, I was hoping to hear from him, but did not, a justification for the role of the board. It still seems to me that an announcement was made about a title and a body without clarity of what that body was going to do. I have to say that I still find it difficult to believe that a Privacy and Civil Liberties Board will be there to support the Independent Reviewer of Terrorism Legislation—it seems a bit incongruous. However, I look forward—I hope—to seeing what is tabled on Report by the Minister and, at this stage, beg leave to withdraw my amendment.
Lord Bates
“(a) sections 28 to 30 and 32;”
“(d) sections 21 and 24 to 26;”