Local Audit and Accountability Bill [HL]
Lord Wallace of Saltaire Excerpts(11 years ago)
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Lord Wallace of Saltaire
My Lords, this amendment removes an unnecessary provision from paragraph 16 which is a supplement to paragraph 15 of Schedule 5. Paragraph 15 substitutes Section 1248 of the Companies Act 2006, with which I am sure noble Lords are all familiar. It enables the Secretary of State to direct a relevant authority to retain an auditor to carry out a second audit in certain circumstances.
Paragraph 16 substitutes Section 1249 of the Companies Act 2006 and inserts supplementary provisions about second audits. Subsection (3) states that a direction given to retain a second auditor may be enforced by injunction, which exactly replicates the wording in Section 1249 of the Companies Act. However, given that all public authorities, unlike companies, are subject to judicial review, we now wish to remove subsection (3) which refers to the use of an injunction; this is clearly not necessary. Should a relevant authority fail to comply with the direction relating to a second audit, an action could be brought for judicial review. This is currently the way in which local public bodies are brought to account. This is a minor and technical amendment that removes an unnecessary provision. I beg to move.
Lord McKenzie of Luton
I thank the noble Lord, Lord Wallace of Saltaire, for the explanation of this amendment, and I have no problem with it. My question was about what alternative the Government had in mind by deleting this enforcement by injunction. The Minister dealt with that; it is by judicial review. As to being familiar with the Companies Act 2006, I have a great affection for it; it was the first piece of legislation I ever worked on. I spent days carrying the bag of the noble Lord, Lord Sainsbury, around committee rooms on it, although do not ask me what is in it. I support this amendment.
Lord McKenzie of Luton
My Lords, this is another quick one, I expect. This amendment relates to an offence under Clause 22. Clause 21 provides for an auditor’s right to documentation and information. Clause 22 makes it an offence without reasonable excuse for a person to obstruct the process or to fail to comply with any requirement of a local auditor. A person guilty of an offence can be subject to a fine on summary conviction. A local auditor can recover reasonable expenses in connection with proceedings alleged to have been committed by certain persons from the relevant authority. Those persons include, for example, a member or officer of the relevant authority. The amendment seeks to makes certain that the right to recovery runs, albeit that the person committing the offence is no longer a member or officer of the authority. This raises the issue of when an offence might have been committed when it includes, for example, continuing failure to provide information or explanations by somebody who has ceased to be a member or officer and perhaps put themselves in that position deliberately. This ties the position back to Clause 21(8)(f), which brings such individuals within the scope of those from whom the auditor can seek information. We do not want anyone to escape by jumping ship or, indeed, for the recovery of costs to be precluded in those circumstances. I beg to move.
Lord Wallace of Saltaire
My Lords, Clause 21 gives auditors a right to access documents and information that they consider necessary for them to exercise their functions under this Bill. Clause 22, as the noble Lord has just explained, provides that a person who obstructs the auditors’ rights under Clause 21, without reasonable excuse, commits an offence. Clause 22 enables the auditors to recover their expenses from relevant authorities in connection with offences committed by members or officers of the authority.
This amendment enables me to highlight two improvements we have made to the Bill since we published it in draft. First, we have included former members and officers of a relevant authority within the duty to provide information and explanation as required by the auditor. Secondly, we have increased the provisions supporting the auditors’ recovery of their costs. Auditors will be able to recover reasonable costs from the authority being audited for their time. We expect that the contracts between the auditor and relevant authority will also enable this, but to remove doubt, the Bill includes specific provisions to enable the auditors to recover costs or expenses for specified functions.
As I have set out, Clause 22 enables the auditors to recover reasonable expenses incurred from the authority as a result of any offence committed by a member or officer of the authority or a person within a connected entity of that authority.
This amendment would extend the provision set out in this clause to enable auditors also to recover expenses regarding offences committed by former members or officers of an authority from the relevant authority. This is a matter to which we gave some thought when we were strengthening the provisions supporting the auditor to recover costs and expenses incurred in undertaking its functions. We concluded that there are some circumstances under which it would not be right for a relevant authority to be required to fund these costs automatically; for example, where a person was a member or officer at the time to which the information or explanation relates but commits the offence of obstructing or not complying with the auditor after they have left the position. Rather than legislating to provide for such rare situations, we consider that it would be preferable for the relevant authority and auditor to agree via their contracts how the auditor’s costs and expenses would be covered in such an unusual situation. I hope my explanation allows this amendment to be withdrawn.
Lord McKenzie of Luton
I am grateful to the noble Lord. I think his explanation confirms what I thought was an issue about somebody who was involved and who had committed an offence but subsequently left the organisation. In those circumstances, if I understand the explanation, that precludes the recovery of the auditor’s reasonable expenses. Did I understand that correctly?
Lord Wallace of Saltaire
My understanding is that it means that the recovery of the reasonable costs does not automatically fall to the authority. If the person who had left the employment of the authority was unreasonably obstructing the provision of the information—refusing to give it—there are circumstances in which the reasonable costs might indeed fall on him or her; that would be a matter to be agreed in the contract between the auditor and the authority.
Lord McKenzie of Luton
I am grateful for that. I missed that part of the explanation originally. If we are not saying that the costs are not going to be recovered, if it is not the audited body, it is going to be the individual. I am grateful for that explanation, and I beg leave to withdraw the amendment.
Lord McKenzie of Luton
I speak briefly in support of my noble friend’s amendment concerning freedom of information. He has opened up a very important area of discussion. My understanding—as he said—is that the Audit Commission, as a public authority, is subject to freedom of information but that those private sector firms appointed to undertake local public audits are not. The purpose of the amendment is to put them in a position where they would be subject to freedom of information. My noble friend made a good case for this.
As I understand it, there was a consultation on that in 2011 and the Audit Commission’s response was that it was sensible for auditors to be brought within the Freedom of Information Act, adding that it would be necessary to make it clear that freedom of information requirements applied only to information held in support of the functions of local public auditors. My noble friend made a good case.
In relation to Amendment 17, I am not quite clear about the extent to which my noble friend wishes this to proceed. It talks about the audit documents from private companies to which the local authority has contracted services. It is sometimes, possibly frequently, the case that it is not just one entity that is providing services. There is a whole range of sub-contractors in the chain and I am not sure quite how it would work in those circumstances. However, I believe that my noble friend has raised a very important point and, like him, I look forward to the Minister’s reply.
Lord Wallace of Saltaire
My Lords, I recognise the importance of this transparency issue. I suppose that I should start by declaring an interest as someone who has received a number of parking tickets from Wandsworth Council. It strikes me as odd that I have never received any parking tickets from Bradford Council. London councils must be sharper on the draw on this, and of course they use private contractors rather more than do councils in Yorkshire and, for all I know, councils in Newcastle.
There was considerable consultation on this issue, and I regret to tell the noble Lord that one thing that came back most strongly from it was a fear that this sort of provision would increase audit fees.
Amendment 17 seeks to give auditors a right of access to the audit documents of companies with which local authorities have entered into contracts and a duty to publish those documents. Following consultation, we believe that the Bill provides sufficient powers for local auditors to access all documents and information that they need in order to undertake the audit and that they have powers to publish those documents, and that therefore the amendment is not needed.
Clause 21 includes a broad power that enables auditors to access all documents and information that relate to the relevant authority which the auditor thinks are necessary to support him or her in undertaking the audit. These rights apply not only to documents and information held by the authority, its members and staff but to documents and information held by other persons—including the authority’s contractors—that the auditor thinks are necessary to undertake his or her statutory duties in relation to the audit of the relevant authority. Clause 22 makes it an offence to obstruct the auditor’s power to obtain these documents and information or to fail to comply with the duty. These provisions are very similar to those under the existing Audit Commission Act regime, which have not proved to be lacking.
In terms of publication of documents, the auditor is able to refer to information and documents from private companies in audit reports where these are appropriate to the audit of the local authority. In addition, the Government’s code of recommended practice for local authorities on data transparency encourages local authorities to publish all expenditure over £500, as well as copies of contracts and tenders. All councils are publishing spend above £500 and many provide contracts information. In late 2012, we consulted on updating the code and making it mandatory through regulations, and we will publish a government response later this summer.
Amendment 18A would amend the Freedom of Information Act so that auditors appointed by local authorities are defined as public authorities and are subject to the provisions under that Act. Auditors appointed by the Audit Commission are not currently included within the remit of the FOI Act. When we originally consulted on the future of local audit framework in spring 2011, we asked whether the future regime should bring local auditors into the Freedom of Information Act. After considering the broad range of responses to the consultation, the Government concluded that there was no compelling case to bring the auditors’ public office functions within the remit of the FOI Act.
There are two key reasons for that. First, we believe that doing so would add little to the existing provisions within the Freedom of Information Act and this Bill. Local authorities are already covered by the Freedom of Information Act, and therefore these requests could be directed at the local authority. Secondly, all respondents to the question—I stress “the respondents”, not the Government—said that they thought that bringing auditors into the Freedom of Information Act would increase audit fees.
In addition, the Bill already supports local transparency and local electorate access to the auditor in a number of ways. For example, the Bill retains all the existing rights for electors to inspect the statement of accounts and audit documents, and to raise questions and objections with the local auditor. Schedule 11 to the Bill enables an auditor to release material in response to this, unless it could prejudice the effective performance of the auditor’s functions.
I hope that that provides assurances that the new regime will support openness and transparency at all stages of the audit process. Auditors will have access to all documents and information that they consider relevant to the audit, local authorities will publish information relating to expenditure and contracts with private firms and local people will be able to inspect the accounts and raise objections with these assurances.
Having debated many previous amendments on other Bills with the noble Lord, I suspect he may nevertheless say that he is not entirely satisfied with all this. If he would like to talk to the Government between Committee and Report, we would be happy to do so, but I hope that, with those assurances, he will be prepared, at this stage, to withdraw his amendment.
Lord McKenzie of Luton
Before my noble friend withdraws his amendment, will the Minister clarify something? I think part of his answer was that all the transparency that is needed is provided for in the Bill and the regime that we are discussing. In that case, why is there concern about additional audit fees? What extra transparency is being forgone to keep those audit fees down if they would rise if my noble friend’s amendment is pursued?
Lord Wallace of Saltaire
I take the noble Lord’s cynicism about it always being a question of costs, although costs are not entirely a negligible issue at the moment for any of us. We had better pursue through further discussions the particular examples that the noble Lord raised and the question of how far into the internal workings of private contractors one needs to go to be sure that one is getting the value for money and service that one really requires.
Lord Wills
I am very grateful. My noble friend reinforces the point about the pathetic nature of the Government in accepting these arguments about increased audit fees. They really need not be there. These auditors are getting access to a very lucrative new stream of work and they should pay the price to the public in making information available.
Lord Beecham
Before my noble friend withdraws the amendment, what is the present position when a contract is let by the local authority for a particular service in terms of the audit? What is the relationship of the district auditor to a council-commissioned contract in relation to its own service? Does he have access and is he subject to the same disclosure requirements that my noble friend seeks as if the council itself were directly providing that service?
Lord Wallace of Saltaire
My clear understanding is that auditors do have access to the relevant accounts of the contractor, but that would probably differ a great deal from one contract to another. I therefore need to make sure that in saying that they have access I am talking about all the cases rather than some. It may well be that a number of contracts differ one from the other.
Lord Wills
Again, I am grateful to my noble friend, who has made an important point. We will return to these issues in private discussion and I hope that I can persuade the Government that they need to be a little more robust in responding to the consultations. They often are, but not in this particular case. In the mean time, I beg leave to withdraw the amendment
Social Mobility
Lord Wallace of Saltaire Excerpts(11 years ago)
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Lord Wallace of Saltaire
My Lords, we have had a really good Moses Room debate. As I have experienced on several occasions, it is something like an academic seminar, from which one learns a good deal. I thank the noble Baroness, Lady Tyler, partly because I should have been reading a lot of this stuff before and she made me read it. We have had a very interesting and informative debate in which I have to say that the speech of the noble Baroness, Lady Sherlock, was one of the most interesting and inspiring. I hope that we will now go away and start arguing about this more actively in our parties and groups to take it forward.
I have a speech with a whole range of statistics on what the Government are doing about social mobility, but I want to concentrate on character and resilience, which is the bit that has not been as emphasised in dealing with social mobility as it should have been.
I was originally a bit of a cynic about the big society, the national citizen service and community organisers, until I went to see a national citizen service scheme in Bradford last summer and spent a long afternoon with children from what I know to be some of the roughest schools in Bradford, when I was asked to teach them how to give a speech. It was fascinating, because I realised that I was dealing with people who thought that they could not do things, that they could never stand up in front of others and perform. I managed to persuade three of them to do so. I began to see that that course gives you that much more confidence to believe that you can do things which before you thought that you could not. I am now a strong proponent of national citizen service. We are expanding its coverage this summer. Of course, it is only one of the many elements that we need, but it is giving children at different levels more opportunity to realise: “I can do that”. It teaches them how to volunteer and to take part in community activities. That is exactly the sort of thing that helps.
Similarly with the community organisers’ scheme. In Yorkshire, I see the problems of social mobility most of all in the big, almost entirely white estates in Bradford and Leeds—and occasionally in Sheffield and Hull. There is very high unemployment, a lot of intergenerational unemployment and a deep sense of grievance that the local authority does not look after them, but they do not actually look after themselves very much. There is a high incidence of Staffordshire bull terriers. There is a sense that nothing much is being done for them. The community organisers’ scheme tries to get them back into the habit of thinking that they could do some things for themselves with themselves, the local authority and local voluntary organisations. That is how you start to rebuild a community, because, as the right reverend Prelate said, the collapse of local community is part of the problem here. Your nonconformist church, your established church or whatever gave you a lot of those skills as you grew up within it. Sunday schools were not just about learning the number of books in the Old Testament, there were a lot of other things as well. That part of what the Government are doing is useful.
I declare an interest. For the past seven years, I have been chair of a musical charity. I was bounced into it by some young men who have been choristers at Westminster Abbey a long time after me, who decided that they were going to set up not only a choir but something that would bring music into primary schools. Two weeks ago, as they took over a church in the City of London, the right reverend Prelate the Bishop of London and I watched the Hackney Youth Children’s Choir performing. Evidently from their clothing, they were children from deprived backgrounds, standing up and performing in front of us and really enjoying themselves and therefore getting a sense that they can do things.
I believe that music in schools, as well as sport and getting people out learning to volunteer, is a very important part of building self-confidence. One of the reasons why the Parliament Choir is so good is that music teaches you two of the basic political skills: one, standing up in front of other people; and two, projecting your voice. Of course, that suggests that not everything we do on character and resilience needs to be done by government, let alone central government. A lot of this can be done by volunteers, by non-governmental organisations and by government—locally and centrally—and civil society working together.
A number of people have talked about early years and talking to small children. I have another personal interest in that I watch my two-and-a-half year-old grandson and am deeply conscious that the amount you talk to a small child comes right back at you over the months, and that those whose parents do not talk to them are a long way behind by the time they are three. In spite of the attacks in the Daily Mail, I am strongly in favour of local authorities and voluntary organisations providing parenting class incentives, explaining to young parents in particular what they can do for their children before they go to school, such as breakfast clubs and children’s centres. My figures suggest that actually the reduction in the number of children’s centres has been extremely small in the past two or three years. There has been a certain amount of merging and so on. We all recognise that this is a very important part of the mix of things that we need to do.
Moving on to what one does in the later years, I find it very depressing as I go around Yorkshire and ask people in pubs, restaurants and hotels why they employ so many Poles, Slovaks, Lithuanians and so on, and the answer is almost always, “Because they turn up for work on time, they do not take sick leave, they dress smartly and they want to get on”. Unfortunately, the children from these big inner-city estates tend to take a lot of sickies and often do not really want to work the hours that they would have to. We should be motivating them to think, “Actually, this is quite fun” and that living in Upper Wharfedale or wherever it may be for a bit might be also quite fun. It is not just a matter of forcing people to work and showing them what they can do but showing them that they can follow their own careers and that work cheers you up.
The noble Lord, Lord Knight, asked how we get people out of poverty. The best way to get people out of poverty is to get them into work—I think we all agree—and that is partly where character and resilience are needed to motivate all these people who are growing up, sitting around and complaining. I am conscious that I am caricaturing a little—but not very much. I have a vivid memory of an afternoon in Armley jail in Leeds talking to the “popos”—the persistent and prolific offenders—and thinking that these people actually had the talent to do things if they had only been directed and encouraged in the right way.
A number of other points have been made about state schools and public schools. The question of public benefit is clearly one that we need to revisit. I know that a number of public schools are sharing their excellent facilities with local state schools. That needs to be encouraged. It is something that they should be doing on their own anyway. They can certainly help with volunteering and getting out in local communities, and that is something that we should be taking a good deal further.
Universities and access were mentioned. Again, I have an interest to declare. When I taught at the University of Oxford, every year I used to take children from sixth forms in Wandsworth around Oxford. It was a disillusioning experience, I have to say. I did it because my children were at state schools in Wandsworth. The culture clash between many of the working-class children from Wandsworth and the admissions tutors at Oxford colleges was sometimes far too wide to be able to bridge. It is excellent that the Sutton Trust and others are doing a great deal with summer schools and access programmes. Partly re-educating the admissions tutors is a road we need to go down.
Apprenticeships help a great deal, particularly as we move towards keeping people in school until 17 and 18 and discouraging people from dropping out of education altogether. Giving people practical and directed work experience with apprenticeships is highly desirable. The number of apprenticeships has been rising over the past two years and we wish to take it a good deal further. Volunteering of all sorts—the Girl Guides, the Woodcraft Folk and all those other things—used to provide opportunities for this. We have to build that back in. As has also been said, this is all part of citizenship. It is not an accident that those big, working-class estates only provide a 15% turnout at local elections and about 25% at general elections. They feel completely disengaged, so we need to rebuild the local community for all these activities.
We have heard about a wider range of issues from my noble friend Lady Miller, the noble Baroness, Lady Sherlock, and the right reverend Prelate the Bishop of Derby on a more equal society and moral climate, which go wider than we can go on this occasion. We recognise that part of what went wrong over the past 25 years has been that we have become a much more atomised society, which valued wealth for its own sake and in which inequality has risen. Part of the argument that we all need to be making about taxation, personal reward and what companies and banks pay is that a society which is too unequal becomes a society which is very difficult to hold together. One loses a sense of common interest and community, locally, regionally and nationally. The banking commission hints at that in one or two places, but does not quite get sufficiently explicit on it; that sounds to me like a good role for the Church of England to take further in its contribution to the public debate.
Having made those comments as a wind-up to this seminar, I thank again my noble friend Lady Tyler for introducing this subject and for encouraging me to read a number of things which her All-Party Parliamentary Group has produced; I very much look forward to seeing what it produces from now on. I know that the Deputy Prime Minister and others are actively interested in the work of this group. We recognise that social mobility and inclusion are extremely complex areas. There is no single factor but a whole host of factors that come into play. I hope that we are all committed to building a more socially inclusive and coherent society.
Local Audit and Accountability Bill [HL]
Lord Wallace of Saltaire Excerpts(11 years ago)
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Lord McKenzie of Luton
My Lords, this is a very straightforward amendment, which is intended to ensure that the Secretary of State will consult before producing regulations under paragraph 4 of Schedule 3. Perhaps the Minister will take the opportunity to share with us what the broad content of the regulations will cover, or say when we might expect to receive a draft. I beg to move.
Lord Wallace of Saltaire
Here I am acting as the Minister, jumping to my fifth subject today, although I am happy to do so. As has just been explained, Amendment 14ZD would require the Secretary of State to consult relevant authorities and representatives of local government before exercising powers as set out in Schedule 3 to make further provision about the appointment of an auditor to certain bodies.
We are sympathetic to the concerns behind the amendment, which we understand are to ensure that bodies are suitably consulted before further provision is made on auditor appointment. Perhaps it would be helpful if I clarify the scope and purpose of this power, which I understand to be the purpose of this probing amendment. The power is limited to bodies not covered by paragraphs 1 to 3 of Schedule 3. It therefore does not apply to local authorities, police bodies, or the GLA.
Schedule 3 already makes provision in relation to these bodies to ensure that the appointment process reflects their specific governance arrangements. In the case of local authorities, it prevents the delegation of the appointment decision below full council. This ensures that the appointment of the auditor is made in a transparent manner and with proper accountability. The power at paragraph 4 is simply intended to allow the Secretary of State to make similar minor provisions for other bodies covered by the Bill to support accountability. This might mean preventing the delegation of the appointment decision for other bodies as set out, as the noble Lord will know, in Schedule 2.
As set out in the statement of intent that the Government laid earlier this week, we will work with delivery partners and interested parties to consider what specific provisions are needed. With these reassurances on the scope and purpose of the clause, and on our intent to consult affected bodies, I hope that this provides sufficient additional information for the noble Lord to be able to withdraw his amendment.
Lord McKenzie of Luton
I am grateful to the noble Lord for that response. I certainly intend to withdraw the amendment. However, perhaps he could be a little more specific about the other bodies covered by this. I am not sure that I fully grasped his point about particular bodies. Does he have an example?
Lord Wallace of Saltaire
Schedule 2 sets out a range of other bodies. The minor bodies that are set out range from waste management boards to drainage boards to parish councils and to others but do not include the major local authorities or the GLA et cetera. Schedule 4 relates to Schedule 2. I hope that is clear.
Lord McKenzie of Luton
I am grateful for that further exemplary clarification. I have not had a chance to read the statement of intent in detail yet, which came on Monday when we were in Committee. In the mean time, I beg leave to withdraw the amendment.
Lord Beecham
Perhaps I may just ask whether it would remain open to authorities to combine in placing audit contracts. The Audit Commission identified substantial savings having been made by central commissioning, and it anticipated that if extended to the remaining 30% of contracts, a significant further saving of some £400 million over five years could be made. I am not necessarily saying that that is the way to go but, under the provisions of the Bill and this whole appointment process, would it still be open for such an approach to be adopted by authorities coming together, for example, in a particular region or a particular class of authority, obviously with the support of their independent panels? Would it still be open to them to move in that direction, getting a sort of bulk purchase by agreement rather than it being imposed externally? It would be helpful to have some assurance on that.
Lord Wallace of Saltaire
My Lords, I am happy to give that assurance. That is entirely acceptable and to be expected within the Bill. Often small authorities in particular will find it convenient and useful to combine how they approach this matter. However, as the noble Lord has just said, this is by voluntary co-operation rather than by imposition from the centre.
I have to reprimand the noble Lord, Lord Tope, for making exactly the first point that I was going to make, thus cutting down on what I have to say.
Lord Wallace of Saltaire
The Government understand and support the intentions behind the amendment—to ensure that there is transparency over the appointment of the auditor—but they are not convinced that this is the sort of thing that needs to be in the Bill. The Bill already includes a requirement for the notice to include the advice of the auditor panel, which is required to advise on the selection and appointment of the auditor. This might cover issues such as the length of the appointment and the process for appointment. Under the Bill, auditor panels must have regard to guidance issued by the Secretary of State on their functions. We expect that such statutory guidance, or wider guidance on best practice, might cover the sorts of issues that should be included in any advice from the panel.
With those reassurances, I hope that the noble Lord will be willing to withdraw the amendment.
Lord McKenzie of Luton
I am grateful to the Minister. I certainly do not intend to press the amendment. I say to the noble Lord, Lord Tope, that I did not honestly expect the Minister to rush to accept the wording; it was a mechanism to open up a debate, particularly about the process and there being transparency in the extent to which other firms are invited in—in a beauty parade or whatever the mechanism is. That may be some measure of the determination of the local authority, if it has one, to broaden and open up the market. However, I entirely accept that that will be the expectation and that it will be set down in some of the guidance that will flow from this Bill. Accordingly, I beg leave to withdraw the amendment.
Lord True
My Lords, I declare an interest myself, as leader of a local authority, and apologise for not being able to take part in these proceedings before. I shall make a very small point, which need not be clarified now but perhaps could be before Report.
I have a great deal of sympathy with the tenor of comments being made universally around the Committee about the risks of overlapping. I strongly follow the noble Earl’s comments about the importance of the integrity and role of audit as it is practised by local authority officers at the moment. I was going to raise my query later, but I shall follow the noble Earl, because it affects independence, which is the subject of this amendment. Paragraph 2(2)(b) of Schedule 4 would not disqualify somebody from being a member if,
“the panel member has not been an officer or employee of an entity connected with the authority within that period”—
that is, for five years.
The only thing that needs to be made clear and perhaps can be made clear on Report is whether that means the authority or the individual. Let us posit a case of somebody who has been an officer of a body and has gained a great deal of lifetime experience, and has retired early, perhaps eight years ago—we do not want any age complication, so let us just say that he no longer works for that authority. After his departure, some years later, that body becomes a connected authority, whereas he has had no connection with it for some time. His experience might be useful, and one does not want to exclude potential individuals by idle wording. I take it that the Bill means that somebody who has been working for, or connected with, the authority in the past five years should be excluded. However, the way in which it is written could mean that if you have worked at any time for a body that becomes connected in the previous five years, you would be excluded. I think that the second category might be considered, as somebody could be useful in pursuing this role.
Lord Wallace of Saltaire
My Lords, the definition of independence is set out in Schedule 4, which says that a person is independent if they are not a member or officer of the authority and have not been within the past five years, or a “relative or close friend” of such a person. Questions of objectivity and competence, particularly competence, are, apart from qualifications in accountancy, a little more subjective. Professional competence is defined by qualifications rather than by other things.
The intention here is to allow flexibility rather than to be too prescriptive. I am told that 80% of local authorities already have audit committees; 31% have at least one independent member and 15% have more than two independent members. If panels can be constituted from members of the audit committee, that is fine, provided that they are independently chaired and have an independent majority. There could be two independent members of the local audit committee, plus one other, to make the specific appointment for external audit. I assume we all accept that there is a difference between the continuing internal audit process and the appointment of external auditors. We are trying not to be too prescriptive on this, but that is the distinction that we are drawing.
There are concerns that audit committees will get in a muddle about having audit panels alongside them, but that is not at all necessary, particularly in larger authorities. We are not convinced that we need to make audit committees a statutory requirement in local government, although, of course, practice is such that the overwhelming majority of large and small local authorities have audit committees. Local authority audit committees may wish to set up a small auditor panel, which may be connected with the audit committee, provided that it has an independent chair and an independent majority. There can be important links between the role of a panel and the audit committee, but their specific roles are distinct.
We do not think that there is a wider case for imposing statutory majority independent audit committees on local government for internal audit, for some of the reasons mentioned, but for a panel that appoints the external auditors that case should stand. Under the accounts and audit regulations, local authorities are already required to ensure that a committee, or a meeting of the whole body, reviews arrangements for the internal control and effectiveness of internal audit, approves the annual governance statement and considers and approves the statement of accounts. That is what the audit committees in most local authorities already do, usually led by back-bench councillors and, as noble Lords have said, very often by opposition councillors. However, the Government are not prescriptive about the precise structure that local bodies use to meet these requirements. Based on these existing functions, guidance from the Chartered Institute of Public Finance and Accountancy suggests that members of audit committees should be independent of the executive but need not be fully independent of the council.
Lord Wallace of Saltaire
My Lords, we will move on to the question of health bodies in our discussion of further amendments, and I hope that the noble Lord will allow us to return to the issue when we deal with them.
In answer to the noble Lord, Lord True, the Bill would not prevent someone who had worked for the local authority but had finished working for the local authority more than five years ago acting as an independent member of the panel. That is certainly my reading, and I state that as the Government’s clear understanding of the position.
On the question of a close friend—I appreciate that the noble Lord, Lord Beecham, is querying this—I am told that the phrase is already in the Localism Act. It is, to some extent, a matter of perception, but we all understand, from having dealt with local authorities over a long period, that this is one of the areas where one needs to make sure that panels look independent and are assured to be independent. Where someone seems like a close friend, it is clear that we will give guidance that that sort of person ought not to be appointed to a panel in that area.
There is more on the definitions in the letter of intent that was circulated on Monday, which I hope noble Lords have seen, and there will be more in the guidance provided to local bodies. I hope that provides sufficient reassurance for the amendment to be withdrawn.
Lord Tope
My Lords, I am slightly confused, because the group of amendments with which we are dealing is about the relationship between audit committees and auditor panels. The noble Lord, Lord McKenzie, as the mover of the amendments, will comment on that in a moment. However, I am quite sure that we will return to this issue, if only to seek clarification about the distinction and whether the two bodies should be, or have to be, separate. My noble friend Lord Wallace seemed almost to be saying that the auditor panel could in effect be a subcommittee of the audit committee. I do not think that that was quite what he meant, but maybe it was. We still need to clarify that role.
My confusion started when my noble friend went on to reply to Amendment 14BBA, which is not only in the name of the noble Earl, Lord Lytton, but in mine. That amendment has not been moved yet, so I am not quite sure whether we are dealing with it. If we are, and for the sake of preventing us from dealing with it later on—if and when it ever gets moved—perhaps I might say that the noble Earl is vastly more expert than me on the case of small bodies, such as parish councils and the like. However, the amendment comes from the Local Government Association, which represents primarily the larger authorities that do have these concerns. Personally, I have no great problem with majority independent members, but the LGA is concerned about it on a number of grounds.
First, the LGA quite rightly makes the point about the professional integrity of auditors, which the noble Baroness, Lady Eaton, has already made, as has the noble Lord, Lord True, and others, and which I think we all accept. They are already fully regulated, quite rightly and properly, and therefore the perception of independence is, in a sense, already covered to a considerable extent by the regulation.
Secondly, there is the rather more important, practical problem of whether in some areas it will be possible to find a significant number of truly independent people. That does not mean somebody elected to the council as being independent of a political party; it means somebody who is truly independent of the council in a way that is defined in the schedule. In some areas, it may not be possible to find sufficient people of relevant experience. That does not mean that they have a professional qualification necessarily, but that they have relevant experience and are also able and willing to put in the necessary time to serve on this. That may be less of a concern in some London boroughs that many of us know. However, I can well see that in more rural areas or smaller district councils, it may well be quite a significant difficulty. That is part of the concern that the LGA was raising and which we need to include in this debate, whichever amendment we are debating at this moment.
The Deputy Chairman of Committees (Lord Haskel)
I have to inform your Lordships that if Amendment 14BB is agreed I cannot call Amendment 14BBA on the supplementary list because of pre-emption.
Lord Wallace of Saltaire
My Lords, we are, in a sense, continuing the previous debate. Before I directly address the amendment in terms of defining “independent”, I shall speak with another hat on. As noble Lords will know, I speak for the Cabinet Office on issues of civil society and I am struck by the fact that the largest single part of the population that is becoming more active in all civil society activities is the fit retired. There is a very large and growing element there and it is precisely the area from which local bodies are likely to find the independent members that they are looking for. Looking around this room, I note that many of us would fit into that category but, unfortunately, we are not retired. Therefore we have less time than we would otherwise like to have. The noble Lord, Lord Tope, is particularly fit, although I like to think that I am fitter than he is.
We are happy to look into the question of how one defines “close friend” and of course we will have discussions on a range of these issues between Committee and Report. However, I reiterate that a third of audit committees already have independent members and 15% have two independent members. We see the independent panels which will appoint external auditors as not having the heavy weight of work that audit committees have but as fulfilling a rather more distinctive function.
The proposal in the amendment for mandatory audit committees is addressed more directly in other amendments but, as I understand it, this specific amendment is intended to ensure that, as well as being independent of the authority, members of an auditor panel or audit committee do not have wider conflicts of interest that might compromise their independence. I agree that potential conflicts of interest should of course be taken into account in appointing members of auditor panels. However, the Bill already includes a duty for relevant authorities to have regard to guidance issued by the Secretary of State in relation to their independent auditor panels.
We intend that such guidance will cover exactly these sorts of issues, such as how auditor panels will operate and who should sit on them. We intend to work closely with the sector and interested parties on developing such guidance and identifying what wider interests should be considered in appointing members of a panel. I hope these reassurances are sufficient for the noble Lord to withdraw his amendment, or perhaps to ask for further discussion between the Committee and Report stages.
Lord True
My Lords, I should apologise to the Committee. It was probably my fault that we got confused. I was following my noble friend Lord Lytton and my eyes went to page 40, and we therefore drifted on to the next group.
Perhaps I may ask a brief question. The noble Lord, Lord Beecham, raised the question of a “close friend”—it is good to know that the noble Lord has many close friends—and he is right to be concerned about the definition. Where is the question of political friendship dealt with in this? While it is good practice in local authorities, including my own, to have an opposition chairman—we are conscious of the political issue—is the situation of independents having close political associations but not close personal ones dealt with, in this or other legislation, in a way which would enable the work of panels not to be distorted by political considerations? In some authorities which are perhaps not as well governed as others, those kinds of considerations can be just as important as personal friendships.
Lord Wallace of Saltaire
My Lords, we are willing to look at that as well and I will write to the noble Lord. After all, we are talking about panels that may consist of two independents and one member of the audit committee. We are not talking about a vast number of people to be found outside. However, my understanding is that “independent” will exclude close political friendship. My experience of close political friendship also tends to mean close personal friendship, but we could discuss that in the bar or on another occasion.
Lord Palmer of Childs Hill
My Lords, perhaps I can come back on that because I am probably the only person in your Lordships’ House who is a chairman of an audit committee. The present situation in many audit committees, of which mine is one, where the chairman is a member of an opposition party, which I am, gives an incredible independence. You are not part of the ruling party and when we were in power we did the same the other way round.
As the noble Lord mentioned, we already have two independent members, which is very good. However, the trouble is that if you appoint an independent chairman or chairwoman of the committee, that person could well have a political affiliation. Therefore, when the controlling party in that local authority was looking for an independent chair of that committee or panel, not unnaturally it would look to people whom they know or know of. The current situation where the person is of an opposition party, where that is relevant, seems to get over that point because that person is not a close political friend. I just wanted to pick up that point from my personal experience as something to think about that when we are considering this point.
Lord Wallace of Saltaire
My Lords, I am very happy to look at this again between Committee and Report and make sure that the definition is as clear as it can be.
Lord McKenzie of Luton
My Lords, I am grateful to the Minister for that response and for the undertaking to look at this again. The points that have been made around the Committee today emphasise that there is less clarity than there should be on how this is all meant to operate and some of the nuances that could flow from just a strict reading of the legislation as it is.
I understand the point about making a judgment about whether someone was independent from an authority because of a business relationship. As the Minister said, you would seek to deal with that through guidance and it would be an issue as to whether they should be appointed to serve on the committee or the panel. In a sense, we are differentiating between someone who is not independent in that category and someone who is a relative, where they are not precluded from being appointed to the panel or committee. However, there cannot be too many of them or the requirement for a majority to be independent would break down. I am not quite sure of the logic in that. However, rather than stretch the debate this afternoon, I ask the Minister to look at that as part of the broader discussion. Maybe we could have a meeting of all noble Lords who have contributed before we get to Report because it would be difficult to repeat this discussion at Report without some interim deliberations. Having said that, I beg leave to withdraw the amendment.
EU: UK Membership
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Lord Dykes
To ask Her Majesty’s Government what representations they have made to the Government of Germany about recent comments made by senior members of that Government about the United Kingdom’s membership of the European Union.
Lord Wallace of Saltaire
My Lords, the Government discuss a range of issues with Germany and with other EU member states, many of which agree about the need for reform to address the challenges that the EU faces, including dealing with the eurozone crisis, increasing the EU’s competitiveness in the global economy and making the EU more flexible and democratically accountable. Of course, the Government are committed to membership of a reformed EU. As the Prime Minister repeated on Monday, membership of the EU is in the UK’s national interest.
Lord Dykes
Does my noble friend agree that our connection and links with Germany are a key factor for us not only bilaterally but in extending and empowering our greater influence in the whole of the European Union? Can he give some specific examples of how British Ministers have engaged positively with their German counterparts in recent times to further those links?
Lord Wallace of Saltaire
My Lords, this Government have made it a priority to increase our engagement with Germany. We have nearly quadrupled the number of ministerial and senior official bilateral visits to Germany each year compared with 2009-10. We have established joint meetings twice a year of the British-German ministerial committees on the European Union, in which I take part myself. The Foreign Secretary has made many visits to Germany, most recently to the Königswinter conference on 31 May, and the Prime Minister works very closely and regularly with Chancellor Merkel.
Lord Tomlinson
Does the Minister accept that, in the impressive list that he gave of things that we are discussing with our German friends, he did not mention our future engagement with justice and home affairs, on which I am sure that the German Government have strong views, somewhat in conflict with the views expressed from the government Front Bench in the other place yesterday?
Lord Wallace of Saltaire
I thank the noble Lord for his usual extremely constructive contribution. Of course we are discussing co-operation in police and judicial matters with the Germans, as we are discussing all other matters.
Lord Marlesford
Does my noble friend agree that bilateral discussions are one thing, but negotiations on the future of the EU are another? When do the Government expect negotiations to start and with whom?
Lord Wallace of Saltaire
My Lords, the European Union is a continuous process of negotiation. We are pursuing a multilateral reform agenda and, indeed, in the past few months a number of things on that agenda have been achieved. We were committed to containing the growth of the European Union budget and the multiannual financial framework agreement has achieved that. We have been committed, as indeed were the previous Labour Government, to extensive reform of the common fisheries policy; that has now been more or less achieved. We were committed to an EU patent court; that is now here. There is a range of further items that we wish to pursue and we will do so with like-minded member Governments, many of whom share our concerns, through the processes of multilateral negotiation.
Lord Hannay of Chiswick
My Lords, does the Minister agree that one of the best ways of ensuring that great concerns are not caused by British European policy would be to accept the sage advice of the Foreign Affairs Committee in another place? In its report published earlier this week it said that the way to proceed is through a broad, positive reform agenda for the EU as a whole and not by devising new cut-outs for the UK. In the effort that the Government are making to talk at all levels with the German Government, which I strongly welcome, please do not forget—and I hope that the Minister will say that he has not forgotten—about the need to talk to France, too, because unanimity is needed to get many of these changes.
Lord Wallace of Saltaire
My Lords, we have certainly not forgotten about France or the other 25 members of the European Union. Bilateral discussions and multilateral negotiations are a constant process. We welcome the report from the Commons Foreign Affairs Committee and I recommend it to Members of this House.
Lord Grocott
Given that these days we are regularly given the benefit of different members of the Government giving different opinions on government policy, will the Minister, with his academic and political background, give us the latest definition of what he understands by the term “collective responsibility”?
Lord Wallace of Saltaire
My Lords, we are a coalition Government. However, I remember that during the previous Government there were occasions when Ministers—and special advisers—actively briefed against one another.
Lord Pearson of Rannoch
My Lords, as we are the eurozone’s largest trading partner, both for exports and imports, will Germany not do all in her power to ensure that none of our jobs is in danger when we come to leave the failed political construct of the EU itself?
Lord Wallace of Saltaire
My Lords, the idea that countries in deficit have the overwhelming negotiating advantage over countries in credit would not be supported by most economic historians. I trust that the noble Lord noticed the Daily Mail story yesterday on the European Parliament, which noted that three of the five most ineffective and absent Members of the European Parliament are members of UKIP and that the most conscientious, dedicated and hardworking group is the British Liberal Democrats.
G8 Summit
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Lord Wallace of Saltaire
My Lords, I wish to add my regret that, sadly, the right reverend Prelate the Bishop of Bath and Wells is about to retire. Over the past week, I have been thinking about the first Bishop of Bath and Wells whom I was aware of, who stood on the right of the Queen, I think it was, as she was crowned. In some ways I regret—though in others I am glad—that the current right reverend Prelate has not been able to assert that privilege during his time as a Bishop. We shall miss him, but the Bishops keep the House of Lords young, as they say.
Before moving to other topics in this debate, I want to answer the noble Lord, Lord Triesman, on the coalition Government’s attitude to international and European co-operation. I say this as a Liberal Democrat, but what I have heard from the Prime Minister and Foreign Secretary in recent weeks has been outstandingly clear: our national interests rest in international co-operation and in remaining a full and committed member of the European Union. I have heard no such clear statement from any member of the shadow Cabinet.
If we are to have responsible opposition, we also need a clear indication from the Labour Party of its commitment to staying in the European Union and its position on a referendum. We need clear cross-party support in the national interest. I see that the noble Lord is unhappy with my criticism, but I look forward to hearing a clear statement from the Labour Party on those issues. I am happy with the coalition position on European reform and with the way in which we are moving forward with the balance of competences exercise and I reject the idea that we are being blown about by the right-wing press and UKIP.
This has been a good debate in terms of the G8’s broad agenda, particularly about going to Fermanagh. To hear the noble Lord, Lord Trimble, refer to Fermanagh as “tranquil” is an indication of just how far Northern Ireland has moved. Enniskillen was anything but tranquil 20 years ago. Fermanagh and Tyrone were bandit country during the Irish emergency. It is therefore tremendous that the Prime Minister was determined to bring the G8 to Northern Ireland this year to showcase Northern Ireland to the international media, to foreign Governments and as a place to invest.
I note to myself that it is now time for Yorkshire to start lobbying for the G8 summit to be held there when it comes around in eight years’ time, for not dissimilar reasons. Meanwhile, the Tour de France will have to do for next year. I am already discovering that it is impossible to get a hotel anywhere on the route of the Tour de France for next year, so Yorkshire is already beginning to do quite well in that regard.
Let me turn to the substance of what the G8 leaders will discuss when they meet next week and address the question of whether the G8 is the right body to meet. The noble Lords, Lord Bates and Lord Howell, and the noble Baroness, Lady Falkner, raised questions about whether we should now be going with some other body. It is of course always easier to carry on with what you have than to carry on with something new. However, I would stress that in many ways this is the best group we have because it is the only group we have to focus attention on strategic global issues, whether they are economic, political, developmental or environmental.
As the noble Lord, Lord Bates, remarked, the G8 had its origins as the G4 in 1975, when three major European Governments were trying to bring a then rather distracted American Government back to discussing how we managed the global economy. It was then expanded to become the G7 with Italy, Canada and Japan—and with the EU playing a role, because the EU as a collective body has competence in matters of trade, which has always been very important for the G7 and G8. Russia was added in the mid-1990s when, as a post-communist country, it was becoming a much more open society and moving towards a rather more open market economy. This is a group, after all, which is committed to free institutions, open markets and open societies. That is one reason why, as I was saying at the Dispatch Box yesterday, we have some concerns about the direction in which Russia is going. These eight countries are responsible for 50% of global output and 66% of global trade, so in many ways they are still the reliable top table at which one has to discuss many of these matters, in a rather messy response to the need for some form of global governance among major sovereign states.
There is of course the G20 now, the larger grouping which includes the Chinese, the Indians, the Indonesians, the Brazilians and others. The G20 will be meeting in St Petersburg in September, under Russian chairmanship, and many of the issues to be discussed among the G8 will be pursued further there. We all have to recognise that in different ways China, India, Indonesia and Brazil are still reluctant to take on and share the full responsibilities of global leadership and that much of the agenda for global co-operation and future global regulation thus remains to be negotiated between European countries, the European Union and the United States, then to be accepted by others.
The G8 has of course grown more institutionalised. It has grown larger and its agenda has grown amazingly wide. The numbers of officials attending have mushroomed and our Prime Minister is attempting to bring back direct conversation, intimacy, informality and a focus on getting things done. The noble Lord, Lord Hunt of Chesterton, queried the outcome and the follow-through. One of the British initiatives this time is to have an accountability report to look back at former G8 pledges and see what has been done. We have produced a report with checks on what we think has been achieved, or moderately half-achieved, and what has been left undone. It is not that bad a record, actually. Of course, as in all negotiations between Governments, there are some things on which you simply cannot manage to make progress, but we have made a lot of progress, particularly on global development.
Lord Wallace of Saltaire
I do not know whether it is yet in the Library. It was published two days ago. I will do my best, looking hopefully at the Box, to put it in the Library as soon as we can. I must say that I have been briefed by a number of officials who are working incredibly hard for the G8 exercise. I am very grateful that one of them has been able to spare a bit of time out of her 14-hour day to come here and assist me in this and I wish to add my compliment on her remarkably clear handwriting.
The G8 is an informal directing group and the discussions within the G8 then feed out to others. On the final lunch the secretaries-general of the IMF and the OECD will be there and the tax transparency agenda will be carried on quite largely through the OECD. The land ownership agenda, which was mentioned by the noble Earl, Lord Listowel, will be carried out partly through the Food and Agriculture Organisation. Discussions are part of a very intricate network in which we work as we can with others. There are a number of associated conferences now. We have had a Foreign Ministers’ G8 with very active engagement from the Russians on issues such as Syria and elsewhere. We do not always agree but we are actively discussing these issues. There is also the Science and Innovation conference mentioned by the noble Lord, Lord Hunt. The Nutrition for Growth compact has been signed by 24 Governments from the developed and developing worlds, 22 business groups, four science organisations and a number of major international non-governmental organisations.
Sessions at the G8 will cover the global economy, including trade, and the very important bilateral negotiations which have been taking place between the EU and Japan and which will be taking place between the EU and the United States. There will be a session on international political issues and foreign policy, a session on countering international and cross-border terrorism, a session particularly devoted to tax and transparency, and a final lunch at which the delegates will be joined not only by the secretaries-general I have mentioned but also by a number of other senior figures from Africa and South America.
The Prime Minister has focused on the three Ts—trade, tax and transparency. I have already spoken about trade. We very much hope that we will be able to get back to a global trade agenda with the World Trade Organisation. However, some of the leading members of G20 have not been particularly co-operative on a global trade agenda which is why we are having to pursue regional trade negotiations. If we are able to achieve a trade agreement between the United States and the European Union to follow those with Japan, Korea and Canada, we will have made a major contribution to global economic growth. This is about the rules which shape global trade and the fairness and openness which characterise them.
We have also discussed tax. Britain has a particular responsibility here because of the number of overseas territories and Crown dependencies which have become offshore financial centres. The Prime Minister has been in contact with all of our overseas territories and Crown dependencies. They have now all agreed on a number of measures. Bermuda is still discussing the question of a multilateral convention on mutual assistance on tax matters but we hope to resolve that issue with Bermuda before we have sorted out the complete agenda for the G8.
I was asked about the fourth money-laundering directive. This is an EU measure and proposals are currently being negotiated by member states and the European Parliament. They would require that companies obtain information on their beneficial ownership, hold this information and make the information available to competent authorities. The European agenda, the global agenda and the G8 agenda overlap and complement each other. In all of this one has to recognise that tax sovereignty and global markets do not go easily together. That is why we have to pursue these international negotiations on tax transparency in order to regain a degree of our tax sovereignty. The Government have been relatively successful over the past three years at regaining tax from multinational companies. I am told that HMRC has collected more than £23 billion in extra tax since 2010 through challenging large businesses’ tax arrangements and tackling transfer pricing issues, and we continue to hope that we will raise a good deal more through tax transparency.
As noble Lords know, transparency is about not only tax but beneficial ownership. The noble Earl, Lord Listowel, asked particularly about transparency over land tenure. The problem with land tenure in developing countries is that often records do not exist, so in terms of technical assistance, as part of bilateral or multilateral aid programmes, helping these countries to establish clear records of land tenure is a necessary part of what we do to establish who owns what, where foreign companies are buying in and how far we protect local farmers on their own. There is very careful work on greater transparency with less developed countries, starting with proper land records.
On 22 May the Prime Minister announced that Her Majesty’s Government intend to sign up to the Extractive Industries Transparency Initiative, which was set up to tackle corruption, to improve the way in which the revenues from oil, gas and minerals are managed and to ensure that people across the world share in the economic benefits of natural resources in their country. A lack of transparency there, as with land transactions, is very much part of the obstacles that we have to overcome in ensuring that free trade and open markets benefit everyone, including the poor and weak countries, which are often open to these sorts of extractive industries in particular.
The lunch on Tuesday will focus particularly on Africa, looking at the millennium development goals and, as we have already mentioned, talking about the larger issue of nutrition. I am disappointed that we are not paying more attention to population on this occasion. The noble Lord, Lord Hunt of Chesterton, is disappointed that we are not spending more time on climate change, although there will be preparations for a major conference in 2015 under different tutelage—the UN Committee on Climate Change—which will be a main focus.
With regard to our political discussions, I was asked particularly about Syria. At Prime Minister’s Questions yesterday, the Prime Minister said:
“We should use the G8 to try to bring pressure on all sides to bring about what we all want … which is a peace conference, a peace process, and the move towards a transitional Government in Syria”.—[Official Report, Commons, 12/6/13; col. 331.]
This has been a worthwhile debate. I was nervous that the agenda of the G8 was so wide that I would be unable to cope with many of the questions that would come in. I sat here trying to imagine the noble Lord, Lord Hunt, talking to his Soviet colleagues during the Cold War about eastern and western approaches to weather forecasting and whether there was a Marxist approach to it as well as a capitalist one.
We have looked back to the previous UK-sponsored G8 in 2005. Gleneagles was a great success and helped to push the G8 on to the development agenda to a much greater extent than before. It is still managing to push that forward. This Government, as the Nutrition for Growth compact shows, are still attempting to use the combined efforts of the developed democracies, non-governmental organisations and international organisations as such to promote a more open global market and a more equitable global society.
We look forward to a successful G8 summit next week. This is of course only one in a long series of heavy intergovernmental negotiations, but Her Majesty’s Government are using this opportunity to press forward what I hope all noble Lords will agree is a very worthwhile and constructive global agenda.
Lord Hunt of Chesterton
Will the Minister respond on the issue of water? This is the United Nations International Year of Water Co-operation and the water issue has not really had the emphasis it should have had, as was mentioned by the noble Lord, Lord McColl.
Lord Wallace of Saltaire
My Lords, the noble Lord, Lord Alderdice, has sponsored one or two conferences on water in the Middle East in the past year with the support of the Foreign Office. We are all well aware of the many complexities of water. Those of us following the argument between Ethiopia and Egypt over the dam on the Blue Nile will know that water wars are not necessarily too far away. There are a great many complications and the Government understand that not only clean water but also cross-border water supplies are very important matters for us to deal with. It is not neglected simply because it is not a major item on this year’s G8 agenda.
Russia: Non-Governmental Organisations
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Lord Wallace of Saltaire
My Lords, the Government are concerned by pressures on NGOs across Russia, including the NGO “foreign agents” law. These concerns are outlined in the FCO’s Human Rights and Democracy report for this year. In recent months the Foreign Secretary, the Minister for Europe, and my noble friend the Minister of State for Justice have raised this subject with their Russian counterparts. Two days before the Prime Minister’s 10 May visit to Sochi, senior officials raised concerns about the treatment of civil society at the annual UK-Russia human rights dialogue, held in Moscow.
Lord Judd
Do the Minister and the Government agree that a vibrant civil society, participating in public debates and analysing policy on the basis of the experience of engaging in society are vital to a healthy democracy? How can the recent draconian action by the Russians, with more than 208 organisations now raided by government officials, possibly strengthen democracy and stability in Russia? How can this be reconciled with membership of the Council of Europe? What are the Government, together with European Union partners, doing, in the Ministers’ meeting at the Council of Europe, in bilateral meetings and on every possible occasion, to bring these truths home to the Russians?
Lord Wallace of Saltaire
My Lords, Russia is at present moving away from the principles of open society. That is deeply concerning to all of us. We continue to express our deep concerns about that, and our concern that this does not allow for the long-term stability of Russia itself, every time we meet our Russian counterparts.
Baroness Williams of Crosby
My Lords, while I agree strongly with some of the remarks made by my noble friend the Minister and the noble Lord, Lord Judd, at present the Council of Europe is very much engaged in close discussions with the Russian authorities and some questions are being raised about whether the draconian law will be carried out effectively or reconsidered. May I therefore suggest that the better approach at present is probably through the Council of Europe, of which Russia is a member, dedicated as it is to all the values and ideals of democracy, rather than an individual national protest by the United Kingdom when the President of Russia is just about to arrive here?
Lord Wallace of Saltaire
My Lords, the United Kingdom is, I think, the only EU member state that has a bilateral human rights dialogue with the Russians. We have had it for some years and we think it is valuable. The EU itself has collectively expressed its concerns at the current Russian situation. Our counterparts in the German and French Governments, whose German party political foundation offices and Alliance Française have been raided and inspected in Russia, have also expressed their concerns.
Lord Anderson of Swansea
My Lords, does the Minister agree that the current swathe of repression of non-governmental organisations is just one of a number of measures taken by the Russian Government as they move along the path of a quasi-tsarist autocracy? Have we specifically raised this matter in the Council of Europe with like-minded countries, as Russia is a member and has certain obligations under the Council of Europe agreement?
Lord Wallace of Saltaire
My Lords, we actively discuss with our partners in the European Union and the Council of Europe a whole range of concerns, including those about Russia. I think I am correct in saying that one in every four cases before the European Court of Human Rights at present concerns Russia.
Lord Triesman
My Lords, we share the anxieties that have been expressed. I was interested to hear the Minister mention in his very first response NGOs from outside Russia. What is the current status of the relationship between the Russian Government and the British Council, and is the British Council able to conduct its normal and completely proper work inside that country? If I may follow up a point made by the noble Baroness, Lady Williams, is there perhaps an opportunity for a side meeting at the G8 to underline this issue with the Russian President?
Lord Wallace of Saltaire
My Lords, the British Council was under considerable pressure some years ago. Indeed, my wife and I were in St Petersburg and visited Stephen Kinnock, who was then the head of the office there, the day after his office had been inspected by the authorities in a clear attempt to intimidate its activities. At present, however, the Alliance Française is being pursued, not the British Council. The British Council does its best to operate in rather difficult circumstances.
Egypt
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Baroness Cox
To ask Her Majesty’s Government what is their assessment of the situation of religious minorities in Egypt since the Arab Spring.
Lord Wallace of Saltaire
My Lords, Egypt has witnessed an upsurge in sectarian violence during the transition period. Foreign Office Ministers have been clear throughout the events in Egypt that have taken place since the revolution that the freedom of religious belief needs to be protected and that the ability to worship in peace is a vital component of a democratic society. We continue to urge the Egyptian authorities to promote religious tolerance and to revisit policies that discriminate against anyone on the basis of their religion. We are also in contact with representatives of the Coptic Church and other religious groups.
Baroness Cox
My Lords, I thank the Minister for his sympathetic reply. Is he aware that since the downfall of President Mubarak there have been attacks on Sufi shrines, the marginalisation of the Baha’is, hostility towards Muslim secularists and a massive escalation of assaults on Christian communities, including the Coptic cathedral, when security forces stood by doing nothing to deter the violence? In what specific ways have Her Majesty’s Government encouraged the Egyptian Government to create an environment of social cohesion, reduce tensions and promote mutual respect between adherents of different faiths so that they can live together as equal citizens in a nation that recognises their rights and values their citizenship?
Lord Wallace of Saltaire
My Lords, as we all know, it has not been an easy transition, and one could add to the noble Baroness’s list new laws that limit the role of NGOs and their ability to accept foreign funding, arrests of bloggers and restrictions on the freedom of the media. It is a messy transition, which is not entirely surprising given how long the authoritarian Government of Egypt had been in effect and given also the internal divide between a relatively liberal urban elite and a much more conservative peasant class from outside Cairo. We have intervened on a number of occasions. My noble friend Lady Warsi made a major speech at the organisation of Islamic states conference on the importance of freedom of religion and belief, and my honourable friend and colleague, Alistair Burt, has spoken to the Egyptian Government several times in Cairo and elsewhere on the importance of respect for minority rights of all sorts.
Lord Boateng
How are the lessons from Egypt being applied to Syria? Given the plight of Christian refugees in the region since the rebellion in that country, it is not clear how the removal of the arms embargo actually assists the development of a free and multifaith, tolerant Middle East.
Lord Wallace of Saltaire
That is a huge question. A free and tolerant Middle East is something that we would all love to have. At present, in Iraq as well as in Syria and a number of other countries, the question of religious minorities, be they Muslim or non-Muslim, is very much in play. We know that the conflict between what one might call moderate Sunnis and Salafi Sunnis is also acute. We do what we can, and I have to say that Muslim leaders in this country also do what they can, to influence the debate, but we recognise that the Middle East is in turmoil. Coming out of this very long period of authoritarian regimes does not make it easy to change habits immediately.
Baroness Hussein-Ece
My Lords, in Egypt the use of defamation laws to lock up people on supposed religious grounds has increased, and Article 44 of the constitution bans blasphemy. What actions are Her Majesty’s Government taking in the UN Human Rights Council in Geneva to ask the Egyptians to look again at these provisions?
Lord Wallace of Saltaire
My Lords, we are working through a number of multilateral and bilateral channels to argue to the Egyptian Government that they need to have a much more open attitude towards minority opinion of all sorts. Article 44, as the noble Baroness rightly says, prohibits blasphemy, but Article 45 advocates freedom of speech. Given the continuing conflict about the role of the judiciary in Egypt, it will take some time for the new Egyptian constitution to be applied in full.
The Lord Bishop of Ripon and Leeds
My Lords, will the Minister confirm that freedom of religion involves the right to change one’s religious beliefs and that Egypt and other nations need to be pressed to ensure that those who change their religious affiliations are defended in doing so? How far are the Government able to put pressure on countries to ensure that blasphemy laws do not prevent that happening?
Lord Wallace of Saltaire
My Lords, religious tolerance is something that we in the United Kingdom learnt about the hard way through religious persecution. We have to argue as vigorously as we can to all other countries that religious tolerance between a whole range of different religions is highly desirable in the development of an open and stable society.
Baroness Symons of Vernham Dean
My Lords, the Government are about to host the G8 conference and much of it will be focused on the Deauville partnership about Arab countries in transition. To revert to the specific question raised by my noble friend Lady Cox, in hosting the G8, will the Government take any specific initiatives to progress religious tolerance?
Lord Wallace of Saltaire
At the moment, I am not aware of the Government’s preparations for the G8 in this area. I shall feed that back to the Government and see what they can do.
Baroness Afshar
My Lords, is not the real problem that by focusing on faith as a means of the political arrangement in the Middle East—in Israel, in Egypt and in all areas—we are coming to the dangerous point of fanaticism taking over? People are doing things in the name of faith. Would it not be a good idea to demand of nations not to take their faith as a parameter of government? I speak about Iran as well as Israel and other countries.
Lord Wallace of Saltaire
One has to demand that of people as well as of nations. As we know, there are moderate people of faith and extremist people of faith in almost all religions one can think of, sadly, including Buddhism. We all have to work actively to promote a moderate version of faith. I am a member of the Church of England and as a Christian I have always regarded St Thomas as my favourite saint because he doubted.
Elections (Fresh Signatures for Absent Voters) Regulations 2013
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Lord Wallace of Saltaire
That the draft regulations and order laid before the House on 25 April and 8 May be approved.
Relevant document: 1st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 4 June.
Government Communications Headquarters
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Lord Wallace of Saltaire
My Lords, with the leave of the House, I will repeat a Statement which my right honourable friend the Foreign Secretary has just been making in the House of Commons. The Statement is as follows.
“Mr Speaker, with permission, I will make a Statement on the work of the Government Communications Headquarters, GCHQ, its legal framework and recent publicity about it. As Foreign Secretary, I am responsible for the work of GCHQ and the Secret Intelligence Service, SIS, under the overall authority of the Prime Minister. My right honourable friend the Home Secretary is responsible for the work of the Security Service, MI5.
Over the past few days there have been a series of media disclosures of classified US documents relating to the collection of intelligence by US agencies, and questions about the role of GCHQ. The US Administration has begun a review into the circumstances of these leaks in conjunction with the Justice Department and the US intelligence community.
President Obama has been clear that US work in this area is fully overseen and authorised by Congress and relevant judicial bodies, and that his Administration is committed to respecting the civil liberties and privacy of its citizens.
The Government deplore the leaking of any classified information wherever it occurs. Such leaks can make the work of maintaining the security of our country and that of our allies more difficult. By providing a partial and potentially misleading picture, they give rise to public concerns.
It has been the policy of successive British Governments not to comment on the detail of intelligence operations. The House will therefore understand that I will not be drawn into confirming or denying any aspect of leaked information. I will be as informative as possible to give reassurance to the public and Parliament. We want the British people to have confidence in the work of our intelligence agencies and in their adherence to the law and our democratic values. But I also wish to be very clear that I will take great care in this Statement and in answering questions to say nothing that gives any clue or comfort to terrorists, criminals and foreign intelligence services as they seek to do harm to this country and its people.
Three issues have arisen in recent days which I wish to address. First, I will describe the action the Government are taking in response to recent events; secondly, I will set out how our intelligence agencies work in accordance with UK law and subject to democratic oversight; and thirdly, I will describe how the law is upheld with respect to intelligence co-operation with the United States, and deal with specific questions that have been raised about the operation of GCHQ.
First, in respect of the action we have taken, the Intelligence and Security Committee has already received some information from GCHQ, and will receive a full report tomorrow. My right honourable friend the Member for Kensington, who chairs the ISC, is travelling to the United States on a long-planned visit with the rest of the committee, including Members of this House. As he has said, the Committee will be free to decide what, if any, further action it should take in the light of that report. The Government and the agencies will co-operate fully with the committee, and I pay tribute to its members and their predecessors on all sides of both Houses.
Secondly, the ISC’s work is one part of the strong framework of democratic accountability and oversight that governs the use of secret intelligence in the United Kingdom, which successive Governments have worked to strengthen. At its heart are two Acts of Parliament: the Intelligence Services Act 1994 and the Regulation of Investigatory Powers Act 2000. The Acts require GCHQ and the other agencies to seek authorisation for their operations from a Secretary of State, normally the Foreign Secretary or the Home Secretary.
As Foreign Secretary, I receive hundreds of operational proposals from SIS and GCHQ every year. The proposals are detailed. They set out the planned operation, the potential risks and the intended benefits of the intelligence. They include comprehensive legal advice describing the basis for the operation and comments from senior Foreign Office officials and lawyers. To intercept the content of any individual’s communications within the UK requires a warrant signed personally by me, by the Home Secretary or by another Secretary of State. This is no casual process. Every decision is based on extensive legal and policy advice. Warrants are legally required to be necessary, proportionate and carefully targeted, and we judge them on that basis.
Considerations of privacy are also at the forefront of our minds, as I believe they will have been in the minds of our predecessors. We take great care to balance individual privacy with our duty to safeguard the public and UK national security. These are often difficult and finely judged decisions, and we do not approve every proposal put before us by the agencies.
All the authorisations the Home Secretary and I do give are subject to independent review by an Intelligence Services Commissioner and an Interception of Communications Commissioner, both of whom must have held high judicial office and who report directly to the Prime Minister. They review the way that these decisions are made to ensure that they are fully compliant with the law. They have full access to all the information they need to carry out their responsibilities, and their reports are publicly available.
It is vital that we have this framework of democratic accountability and scrutiny. But I also have nothing but praise for the professionalism, dedication and integrity of the men and women of GCHQ. I know from my work with them how seriously they take their obligations under UK and international law. Indeed, in his most recent report the Intelligence Services Commissioner said: ‘it is my belief that… GCHQ staff conduct themselves with the highest levels of integrity and legal compliance’.
This combination of needing a warrant from one of the most senior members of the Government, decided on the basis of detailed legal advice, with such decisions reviewed by independent commissioners and implemented by agencies with strong legal and ethical frameworks, with the addition of parliamentary scrutiny by the ISC, whose powers are being increased, provides one of the strongest systems of checks and balances and democratic accountability for secret intelligence anywhere in the world.
Thirdly, I want to set out how UK law is upheld in respect of information received from the United States and to address the specific questions about the role of GCHQ. Since the 1940s GCHQ and its American equivalent, now the National Security Agency, have had a relationship that is unique in the world. This relationship has been and remains essential to the security of both nations. It has stopped many terrorist and espionage plots against this country, and has saved many lives. The basic principles by which that co-operation operates have not changed over time. Indeed, I wish to emphasise to the House that while we have experienced an extremely busy period in intelligence and diplomacy in the last three years, the arrangements for oversight and the general framework for exchanging information with the United States are the same as under previous Governments.
The growing and diffuse nature of threats from terrorists, criminals or espionage has only increased the importance of the intelligence relationship with the United States. This was particularly the case in the run-up to the Olympics. The House will not be surprised that our activity to counter terrorism intensified and rose to a peak in the summer of last year. It has been suggested that GCHQ uses our partnership with the United States to get around UK law, obtaining information that it cannot legally obtain in the UK. I wish to be absolutely clear that this accusation is baseless. Any data obtained by us from the US involving UK nationals are subject to proper UK statutory controls and safeguards, including the relevant sections of the Intelligence Services Act, the Human Rights Act and RIPA. Our intelligence-sharing work with the United States is subject to ministerial and independent oversight and to scrutiny by the Intelligence and Security Committee. Our agencies practise and uphold UK laws at all times, even when dealing with information from outside the UK.
The combination of a robust legal framework, ministerial responsibility, scrutiny by the Intelligence Services Commissioners and parliamentary accountability through the Intelligence and Security Committee, should give a high level of confidence that the system works as intended. This does not mean that we do not have to work to strengthen public confidence wherever we can, while maintaining the secrecy necessary to intelligence work. We have strengthened the role of the ISC through the Justice and Security Act 2013 to include oversight of the agencies’ operations as well as their policy, administration and finances, and we have introduced the National Security Council so that intelligence is weighed and assessed alongside all other sources of information available to us as a Government, including diplomatic reporting and the insights of other government departments, and so that all this information is judged carefully in deciding the Government’s overall strategy and objectives.
There is no doubt that secret intelligence, including the work of GCHQ, is vital to our country. It enables us to detect threats against our country ranging from nuclear proliferation to cyberattack. Our agencies work to prevent serious and organised crime, and to protect our economy against those trying to steal intellectual property. They disrupt complex plots against our country, such as when individuals travel abroad to gain terrorist training and prepare attacks. They support the work of our Armed Forces overseas and help to protect the lives of our men and women in uniform, and they work to help other countries lawfully to build the capacity and willingness to investigate and disrupt terrorists in their countries, before threats reach us within the United Kingdom. We should never forget that threats are launched at us secretly, that new weapons systems and tactics are developed secretly, and that countries or terrorist groups that plan attacks or operations against us do so in secrecy. So the methods we use to combat these threats must be secret, just as they must always be lawful.
If the citizens of this country could see the time and care taken in making these decisions, the carefully targeted nature of all our interventions and the strict controls in place to ensure that the law and our democratic values are upheld, and if they could witness the integrity and professionalism of the men and women of the intelligence agencies, who are among the very finest public servants our nation has, then I believe that they would be reassured by how we go about this difficult but essential work. The British people can be confident in the way that our agencies work to keep them safe, but would-be terrorists—those seeking to spy against this country or those who are the centre of organised crime—should be aware that this country has the capability and partnerships to protect its citizens against the full range of threats in the 21st century, and that we will always do so in accordance with our laws and values but with constant resolve and determination.”
My Lords, that concludes the statement.
Lord Wallace of Saltaire
My Lords, I thank the noble Lord for the general support he has given the Government and for his very constructive remarks on the necessary and excellent role of our agencies. He will understand that I cannot give him precise answers on some of the questions that he asked. As the Foreign Secretary said in his Statement, a preliminary report has already gone to the Intelligence and Security Committee, a fuller report will go to it and the committee will have the opportunity to examine the Foreign Secretary and a great many others on the reports that have come out. I hope that the noble Lord will allow me to leave it at that.
I simply add that the transmission of global communications is part of the context in which we all have to operate, as is the transmission of human movement. Someone may have been in London yesterday, is in Lagos today and could be in Aleppo in three days’ time. That person might be a citizen of two or three countries, one of which might be the UK. That is part of the problem. When the noble Lord says “within the UK”, what is within the UK is a great deal less clear than it was a few years ago. For all I know, the server which might hold the noble Lord’s private information from his Facebook account could be in Washington state—possibly even in southern China. Therefore, we are moving away from the ability to handle some of these issues entirely within the framework of the single nation state.
There are some extremely large questions here on data-sharing and data protection, some of which we will have to return to. Clearly data protection has to be on a European and global scale and cannot be purely domestic. That is the context in which we face all these challenges. We need different ways of attempting to keep up with criminals, terrorists and others from those we see in television series about the 1930s and 1920s, when detectives and security agencies steamed open the envelopes of letters, which were the main means of communication in those days.
Lord King of Bridgwater
My Lords, do we not now face a much more dangerous world in which we know that certain organisations are determined to commit acts of terror against this country in a more positive and direct way than we have perhaps faced before? Combine that with an explosion in systems of communication which did not exist before, and the graphic illustration that the Minister just gave about London, Lagos and Aleppo, and there is a globalisation and dependence on other countries for intelligence. The front line in the defence of our country is intelligence. From my previous experience, I pay tribute—as has already been done—to those who serve in our intelligence agencies. However, the challenges they now face are very real, and protecting the rule of law and following the orders under which they operate against the threats that our country faces involve very high standards indeed.
The real core of this Statement is that we need the ISC. We have to have some impartial outside body, and it will not surprise the Minister when I say that we must preserve the credibility of the ISC. Sir Malcolm Rifkind and his colleagues, including two Members of this House, face a challenging job. A very serious accusation has been made and we must get to the truth about it. I have absolutely no criticism of Sir Malcolm Rifkind, and have fortunately been long enough out of post. In preserving that credibility, we have to watch that we do not appoint people who have just had ministerial responsibility for the areas that they may be asked to investigate. A continual challenge is ensuring that we have experienced people who can contribute to what is now a very important job for the ISC.
Lord Wallace of Saltaire
I thank the noble Lord for those comments. I am not sure that in some ways we are in a more dangerous world than we were in 100 or more years ago when international anarchist groups succeeded in assassinating the heads of state of two or three European countries. However, he is absolutely right about the explosion of communications and the speed of communications. The general increase in the educated population of the world means that, when you are looking for terrorist groups, you are not able to look for a small group within each city but are looking at a much larger number of possible suspects. That is why agencies have to adapt the way they look at these sources.
Lord Lloyd of Berwick
I understand extremely well that the Minister cannot at this stage tell us very much, but I hope that he can at least confirm what appears to be the case—that the 197 Prism reports said to have been passed on to GCHQ last year all relate to communications data and not to the contents of any intercepted communication. If he can give us that confirmation—I hope he can and can see no reason why he should not if it be the case—it would be much less serious and would allay certain anxieties that otherwise we must all feel. If it is the case that it relates solely to communications data, will he say who gave the authorisation under Section 21 of RIPA, which is the relevant section, not Chapter 1, and whether the authorisation was specific to this case or was a general authorisation?
Lord Wallace of Saltaire
The noble and learned Lord would like me to go into specifics on specific cases, and I am going to resist that for reasons he will fully understand, while recognising the importance of the distinction made between communications data and the details of communications, which is one that we all recognise.
Lord Reid of Cardowan
My Lords, first, in all humility, I advise the Minister that it would be useful to distinguish between published opinion and public opinion. He may never be able to reassure some elements of published opinion that the security services are not being overzealous until there is some great incident, and it will then accuse the security services of not having done enough. That is the experience.
Secondly, to reassure public opinion, will he confirm that the regulatory legal framework is among the best, if not the strongest, among western democracies, not only the legal framework he mentioned of the Intelligence Services Act and RIPA but ministerial oversight, independent scrutiny and parliamentary accountability through the ISC? I tell him from my own interests—I declare them as registered—not only as a former Home Secretary but in the private sector and the academic sector that there is astonishment among many colleagues in Europe and the western democracies at just how far we go to ensure that oversight.
Will the Minister confirm the simple point that international terrorism is by definition international, that the means of communication in the world wide web is by definition worldwide and that therefore, if we are to protect the lives of the citizens of this country, we have to operate on an international basis? Almost every single plot that has threatened the public, many of which they have not heard about, has involved at least two or three countries, and in some cases more than 20. Therefore, within the legal framework, the security services, operating and sharing information on counterterrorism with our close allies throughout the world, have saved literally thousands of lives in this country over the past 15 years. The whole House should note that and congratulate our security services on it.
Lord Wallace of Saltaire
I thank the noble Lord for those very helpful words. However, it is not only all terrorism that is by definition international. When I was covering the Home Office brief and spent some time with the West Yorkshire Police I came to the conclusion that all serious organised crime is now international. We therefore operate in a world in which co-operation, not just with the United States but with our European partners and others, is nevertheless essential in order to combat this global phenomenon—and, of course, some of those with whom we have to co-operate are not the easiest of partners. The noble Lord will know well that some of the websites which those who have been radicalised in this country have had access to are operated out of very distant countries.
The difference between public opinion and published opinion is, of course, that public opinion very often wants different and contradictory things. The public want security and privacy, they want the state off their backs, but at the same time they want the state to protect them. That is part of what politicians have to deal with. It is one of the reasons why referendums are not always a terribly good idea, because the way public opinion flies depends on which week the referendum is held. Attitudes to privacy among the young are much more relaxed than among the old. Whether as the young get older they become more concerned about privacy is something we shall slowly discover as we go on.
Baroness Falkner of Margravine
My Lords, the Foreign Secretary’s Statement will have gone far to reassure people that our very high standards of oversight are being upheld. However, the problem for people is not so much about our own legal standards and standards of oversight, but what happens internationally, in other countries, and whether their standards are as high. In light of that, will my noble friend tell us what attention Her Majesty’s Government are giving, in the borderless cyberworld, not just to the full implementation of the 2006 data retention directive, but also to aspiring to have high common standards as we go forward into negotiations with the United States on the transatlantic treaty? Will that subject be covered in those talks?
Lord Wallace of Saltaire
My Lords, I am not entirely sure that I understand the full transition to cloud computing. A very small number of people in this House understand it, and I run to them from time to time to ask for their advice. Certainly, we will find that the new global standards on attempts to regulate cloud computing will be thrashed out in negotiations between the United States and the European Union in the context of the transatlantic negotiations. So far we are a long way from discovering how those will turn out. I read in the New York Times the other day that one of the differences across the Atlantic is that in the United States most people distrust the state much more than they distrust companies, whereas in Europe more people trust the state and distrust companies. That raises implications for what sort of regulation people really want. Clearly there will be some extremely difficult negotiations, first on the EU data protection directive, and then within the transatlantic negotiations.
Lord Elystan-Morgan
My Lords, in quoting the words of Sir Malcolm Rifkind, the chairman of the security committee, the Minister referred to a statement by him which said that normally only information which had been the subject of specific ministerial request would be used. The word “normally” suggests to me that there may be exceptional circumstances. Can the Minister, without embarrassment, suggest the sort of situation in which that might operate? It is a constructive and relevant question, which I am sure the House would wish to have an answer to, if possible.
Lord Wallace of Saltaire
The noble Lord tempts me to go down a lane which I think that I would prefer not to go down. It is, of course, the case that, in moments of absolute crisis, a short cut may possibly be taken, but this country attempts in all circumstances to go through the correct procedures and hold to the legal framework.
Lord Carlile of Berriew
Would my noble friend agree that one of the duties of the security services is to obtain relevant information in accordance with the constraints imposed by British law? Would he further agree that there is absolutely no evidence that GCHQ has deliberately circumvented British law to obtain information that might be available to the American authorities under quite different American law? Thirdly, would he agree that it is to be hoped that the free flow of important information between the United Kingdom’s security services and the Americans will continue, particularly if that information indicates that lives might be saved if the information is acted on? Would he further agree that it would be completely unacceptable for the British authorities to ignore information coming from abroad, wherever it comes from, if acting on that information might save lives?
Lord Wallace of Saltaire
I can confirm most of the questions asked by the noble Lord, but I had better not go into too much detail. An enormous amount of information is flowing into the United Kingdom on any day of the week from a range of other intelligence services. Naturally, we trust the Americans far more than we trust some other countries. But one has to listen to countries that may in many ways be hostile to the United Kingdom but with which we may share some real security interests. That is all part of the very delicate world in which we live and have to operate. None of this is easy, but maintaining British security and, at the same time, maintaining an open society is our underlying intention.
Lord West of Spithead
Would the Minister agree that it is somewhat ironic that the so-called whistleblower chose Hong Kong, which is close to and alongside China, as the place to make this statement, bearing in mind its systematic control of the internet within its own country, the way in which it looks intrusively at its own population, and the fact that it has probably been in among the computers of a large number of us here, let alone organisations in this country?
Lord Wallace of Saltaire
I confirm that, and congratulate the noble Lord on asking a question that did not mention the Royal Navy for the first time in some considerable period.
Lord Lucas
My Lords, will my noble friend confirm that at least one of the organisations with oversight over the security services would have it drawn to their attention if we started to get a large flow of communications content information from the United States, as opposed to communications data?
Lord Wallace of Saltaire
My Lords, lawyers have come in at a very early stage in this. I was briefed by FCO lawyers as well as by FCO officials this morning. Oversight is a continuing process, so any unusual change in pattern would naturally feed up towards the scrutiny and accountability process.
Lord Strasburger
My Lords, I apologise for arriving during the reading of this Statement but, in my defence, I was late because I was listening to it from the horse’s mouth, from the Foreign Secretary in another place.
In the USA, it would seem that politicians have been asleep at the wheel while their security and intelligence services have helped themselves to anyone’s private data without any meaningful oversight. Happily, in this county we have much better checks and balances on our security services, and the Government to their credit have been much more robust in resisting calls for security at any cost from the proponents of the disproportionate and unnecessary communications data Bill, which was accurately given the soubriquet the “snoopers’ charter”.
My question has been asked already today, but I ask my noble friend to try to address it. On the 197 occasions in the past year when GCHQ has stated that it obtained data from the Prism system in the States, was the data acquisition authorised by a Minister on each occasion? That is not about the content or the cases involved but simply about the process and legality.
Lord Wallace of Saltaire
My Lords, that is one of the issues which will be investigated by the ISC. The noble Lord and I may differ on what we think about the history and current role of the US agencies, but there is quite a large issue about US companies—Google and others—which we have assumed to be extremely benevolent but which are collecting a great deal of personal information on a very large number of people. That raises long-term issues which we will, no doubt, have to debate in future Sessions along with both domestic and international regulations to cope with them.
EU: Advocates-General of the Court of Justice
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That this House takes note of European Union Document No. 7013/13, the draft Council Decision increasing the number of Advocates-General of the Court of Justice of the European Union, and, in accordance with Section 10 of the European Union Act 2011, approves Her Majesty’s Government’s intention to support the adoption of that draft Council Decision.
Lord Wallace of Saltaire
My Lords, I am grateful to the European Scrutiny Committee for its thoughtful consideration of the draft Council decision increasing the number of advocates-general at the Court of Justice of the European Union from eight to 11. As the House will be aware, this proposal is subject to the EU Act 2011 and, before Ministers can take a position in Council, parliamentary approval must be secured for the UK’s position. That is the purpose of our debate today.
The Lords European Union Committee has reported on this subject twice, in 2011 and again in April this year. An increase in the number of advocates-general at the Court of Justice of the European Union will be of benefit to British businesses, which will gain from the increased capacity of the Court. The proposal is to increase the number of advocates-general to nine from 1 July 2013 and to 11 from 7 October 2015. The first additional advocate-general will be a permanent Polish advocate-general. Under Declaration 38 on Article 252 of the Treaty on the Functioning of the European Union, member states agreed in 2007 that, if there was an increase in the number of advocates-general, Poland would have a permanent advocate-general and no longer take part in the rotation of advocates-general. This will bring Poland in to line with the other “Big Six” member states, including the UK, which all have permanent advocates-general. The other two additional advocates-general will increase the existing rotation system from three to five. Under the current arrangements, we expect that the first two additional advocates-general appointed in October 2015 will be Czech and Danish.
The Government believe that this reform will help to maximise the efficiency of the Court and promote the effective passage of justice, as it will allow the Court to increase the speed at which it handles cases and improve the quality of its decision-making. However, more efficient operation of the Court will require more than the appointment of these three additional advocates-general to the Court of Justice. Peers will already be familiar with the reforms that the Court has introduced in the last two years, which include: increasing the number of judges in the Grand Chamber from 13 to 15; abolishing unnecessary procedural elements, such as the requirement to read the report for the hearing in full, and thus the need to produce the report; providing for the appointment of temporary judges to the Civil Service Tribunal; and establishing a new office of vice-president in the Court of Justice and the General Court. Today’s debate focuses on the latest of these wider reforms, but it will not be the last.
The Government share the eagerness of the European Union Committee for the question of additional judges at the General Court to be resolved. Negotiations on that reform have been ongoing since March 2011 and currently are at an impasse. In common with many other member states, the UK had concerns about the proposals that have been made so far. However, the Government are keen to work with other member states to agree a way forward. With that in mind, we look forward to receiving new proposals to consider. In addition to negotiations on extra judges at the General Court, the Government will continue to work closely with the Court, the Commission and other member states to identify and take forward both long-term and short-term solutions to the General Court’s backlog. We will continue to explore the full range of options for structural reform to identify a solution that meets the needs of all concerned.
To return to the specific issue today, the Government broadly support this proposal. In particular, it meets three key goals of our policy towards Court reform. Those goals are to promote the effective passage of justice, for there to be a clear need for any reform, in this case the additional advocates-general, and for costs to be contained. The role of advocates-general is to produce non-legally binding opinions for the Court of Justice to assist it in reaching its judgment. They do this in more than 50% of cases, particularly in cases that raise a new point of law. As there is no appeals process in the Court of Justice, their additional reasoned submissions help the Court to provide effective justice. As the number of cases before the Court of Justice continues to rise, by 4.5% in 2012, the Government are satisfied that there is a need for additional advocates-general to manage the workload of the Court of Justice.
I turn now to the particular issues that the EU Committee has raised with the Minister for Europe: the timetable for appointments and Council decisions, and funding. To take the timetable for appointments and Council decisions first, the Court would like to have the first additional advocate-general, the Polish one, in post from 1 July 2013 and the other two from 7 October 2015, when there will be a partial replacement of the members of the Court. Given that this request was made by the Court only on 16 January 2013, the 1 July date was always an ambitious timetable for the first advocate-general. In addition to our requirement for an affirmative debate in both Houses before Ministers can take a position in Council, Poland also estimates that the appointment process will take four months. However, the Government are still hopeful that, if parliamentary approval is secured today in the House of Lords and tomorrow in the House of Commons, the Council will be able to approve the decision under the Irish presidency, which ends at the end of June. If the 1 July deadline is missed, member states can appoint the first advocate-general at any point from then onwards and do not need to wait until October 2015. We know that the Court and other member states are keen to have the Polish advocate-general in post as soon as possible, so we anticipate that happening quickly.
Lord Liddle
My Lords, this is the third debate in which I have spoken on the European Court of Justice from the Opposition Front Bench. We support the strengthening of the system; it is essential to the effectiveness and quality of justice in the European Union. We seem to be getting there at least step by step. The proposal for additional advocates-general has our support. The idea that Poland should have a permanent position seems to be in accord with the acceptance that that country is one of the major member states of the Union. It grants Poland the equality of status that it has long sought.
It is significant that the Government have moved to support this proposal. It shows that at least they accept the pragmatism of the view of the noble Lord, Lord Rowlands, whereby if you are going to have an effective single market you have to have an effective form of justice. I have to say, however, that there are many people not present tonight but who occupy the government Benches and talk about renegotiating a relationship between Britain and the European Union, which, in essence, boils down to free trade and political co-operation. If that is the vision of the modern Conservative Party about Britain’s relationship with the EU, it is not one in which you would have this system of law which upholds the single market. We need clarification from the Government as to what they envisage the role of the system of law in the European Union to be. I very much hope that what they are doing now, on a case-by-case basis, demonstrates that they accept pooled sovereignty in areas where we have chosen to accept it, and that part of this involves a form of supranational decision-making and supranational law.
My second point is that I support those noble Lords who have raised the question of why progress is limited, so far, to the issue of additional judges for the general court. That is clearly an important part of the reform package. I listened very carefully to what the Minister said about the Government broadly supporting this proposal. Do they support it or do they not? Do they regard the requirement to keep within the existing budget of the court as a binding constraint in all circumstances, or do they not? Is it a binding constraint or is it not? If they say it is a binding constraint, what efficiency proposals are the Government putting forward to the court in order that the cost of the additional judges could be met from within the budget?
I suspect that we are seeing a divided Whitehall here, with some departments recognising the need for additional judges, while others are trying to argue that the cost has to be kept within the existing budget. It is all very well making these declarations but how will it be done?
I agree very much with what the noble Lord, Lord Bowness, said about not differentiating between cost and value. It should be obvious to everyone that the value of more efficient decision-making on issues of central concern to our economy, such as the single market, would greatly exceed the cost. Where do the Government stand on this point?
I also endorse what the noble Baroness, Lady Corston, said about the value not just of greater efficiency of justice in terms of the single market, but also in terms of the basic rights of European citizens. We welcome the limited steps that have been taken. Of course, one should search for efficiency and cost saving all the time, but can the Government give us an assurance that they will not block a proposal to increase the number of judges purely on cost grounds alone?
Lord Wallace of Saltaire
My Lords, this debate has moved more widely than the decision to appoint another three advocates-general. I take it that we are all agreed that we have no objections to the appointment of three additional advocates-general, so I therefore trust that we may agree the Motion—which is the trigger for this debate—at the end of the debate.
On that point, the noble Lord, Lord Bowness, asked about the exact meaning of Article 252 of the TFEU. Many of these things require juristes-linguistes to play around with the words a great deal. I am told that the Council, acting unanimously, can decide, in effect, to increase the number of advocates-general. Declaration 38 is a declaration of intent but the Council has nevertheless to act unanimously to approve a decision. If the British Government, having failed to achieve the agreement of both Houses of Parliament, were to block it, it would not go forward and that would have a damaging effect on UK relations with Poland. The Poles are very much looking forward to joining the other big five, so to speak, in appointing their own advocate-general.