Public Record, Disclosure of Information and Co-operation (Financial Services) (Amendment) (EU Exit) Regulations 2019

Lord Tunnicliffe Excerpts

Monday 18th February 2019 Lords Chamber

[Lord Sharkey (LD)]

We support this statutory instrument, but I have a couple of quick questions. In paragraph 2.7, the EM notes that:

“In certain exceptional instances, a similar requirement to seek consent from the originating regulator applies where the confidential information originated from a third-country regulatory authority”.


That seems a little opaque. I could not find anywhere in the SI what these exceptional circumstances might be. That may well be my fault but I would be grateful if the Minister could point me at the relevant parts of it or, even better, explain what these circumstances are.

Finally, I was puzzled as to why the SI’s introduction of transitional provision, described in paragraph 2.16 of the Explanatory Memorandum, was necessary. That paragraph says:

“In addition, this instrument introduces a transitional provision so that any confidential information that was received on or before exit day will continue to be treated in line with the relevant provisions in EU regulations and directives as they had effect before exit day”.


That raised two questions for me. The first is one of necessity. Would this eventuality not be covered by the general transposition of EU law into UK retained EU law? The second is to do with the wording of the paragraph in the EM, which refers to information received on exit day. But we are scheduled to leave the EU at 11 pm on exit day, so what happens to confidential information received between 11 pm and midnight on exit day?

[Lord Tunnicliffe (Lab)]

My Lords, looking through this statutory instrument to see whether there were any policy shifts, as far as I can understand it, the EEA countries have better protection for their confidential information than third countries do. This statutory instrument takes that special protection away and then requires agreements to be concluded. That would seem to be the wrong way around. I would have thought that the protection which the EEA states have—that before the information can be passed on, permission must be sought from the originating country—would be better extended to other third countries. This would be a better position for the management of confidential information than what is referred to in the Explanatory Memorandum as a series of agreements, followed by instructions to staff. It is a bit late to have a debate on such an obscure point but if the Minister were to read Hansard tomorrow and send me a letter on this point, I would value that.

[Lord Bates]

Again, I thank noble Lords for their scrutiny and questions. I give notice that I may need to write on one or two of them, if they would accept that, but I will say a little about how the negotiations are going. In my enthusiasm to communicate the details of this instrument to the House, I perhaps went a bit fast but I did indeed say that the negotiations were going well.

UK and EU authorities have made good progress in their discussions on a memorandum of understanding, which includes essential provisions for confidential information-sharing and co-operation. It is our hope that these will be in place by exit day. Both UK and EU regulators recognise the importance of effective co-operation and are working hard to finalise co-operation agreements. We fully expect these agreements to be in place by exit day, as part of preparations to deal with a no-deal scenario. More broadly, Members will be well aware of the top priority we have attached to putting in place a range of transitional arrangements, designed to mitigate the impact of no deal.

The noble Lord, Lord Sharkey—eagle-eyed as ever—spotted the gap between 5 pm and 11 pm. I am guessing that it is a standard cut-off point—a sort of close-of-business setting on the day in question—but perhaps that is not the case. I am told that exit day is defined in the EU withdrawal Act as 11 pm on 29 March, specifically; yes, I am aware of that. I think the point was made that it says 5 pm but there might be something else winging its way to me.

The noble Lord, Lord Sharkey, also mentioned confidential information and made a good point on that. Under Section 348 of FiSMA, “confidential information” means information which,

“relates to the business or other affairs of any person”,

that was received by the FCA, the PRA, the Bank of England, the Secretary of State or specified people instructed or employed by them for the purpose of discharging their functions; and it is not prevented from being confidential information because, for example, it has already been made available in public.

I will take advice from my noble friend Lord Young and perhaps just pause there with the assurance that I will write and follow up on this, and thank noble Lords for their contributions.

Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit) Regulations 2019

Lord Tunnicliffe Excerpts

Monday 18th February 2019 Lords Chamber

[Lord Adonis (Lab)]

I have nothing to add to my remarks on the previous regulations. The issues are exactly the same, regarding consultation and the conduct of assessments.

[Lord Tunnicliffe (Lab)]

When I read the SI with care, it seemed straightforward and to do its work. I was seeking to see if there was any new policy, and the new policy that I discovered was the Venezuela point. I hope the Minister will be kind enough to write to me explaining whether “all countries” has that worldwide application and why the Treasury does not perceive that there is any danger in such an extension. Other than that, I am entirely content for this SI to go through.

[Lord Bates]

I am happy to give the noble Lord that assurance; I will write and be clear on that question. I thank the noble Lord, Lord Adonis, for not pressing his amendment.

Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019

Lord Tunnicliffe Excerpts

Monday 18th February 2019 Lords Chamber

[The Earl of Kinnoull]

Thank you for that. I do not want to be the defence attorney for the regulators but the FCA would argue that it did not have the relevant powers beforehand. However, I shall not go there.

Again, this will be the effective framework to enable the FCA to do that work. Without this SI there is no framework.

At the end of the paragraph in the Explanatory Memorandum headed “Why is it being changed?” it states:

“If this instrument were not made, there would be significant market uncertainty among UK and third country providers over whether they would still need to be compliant by 2020, and among users over which benchmark they could lawfully use”.


In other words, it is a complete mess. The size of the markets that are affected by these benchmarks is vast. I am not sure that I quite understand the reasoning behind the amendment moved by the noble Lord, Lord Adonis, to decline these regulations. It seems he is trying to take aim at a government process and is actually clobbering the City. I feel that is wrong and I very much hope he will not press his amendment.

[Lord Tunnicliffe (Lab)]

My Lords, I am afraid that despite my efforts I can find nothing wrong with this statutory instrument. It seems to be perfectly straightforward and necessary to manage the situation. I thank the noble Baroness, Lady Kramer, for reminding us of the Libor scandal. It was a dreadful period in British financial services history, and we forget it too easily, I fear.

If my noble friend intends to divide the House on his amendment I make it absolutely clear that he will not be supported by the Opposition Front Bench. We would support a fatal amendment on a statutory instrument only in exceptional circumstances and only after very careful consideration of the reasons and widespread consultation. We will therefore be sitting on our hands if my noble friend divides the House.

[Lord Bates]

I again thank the noble Lord, Lord Tunnicliffe, for his responsible approach to these regulations. It is quite right that there should be scrutiny, but the amendment which we are now debating would effectively be fatal. It would prevent these regulations appearing on the statute book when their purpose is, as the noble Earl, Lord Kinnoull, and my noble and learned friend said, to avoid the type of abuse of market power and benchmarks that was sadly the case in the past. To avoid all the progress we have made in that in the event of no deal would be regretted.

However a number of points were made, including by the noble Lord, which should be responded to as part of the scrutiny, so I shall launch into them, if I may. The noble Earl, Lord Kinnoull, asked why it is important to have this SI in place. If it were not it would cause significant legal uncertainty and disruption for firms about how they were able to provide benchmarks for use in the UK and for other users about which benchmarks they could legally use. Many of them have already submitted applications or created business models on the basis of market compliance with the regime. That is why the noble Earl was right to cite paragraph 2.6 of the Explanatory Memorandum and my noble and learned friend was right to raise the importance of these regulations.

The noble Baroness, Lady Kramer, questioned the ability of the FCA to enforce these regulations given the previous situation with the Libor scandal. We do not accept that EU regulators are better regulators than ESMA. The EU regulation was created after the Libor scandal and introduced a comprehensive framework to ensure that the business integrity of benchmarks is maintained. We are confident that the FCA will enforce these regulations. She also asked about how EU and UK regulators will co-operate going forward. The FCA will use the information to ensure that on exit day any administrators or benchmarks which are on the ESMA register at 5 pm on the day exit occurs are copied over to the FCA register. FCA-approved benchmarks or administrators will be copied over permanently and those approved by other EU national competent authorities will be copied over for a temporary period of 24 months. This SI removes obligations in retained EU law for the FCA to co-operate and share information with regulators. The FCA will still be able to co-operate with EU regulators through the existing framework in the Financial Services and Markets Act.

The noble Lord, Lord Adonis, asked how we arrived at the number of firms affected by this SI. The number is the current number of approved benchmark administrators. The regulators that we are working with are seeking to understand the full range of administrators that will seek approval, but it is difficult to provide a final figure for the number located in the UK and the EU.

I think that that covers most of the points raised. Again, I thank noble Lords for their contributions on this SI. On behalf of the Government and the Opposition—and I am sure that on this occasion I speak for the Liberal Democrat Benches and perhaps the Cross Benches too—I express the hope that, despite the scrutiny that, rightly, is called for in the amendment, the noble Lord will not press it and will accept the regulations. It is necessary to put them in place in order to protect investors in this country.

Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019

Lord Tunnicliffe Excerpts

Monday 11th February 2019 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, I thank the Minister for introducing these three SIs. However, once again, it gives me no pleasure to be here; these various SIs have ruined yet another weekend and are in pursuit of an outcome which all sane people believe is stupid and potentially catastrophic. It need not have been this way. Even with the excuse of taking responsible action in case of a no-deal scenario, had we started the whole process earlier we could have been considering these SIs at a more modest rate and perhaps giving them more scrutiny than they are inevitably able to receive—certainly, from me.

Before turning to my own concerns, I want to comment on what other noble Lords have referred to. The noble Baroness, Lady Drake, and the noble Lord, Lord Deben, spoke of responsibilities presently held by EU bodies being transferred to UK bodies. There are two problems here. One is that the sheer complexity necessarily involved in doing that leaves the possibility of unintended mistakes having been made in the transfer. Secondly, the noble Lord mentioned costs. I am not too worried about costs; I am much more worried about resources. Do the FCA and the PRA have the resources to take on this burden? It has been explained to me that they will get their money from the industry and so on, but will the people involved be good enough, given the complexity of the situation that we are addressing?

The noble Baroness, Lady Bowles, talked about the generality of Solvency II. From my standing-start understanding of this area, which began on Friday night, I accept that there is some debate about Solvency II. On the solution suggested by the noble Earl, Lord Kinnoull, that the changes be introduced through this instrument, the Minister knows that I would be the first person to jump down his throat if he tried to do that.

[The Earl of Kinnoull]

I am sorry for having confused the noble Lord, but I certainly did not suggest that changes be introduced in the instrument. I suggested that Solvency II was a one-size-fits-all regulation with a number of things in it. The noble Baroness, Lady Bowles, must have known how difficult were the negotiations, taking place over such a long period and spanning a large part of the world, because of the interaction between the global insurance markets. I suggested merely that it might be wise to have a review and asked the Minister for his view on that. I apologise for any confusion.

[Lord Tunnicliffe]

I thank the noble Earl for that explanation and apologise for misunderstanding him.

The task we have is under Section 8 of the European Union (Withdrawal) Act, which is a very narrow task. My concerns are perhaps quite small and detailed, but I think that there is a fundamental concern about the process. There is a generality in political activity whereby what politicians do should be understood by a reasonably intelligent amateur—I am at least an amateur—and there is disquiet about the complexity of these three SIs. They are remarkably difficult to understand if one is not part of the industry. It is impossible to read the raw instruments. Much of them relates to FSMA 2000, which has been amended so many times that the original document is indistinguishable. Trying to understand the measure from the Explanatory Memorandum, in which I must trust because I have no other way of examining it, was difficult.

The Opposition will not oppose these instruments. As I read through them, they seem in general to do similar things, so I have no points to raise. However, paragraph 7.12 of the Explanatory Memorandum states:

“The European Commission’s responsibility for developing legislation will be transferred to HM Treasury which will be given power to make regulations for certain matters previously dealt with under Solvency II, e.g. the system of governance and risk management, methods and assumptions used in valuations and risk modules”.


That seems to be a pretty sweeping power which has been transferred. Does the Minister believe that is compatible with the withdrawal Act, particularly Section 8? What scrutiny, if any, will Parliament have of the exercise of these powers by HM Treasury? As set out here, they seem to be unrestricted.

Paragraph 7.13 says:

“EU assets and exposures held by UK insurers will no longer be subject to preferential risk charges when setting capital requirements for insurers that use the Standard Formula”.


At first sight, that sounds as though we are taking something away from the EU, that we are being beastly to them. It was only when I did further research that I realised that it has the opposite effect. As I understand it—I hope the Minister will be able to confirm this—the effect will be to increase the capital requirements for UK insurers, which will certainly reduce their profitability. As we know from previous debates, the objective of the withdrawal Act was to not introduce new policy. In his introduction, the Minister said that these instruments aligned with previous SIs. I do not think they do because, in order to stop cliff-edge changes in value, previous SIs have always had some sort of transition regime. If the effect is higher capital requirements, does that mean that UK insurers have been operating unsafely, with insufficient capital? If not, we will be introducing an increased burden on them. If my interpretation is right, why is there not a transition regime in order to make sure there is no cliff-edge change to that requirement?

Further on, in the section on impact, paragraph 12.3 states:

“UK insurers which use the Standard Formula for calculating capital requirements will be impacted by the removal of preferential treatment for EEA risk-weighted assets and exposures. Such insurers could face higher capital requirements unless they divest themselves of such assets and exposures. However, the government intends to legislate to provide regulators with powers to introduce transitional measures to phase in on-shoring changes to reduce the immediate impact on exit.


That hints that the Government are going to introduce a transitional regime through the regulators. Is that a proper interpretation of the paragraph? If so, when will the legislation alluded to, giving these powers to the regulators, come before the House? Why has this not been part of the SI?

Paragraph 7.15 of the insurance distribution instrument says:

“Regulations 6 and 12 of this instrument also transfer relevant legislative functions of the European Commission contained within Articles 25(2), 28(4), 29(4) and 30(6) of the IDD to HM Treasury. This includes the powers to make regulations about conflicts of interest, regulations about inducements, and regulations on assessments of suitability, appropriateness and reporting to customers, and specifying principles for product oversight”.


That seems to be a big bunch of powers. Will they be subject to any parliamentary scrutiny?

Finally, I was somewhat exhausted by the time I came to look at the conglomerates SI—we amateurs do have to work hard—but reassured by paragraph 7.12 of the Explanatory Memorandum which says:

“In practice this change will not have a material effect on financial conglomerates already operating in the UK”.


With that assurance, I have no questions on that SI.

[Lord Bates]

I thank noble Lords for their questions and of their scrutiny of these important SIs. I am sorry to have ruined the noble Lord’s weekend. I hope he got a chance to see the rugby.

[Lord Tunnicliffe]

I did.

[Lord Bates]

I hope that cheered him up a bit.

These are very detailed SIs but in your Lordships’ House there was a wealth of ability to understand them and raise some pertinent questions. The noble Earl, Lord Kinnoull, began by paying tribute to the parliamentary draftsmen and officials at the Treasury and the way they have worked with the ABI. I have witnessed that close working relationship and am grateful to the noble Earl for recognising it in his remarks. I do not have a note relating to his question about the insurance industry on the number of insurance brokers relative to the growth in the economy, and whether there is something about the competitiveness of the UK insurance market that we need to learn from. Those are interesting points and I will take his suggestion back to John Glen, the Economic Secretary to the Treasury and brilliant Cities Minister, who is looking at issues of competitiveness. I will then write to the noble Earl.

Most of the questions related to Solvency II, so I will group those and deal with the other ones as I go through. The noble Lord, Lord Tunnicliffe, asked about insurance distribution and why the Government need the additional powers in the SI. The instrument also transfers relative legislative functions of the European Commission contained within the insurance distribution directive to the Treasury. Any changes made to regulations by the Treasury would have to be approved by Parliament. I hope that that offers some reassurance.

The noble Baroness, Lady Bowles, asked whether the financial conglomerates regulations had resolved the problem of double gearing in the insurance model. FICOD has created new supervisory powers which increase standards of governance and oversight for the largest financial groups. This has helped address gaps that arise from the sectoral supervision of individual firms in a group, in particular the risk of double gearing, which can arise in the absence of robust, group-level policies on capital governance. As I was reading that, I wondered if it answered the question of whether the problem has been resolved. I think the answer may be yes, but I will say that we are working on it and I will write to the noble Baroness. I thank her for raising that point.

The noble Lord, Lord Tunnicliffe, asked about the transitional power referred to in the Explanatory Memorandum to the Solvency II regulations. This power can only be used to phase in the EU exposures changes that the noble Lord is concerned about; it cannot be used to avoid a cliff-edge impact. The power will complement transitional arrangements already approved by Parliament, including the temporary permissions regime. The noble Earl, Lord Kinnoull, asked whether we should have a review of Solvency II. The UK is putting in place all necessary legislation to ensure that, in the event of a no-deal exit in March 2019, there is a functioning legal regime. The Act does not give the Government the power to make policy changes beyond those needed to address deficiencies. That means, as far as possible, that the same rules apply. Let me extemporise a bit: the noble Baroness, Lady Bowles, made the point that the record of UK regulators in leading on Solvency II was widely acknowledged. I think that that is to be encouraged. In all likelihood, if our world-class regulators spot deficiencies in the new regime, they will keep that under review.

The noble Baroness, Lady Drake, asked whether we will be weakening standards. In many ways, as I have alluded to already, our intent—the Chancellor and many others have put this on the record—is to recognise that the UK’s reputation in financial services is earned because we have high standards, not because we have low standards. In a sense, there is a tension between the claim that we are going to be lowering standards and my noble friend Lord Deben asking whether we are going to be gold-plating standards, a question I will come to in a second. My noble friend asked about the definition of equivalence. The definitions that operate for each EU equivalence regime will not change and we will use the same criteria for making equivalence decisions in the future as the EU uses now.

My noble friend asked whether the regulators will have adequate resourcing for a no-deal scenario, a question picked up by the noble Lord, Lord Tunnicliffe. Figures on resources and any new costs are for the regulators to publish in their annual reports, which are laid before Parliament. I remain confident that the regulators are making adequate preparations and effectively allocating resources ahead of March 2019. They have actively participated in a wide range of groups in developing technical policy and regulatory rules and have chaired a number of committees and task forces, bringing their considerable experience in implementing EU legislation to bear.

The noble Baroness, Lady Bowles, asked whether there is a figure for EU holding of gilts compared to the rest of the world. To the best of our knowledge, there is no reliable data on EU firms’ holding of gilts; however, analysis by the regulators suggests that the capital impact of this change should not be significant.

My noble friend Lord Deben asked about gold-plating by the UK. Solvency II is a maximum harmonisation directive—I do not know whether that is another phrase my noble friend will pick me up on. There must be a level playing field across the EU and we are preserving these rules as much as possible. He also asked whether the instruments reduce the need for the PRA to co-operate and share information. The UK fully expects a high level of co-operation to continue after exit, as is currently the case with countries such as the United States.

The noble Lord, Lord Tunnicliffe, asked whether too much power has been transferred to the PRA. In the longer term we will need to review the regulatory framework in the UK, including the role of regulators and how far they should be accountable. He asked why we are increasing capital requirements under Solvency II —whether the current requirements are not adequate—and worried about what the past situation was. The prudential standards in Solvency II are not being altered. The capital standards that apply now are entirely appropriate and will be largely unaffected by exit. There are only two situations in which a firm may be required to hold more capital once outside the EU’s joint supervisory framework for group supervision. Some EU groups operating in the UK may be subject to an additional layer of supervision by UK regulators. He asked why we are giving new legislative powers on Solvency II to the Treasury. The EU withdrawal Act explicitly provides for EU functions to be transferred to UK bodies, which is what we are doing.

I will, as with previous secondary legislation, review the record of the debate with officials. Should I find that any points have not been covered adequately, I will write to noble Lords and copy in other Members. In the meantime, I commend the regulations to the House.

Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019

Lord Tunnicliffe Excerpts

Monday 11th February 2019 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I have just one quick question to follow on from the comments of my colleague, who is so much better versed in this than me. It struck me that we seem to have one timetable proposed by the FCA and a different one proposed by the PRA, without an awful lot of logic as to why one takes one approach and the other takes another. Are these two regulators working completely independently and sending over their various paragraphs that then get incorporated into the statutory instrument, or is there some coherent framework? If the regulators are not working together, what can we do to make sure that they will? It will be complicated enough for business without trying to work out which regulator is thinking which way. I would assume—I do not know—that some entities find that they face both regulators. Why the difference under the new rules that each regulator is bringing forward?

[Lord Tunnicliffe (Lab)]

My Lords, it may have been exhaustion, but when I got to this SI, I concluded that it was all really quite straightforward. Having listened to the previous speeches, I am not so sure.

The SI seems to be summed up in paragraph 2.8, and it seems to me to be about run-offs in various areas. As far as I could see, the promises in paragraph 2.8 were carried through in the references to the various areas.

I, too, have some second-order questions about why the time limits were different, but I must admit that I comforted myself with the sure and certain knowledge that if any of them became in the least bit difficult, the Government would introduce an SI to change them anyway, so I did not overburden myself with that.

Paragraph 12.6 states that an impact assessment will be published alongside the Explanatory Memorandum. It has escaped me if it has, so I should be grateful if the Minister would tell me whether one has been published. If it has, I suppose it is my responsibility to find it; if it has not, a further apology on this matter will be gratefully received.

[Lord Bates]

I thank noble Lords for their questions. It might be for the ease of the House to know that I have the advantage—I think—of having a flow diagram in front of me. It must be one that I can release; I am sure it is. It has something printed on the top which probably tells me that it should not be released, but I am happy to make this diagram available. I do not want to reopen the debate about whether the Official Report should be able to capture diagrams and schemes; that would be a heresy that would cause a debate way above my head and pay grade, so I shall stay way out of it. I will circulate that diagram to noble Lords and place a copy in the Library. I will also, if I may, write in detail on the points raised by the noble Baronesses, Lady Bowles and Lady Kramer. Perhaps the same letter could be used to do that.

On the points raised by the noble Lord, Lord Tunnicliffe, about the impact assessment, I can confirm that one was published on 8 February. On the point made by the noble Baroness, Lady Bowles, about the maximum time for extension of terms, the regime can be extended by no more than five years at a time.

[Lord Tunnicliffe]

I think 8 February was Friday, and I do not do Fridays.

[Lord Bates]

But the noble Lord was just telling us how he was working over the weekend. He does Fridays, Saturdays and Sundays. The Opposition Chief Whip is here, so he should not undersell himself. He is one of the most diligent Members of this House. We will certainly look at that point.

On why the CCP regime is non-extendable, the Bank will remain in close contact with CCPs to inform them of expectations during the run-off period. This task is expected to be manageable, given the relatively small number of CCPs that can be expected to be in a run-off.

The noble Baroness, Lady Bowles, also asked under what circumstances a firm may be moved from a supervised to a contractual run-off. The FCSR makes provisions allowing a firm to be moved from the contractual run-off to the supervised run-off and vice versa. For this to happen, a regulator would have to consider the matter specified by the FSCR, including whether the move is necessary for the protection of consumers. Only the regulators can move a firm between the SRO and the CRO; firms cannot choose whether to move.

I appreciate that there will be other points relating to this but, as I have given a commitment to write to noble Lords, I will conclude my remarks there for the time being, and commend the regulations to the House.

Finance (No. 3) Bill

Lord Tunnicliffe Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Thursday 7th February 2019 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, our discussion on this Finance Bill takes place at one of the most interesting—we must not lose sight of the fact that that is a Chinese curse—and unpredictable times in British politics in living memory. During our debate on the state of the economy late last year, the noble Lord, Lord Higgins, noted that he had spoken on 60 Budgets. He observed that the Statement from which the Bill derived took place in the most uncertain economic situation of them all. If he thought that things were uncertain three months ago, I am not sure how he would describe the current situation.

We have a Government in paralysis, having been consumed by Brexit. This has been apparent on legislation for some time, but it is unusual to see that paralysis extend to a Finance Bill. Indeed, having lost a Minister after the Culture Secretary overruled her policy on maximum stakes for fixed-odds betting terminals, the Chancellor was forced to perform another of his Budget U-turns. Having alienated Back-Benchers and partners in the DUP, Government Whips accepted multiple opposition amendments rather than risk losing votes at a critical point in the Brexit process. Having failed to rule out a chaotic no-deal Brexit, the Government were defeated on a Finance Bill measure for the first time since 1978. As the Times journalist Matt Chorley likes to remind us, this is not normal.

There are plenty of other reasons why these are not normal times. The Government opted to use a rare parliamentary procedure—used just six times in the past century—to restrict the right of MPs to table amendments on Budget announcements that are not covered by specific tax changes. As my Commons counterpart, Peter Dowd, commented at Second Reading, the Government’s timetable for the Bill required amendments to be tabled before the legislation had even been published. Printed copies of the Explanatory Notes were provided to MPs only on the day of the debate. Several MPs called this an abuse of power. I am sure noble Lords will agree that this is not how financial matters should be handled. Thankfully, we have had more time to consider the Bill’s contents and to reflect on its passage through the other place.

Before I turn to the tax measures in the Bill, I want to say a quick word about the broader approaches of both this Government and your Lordships’ House when it comes to legislation. Over the past year, your Lordships’ House has spent many hours discussing the Government’s attempts to hoard hitherto unseen delegated powers in order to deliver Brexit. This Bill, like almost every other we have considered during the current Session, seeks to take vague and far-reaching powers to amend laws—this time, in the event of a no-deal Brexit.

The Government’s approach has been labelled an unprecedented transfer of powers to the Executive, but to take wide-ranging powers to amend taxation without proper representation truly is without parallel. We are therefore pleased that the amendment in the name of Yvette Cooper was passed at Commons Report stage. While it does not rule out a no-deal Brexit, it ensures that the Government have to seek parliamentary approval for such an outcome should they wish to utilise the Clause 90 powers. Importantly, the vote demonstrated that there is no Commons majority for falling off a cliff edge in seven weeks’ time.

During the past eight years, we have become accustomed to the Chancellor—whether Mr Osborne or Mr Hammond—extolling the virtues of prudence. But last October, the British people were assured that,

“their hard work is paying off, and the era of austerity is finally coming to an end”.—[Official Report, Commons, 29/10/18; col. 653.]

Despite these warm words, and an overdue injection of cash into the NHS, the autumn Budget marked no such turning point. As my noble friend Lord Davies of Oldham and other noble Lords observed in November, the 2018 autumn Budget can be more accurately described as Mr Hammond’s tearing up of his predecessor’s long-term economic plan.

The Office for Budget Responsibility noted that, having missed their original target for eliminating the deficit, the Government’s new aim of balancing the public finances by the mid-2020s,

“appears challenging from a variety of perspectives”.

Forecast GDP growth, while up on March 2018, is “modest by historical standards” and in any event, only the result of a Budget giveaway. It is worth reminding ourselves that the OBR forecasts were predicated on an orderly Brexit, something that is far from certain at the present time. Indeed, the Government’s own economic analysis suggests a no-deal Brexit would have a catastrophic impact on the UK economy. It is a course of action that no Chancellor should support.

While the Cabinet insists that austerity is over, departments continue to have their budgets squeezed. While it is true that there is a spending review to come, there is little prospect of that exercise pleasing dedicated public servants working in the prison service, local government, schools, social care, the police or the Armed Forces. Reforms to universal credit which return just one-third of the scheduled cuts will do little to improve the lives of benefit claimants. Britain deserves better.

Not only did the Budget fail to end austerity, it failed to crack down on tax avoidance and evasion too. Before elaborating, let me first thank the Economic Affairs Finance Bill Sub-Committee for its work on this Bill. The sub-committee published two helpful reports on the Government’s failures in relation to making tax digital for VAT and the need for HMRC to adopt a more sophisticated approach to those who choose not to pay their fair share of tax. This Bill is a series of half measures. It provides no evidence that Ministers will honour their commitment to introduce a full public register of beneficial owners ahead of the 2020 deadline. While the loan charge introduced in 2017 is a means of tackling certain tax avoidance schemes, HMRC has targeted individuals who joined such schemes in good faith rather than those who enabled their very existence. I therefore welcome the Government’s decision to accept a cross-party amendment to review the effects of changes made by Sections 80 and 81, including comparing them to the provisions in Schedules 11 and 12 to the Finance (No. 2) Act 2017.

This Finance Bill resulted from a Budget full of positive rhetoric but short on workable solutions. It does not take an observer long to conclude that the Government are so consumed by Brexit that they are unable to deal with other major issues of the day, such as tackling climate change and tax avoidance. The Bill therefore amounts to a missed opportunity. Nevertheless, the political situation in the Commons means that it has come to us in slightly better shape than anticipated. With opposition amendments inserted into the legislation, it is now for departments to undertake a series of important reviews. Ministers must listen to and implement their findings.

Financial Services (Implementation of Legislation) Bill [HL]

Lord Tunnicliffe Excerpts

3rd reading (Hansard): House of Lords
Wednesday 6th February 2019 Lords Chamber

[Lord Bates]

I thank the noble Lord, Lord Davies, for his comments. As he has set out, the schedule that we are up against here is pretty demanding. All of us on the Front Benches are in solidarity in recognising the demands of the work going on. It is also demanding on some of the committees of your Lordships’ House, which are having to do an incredible amount of work. I am thinking of the Secondary Legislation Scrutiny Committee and its sub-committees, under my noble friend Lord Trefgarne and the noble Lord, Lord Cunningham of Felling, which is doing a tremendous amount of work.

The noble Lord, Lord Adonis, asked about the progress being made. We have agreed that we will provide regular updates. We have approximately 60 pieces of secondary legislation that need to come through. Around 45 are subject to the affirmative procedure and, of those, 22 or 23 have made their journey through the House, with some benefiting from the scrutiny of the noble Lord himself. That is basically where we are: about half way. We have some 31 sitting days before Brexit, so it is a pressurised and demanding situation.

I turn to the point made by the noble Lord, Lord Foulkes, about the Delegated Powers and Regulatory Reform Committee. I thank that committee in particular because it has done an excellent piece of work. In fact, we almost took the committee’s script to express concerns about the extent of the Henry VIII powers, some of the wording and some of the files that were in flight and which we have just been talking about. I am pretty sure we have addressed all those concerns. If that is not the case, I will write, but from recollection we wanted to address all the points.

The noble Baroness raised the online community. Of course a number of pieces of legislation relate to online financial regulation. I cannot be specific about which ones are relevant but it is a crucial point. We have had many long discussions in Grand Committee in the Moses Room about statutory instruments that have a strong online financial services element to them and make a significant contribution to the success of UK financial services. We want that to continue once we leave the European Union.

[Lord Tunnicliffe (Lab)]

My Lords, perhaps I may say a word or two to put this discussion into perspective. This side hates the idea of a no-deal exit and so on, but the Bill is an outstanding example of co-operation by the Government. The Bill has changed massively from the one introduced at Second Reading. The Government facilitated discussions with the Minister and officials. It is now a much better Bill and, given its task, which we abhor, it is nevertheless a good Bill.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I remind the House of my interests as set out in the register. I also express my thanks to the Minister and his officials, along with other noble Lords who tabled amendments. We have a more than satisfactory outcome. We now have much greater transparency, some new procedures under which the Government will report on what is going to happen and tables to show us where things have gone. I hope this will perhaps lay the ground for how some other things, in what may be more fortunate circumstances than Brexit, could continue in the future. On behalf of these Benches, I thank the noble Lord and the officials.

Offensive Weapons Bill

Lord Tunnicliffe Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Grand Committee

[Baroness Williams of Trafford]

They can be found in regulations associated with the Acts I have just mentioned.

[Lord Tunnicliffe (Lab)]

I echo the remarks of the noble Baroness, Lady Hamwee. It is a problem throughout our legislative activity; this is bad enough but FiSMA 2000 is even worse, having been amended so often.

I hope that after the madness of Brexit has settled down, we can give some consideration to helping these debates by providing richer Explanatory Notes, particularly where a single theme is being carried through. However, we have no objection to the amendment.

Amendment 40 agreed.

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[Lord Harris of Haringey]

My Lords, I had not really intended to intervene but I have come here and it is a fascinating series of amendments.

The amendment in the name of the noble Lord, Lord Lucas, is an extremely interesting one and has much wider ramifications than the purposes for which he has put it forward. There is a real issue—again, I refer to my interests as chair of National Trading Standards—about fulfilment houses in relation to all sorts of trading standards offences and issues. The noble Lord talks about Amazon, but that is at the upper end of the fulfilment house market. There are plenty of fulfilment houses that have essentially been set up by people in their front rooms. I am not sure which of those is more or less likely to know the content and precise nature of some of the orders they are fulfilling. There are a lot of attractions in going in the direction that the noble Lord, Lord Lucas, wants us to go, which would place an obligation on that stage of the distribution process as well as on the point of sale. But I suspect it raises much wider issues around how other laws—for example, consumer protection laws—would apply to fulfilment houses.

I would quite like to see fulfilment houses having to take some of that responsibility, but it is the same argument about internet service providers taking responsibility for the content of what appears on their services. There is a lot to be said for that as well. I suspect, however, that tackling the issue may not sit easily in this Bill, as opposed to perhaps a rather more widespread look at the role of fulfilment houses—an area that will grow inevitably with the increase of online markets.

[Lord Tunnicliffe]

I want merely to thank the noble Lord, Lord Lucas, for putting forward a proposition which means that the Government have to give a comprehensive answer to it.

[Baroness Williams of Trafford]

I would hope the noble Lord thinks the Government always try to give comprehensive answers to things raised.

Moving swiftly on, Amendment 42 would in effect extend the offence created by Clause 17, which is concerned with the delivery of bladed products to residential premises, to any UK-based company that assists in the process between the sale of the item over the internet and the delivery of the item to the buyer where they provide fulfilment functions. I will take a minute to explain fulfilment functions.

We understand what my noble friend is referring to: activities such as stocking, dispatching the order, customer service and returns for sellers outside the UK. In the Bill, the word “seller” carries its normal meaning and is therefore unlikely to cover circumstances where an overseas seller uses a platform in this country to complete or facilitate the transaction, if the company here is not involved in its actual sale. The offence created by Clause 20 is intended to address the issue of overseas sellers. The Government are of the view that it would be a step too far to apply Clause 17 to companies that provide a fulfilment function but are not themselves the sellers. The Government expect that companies facilitating sales online will make sellers who use their platforms aware of the legislation in relation to the sale of knives in the UK, but it is not in their power to compel a seller based abroad—or in the UK, for that matter—to comply with the legislation. They can, of course, remove the seller from their platforms if they fail to comply with UK legislation. I hope that they consider doing so, as sellers that do not comply with the law will damage the reputation of their company.

This does not mean that sellers based abroad, whether they use online platforms or sell directly, will not be affected, albeit indirectly, by the provisions in the Bill. We cannot enforce legislation on to sellers based abroad, and that is why Clause 20 introduces an offence for a delivery company to deliver a bladed article into the hands of a person under the age of 18. Where a platform provides a fulfilment function relating to delivery, Clause 20 may apply to them.

Amendment 54 seeks to introduce measures to ensure that imports of bladed products from sellers based abroad are subject to checks. This is achieved by introducing a licensing scheme for bladed products as defined in Clause 19. The scheme would require importers to have a licence. The amendment would therefore have the effect of limiting the number of persons who would be able to import these items. At the moment, anyone can buy bladed products from abroad. However, if a licence were required, only licensed buyers would be able to import these items.

I believe that the amendment—the noble Lord, Lord Paddick, was quick to click on to this—has been modelled on the registered firearms dealer scheme. However, as the noble Lord pointed out, there are significant differences between firearms and bladed products, as bladed products have much wider application. Whereas it is desirable to have a control mechanism to ensure that only authorised persons can import firearms, I am not persuaded that it would be proportionate to introduce a similar scheme for bladed products. Everyday products present in most households, such as a wide range of knives, gardening tools and the like, are capable of being bladed products. These items can be purchased in the UK freely without a licence, provided that the buyer is over 18.

The Government’s intention is not to stop people buying bladed products or bladed articles in general. We want only to stop these items being sold and/or delivered to people under the age of 18. In relation to remote sales, the Bill already provides for measures to achieve this aim. It does this in relation to domestic sales through the provisions in Clause 17 and in relation to sellers based abroad through Clause 20. A licensing scheme is likely to place burdens on sellers and, either directly or indirectly, on local and central government, which will need to provide administration of the scheme and monitor compliance.

My noble friend is rightly concerned about whether the Bill provides adequate provisions to prevent bladed articles from sellers based abroad being delivered to persons under 18. I believe that the provisions in the Bill are adequate to achieve this end. I state again that we cannot enforce the legislation against sellers based abroad, but we can place the onus on the person who delivers the merchandise here. That is the reason why Clause 20 introduces an offence for a delivery company to deliver a bladed article into the hands of a person under the age of 18. If a bladed article is being delivered on behalf of a seller based abroad, the delivery company has the responsibility to ensure that the item is not handed over to a person under 18, whether the item is delivered to a private address or to a collection point.

Finally, Amendment 57 is concerned with the online sale of bladed articles by sellers based abroad. It would prevent bladed articles from being delivered to under-18s by ensuring that the deliverer takes adequate precautions to ensure that this does not happen. As I indicated, we cannot apply Clause 17 to sellers who are beyond the jurisdiction of UK law and our courts. Sellers based abroad may not be able to determine when they sell a bladed article whether the delivery address is residential or business or whether the seller is under 18—indeed, they may not care. That is why Clause 17 will not apply to sellers based abroad.

The Government consider that it is fair and proportionate to adopt a different approach in relation to delivery of items from sellers based in the UK. In the case of UK-based sales, the Clause 17 offence is committed by the seller, not the person who delivers the article. We think that this is a sensible and practical approach, which will go further in restricting the sale of these items to under-18s. Clause 20 deals specifically with sellers based abroad and the offence is committed by the person who makes the delivery in the UK, who, in this instance, will be the person within the jurisdiction of the UK courts. This addresses the perennial problem of tackling illegal sales made by those based abroad who can otherwise circumvent the intent of our domestic legislation.

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Moved by

[Lord Tunnicliffe]

58: After Clause 20, insert the following new Clause—
“Prohibition of bladed product displays
(1) A person who in the course of a business displays a bladed product in a place in England and Wales or Northern Ireland is guilty of an offence.(2) The appropriate Minister may by regulations provide for the meaning of “place” in this section.(3) The appropriate Minister may by regulations make provision for a display in a place which also amounts to an advertisement to be treated for the purposes of offences in England and Wales or Northern Ireland under this Act—(a) as an advertisement and not as a display, or(b) as a display and not as an advertisement.(4) No offence is committed under this section if—(a) the bladed products are displayed in the course of a business which is part of the bladed product trade, (b) they are displays for the purpose of that trade, and(c) the display is accessible only to persons who are engaged in, or employed by, a business which is also part of that trade.(5) No offence is committed under this section if the display is a requested display to an individual aged 18 or over.(6) The appropriate Minister may provide in regulations that no offence is committed under subsection (1) if the display complies with requirements specified in regulations.”Member’s explanatory statement
This new Clause would prohibit the open display of bladed products in shops.

[Lord Tunnicliffe]

My Lords, this amendment in the name of my noble friend seeks to insert a new clause after Clause 20 to prohibit the display of bladed products in shops. The honourable Member for Lewisham Deptford, Vicky Foxcroft, the chair of the Youth Violence Commission, has done some excellent work on this matter. Members from all sides in the other place, along with academics, practitioners, youth service workers, the police and experts connected with youth violence have been very involved in the work of the commission. I commend the commission’s report, which was recently published—it should be read by all noble Lords. One of its important recommendations is the prohibition of knife displays in shops. During consideration in the other place, USDAW—the Union of Shop, Distributive and Allied Workers—was asked whether it believed that putting knives behind displays would be helpful. Doug Russell, representing USDAW, said:

“It would be. Obviously, now big retailers are increasingly going down the route of making it more difficult for customers to get their hand on the product until they have been age-checked”,—[Official Report, Commons, Offensive Weapons Bill Committee, 19/7/18; col. 98.]


and they have assured themselves that a transaction is safe. I want people’s ages to be checked properly when they seek to purchase knives.

We must also protect against the theft of knives. There are several restrictions in law relating to other products, most obviously the extremely restrictive provisions for the sale of tobacco, which prohibit the display of tobacco products in relevant shops and businesses in England. The Tobacco Advertising and Promotion Act 2002 refers specifically to under-18s, so the principle already exists in law to protect under-18s from harm by prohibiting the open display of goods. I see no reason why this should not be extended to bladed products. I beg to move.

[Lord Paddick]

My Lords, if I understand this amendment correctly, I do not feel I can support it. Clearly bladed products should be displayed in a way that ensures they are safe and cannot easily be stolen, but I cannot agree with the suggestion that they need to be hidden in case they lead people into being tempted to use them for criminal purposes, if that is what the noble Lord is saying. The noble Lord mentioned cigarettes. They are now hidden from view and advertising them has been banned because they are always and in every circumstance bad for your health and addictive, but the same cannot be said for knives. We do not conceal alcohol or glue as they have legitimate uses, and we do not believe it is necessary to conceal knives.

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I hope I have been able to persuade the noble Lord of the Government’s commitment to ensure that bladed products are displayed securely, and therefore he will be content to withdraw his amendment.

[Lord Tunnicliffe]

I thank the Minister for her response. I felt that it was more persuasive in favour of the amendment than my own words, but I cannot agree with the conclusions she came to. Sadly, given the widespread support for the amendment, I beg leave to withdraw it.

Amendment 58 withdrawn.

Moved by

[Lord Tunnicliffe]

59: After Clause 20, insert the following Clause—
“Enforcement of sections 1, 3, 4, 17 and 20
(1) It shall be the duty of every authority to which subsection (4) applies to enforce within its area the provisions of sections 1, 3, 4, 17 and 20 of this Act.(2) An authority in England or Wales to which subsection (4) applies shall have the power to investigate and prosecute an alleged contravention of any provision under sections 1, 3, 4, 17 and 20 of this Act which was committed outside its area in any part of England and Wales.(3) A district council in Northern Ireland shall have the power to investigate and prosecute an alleged contravention of any provision under sections 1, 3, 4, 17 and 20 of this Act which was committed outside its area in any part of Northern Ireland.(4) The authorities to which this section applies are—(a) in England, a county council, metropolitan borough council, unitary authority, district council or London Borough Council, the Common Council of the City of London in its capacity as a local authority and the Council of the Isles of Scilly;(b) in Wales, a county council or a county borough council;(c) in Scotland, a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994;(d) in Northern Ireland, any district council.(5) In enforcing any provision under sections 1, 3, 4, 17 and 20 of this Act, an authority must act in a manner proportionate to the seriousness of the risk and shall take due account of the precautionary principle, and shall encourage and promote voluntary action by producers and distributors.(6) Notwithstanding subsection (5), an authority may take any action under this section urgently and without first encouraging and promoting voluntary action if a product poses a serious risk.”Member’s explanatory statement
This new Clause, for the relevant authorities, would create (a) a duty for them to enforce the relevant sections of this Bill, and (b) a power for them to investigate alleged offences under this Bill.

[Lord Tunnicliffe]

Amendments 59, 60 and 86 in this group, which are tabled in my name, seek to give trading standards powers to enforce the relevant provisions of the Bill and a power to investigate alleged breaches of the relevant provisions contained in the Bill. There are excellent examples of good work already going on, which this amendment seeks to build on. Croydon Borough Council has worked with local retailers to improve their understanding of the law around knife sales through training and to encourage them to go further than required by law through responsible retail agreements and has caught traders willing to break the law on underage sales by using test purchasers in person and online. Croydon trading standards now has 145 retailers signed up to its responsible retailer agreements. It ran eight “Do you pass?” training sessions with retailers over the past year, encouraging additional measures, such as Challenge 25 and the responsible display of knives in stores. The training sessions are a good indicator of which retailers are keen to work responsibly and which might not be. Finally, 61 test purchases of knives have been carried out in the past year to identify those retailers which are not complying with the law. We have also seen excellent work done in this regard by the police in Greenwich through test purchases by cadets.

These additional responsibilities will create a resource issue as this will be an additional power and an additional requirement, but one that I think is needed. I recognise that the Serious Violence Strategy released by the Home Office contained the promise of a prosecution fund for trading standards for two years to support targeted prosecution activity against online and instore retailers in breach of the law on the sale of knives to underage people. The strategy is not clear about how much funding will be made available and gives no clarity to trading standards about support two years down the line. Perhaps the Minister can update the Grand Committee on this.

In putting these amendments forward, I am aware that the budget for trading standards has been cut by half since 2010, from more than £200 million to barely £100 million, while the number of trading standards officers has fallen by 56% in the same period. The cuts I refer to have led to the downgrading of the protections that consumers depend on. In many cases, they have been reduced to a system based on consumer complaints. Relying on such a system is not an effective way to enforce laws, particularly when we talk about the purchase of knives or corrosive substances. I hope to get a positive response and that the Minister will speak to her amendments in this group. I beg to move.

[Baroness Hamwee]

My Lords, I am not sure whether the Minister wants to introduce the government’s amendments now, so perhaps I should just ask some questions. At Second Reading, I raised the role of trading standards so it is obviously welcome that it is being addressed.

There are some obvious questions about the Government’s amendments. First, why weights and measures authorities? I confess that I have not looked up the statutory definition of a weights and measures authority, but there must be one. Why is it that rather than local authorities? The Chartered Trading Standards Institute makes the point that if the obligation was placed on local authorities as a whole, they might have more flexibility in how they dealt with the issue. Secondly, why is it not a statutory duty? On that point, the institute says that, in its experience, local authorities are less likely to provide the resources to deal with a problem, let alone with the training and recruitment of staff. The issue of resources is huge, and it is the elephant in the room in this context. We are all aware of the constraints on local authorities. It is a while since I was a local councillor, and I used to think that we had problems then. I do not know how local authorities manage now to juggle the calls on their resources, so I must make that obvious point as well as asking these few questions. It is right that the role of trading standards is recognised here, as is their role with offensive weapons as a whole, given their understanding of how the communities where they work actually operate.

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The noble Baroness, Lady Hamwee, asked about the use of local weights and measures authorities. This approach goes with the grain—

[Lord Tunnicliffe]

I am very slow today. The Minister has spent a lot of time agreeing with me and then she has not suggested that we should adopt the amendment. Is she suggesting that we should adopt the amendment or is she trying to persuade me that it is not necessary?

[Baroness Barran]

I am trying to persuade the noble Lord that the Government’s amendments will achieve the same aim.

[Lord Tunnicliffe]

No change there.

[Baroness Barran]

Returning to the question asked by the noble Baroness, Lady Hamwee, about weights and measures, I am advised that this approach goes with the grain of existing legislation. We believe that weights and measures authorities are in fact local authorities, but I will confirm that in writing.

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[Baroness Barran]

We will gladly do that.

The noble Lord, Lord Tunnicliffe, asked for more detail about the prosecution fund that was announced in the Government’s Serious Violence Strategy. The Government committed £500,000 in 2018-19 and another £500,000 in 2019-20 to support local authorities to bring prosecutions, where appropriate, in relation to age-restricted sales of knives. The prosecution fund is managed by National Trading Standards, which is the body that brings together trading standards representatives in England and Wales. The fund will be used by 11 local areas identified as having a knife crime problem to test compliance with sale of knives legislation. I think the noble Lord will be pleased to hear that Croydon is among the 11 areas since he referred to the good work that is going on there.

Amendment 86 would enable local authorities and companies to establish partnerships with the purpose of complying with the provisions in the Bill. The noble Lord will correct me if I am wrong, but I suspect that this amendment is aimed at extending the benefits of the primary authority scheme. The primary authority scheme was created in response to recommendations in the Hampton report published in 2005, which noted widespread inconsistencies of regulatory interpretation between different local authorities. It was introduced in April 2009. The Enterprise Act 2016 included measures to amend the Regulatory Enforcement and Sanctions Act 2008 to enable many more small businesses and pre-start-up enterprises to participate in primary authority.

The primary authority scheme provides greater regulatory consistency for businesses operating across a number of local authority areas. This is expected to improve compliance with the legislation. The scheme is based on the creation of a statutory partnership between a business and its primary authority. The primary authority acts as a key point of contact for a business that it partners with, in relation to the business’s interaction with local authorities that regulate it, known as enforcing authorities. The primary authority acts as co-ordinator of other local authority inspections of that business. The primary authority supports businesses in meeting their obligations by helping them to understand what needs to be done to achieve or maintain compliance: setting out a way of doing so, or providing information that the method of compliance chosen by the business is acceptable. For the benefit of noble Lords, I will mention that all the major supermarkets, Amazon and the Association of Convenience Stores—given that your Lordships have mentioned the importance of smaller retailers several times—are all part of the primary authority scheme. The scheme has been received positively and has had widespread uptake and support from businesses, professional bodies and local authorities. Government Amendment 82 therefore extends the scheme to the sale of bladed articles and corrosive products. Amendments 88 and 90 are consequential on the earlier amendments.

In short, the government amendments in this group achieve much the same end as the amendments in the name of the noble Lords, Lord Tunnicliffe and Lord Kennedy. On that basis I hope that the noble Lord will be content to withdraw Amendment 59.

[Lord Tunnicliffe]

I shall read the Minister’s response with some care, but in the meantime I beg leave to withdraw the amendment.

Amendment 59 withdrawn.

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Moved by

[Lord Tunnicliffe]

70: After Clause 25, insert the following new Clause—
“Kirpans
(1) The Criminal Justice Act 1988 is amended as follows.(2) After section 141A, insert—“141B KirpansFor the purposes of sections 139, 139A, 141 or 141A it shall be lawful for a person to possess a Kirpan for religious, ceremonial, sporting or historical reasons.””Member’s explanatory statement
This amendment would ensure that the Kirpan, a mandatory article of faith for a Sikh, possessed for religious, ceremonial, sporting or historical reasons is exempt from provisions relating to the possession of offensive weapons under the relevant sections of the Criminal Justice Act 1988.

[Lord Tunnicliffe]

Amendment 70, tabled in the name of my noble friend Lord Kennedy, and with the support of the noble Lord, Lord Paddick, would place in the Bill a provision to exempt the kirpan from the provisions relating to the possession of offensive weapons under the Criminal Justice Act. There is no question that the Sikh community is fully behind tightening the law on offensive weapons. We are all appalled by the toll that knife crime is taking on innocent young lives. The Government have responded to this issue in the Commons but I seek to go further, and that is the purpose and intention of what I am moving today.

The noble Lord, Lord Singh of Wimbledon, raised the issue during the Second Reading debate, and my noble friend Lord Kennedy responded to those legitimate concerns in his speech. Observance of the Sikh faith for practising Sikhs requires adherence to keeping what I understand is called the five Ks, one of which is to wear a kirpan. Larger kirpans are used on many religious occasions such as during Sikh wedding ceremonies. It is fair to say that noble Lords in all parties and on the Cross Benches would be concerned if restrictions in this Bill had unintended consequences for the Sikh community in observing and practising their faith or caused upset or concern where a member of the community was using a kirpan for ceremonial, sporting or historical reasons.

My first ask of the Minister is that she meet my noble friend Lord Kennedy, the noble Lord, Lord Singh of Wimbledon, and representatives of the Sikh community. In asking for a meeting, I put on record that the status quo is not adequate, as it only provides a defence of religious reasons if a person is charged with a criminal offence. It does not cover other reasons such as ceremonial, historical or sporting, where kirpans are offered as gifts to dignitaries. The status quo only provides a defence if a person is charged—the amendment in the name of my noble friend will provide an exemption for the possession of kirpans. The amendment will provide specific reference in the law for the kirpan, which Sikhs have been calling for. Sikhs are a law-abiding community who make a wonderful contribution to the United Kingdom. However, the community still faces difficulties in workplaces, education and in leisure with their kirpans, and this amendment will provide great assistance in education about the kirpan. I beg to move.

[Lord Singh of Wimbledon (CB)]

My Lords, I thank the noble Lord, Lord Tunnicliffe. I shall give just a little background. Sikhs are sometimes referred to as a martial race. The description is wrong on two counts: we are neither martial, nor are we a race. Sikh teachings criticise all notions of race or caste, emphasising that we are all equal members of one human race.

The martial assumption comes from the fact that Sikhs have had to endure being a persecuted minority for many years—at one time, there was a price on the head of every Sikh caught dead or alive. Sikhs have had to develop dexterity with a sword to survive, and, importantly, to protect the weak and vulnerable of other communities in society. Kirpan, the Sikh word for sword, means “protector”, and figures prominently in religious practice and ceremony.

This amendment is particularly necessary to protect the Sikh tradition of presenting a kirpan as a token of esteem. Recipients have included royalty, a former Speaker of the Commons and a police chief. Sikhs are grateful to the noble Lords, Lord Kennedy and Lord Tunnicliffe, for introducing this amendment and for a large measure of cross-party support.

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[Baroness Barran]

I thank the noble Lord for clarifying that point. Concerns were raised on the possession of long kirpans. As a result, the Government amended the Bill to include a defence for religious reasons rather than religious ceremonies, which is narrower. No concerns were raised in relation to any other provisions of the Criminal justice Act. Moreover, members of the Sikh community have been able to carry kirpans in public, including long kirpans, in religious parades—I am not sure whether that addresses my noble friend’s earlier point—and the Bill will not change that. I am therefore not persuaded that a wholesale exemption for kirpans from the provisions in the Criminal Justice Act 1988 is needed. I fully understand the importance the Sikh community attaches to this issue. Indeed, I understand it better thanks to the interventions of noble Lords. With the reassurance of a future meeting, I hope I have been able to persuade the noble Lord that we have the balance right and that he will be content to withdraw his amendment.

[Lord Tunnicliffe]

This takes me back to those heady days when we had a Labour Government and I was a lowly Whip. That sounds like a very Treasury counterargument. One day when I was handling a particular clause, I was told that it was impossible to frame the legislation to meet the need. I said, from my lowly position in the massive meeting, “You’d better try because otherwise you will get the words that are in the amendment because it will pass at the next stage”. At that, there was a great writing of things and, lo and behold, the Government managed to find an amendment which was satisfactory. I strongly recommend that the Government make an intense effort to frame an amendment of their own which meets the across-the-board support for the spirit of this amendment.

[Lord Paddick]

Before the noble Lord withdraws his amendment, it should be said that concerns are being expressed at the impression being given by the Government of there being no room for negotiation on this issue. I hope that they will at least approach that meeting with an open mind rather than giving the impression, as might be inferred from what the Minister has said from the Dispatch Box, that there is no room for manoeuvre.

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[Baroness Barran]

I hear the concerns of several noble Lords. I reassure them again that we will enter the conversation with a very open mind.

[Lord Tunnicliffe]

I cannot remember the last time I had such broad-based support. I feel that I need to bask in it for a few seconds, but enough is enough. I beg leave to withdraw the amendment.

Amendment 70 withdrawn.

Financial Services (Implementation of Legislation) Bill [HL]

Lord Tunnicliffe Excerpts

Report stage (Hansard): House of Lords
Tuesday 29th January 2019 Lords Chamber

[Baroness Kramer]

My Lords, with that provocation I say to the noble Lord, Lord Hodgson, that perhaps we should look at the quality of enforcement. I would far rather that we had too many warning signs, but captured a large part of the wrongdoing, than missed major wrongdoing because there were so many options where people could avoid early warning signs. I suspect we have an enforcement problem, and often in this House we have heard that echoed. It sits entirely outside what we are dealing with today. For goodness’ sake, let us be very wary of the seductive argument that where we fail to enforce we should not even investigate.

[Lord Tunnicliffe (Lab)]

My Lords, I support Amendments 3, 4 and 5. They are the product of ideas from all parts of the House: from the noble Lord, Lord Hodgson, and particularly from Lib Dem Members. Amendment 4 strikes me as a very important innovation. Other parts of the Administration may want to ponder what should be done here, because while it will all be down to the Government how they use it, it creates a mechanism by which we get will close to being able to amend an SI. Clearly, no great measures are going to fall because we have no great power to influence them and we all know that we are not going to vote on such SIs.

However, to be able to discuss an SI with the Government—obviously not on the Floor of the House but perhaps by approaching Ministers on particular issues—before it is laid would be an important step forward. Proposed new paragraph (b)(ii) and (iii), inserted by Amendment 4, is also important for making how such an SI is generated much more structured. I hope this will give real transparency to SIs, which can at times be very complex. I end by thanking the Minister for his efforts on the Bill and almost by celebrating, for want of a better term, the extent to which we have been able to come to consensus.

[Lord Bates]

I thank the noble Lord, Lord Tunnicliffe, for his last intervention. In effect, I think he was saying that in the way we have been working together we have perhaps somehow pioneered a new way of approaching financial secondary legislation. I am pleased that he feels that.

I am grateful to my noble friend Lord Hodgson for his support for the amendments. He was tempting the noble Baroness, Lady Kramer, to rehearse the vigorous and full debate which took place in Committee on these provisions. Perhaps I may step out of the middle simply to reiterate that the Bill is not the Government’s proposed long-term solution for all financial services legislation. The Government will take forward their proposals for a sustainable, long-term model in due course, when there will be lots of opportunities to discuss the important issues which have been raised.

Offensive Weapons Bill

Lord Tunnicliffe Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 28th January 2019 Grand Committee

[Lord Paddick (LD)]

My Lords, in moving Amendment 1, I will speak to the other amendments in the group in my name and that of my noble friend Lady Hamwee. These amendments seek to change the offences in the Bill from those where there is a reasonable excuse defence only when charged to ones where, if someone has a reasonable excuse, they do not commit an offence. They seek consistency in approach between legislation where no offence is committed if someone has an offensive weapon in a public place because they have a reasonable excuse and legislation where, in exactly the same circumstances, a person does commit an offence and has to rely on a defence only once they have been charged. The amendments also seek consistency between offences where the burden lies on the prosecution to disprove a reasonable excuse defence and offences where the burden lies on the accused to prove beyond reasonable doubt that they have a reasonable excuse.

We return to an issue that I raised in discussion of the Counter-Terrorism and Border Security Bill and which is applicable here; namely, creating offences where a completely innocent person commits an offence and has to rely on a defence once charged, rather than someone with a reasonable excuse for his actions not being guilty of an offence in the first place. In the context of the Counter-Terrorism and Border Security Bill, the Government acknowledged this problem in relation to the designated areas offence. In that Bill, the Government accepted that, rather than a person entering a designated area and having a defence once charged if they had good reason to be there, if they entered or remained in a designated area involuntarily or for a range of other reasons stipulated in the Bill, they did not commit an offence. The Government accepted that there could be legitimate reasons for visiting or remaining in a designated area and that it was more sensible to say that no offence was committed if they had good reason, rather than that they committed an offence but had a defence once charged.

In one part of the Counter-Terrorism and Border Security Bill, the person does not commit an offence if they had good reason yet, in another part, a person has a defence once charged—a different approach in different parts of the same Bill. It is still a Bill, I think, and has not yet received Royal Assent—I am getting nods from the back, so that is good.

In Clause 1 of this Bill, a person commits an offence if they sell a corrosive product to a person who is under the age of 18. They have a defence, if charged, by proving that they took all reasonable precautions and exercised all due diligence to avoid the commission of an offence, rather than it saying, “They do not commit an offence if they act reasonably”. In Clause 3, a person commits an offence if he delivers the corrosive product or arranges its delivery to residential premises. They too have a defence, if charged, if they prove that they took all reasonable precautions and exercised all due diligence to avoid the commission of an offence, rather than it saying that if they act reasonably, they do not commit an offence. There is also an issue with Clause 4, but it slipped through the net and therefore there is no amendment in this group to address it.

In Clause 6, however, a person commits an offence if they have a corrosive substance with them in a public place. It is a defensive charge if they prove that they had good reason or lawful authority for having the corrosive substance with them in a public place, rather than the provision being that if they had good reason or lawful authority, they do not commit an offence. It will perhaps be clearer if I concentrate on the latter of these three offences.

If a 19-year-old young man has a corrosive substance with them in a public place with the intention of using it to attack someone else, they commit an offence under the Prevention of Crime Act 1953 of having an offensive weapon with them in a public place with the intention of causing injury to someone. It is an intended offensive weapon. However, if they have been sent out by their mother to buy drain cleaner in a squeezable bottle to unblock the kitchen sink—I speak with some experience having recently cleared one of my drains; drain cleaner does come in squeezable bottles—they do not commit an offence under the 1953 Act. They have a corrosive liquid with them in a public place, in a squeezable bottle that could be used to cause injury to someone, but have a reasonable excuse for possessing it. Were the police to stop and search the youngster, a quick phone call to the mother could establish the reasonable excuse.

Under the Bill, the 19 year-old running the errand for his mother commits a criminal offence because, under Clause 6(1):

“A person commits an offence if they have a corrosive substance with them in a public place”.


Under Clause 6(2), it is a defence for the youngster charged with an offence under subsection (1) to,

“prove that they had good reason or lawful authority for having the corrosive substance with them in a public place”,

but a police officer would be justified in arresting the youngster, because he is clearly committing a criminal offence.

When discussing the Counter-Terrorism and Border Security Bill, we also debated the principle of necessity in relation to arrests. One of the circumstances included in the reasons why an arrest might be necessary under Section 110 of the Serious Organised Crime and Police Act 2005 is to allow,

“the prompt and effective investigation of the offence or of the conduct of the person in question”.

It would be quite easy for a police officer to reason that the quickest and easiest way to determine whether the young man has a blocked drain is to arrest him and take him to his home address, to see whether the kitchen sink is blocked.

I am sure that the Minister will say that of course the police will act reasonably, but the police do not always act reasonably. Believe me, from 30 years’ experience in the police service, including four years as a bobby on the beat, I can say that sometimes police officers look for any reason to arrest someone. For those who might argue that my experience is not current, I point out that if you own a drone, live within a short distance of Gatwick Airport and have suspicious neighbours, apparently you can end up being arrested even when you can easily prove that you were miles away at work at the time the offence was committed.

There is another anomaly. In the Counter-Terrorism and Border Security Bill, in offences that remain of the “defence when charged” type, the burden is on the prosecution to disprove the reasonable excuse defence put forward by the accused, and to do so beyond reasonable doubt. Section 118 of the Terrorism Act 2000 states:

“If the person adduces evidence which is sufficient to raise an issue with respect to the matter the court or jury shall assume that the defence is satisfied unless the prosecution proves beyond reasonable doubt that it is not”.


Indeed, in Clause 3(10) of this Bill we find a similar provision, except that it applies only in Scotland. South of the border, not only is it only a defence once charged—as in subsection (8)—but the person charged has to,

“prove that they took all reasonable precautions and exercised all due diligence to avoid the commission of the offence”,

presumably beyond reasonable doubt. Noble Lords will recall that Section 118 of the Terrorism Act saved the Government from the accusation of reversing the burden of proof but, in these offences, the burden of proof is on the accused, presumably to the criminal standard of beyond reasonable doubt, that they have a reasonable excuse. Why is the burden of proof reversed in this Bill, except in Scotland, but not in the Counter-Terrorism and Border Security Bill, which passed through this House only recently?

Sending a message to the police that an offence is not committed if someone has lawful authority or reasonable excuse is preferable to saying that an offence is committed and that there is a defence once charged. Sending a message that you have nothing to fear by buying corrosive substances for illegitimate purposes and carrying the substance home through the streets or to a place of work is preferable to saying: “You are committing an offence and have to prove to a jury beyond reasonable doubt that you did so innocently”. The principle adopted in Section 1 of the Prevention of Crime Act 1953, which deals with offensive weapons, is that you are innocent if you have a reasonable excuse. That legislation has not been repealed, nor have the Government sought to amend it. That is the principle adopted by the Government in recent weeks in relation to an offence under the Counter-Terrorism and Border Security Bill, and it is the principle that the Government should adopt in this Bill. I beg to move—

[Lord Tunnicliffe (Lab)]

Not being familiar with police procedures, to me the essence of the argument seems to be about when the defence is deployed. Can the noble Lord explain what that means in practical terms?

[Lord Paddick]

My Lords, when the police are told that the offence is not committed if somebody has a reasonable excuse, the clear message sent to them is that they need to investigate the matter there and then to establish whether that reasonable excuse exists. If a Bill, as in this case, says that somebody who carries a corrosive substance in a public place commits an offence, it sends a message to the police that investigation of any reasonable excuse that the person may have can wait until later because, according to the legislation, the defence is available only once the person has been charged.

--- Later in debate ---

[The Earl of Listowel (CB)]

My Lords, listening to the debate and the presentation of the amendment, I wonder how the amendments might protect the important relationships between young people and the police—maybe particularly between young people from ethnic minorities and the police. I can see that if the authorities have to do more work before they can detain a young person or take them to a police station, it might prevent trouble between the police and young people. My sense—and I am sure we will discuss this further on—is that one of the reasons young people carry knives is because they distrust the police and do not feel that authorities are there to protect them. The amendment may be helpful in engendering more confidence in the police—and indeed the authorities—among young people, particularly those from minority-ethnic communities, and help to make it less likely that young people will carry knives. I would be interested to hear the view of the noble Lord, Lord Paddick, on that, from his experience on the beat, if he has time towards the end of this discussion.

[Lord Tunnicliffe]

My Lords, the Opposition are generally in favour of this Bill, but I find the arguments of the noble Lord, Lord Paddick, somewhat persuasive. I particularly like the way the noble and learned Lord, Lord Judge, put things in the general perspective of law. Even little deviations from sound general principles are a bad thing, so I hope the Minister will not reject this out of hand but will ponder this set of amendments. The only area I am slightly unsure about—the noble Lord, Lord Paddick, or the Minister may want to address this—is the argument that the defence has to be proved beyond reasonable doubt. My understanding was that there was a general piece of law that said that defences have to be proved only on balance of probability. It is important to know which of those tests the defence has to meet.

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, I thank noble Lords for their points and the noble Lord, Lord Paddick, for tabling these amendments. As he explained, they address the construction of the new offences relating to the sale of corrosive products to under-18s, the prohibition on sending corrosive products to residential premises when bought online and the possession of a corrosive substance in a public place. The noble Lord’s basic premise is that it is unjust that a person who took all reasonable precautions and exercised all due diligence to avoid committing the sale or delivery should be guilty of the offence, rather than having to rely on the permitted defence to establish his or her innocence. The same principled objection applies to the possession offence and the person who has a reasonable excuse for having a corrosive substance with them in a public place.

As the noble Lord, Lord Paddick, said, this has echoes of the recent debates we had on the Counter-Terrorism and Border Security Bill. However, as my noble friend Lord Howe indicated in that context, we are not persuaded that whichever way these offences are constructed will make much material difference to a suspect or how the police go about an investigation.

In relation to the sale offence and the offence of sending corrosive products to a residential premises, I think it is quite right that it should be for the seller to prove that they took reasonable precautions to avoid the commission of these offences. The seller will clearly know what checks they carried out to stop a sale to a person under the age of 18. In the shop context, they will know whether they asked the buyer in appropriate cases to verify their age, which will normally consist of asking them to produce a passport, a driving licence or an age proof card. In the online case, it is important that the seller has put in place some arrangement for checking the buyer’s age. Clearly where a seller has shown that they have verified age, no prosecution will take place.

In answer to the question asked by the noble and learned Lord, Lord Judge, about the normal principles of criminal law, the Bill reflects knife crime legalisation going back at least to the Criminal Justice Act 1988. His point about consistency is important, but I can point to other examples in other areas of law.

Going back to sellers, it is important that they take responsibility in this area and it is right that they have to prove what checks they have made rather than placing the burden on the prosecution. That is what happens in relation to other age-related sales, such as knives, alcohol and tobacco, and the approach is well understood by retailers, trading standards and the police.

Similarly, with the offence on arranging delivery to a residential premises or locker when a corrosive product is bought online, it should be for the seller to ensure that they are not sending the product to a residential address and to make sure they have the appropriate checks in place to stop this happening. The seller should be able to do this easily, and I can see no benefit in placing the burden on the prosecution to prove that the seller made the appropriate checks.

In the possession offence, as I have said before—for example, on the Counter-Terrorism and Border Security Bill—the police on the ground will use intelligence to decide whether someone may be in possession of a corrosive substance without good reason. They will not stop people coming out of B&Q with their cleaning products and question them, just as they do not stop people coming out of B&Q with garden shears and scissors. The police will use this power only where they have reasonable grounds for suspecting the person has a corrosive substance on them in a public place without good reason—for example, where a group of young people may be carrying a corrosive that has been decanted into another container. Establishing good reason on the street should be relatively easy. If a person can show they have just bought the cleaner and are taking it home to unblock their drains or that they are a plumber and need the substance as part of their work, good reason will have been established and no further action would be taken. It is only where a person cannot provide a good reason—for example, for why they have decanted the substance into another container that will make it more easily squirtable, or where they cannot say where they bought the substance or what they intend to use it for—that further action may be taken, and in this case it is quite right that the person should have to set out any good reason why they had the substance in a public place.

That aside, and returning to the point made by the noble and learned Lord, Lord Judge, it is important that we have consistency across similar offences. I have just explained the sale and possession of knives. We think that corrosives have the potential to be used as a weapon just as much as knives and that wherever possible the legislation dealing with the two should be consistent. Both corrosives and knives are widely available and have legitimate uses—they are not in and of themselves weapons—and to have a different approach for corrosives would suggest that they are somehow less of a threat as a weapon.

Retailers are familiar with the existing law relating to the sale of other age-related products and know what measures they need to put in place to ensure they comply with the law. It could be confusing to retailers if we now constructed these offences differently. The police are also familiar with the approach relating to possession and we are not aware that the good reason defence has caused any issues regarding possession of a bladed article in a public place.

On the question from the noble Lord, Lord Tunnicliffe, on the standard of proof, I can confirm that if a defence is raised, the defendant has only to prove that the defence is made out on the balance of probabilities. There was a question on Scotland: obviously it has a separate legal jurisdiction with its own sentencing framework. The Bill’s provisions work with the grain of the existing sentencing provisions. For example, the maximum penalty on summary conviction is 12 months in Scotland, but only six months in England and Wales. The same is true for the burden of proof, where the Bill reflects existing Scots law.

I appreciate noble Lords’ concerns but, as I said, the approach we have taken is to follow a well-precedented form for offences relating to other age-restricted goods. If we reconstructed the sales and delivery offences for corrosive products we would be creating a different legislative regime from other age-restricted products, such as for knives. I am therefore not persuaded that we need to change the construction of the new offences. With those words, I hope that the noble Lord, Lord Paddick, will be content to withdraw his amendment.

--- Later in debate ---

[Baroness Hamwee]

My Lords, in moving this amendment on behalf of my noble friend I will speak also to Amendment 16. These are nothing like as technical as the matters raised in the previous group. Indeed they are probing, as all amendments are at this stage in Grand Committee.

The first probe concerns condition A, one of the defences in Clause 2, to which the noble and learned Lord, Lord Judge, has already referred. The Explanatory Notes very straightforwardly state of condition A that,

“at the time of any alleged offence being committed, a seller had a system in place for checking the age of anyone purchasing corrosive products that was likely to prevent anyone under the age of 18 from purchasing that product”.

That seems quite straightforward. What is important, as I read it, is that there is a system in place to check that purchasers are not under the age of 18. The amendment would delete the words,

“by the same or a similar method of purchase to that used by the buyer”.

I am not entirely clear to what those words refer. I do not understand them and I apologise to the Committee if they are perfectly obvious to other Members. The purpose of my amendment is to obtain an explanation of what the words add to those in the Explanatory Notes.

Amendment 16 relates to Clause 2(10) and queries the term “supply”. We have a buyer and a seller, a reference to sale and a reference to delivery, which is to be read as its “supply” to the buyer or someone acting on the behalf of the buyer. The offence in Clause 1 is that of sale. That is not the same as delivery. I would be grateful if the Minister could explain the choice of terminology here. I beg to move.

[Lord Tunnicliffe]

My Lords, if I can give some comfort to the noble Baroness, Lady Hamwee, I did not understand it either.

[Baroness Williams of Trafford]

I am sure that the noble Baroness is very much comforted. I hope I can clarify the meaning.

Amendment 12 seeks to test why it is necessary to include in Clause 2(6)(a) the words,

“by the same or a similar method of purchase to that used by the buyer”.

There are many different ways to make purchases online or in response to an advertisement by post or telephone. The simple purpose of the condition set out in Clause 2(6)(a) is to ensure that, at the time of making the sale, the seller had the required arrangements in place to verify the age of the buyer. This would assist in proving that an offence had been committed.

Amendment 16 seeks to clarify why Clause 2(10) uses the term “supply” instead of “delivery”, given the terms of the Clause 1 offence. The use of “supply” is correct in this context because it is about the actual handing over of the product to a person or their representative at the collection point, rather than its delivery to the address from where the buyer ordered the product. I hope that provides clarification, although the noble Baroness, Lady Hamwee, is looking even more puzzled than she initially was.

--- Later in debate ---

[Baroness Williams of Trafford]

My Lords, obviously in a perfect world the overseas arrangements would mirror the home arrangements, but the rigour of the age-verification procedures applied to the arrangements for pick-up points cannot be relied on or effectively enforced for home deliveries. It would be great if we could do the same for both situations but we cannot, although I shall be very happy to talk about these issues further before Report.

[Lord Tunnicliffe]

Given the lack of clarity, if a letter could be sent to us before any discussion takes place, that would be good.

[Baroness Williams of Trafford]

I am very happy to do that.

--- Later in debate ---

[Baroness Hamwee]

My Lords, I beg to move Amendment 22 but I wonder whether, with the indulgence of the Committee, I can go back to Amendment 12. As it has puzzled at least three noble Lords—three of us have confessed to it—I urge the Minister, as well as writing, to consider whether the wording might be clearer. We would be happy to look at a government amendment on Report because, if it confuses people who are used to reading legislation, there is a good argument for making it clearer to others who will also read it.

Amendment 22 again concerns some detailed wording. Clause 4(1)(c) provides that the clause applies if before the sale the seller has entered into an arrangement for delivery. Why before the sale? Does this apply only if the seller already has delivery arrangements in place? Often that will be the case but I am puzzled as to whether those words might, in a few situations, limit the application of the clause. I beg to move.

[Lord Tunnicliffe]

May I join the noble Baroness and say that I too am confused?

[Baroness Williams of Trafford]

My Lords, I fear that I am about to confuse people further—I hope not—because the noble Baroness is effectively asking why Clause 4 is drafted on the basis that the delivery arrangements for an online sale made to a vendor based overseas will have been made at the point of contract and not subsequently. It therefore might be helpful if I explain how we have drafted the clause in this way.

The purpose of Clause 4(1)(c) is to avoid criminalising a delivery company in instances where an overseas seller has simply placed a package containing a corrosive product in the international mail. By doing this, it then places an obligation on the delivery company, and potentially the Royal Mail, to deliver the item without having entered into a contract or necessarily knowing that the package contains a corrosive product. If we did not have the provision in place and in combination with the provisions of Clause 4(1)(d), which makes it clear that the company was aware that the delivery arrangements with the overseas seller covered the delivery of the corrosive product, then delivery companies such as the Royal Mail would be committing an offence.

We want to mitigate this, which is why we have constructed the offence in this way so that it requires the delivery company to have entered into specific arrangements to deliver corrosive products on behalf of an overseas seller.

The noble Baroness looks far less confused than she did in my previous explanation and I hope I have provided the explanation she seeks.

--- Later in debate ---

[Baroness Hamwee]

My Lords, the noble Lord, Lord Lucas, is in the same territory as my noble friend and I. Like him, we seek to know how one objectively defines “corrosive substance”. His amendment asks what happens if the skin is particularly sensitive. I am not sure that there is such a thing as the “average human hand”, which he refers to in his amendment. I suspect that sensitivity may depend on age—whether one is young or old could affect vulnerability—as well as all sorts of other matters.

Our amendment proposes two points. The first refers to the testing method. That would not help the point, with which I have a great deal of sympathy, about knowing whether a substance falls within the definition but it enables us to ask about the status of the testing kits. The noble Earl has said that work on them is well under way. Can he tell us any more about them? Are they intended to work—as I understand it—like a breathalyser? It is enough to get you taken off for a second and different test, but does it start with a roadside test? As with a breathalyser, it may look as if you have failed it. Again, this is as I understand it; I do not have personal experience of going down to a police station and giving a blood test or a mouth-breath test. The point is about the process.

My second question is about the definition of the substance as one capable of burning human skin. Our amendment refers to eyes, since a lot of awful acid attacks have involved throwing acid into someone’s eyes. Are eyes “skin” for this purpose? We simply want to be sure that we have covered the ground here.

[Lord Tunnicliffe]

My Lords, perhaps I may speak briefly on this rather macabre amendment. First, I am not sure who the testing is to be done on. I cannot see many volunteers being willing to be corroded. My second and more substantive point is that I cannot see why the definition is required because, as I read the Bill—not an easy Bill to read, as we have discovered today—a corrosive substance is de facto defined by Schedule 1. I would have thought it much more satisfactory to retain the concept of a schedule, which can be altered by order, than to have this rather frightening test.

[Earl Howe]

My Lords, I am grateful to my noble friend for explaining his amendment, which seeks to modify the definition of a corrosive substance for the purposes of the new possession offence. This provides me with the opportunity to clarify why we have taken the approach that we have, and to reassure him about how the new possession offence would be used.

We know that perpetrators of these horrendous attacks often decant the corrosive into other containers, for example soft drinks bottles. This is done to make the substance easier to use but also to conceal.

Police officers who come across an individual carrying a bottle containing a suspect liquid will not know exactly what chemicals it contains or at what levels. As a result, the approach we have taken for the sales and delivery offences of defining a corrosive product by substance and concentration limit will not work on our streets. The police require a simpler definition for use operationally, so we have defined a corrosive substance by its effect rather than by its specific chemical composition—that is, as a substance capable of burning human skin by corrosion.