HOUSE OF LORDS - Parliament Publications

Vol. 741No. 77

Monday3 December 2012

P A R L I A M E N T A R Y D E B A T E S

(HANSARD)

HOUSE OF LORDSOFFICIAL REPORT

O R D E R O F BU S I N E S S

QuestionsIranEuropean Council: December MeetingBritish Transport PoliceImmigration: Home Office Meetings

Medical Innovation Bill [HL]Mental Health (Discrimination) (No. 2) BillPrisons (Property) BillMarine Navigation (No. 2) BillPresumption of Death BillMobile Homes Bill

First ReadingsSix Statutory Instruments

Motions to ApproveCanterbury City Council BillLeeds City Council BillNottingham City Council BillReading Borough Council Bill

Third ReadingsDraft Cumbria (Electoral Changes) Order 2012

Motion of RegretCivil Legal Aid (Merits Criteria) Regulations 2012Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Amendment of Schedule 1) Order 2012

Motions to ApprovePalestine: United Nations General Assembly Resolution

Question for Short DebateLegal Profession: Regulation

Question for Short Debate

Grand CommitteeEnterprise and Regulatory Reform Bill

Committee (1st Day)

Written StatementsWritten AnswersFor column numbers see back page

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House of LordsMonday, 3 December 2012.

2.30 pm

Prayers—read by the Lord Bishop of Guildford.

IranQuestion

2.36 pm

Asked By Lord Wood of Anfield

To ask Her Majesty’s Government what legaladvice they have received on whether a pre-emptivemilitary strike on Iran would violate internationallaw.

The Senior Minister of State, Department forCommunities and Local Government & Foreign andCommonwealth Office (Baroness Warsi): My Lords,the Government do not believe that military actionagainst Iran is the right course of action at this time,although no option is off the table. We believe that thetwin-track approach of engagement with Iran andpressure through sanctions is the best way to resolvethe nuclear issue. We do not comment on legal adviceand will not speculate about the legality of variousscenarios.

Lord Wood of Anfield: I thank the Minister for thatAnswer. I have asked this Question because of a reportin the Guardian which suggests that the AttorneyGeneral’s Office has argued internally in governmentthat providing assistance to forces that could be involvedin a pre-emptive strike would be a clear breach ofinternational law. Will the Minister clarify theGovernment’s understanding of the principles thatshould inform any decision about assisting forces in apre-emptive strike on another country?

Baroness Warsi: I can inform your Lordships’ Housethat we are not advocating military action againstIran. We continue to believe that the twin-track processof pressure and engagement offers the best hope ofresolving the Iranian nuclear issue. In relation to legaladvice, the noble Lord will be aware that it is notpractice to inform this House or notify parliamentariansof specific legal advice, if any, that we may be obtaining.

Lord Ashdown of Norton-sub-Hamdon: My Lords,leaving aside the legal considerations, given that apre-emptive all-out strike on Iran would almost certainlybe militarily unsuccessful, unite Iranian opinion behindthe leadership and scupper any diplomatic talks, wouldnot such a move be militarily inept, politically unsuccessfuland diplomatically disastrous?

Baroness Warsi: My Lords, my noble friend comesto these matters with great experience and expertise,and it is important that voices such as his are heard.However, I can assure him, as I can assure the House,that there is no plan whatever to take military actionagainst Iran, although of course all options are on the

table. We fundamentally believe that the best way todeal with this matter is through pressure and engagement,and that is the process that we have adopted.

Baroness Deech: My Lords, does the noble Baronessagree that there is something that is perhaps slightlyupside down about this Question and that what weshould be worrying about is the legality of the preparationof nuclear weapons by Iran? No country should haveto face the choice between obliteration and self-defence.

Baroness Warsi: The noble Baroness raises animportant point. We have concerns and it is because ofthose concerns that there have been successive UnitedNations resolutions on this matter over a number ofyears. It is why the international community wantsIran to be much more transparent and why we continueto engage and push for that transparency. We wouldall like to come to a negotiated solution.

Lord Tomlinson: My Lords, is the Minister awarethat, in her reply to my noble friend Lord Wood, shesaid that a pre-emptive was not justified “at thistime”? Can she tell us when she envisages that such astrike might be justified?

Baroness Warsi: As I said at the outset, all optionsare on the table. It would be inappropriate for me tospeculate on what scenarios may come forward in thefuture, and of course it would depend very much onthe scenario we faced at the time. However, I can beclear that the Government are certainly mindful oftheir legal obligations within international law.

Lord Hannay of Chiswick: Does the Minister notagree that there would be no doubt whatever about thelegal situation if Iran developed nuclear weapons? Itwould be illegal under the nuclear non-proliferationtreaty, which was signed and ratified. However, ratherthan having the argument this afternoon about thelegalities, is not the top priority, with the new AmericanAdministration, to revive the second of the two tracks—not the sanctions track, which must be kept up, but thetrack to talk to the Iranian regime? Would it not beworthwhile for the Government to take the view withthe United States Administration that they shouldhave some kind of bilateral contact with the Iraniansbefore matters get to the point where they cannot beretrieved?

Baroness Warsi: Discussions about these mattersare ongoing in a number of different ways. The nobleLord will be aware that the E3+3—Russia, China, theUS and ourselves, France and Germany—have hadfour meetings since the beginning of this year; I thinksince February. Indeed, the noble Baroness, Lady Ashton,is in the process of taking forward a further meeting,possibly before Christmas. We are absolutely committedto negotiating our way out of this matter.

Lord Anderson of Swansea: Does the noble Baronessagree that, while the centuries-old legal principles inrespect of pre-emptive strikes remain valid, they havebeen transformed in practice by the speed of warningand response in the nuclear age? Although we, alongwith much of the security establishment in Israel, may

431 432[3 DECEMBER 2012]Iran Iran

[LORD ANDERSON OF SWANSEA]be highly critical of a possible strike, should we not atleast acknowledge the dilemma of the Israeli Government,who are faced with President Ahmadinejad, who hassaid he intends to destroy Israel and may very wellsoon have the capability to do just that?

Baroness Warsi: Iran’s development of military nuclearpower is a matter of concern for many more countriesthan just Israel. It is why we have United NationsSecurity Council resolutions in relation to this matterand it is why we have tried to negotiate with Iran overa number of years. It is important to continue thosenegotiations and discussions. These are concerns thatwe in this country have too.

Baroness Williams of Crosby: Does the Ministeragree that only a few weeks ago Mr Soltanieh, theIranian ambassador to the IAEA, specifically indicatedthat Iran was now open to the possibility of bilateraldiscussions with the United States, and that PresidentObama has reflected this in his recent views expressedwithin the United States? Finally, according to recentpolling by the Knowledge Forum, a clear majority inthe United States is now clearly in favour of discussionsand diplomatic relations between the United Statesand Iran, beginning as soon as possible.

Baroness Warsi: Of course, we raise this matter indiscussions with the United States but it has to be forthe United States to take these discussions forwardwith Iran if it feels that that is the right way forward.As we do with a number of countries, we encourage itto take all opportunities to have these discussions. Thefindings of the poll that my noble friend refers to verymuch reflect the opinion of all of us in this House, andindeed the public, that the better way to resolve thismatter is not through military action.

Lord Wigley: My Lords, are there any circumstanceswhatever where a first strike with nuclear weaponscould be morally justifiable?

Baroness Warsi: I am not enough of a militaryexpert to start making these decisions. I do not thinkthat this is a matter for moral judgment; it will bebased on any scenario that presents itself at the time,and it would be wrong for me or the Government tospeculate at this stage.

Baroness Afshar: My Lords, should there not be thesame kind of sanctions against all countries who havenuclear weapons? Is it not the case that these sanctionshurt the poor in Iran while the elite are totally unaffected?

Baroness Warsi: The noble Baroness raises a veryimportant point. When we look at sanctions, we areextremely aware of the need to have appropriateexemptions in place that cover humanitarian assistance,including medicines. It is important to remember thatwhat we are concerned about is the development ofnuclear weapons. We have concerns about the regimebut not about the Iranian people. They are not thepeople we want to suffer as a result of these sanctions.

European Council: December MeetingQuestion

2.46 pmAsked By Lord Liddle

To ask Her Majesty’s Government what are theirpriorities for the December meeting of the EuropeanCouncil.

The Senior Minister of State, Department forCommunities and Local Government & Foreign andCommonwealth Office (Baroness Warsi): My Lords,the December European Council will cover economicpolicy, including economic and monetary union andbanking union, as well as defence enlargement andforeign policy. The UK will seek to ensure the integrityof the single market in relation to banking union andeconomic and monetary union. We will press for furtherprogress on growth and work to ensure that the defencestrategy reflects UK priorities. Enlargement is dependenton the December General Affairs Council.

Lord Liddle: I thank the noble Baroness for herAnswer. Why have the British Government adopted acompletely different approach to a banking unionfrom that of a fellow euro-out, Sweden, which is run,we are told, by David Cameron’s favourite conservativeEuropean Prime Minister? Sweden has engaged withthe negotiations on a banking union, whereas Britainappears to be trying to reintroduce, for the first timesince the introduction of the single market, some kindof veto on financial services legislation. Does thenoble Baroness think that that strategy is likely tomeet with more success than it did in the negotiationson the fiscal treaty last December, or are the Governmentonce again shouting from the sidelines to try to appeasethe unappeasable?

Baroness Warsi: The Government’s strategy on thismatter is one that reflects the best interests of Britain.I am sure that noble Lords on the other side of theHouse agree that it is important that when the PrimeMinister goes to Europe, he acts in the best interests ofthis country and negotiates on the basis of that strategy.The UK does not use the euro, and we have been clearthat the UK will not be part of any banking union orfall under the jurisdiction of the ECB. However, thatdoes not mean that we do not continue to push forfurther liberalisation of the single market.

Lord Roper: Does my noble friend the Ministeragree that one of the priorities of our right honourablefriend the Prime Minister should be to ensure that anydiscussions or negotiations about institutional changesshould take place at the level of the 27, even if theyconcern the eurozone, in order to maintain the integrityof the single market?

Baroness Warsi: My noble friend makes an extremelyimportant point, and the Government are with him onthis matter. We are not part of the euro, but it isimportant that structures are not put in place thatallow the euro countries to effectively exercise a blockvote and therefore make decisions that could impacton us within the single market.

433 434[LORDS]Iran European Council: December Meeting

Lord Soley: Although the economic issues just discussedare probably the most important, can the Governmentalso look at the way in which these internationalcompanies use the different tax regimes within theEuropean Union to avoid their responsibilities inindividual countries, and also perhaps at the semi-monopolistic practices of such companies? It is fairlyeasy—indeed, one might say pleasant—to boycottStarbucks, but Google and Amazon are a lot moredifficult and are semi-monopolistic. It is somethingthe EU should take a look at.

Baroness Warsi: The question goes beyond theimmediate Question but I am sure the noble Lord willagree that the Government have been deeply committedto making sure that those who should pay tax do paytax. We have invested more in HMRC to make surethat those who should pay tax in this country do paytax in this country.

Lord Stoddart of Swindon: Should the Governmentnot tell the European Union that they are in favour ofa much looser arrangement between the countries ofthe European Union, and less centralisation? Whilethe Prime Minister is over there, perhaps he could alsohave a word with the Prime Minister of Poland, whoseems to imagine that the average cost of the EUbudget paid by British people is only £35 a year,whereas it is actually £156.

Baroness Warsi: I will certainly feed that fact backin. I agree with the noble Lord about less centralisation.Of course we believe in power being nearest to thosewho are affected by those decisions. However, I thinkthe noble Lord would agree with me that in relation tothe European Union, we want a trade area but it isalso important to be part of the group that makes therules in relation to that trade area.

Lord Foulkes of Cumnock: My Lords, will the Ministertake the opportunity to ask the Prime Minister to raiseat the European Council the way in which three privatecompanies—the credit rating agencies based in theUnited States—have such an undue and malign influenceover the economy not just of the United Kingdom butthe whole of Europe? I hope she will take some advicefrom her Treasury colleague on this. It is about timethat we took collective action so that we in Europe arenot dominated by these American private companies.

Baroness Warsi: The EU is engaged in ongoingdiscussions on work in relation to better regulation ofthose very institutions.

British Transport PoliceQuestion

2.51 pm

Asked By Lord Faulkner of Worcester

To ask Her Majesty’s Government whether theywill recognise the British Transport Police for thepurposes of the Firearms Act 1968.

Earl Attlee: My Lords, the Government recognisethe need to amend the Firearms Act 1968 to addressthe anomalous position of the BTP in relation tofirearms licensing. We are continuing to seek a suitablelegislative vehicle to make the necessary amendmentto the Firearms Act 1968. We hope that it will bepossible to do so during the third Session Bill programme.

Lord Faulkner of Worcester: My Lords, there iswidespread admiration in your Lordships’ House andelsewhere for the work that the British TransportPolice do, particularly in tackling metal theft, as weheard in the debate on Friday. In May last year, theSecretary of State for Transport announced that theBritish Transport Police could arm its officers. However,for the reason the Minister mentioned—because thedefinition of “police” in the Police Act 1996 does notinclude the BTP—its officers are not regarded asCrown servants under the Firearms Act 1968. Is heaware that, as a result, BTP officers do not enjoy thelegal protection afforded to other police officers andthat they have to apply for firearms certificates individuallyas if they were members of the public? The Ministerreferred to legislative opportunities—

Noble Lords: Oh!

Lord Faulkner of Worcester: I will finish very quickly.The Minister referred to legislative opportunities. Willhe look at a late amendment to the Crime and CourtsBill or the introduction of a statutory instrumentunder the Railways and Transport Safety Act?

Earl Attlee: My Lords, the noble Lord is absolutelyright in his analysis of the problem. Unfortunately, wecannot make any suitable amendment to current legislationgoing through your Lordships’ House. I am advisedthat other routes, such as a regulatory reform order,are not suitable, so we will have to wait for a suitableslot in the primary legislation. However, the nobleLord’s point about legal uncertainties is extremelyimportant.

Lord Berkeley: My Lords, how many BTP officerscarry firearms? As my noble friend said, it seems oddthat they do not have the same legal position as otherpolice officers around the country who are able tocarry firearms. What is the legal position of BTPofficers who carry firearms? Are they at risk on apersonal level in a way that the other police officersare not?

Earl Attlee: My Lords, in answer to the nobleLord’s first question, we are talking about only 53 policeofficers, so the bureaucracy load is manageable, althoughextremely inconvenient. The weakness in the legislationon the protection of officers who are involved in anincident, alluded to by the noble Lord, Lord Faulknerof Worcester, is an extremely important point.

Lord West of Spithead: My Lords, does the Ministeragree that although metal theft is a heinous crime andhas caused damage to war memorials and danger tohospitals and railway lines, shooting those involvedmight be a little over the top?

435 436[3 DECEMBER 2012]European Council: December Meeting British Transport Police

Earl Attlee: My Lords, in the case of a war memorial,I am sure that the noble Lord and I would have somedoubt over whether that would be over the top. Policeofficers have a range of options. It is important to notethat British Transport Police armed officers have notonly a firearm but a Taser and other weapons, such aspepper sprays, so they do not need to resort to thefirearm immediately.

Immigration: Home Office MeetingsQuestion

2.55 pm

Asked By Baroness Smith of Basildon

To ask Her Majesty’s Government when HomeOffice Ministers last met the Chief Inspector ofBorders and Immigration; and how often such meetingsare held.

The Parliamentary Under-Secretary of State, HomeOffice (Lord Taylor of Holbeach): My Lords, HomeOffice Ministers have regular meetings with officialsand others as part of the process of policy developmentand delivery. As was the case under previousAdministrations, it is not the Government’s practice toprovide details of all such meetings.

Baroness Smith of Basildon: My Lords, I am nonethe wiser after that Answer than I was before I askedthe Question. There was a serious reason for asking,because it is clear that there are serious problems inthe UK Border Agency. Even the recent fall in netmigration is due to British citizens leaving the countryand the fall in student numbers. Time and again, thechief inspector has found problems but, despitecommitments to his recommendations to make thesystem more efficient and fairer, it just does not happen.We now even have the Mayor of London accusing theGovernment of turning a blind eye to long-term illegalimmigrants.

Is part of the problem cuts that have led to 5,000fewer UK Border Agency staff ? Can the Minister givea commitment to your Lordships’ House today thatthe Government will act, not just promise to act, onthe chief inspector’s reports?

Lord Taylor of Holbeach: The chief inspector haspublished two reports recently, and I thank John Vine,the chief inspector, for them. He will be appearingbefore the Home Affairs Select Committee tomorrow.I totally accept the view that the UK Border Agencyhas not performed as strongly as this House wouldexpect, but it is improving, and that is the right directionof travel. The question we have to ask ourselves is: forhow long does this go back? I fear that it goes back to2006, when there was a huge backlog of cases, andthat has taken an awful lot of clearing up. The currentsituation is greatly improved.

Lord Naseby: Does not the number of bogus studentsmentioned in one of the reports indicate how right itwas that Her Majesty’s Government, first, allowed theLondon Metropolitan University students who werebogus to be dealt with; and, secondly, decided to keep

student numbers quite separate from other immigrationstatistics? Can my noble friend assure us that a firmnotice has gone out to all the many agencies scatteredaround the world looking to bring students to the UK,and through our embassies and consulates, that good,genuine students will always be welcome in UnitedKingdom but that bogus ones will be sent home?

Lord Taylor of Holbeach: That is exactly the messagethat the Government are sending. In fact, as has beenshown in the most recent reports, university numbersare holding up very well. UCAS acceptances ofinternational students are up by 4%, showing that ourpolicies are having the right effect. There was a 1% increasein visa applications for students attending universities.The university sector now accounts for three-quartersof sponsored visa applications, up from about half inthe equivalent period last year.

Lord Dholakia: My Lords, at my noble friend’s nextmeeting with the Chief Inspector of Borders andImmigration, will he insist on records being kept ofcases of domestic violence where there is evidence thatjudicial decisions on permanent settlement have beenoverridden by the Executive?

Lord Taylor of Holbeach: I have recently written tothe noble Lord because he asked a similar questionlast week on this issue. Obviously, it is important thatwe have a regime that is capable of ensuring thatpeople who come to this country are fit and properpersons to be here.

Lord Hannay of Chiswick: My Lords, does theMinister agree that the considerable number of studentswho were threatened with expulsion following theaction at London Metropolitan University were notbogus at all? That presumably was why the Governmentforked out £2 million to find them new places. Weshould not shelter behind figures that do not reallyprove what the Minister tries to make them prove. Thissector is enormously competitive. We should be increasingit by much more than the figures he gave and would beso without the chilling effect of the Government’sMinister for immigration going out and beating hischest and saying how jolly well he had done to keep allthose students out.

Lord Taylor of Holbeach: The noble Lord is perfectlyright. The university sector is very important, as is thecontribution made by international students to thiscountry and the economy. I reiterate to noble Lordsthat there is no limit to the number of students whocan come to the UK. Put simply, if they can speakbasic English and have sufficient funds and the necessaryqualifications, they can come.

Baroness Brinton: Does the Minister agree that it isextremely unfair to class the international students atLondon Metropolitan University as bogus simply becauseof the mistakes made by the university? The vastmajority of errors were found to be in the registeringof students and in the systems to monitor them. It is

437 438[LORDS]British Transport Police Immigration: Home Office Meetings

appalling that we should even contemplate saying thatthe majority of international students there are bogus.Does the Minister agree?

Lord Taylor of Holbeach: I do not think that I usedthat word. In fact, I agree with the noble Lord, LordHannay. The Government made funds available toensure that students could continue their studies becausewe understand that the problem lay with the university,not with the students there.

Lord Morgan: Is the Minister aware of the appallingdamage done to graduate studies at our universities,both academically and financially? The figures that wesaw last week indicate very clearly that tens of thousandsof graduate students have not come to this country,not because they are bogus but because of otherqualifications—including financial—imposed by theBorder Agency, whose policies have proven to be crassand philistine.

Lord Taylor of Holbeach: I do not agree with thatdescription. The arrangements for graduate studentsare that they can come, but they have to show that theyhave an appointment that is capable of earning £20,000a year. That is a reasonable expectation that we shouldhave for people coming in as graduate students.

Lord Avebury: My Lords, who is accountable forthe false statement made by the UKBA last springthat the legacy cases had all been resolved when it nowemerges that there were still 147,000 in the queue?

Lord Taylor of Holbeach: As we know, there is ahuge number of legacy cases. This was referred to inthe Question we tackled last week. It is a matter ofconcern that these legacy cases were not cleared uppromptly; they are being cleared up now and are beingtackled so that those students who have been discoveredto be here improperly are being sought and obliged toleave.

Lord Brooke of Alverthorpe: Do the legacy casesnot cover other people as well as students? Is thefundamental problem not the one which the Ministerspoke about last week: the inadequacy of our abilityto search and locate these individuals to try to getthem out of the country? Is it not true that thedepartment is currently cutting the number of staff itengages by around 5,000, yet claims that it is going tobe able to perform better? Will the Minister please tellthe House how it will do that?

Lord Taylor of Holbeach: Identification of peoplewho have overstayed is a clear technical problem whichrequires the application of all the resources of theUKBA. The UKBA is confident that it can achievethis and has given assurances that it will do so.

Lord Forsyth of Drumlean: My Lords, could theMinister possibly answer the question of my noblefriend Lord Avebury when he asked who is being heldaccountable for the fact that we were mislead aboutthese legacy cases?

Lord Taylor of Holbeach: There have been a coupleof incidences where staff of the UKBA have indeedapologised to the Home Affairs Select Committee formistakes that they have made. That was done orallylast week and, indeed, before then in writing by thehead of the UKBA.

Baroness Tonge: My Lords, is the Minister awarethat in this country the age of marriage is 16 if thatmarriage takes place with parental consent? Is he alsoaware that this is used for some girls to be taken out ofthe country against their will to be married so thatthey can then bring their husbands back here? What ishis department doing to stop that practice, and whenwill we bring our age of marriage up to 18 in line withother countries?

Lord Taylor of Holbeach: This House has frequentlydebated forced marriages. The Government are bringingforward legislation to criminalise them.

The Countess of Mar: My Lords, for 21 years I wasa lay member of the Immigration Tribunal until Iresigned in 2007 because I thought my job was notworth while. I have heard noble Lords at that DispatchBox reiterating over and again what the Minister hasiterated today. What guarantees are there this timethat the Government’s measures will work?

Lord Taylor of Holbeach: The Government’s resolutionto deal with this problem is the one thing that I canassure the noble Countess of.

Lord Winston: My Lords, is the Minister aware thatat a recent Select Committee when the UK BorderAgency was giving evidence, the members of thatagency were completely incapable of giving accuratestatistics on students, particularly regarding the coursesand universities that they were attending? Do we notthink that, rather than a ball-park figure, it would beappropriate to know exactly the quality of the studentsand which universities they are going to?

Lord Taylor of Holbeach: Indeed. I am sure thatthat information is available. The question is how it iscollated.

Baroness Sherlock: My Lords, the Minister told theHouse that the Government’s resolution is all thatthey need to solve the problem. Would a little humilitynot be in order? Maybe if the Minister spent sometime looking at why previous solutions have failed,there might be more chance that the Government willsucceed. Does he agree with me?

Lord Taylor of Holbeach: I am always prepared tolearn. Indeed, I have asked for a meeting with JohnVine as a result of the report that I received the otherday.

Medical Innovation Bill [HL]First Reading

3.07 pm

A Bill to make provision for innovation in medicaltreatment.

The Bill was introduced by Lord Saatchi, read a firsttime and ordered to be printed.

439 440[3 DECEMBER 2012]Immigration: Home Office Meetings Medical Innovation Bill [HL]

Mental Health (Discrimination) (No. 2)Bill

First Reading

3.07 pm

The Bill was brought from the Commons, read a firsttime and ordered to be printed.

Prisons (Property) BillFirst Reading

3.07 pm


Marine Navigation (No. 2) BillFirst Reading

3.08 pm


Presumption of Death BillFirst Reading

3.08 pm


Mobile Homes BillFirst Reading

3.08 pm


Disabled People’s Right to Control (PilotScheme) (England) (Amendment)

Regulations 2012Motion to Approve

3.09 pmMoved By Baroness Stowell of Beeston

That the draft Regulations laid before the Houseon 24 October be approved.

Relevant documents: 9th Report from the JointCommittee on Statutory Instruments, considered inGrand Committee on 26 November

Motion agreed.

Electoral Registration Data Schemes(No. 2) Order 2012

Charitable Incorporated Organisations(Insolvency and Dissolution) Regulations

2012

Charitable Incorporated Organisations(Consequential Amendments) Order 2012

Motions to Approve

3.09 pm

Moved By Lord Wallace of Saltaire

That the draft Orders and Regulations laid beforethe House on 30 October be approved.

Relevant documents: 10th Report from the JointCommittee on Statutory Instruments, considered inGrand Committee on 27 November

Motions agreed.

Green Deal Framework (Disclosure,Acknowledgment, Redress etc.)(Amendment) Regulations 2012

Electricity and Gas (Energy CompaniesObligation) Order 2012

Motions to Approve

3.09 pm

Moved By Baroness Verma

That the draft Order and Regulations laid beforethe House on 30 October be approved.

Relevant documents:10th Report from the JointCommittee on Statutory Instruments, considered inGrand Committee on 27 November

Motions agreed.

Canterbury City Council BillThird Reading

3.10 pm

Moved By Lord BilstonThat the Bill be now read a third time.

Lord Bilston: My Lords, I should first explain thethree minor amendments to this Bill, which I shallmove formally at a later point. All I can say aboutthese amendments is that they are in the nature oftidying up. One of them alters an incorrect referenceto the “Kent Valley Police Force”, which appears to besomething of a hybrid of Kent and Thames Valley, nodoubt caused by the fact that Reading Borough Councilis promoting one of the other Bills that we are discussingthis afternoon.

I begin by paying tribute to those noble Lords whoconsidered the Bill in Select Committee just over ayear ago. The noble Baroness, Lady Knight of Collingtree,

441 442[LORDS]Mental Health (No. 2) Bill Canterbury City Council Bill

chaired the committee most ably, and was supportedby the noble Lord, Lord Blair of Boughton, the nobleViscount, Lord Eccles, my noble friend Lord Glasmanand the noble Lord, Lord Strasburger. All the membersof the committee took a very strong interest in theBills, and that is evidenced not only by their attendancehere today but by their detailed special report which I,and I am sure other noble Lords, have read withinterest.

Over three days the committee heard evidence fromall four councils, and from pedlars who had presentedpetitions against the Bills. I am told that the committeewas not only fair and even-handed with all the parties,as we would expect, but took a truly active and interestedrole in the proceedings, questioning the witnessesforensically in some detail. The committee decided toamend the Bills substantially, and highlighted a numberof points in its special report, which I will try tosummarise now.

First, there was a concern that the Bills weredisproportionate, in the way that they restricted people’sability to exercise their rights legally to trade as pedlars.The committee was particularly concerned to protectthe rights of those pedlars—genuine pedlars, as theyhave become known—who play by the rules, whomove around when trading and who do not use oversizedstores to display their wares. These mirrored concernsraised by the noble Lord, Lord Lucas, at SecondReading, and the committee addressed them by amendingthe Bills in the way that it did. The Bills now containprovisions that restrict the size of stall that can be usedby pedlars, but they are otherwise able to continue totrade as they did before.

Secondly, the committee was concerned about theuse of piecemeal, incremental modification of nationallaw by private legislation. As I mentioned at SecondReading, pre-empting points that were made by thenoble Lord, Lord Lucas, the Bill’s promoters have realsympathy with his concern. They would have preferrednot to promote these Bills to deal with these localissues, but the problems that they were encounteringmeant that they felt that they had to, particularly asthere was, at the time that the Bills were deposited, noreal appetite on the part of the Government to addressthe issues nationally. Things have changed on thatscore, and in a somewhat timely manner. Only lastFriday, the Department for Business, Innovation andSkills published a consultation paper on regulations toamend street trading legislation on a national basis. Iwill return to that topic a little later.

The committee also questioned the motivation ofthe councils in promoting the Bills. It accepted thecouncils’ primary concern, about the need to ensuresafe passage on the highway and to prevent obstruction,but was unconvinced by the council’s evidence on theneed to protect the urban environment. Again, thecommittee’s views chimed with those of the nobleLord, Lord Lucas, at Second Reading, when heexpressed his views about some of our streets lackingcharacter.

The committee was also concerned about what itsaw as an attempt to protect licensed street tradersfrom unfair competition from pedlars. The councilspresented evidence to show that licensed street traders

sometimes paid hundreds of pounds annually for theirlicences, compared to the £12.50 paid by pedlars. Theyalso demonstrated that, in many cases, traders whowere trading under the authority of a pedlar’s certificatewere often doing so from stalls that gave the impressionof being permanent. I have some sympathy for thosestreet traders and, in that respect, I am glad to saythat, as I mentioned earlier, the committee amendedthe Bill in such a way that the use of larger stalls willbe subject to control.

The next point that the committee dealt with wasenforcement. All four Bills would have allowed thecouncils to seize items from unlawful street traders.The committee thought that this was a step too farand removed the seizure provisions. The councils werenaturally disappointed, but were pleased that thecommittee was content leave in the fixed-penaltyprovisions.

Finally, the committee was concerned to ensurethat the new restrictions on pedlars did not operatethroughout the whole area of each council. It is fair tosay that a happy medium was reached in that regard,with the committee deciding that the new restrictionson the size of pedlars’ stalls should apply only in thoseparts of the authorities’ areas which are designated bycouncils on the basis that the controls will be necessaryto ensure road safety or prevent obstruction of thehighway.

Having mentioned the committee and its decisions, Iturn briefly to the Government’s position. The Departmentfor Business, Innovation and Skills has, while the Billshave been progressing through Parliament, beendeveloping its own policy on street trading, particularlyin the light of the European services directive which,since the introduction of the Bills, has been recognisedas applying to the retail sale of goods and, therefore,to street trading. The department submitted the reportto the Select Committee and appeared before it, expressingsome concerns about the compatibility of the Bills, asthey then were, with the directive. During proceedings,the councils drafted amendments which satisfied thedepartment in that regard. As I have mentioned, thecommittee went somewhat further with its amendments,noting importantly that it was satisfied that the Billsbefore us now are compatible with the directive.

The Government have also recognised the need todeal on a national basis with the issue of compatibility.After a long wait, they published a consultation and adraft regulation just 10 days ago. It would not beappropriate to dwell on that consultation for too longtoday, but there is some similarity between what theGovernment are proposing on a national basis asregards the equipment that a pedlar may trade withand what the Bills now provide. The councils will needto examine the consultation document carefully andwill no doubt provide detailed responses in Februarywhen the consultation closes. What seems clear, andwill no doubt come as something of a relief to yourLordships, is that if the Government make their proposedregulations there are very likely to be no more localpedlars’ Bills. We should all give three cheers for that;we have been waiting for this consultation for a longtime.

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[LORD BILSTON]I conclude by saying that, after their long gestation

in Parliament, these four Bills are now in a form that Ihope your Lordships will find acceptable. The councilswill be able to exert much needed control over thosewho abuse the pedlars legislation and, as a result ofthe committee’s amendments to the Bills, those whoare now commonly referred to as genuine pedlars willbe afforded protection. I therefore hope that yourLordships will allow the Bills to pass today and agreeto the amendments that I shall propose to the CanterburyCity Council Bill. I beg to move.

3.22 pm

Baroness Knight of Collingtree: My Lords, we areall indebted to the masterly summary from my oldfriend and parliamentary neighbour for some years,the noble Lord, Lord Bilston. We had another guardianangel, and that is the noble Lord, Lord Lucas; I amdelighted that we shall hear from him in a little while.When one is told one is to chair a Select Committeeset up to examine a case put forward by quadruplets—three cities and a borough—it sounds like rather a dullold chore. That is wrong—in fact, it turned out to be afascinating, educative, challenging and rewardingexperience and I would not have missed it for theworld.

I will put a slightly different complexion on whathas been said by the noble Lord, Lord Bilston, fromthe heart of the Select Committee, as it were. I wouldlike to make it clear to the House that the team ofcolleagues I worked with could not possibly have beenbetter. From all political corners of this House, weworked in happy unison. I begin with my heartfeltthanks to every one of them for their expertise, wisdom,patience, judgment and, may I also say, their friendship.

Basically, as the noble Lord, Lord Bilston, has said,these local authority Bills were seeking the total eradicationof pedlars from their streets. The supporting counselsaid that pedlars caused unacceptable congestion. Themembers of the committee asked for evidence andthey produced photographs of their streets, which ofcourse were very crowded. We scrutinised them carefullyand asked questions. We concluded that nothing wehad been shown, or told, proved the case that the localauthorities were making.

We reached the conclusion, as the noble Lord, LordBilston, has touched on, that the local authorities wereat least partly motivated by a desire to protect licensedstreet traders who pay a lot more for their licencesthan the pedlars pay for their permits. We did notaccept the claim that pedlars should be banished becausethe quality of their goods might be inferior to thatbeing sold in the shops or on the fixed stalls. We feltrather outraged by this; it has never been the businessof local councils to set up as experts on what is unfairor fair trading, as regards the quality of the goods. Sothat claim went by the wayside.

The representatives of the councils then assured usthat the public were much against pedlars, that theycould not stand having pedlars in their streets and thatwe really should listen to what the public said. Thecommittee asked for evidence on that issue. Theycould not produce a single letter or newspaper campaign

in support of their contention. However, the pedlarsgave us acceptable and valid reasons to say that therewas good evidence of public approval.

The members also reflected that pedlars had beenon the streets of England prior to Shakespeare. EvenChaucer mentioned pedlars and we saw no reason togo to war with them or to change history. However, ashas been said, we felt that some changes should bemade in the way in which pedlars operate. Some of thepictures submitted by the promoters showed that thesmall trolleys that pedlars are allowed to use to carryand display their wares were sometimes very muchextended. The base was small with four little wheels,rather like those that we all wheel about when we cometo London for the week. But enormous adjuncts,including poles, were put on and where the trolleystarted quite small, it finished up yards wide with, forexample, pashminas and scarves hung all along it. Wefelt that those were not acceptable and could causeobstruction.

Therefore, the committee suggested amendments.We have heard a little about the changes but I have theexact measurements. The trolley used to carry thegoods must not be more than 0.75 metres in width;0.5 metres in depth; and 1.25 metres in height. Theoverall size of the trolley also is constrained. Wegratefully accept the small amendments, which werenecessary, on different subjects, about which we haveheard from the noble Lord, Lord Bilston. Clearly,great care has been exercised on the whole of theseapplications by the councils.

However, we had several other concerns. So greatwas the interest of the members of the committee thatone brought a pedlar’s base to the Committee Room.We had it on the desk where we gazed at it, walkedaround it and figured out how it would look when itwas dressed. We really concerned ourselves with howthings were to work.

I am delighted to receive the news that other changesare to be made, because we felt that the four Billspresented would undoubtedly have given councils adisproportionate power in relation to suspected streettrading offences. The pedlars were very worried aboutthat, particularly the suggestion that almost at thedrop of a hat all their goods could be confiscated forsuch a period of time that many would be uselesswhen that time was up—they would have gone pasttheir sell-by date by a long way. We have reduced thesepowers to the issuing of fixed penalty notices and wehave made it a requirement that councils train allofficials who exercise the remaining powers. We decidedit would be best to put in place a statutory duty oncouncils, rather than just relying on an undertakinggiven under private Bill procedures.

The most important change of all is the piecemealmodification of national law by scores of individuallittle bits of private legislation that has gone on untilnow, but is now—thank heaven—to be changed. Itreally is extremely unsatisfactory. There are peoplewho very much support the right of local authoritiesto put forward their own Bills—and long may thatcontinue—but here we have a silly situation where thesame objective has so far been put forward by 40 localauthorities through their own legislation. There are

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some 300 others waiting around the corner to seewhen they are going to have their chance. These Billswould have come to this House, causing more time-wastingand money-wasting for the local councils, who have toemploy counsels to put forward their case.

We heard a little about the arrests that this has ledto, which are quite wrong and totally unfair. If apedlar gets his certificate to trade, say, in Newcastle,that gives him the right to trade just as legally inBrighton, Bodmin, Birmingham or anywhere else; hecan use the one certificate. However, a certificate inone place gives powers that are quite different fromthose in another place which has brought in its ownrules. This is very confusing, and I am glad that wenow see a light at the end of that tunnel and that this,too, will be altered. Incidentally, we heard evidencefrom a woman pedlar who had received her certificatequite legally, but who was arrested by the police in atown other than the one which had granted the licenceand taken her money for it. She had no idea that shewas breaking the law. That really must stop, and I amdelighted that it will not be long before we see thechange that we have all asked for.

It may be worth throwing in another point. Weunderstand that there have been at least four otheroccasions when this House has held a Select Committeeon very similar Bills. None of those committees cameto the same conclusion that we did. They thought thatthe local authorities were right. That will have to besorted out: they came to totally different conclusions,and those conclusions were wrong. Suffice to say thatall the Bills were after the same thing: getting rid ofpedlars.

Only a few weeks ago the Government published aconsultation paper on repealing the Pedlars Act 1871and the Pedlars Act 1881. The paper appeared afterour committee had sat, but during our deliberationswe warned that repealing the requirement on pedlarsto obtain a certificate to trade would take away theexemption for certified pedlars from other street-tradingrestrictions. To do this without putting in its place aclear national exemption allowing pedlars to exercisetheir right to trade would be wholly unacceptable.

For more years than anyone wants to count, Peershave paid their tributes and uttered their thanks to themagnificent staff who serve us all in the Private BillOffice and the Public Bill Office. All of us on thecommittee wish to do so unreservedly. Nothing wastoo much trouble for the staff who worked with us.The bounty and quality of their help was absolutelyendless. I will mention specifically the wonderful KateLawrence, whose expertise as clerk to the committeewe relied on completely and endlessly, and Chris Bolton,who bears the impressive title Examiner of PrivateActs. She, too, must be a very busy lady. Betweenthem, these two ladies know absolutely everything andare a huge asset to the House.

3.36 pmLord Blair of Boughton: My Lords, it gives me great

pleasure to speak after the noble Baroness, Lady Knight,and to thank the one person whom she did not thank—namely, her. I am sure that I speak for all my colleagueson the committee when I say how marvellously shechaired it and how enjoyable the experience was.

I shall speak extremely briefly. Having heard fromthe noble Lord, Lord Bilston, and the noble Baroness,Lady Knight, I am not sure that there is much more tosay. The crucial issue is that we cannot go on havingprivate Bills on the same subject for the next 300 councils.The intellectual experience of trying to combine theprovisions of 19th century legislation with the EUservices directives of 2010 or 2012 should not beimposed on any other committee.

I urge the Government, when the consultation isover, to go back to the existing legislation and othercouncils. We are now in a position where the fourcouncils whose Bills we examined will have a regimethat is more restrictive of them than is the case, forinstance, in London, which is much harsher towardspedlars.

Our real triumph was to look at the trolley, decidewhat size it was, look at the photographs of ones thatlooked like small cars being pushed round the streetsof Leeds and decide that enough was enough.

Finally, in a period when city centres are under suchpressure and there are too many closed shops, whywould we wish to close down the seed corn of thepedlars who bring some brightness to those streets? Icommend the Bills.

3.38 pm

Viscount Eccles: My Lords, I, too, will say a greatthank you to my noble friend Lady Knight. Thewitnesses who came before the committee were veryvaried. It was not particularly easy to give them theopportunity to say what they wanted to say. Some ofthe representatives and the pedlars were quite overawedby the Pugin experience. Of course, the evidence comingfrom the local authorities was very different. Theywere very well schooled, they knew what they weregoing to say, and they also knew what they were notgoing to say. Our chairman did a brilliant job ofbringing out the evidence that came out during ourinquiry. Certainly it was because of that that themembers of the committee became so intrigued byand involved in what was going on in front of us.

I want to talk briefly about fixed penalties. I thinkthat in principle fixed penalties are undesirable. Theymay be necessary but, when they are, they are anecessary evil. The problem is that many people acquirethe power to impose fixed penalties. We try to offsetthat by training and I hope that that works, but I thinkyour Lordships will all recognise that power corrupts.One can go on to absolute power but power doescorrupt—there is absolutely no doubt about that. Insome fixed penalty regimes, there are people who takeadvantage of the power that they have and they imposethe regime in a very unfriendly way. The necessity forthese regimes may arise from the courts being overloaded,but one has to ask why they are overloaded. Theconclusion is that Parliament must have someresponsibility for that.

In the exercise of these powers, which are in someof the Private Members’ Bills that have become Acts,I think that my noble friend is entirely right thatthere is a culture of chasing pedlars about. I am notsure about removing them altogether—it is morefun to chase people who are still there—but they do it


[VISCOUNT ECCLES]to make pedlars’ lives more difficult. I am verygrateful that in the Bill the Secretary of State has thepower to look at the penalties and, if necessary, torestrict them.

As for the new regime which we have been toldabout, I hope that it is a liberal one—that is, liberalwith a small “l”. I have always thought, and continueto think, that one of the great advantages of democracyis an acceptance of difference and diversity, and not awish to make everybody look and behave the samewhile living by a great welter of rules. I very muchhope that the 4,000 pedlars are not reduced in numberunder the new regime but are able to trade and to livetheir lives in the way that they want.

3.42 pmLord Glasman: My Lords, I also pay tribute to the

committee, and particularly to the noble Baroness,Lady Knight, who gave me incredible instruction onhow to chair. It was a genuinely excellent experience.There are two things I should like to share with theHouse. First, the balance between kindness andseverity was very well judged. The pedlars and theirrepresentatives were occasionally speechless andsometimes cried in the committee. They were scaredand I thought that the noble Baroness dealt with thembeautifully. Towards the legal counsel, the proposersand the pedlars’ legal representative, who tended togo on a little, I thought that she showed theappropriate degree of, let us say, sternness. Secondly, Ishould like to share with the House what the nobleBaroness said to me. When I asked her a question, shesaid, “Being in committee is as much about the workyou do between the meetings as the work you do inthem”. That was taken on board. It was a very goodexperience indeed and I think we came to the rightjudgments.

There are two concerns that I should like to sharewith the House. First, I asked the representative fromLeeds council whether she could name one world-classinstitution that came out of Leeds. It was obviouslynot the football club. She could not quite put herfinger on it. I tried to prod her, telling her that Marks& Spencer was the institution and that Simon Marksstarted off as a pedlar. The idea that pedlars—poorpeople coming to this country, moving around andshowing some enterprise—would be stamped on herewas astonishing to me. I completely echo what thenoble Viscount, Lord Eccles, said about the desire tohomogenise the shopping experience and shoppingcentres. There was quite a whiff of local enforcementgoing on against the pedlars that came through fromthe witnesses, and I found that quite unpleasant anddisturbing.

My second concern is a constitutional one. “Pedlar”is from the Latin for feet—as we said in the committee—asin pedalo. It is true that pedlars were pushing theirbags rather than walking them in some cases, due thesize of the things that they had, and we originallybased it on Simon Marks’ bag, which we looked at inthe Marks & Spencer museum. That was an appropriatesize for a pedlar’s bag, we thought. There has to beenforcement in bringing that down to size and gettingit correct.

One finds references to pedlars even before Chaucer,going back to accounts from Roman times. There havebeen pedlars taking their wares from town to townand from city to city for as long as there have beenrecords in the country, so it is a status that has existedfrom time immemorial. There were references to pedlarsbefore 1191. It is not customary practice; it is practicefrom time immemorial. It was recognised in the 1871 Act;it was not created in the 1871 Act—that is a veryimportant distinction. In other words, it is not clearthat the status of the pedlar can be abolished. It seemsto me that it is an ancient status in the realm and thatthere have been very ill thought out and incoherentattempts to limit that freedom of movement, as wasmanifest in the Bills that came before.

I looked at the BIS consultation document. BIS’slegal evidence seemed to suggest a lack of historicalawareness about pedlars. It was taking EU directivesand applying them in a very flat and straightforwardway. I asked BIS how it could account for the fact thatGermany has enormous differences in craft status thatare still consistent with the EU. Its reply was, “We takea different view of enforcement”. BIS is taking a verystraightforward, unhistorical view that pedlars willinterfere with new services. We have to resist that,refute it and absolutely assert that pedlars have beenpart of our kingdom and part of the realm for manythousands of years. They play a role in taking thingsfrom town to town and in bringing people together inmany ways, disrupting stable, corporate markets. Wereally should defend them. I commend the report andI commend the committee.

3.46 pmLord Lucas: My Lords, I am absolutely delighted to

be able to praise my noble friend’s committee. It is anextraordinary example of the Lords at its very bestand I cheer to the echo what it says in its report. It iswonderful to see the Lords standing up for the unregarded,which is something which, when we pay attention, wedo very well. I echo my noble friend’s praise for ChrisBolton, who is one of the great anchors of this House.I am also going to praise the European Union, which Ido not always do—it seems to me that it has got theservices directive right—and I am going to praise mynoble friend on the Front Bench in his role with hisdepartment, because the consultation that it has producedis a very fine example of a consultation. It is clearabout what it sets out to do; it is clear about thereasons that it is adducing for that; and it is open asregards the responses that it is looking for. It clearlyanticipates that people will disagree and it encouragesdisagreement. It is a very fine piece of work and I lookforward to the legislation if it carries on in that spirit.It would have been nice, too, to be able to praise theLocal Government Association, but its reaction to theconsultation was immediate, negative and silly.

As the noble Lord, Lord Sugar, often reminds us,we are going through tough economic times. It looksas though those will be with us for some time to come.We really have to make it easy for people to start out inbusiness, whether they intend to found Marks & Spenceror whether they intend just to make a living. If that issome minor inconvenience to us, we jolly well have toput with it. The high streets are difficult places to

449 450[LORDS]Canterbury City Council Bill Canterbury City Council Bill

break into now. It would be very difficult for the nobleLord, Lord Sugar, to do what he did in founding abusiness because so many businesses are now chains.How can a little guy starting out get a chain store totake up his product? It is very difficult. A lot of theempty premises in high streets are not for rent exceptat very high figures because the landlords are desperateto keep up the fiction that they still have a high-valueproperty on their hands. That makes it very difficultfor people who are just starting out to obtain space onthe high street. The attitude shown by the consultationand by my noble friend’s committee seems to meentirely praiseworthy.

When one walks around the streets of Westminster,one sees that Westminster Council is very much infavour of sterility when it comes to its streetscape. Ifeel ashamed because there is so much money inWestminster and so many opportunities to start businesses.I hope that the result of the determination of mynoble friend on the Front Bench’s department to openup the legislation on street trading and pedlary will bethat we start to see that, as a community in Westminster,we give many more people the chance to start out inlife.

3.51 pm

Lord Strasburger: My Lords, I, too, was a memberof the Select Committee that considered these Billsand I will start by thanking the noble Baroness, LadyKnight, who chaired the Select Committee with greatpatience and skill.

Most pedlars are itinerant and often go where thebusiness takes them, selling hats, scarves, other itemsof clothing, key rings and balloons. They are trueentrepreneurs, adapting their products and location towhat their customers want and where the market is.They add colour and diversity to our increasinglyuniform shopping streets. The fact that they can makea living as pedlars suggests that they provide a usefulservice and, so far as the committee could tell, theyappear to do no one any harm at all.

The Bills as drafted sought to end the pedlars’exemption from street trading laws so that they wouldnot be able to operate on the street in areas designatedby the four local authorities that are pushing the Bills.The Bills as presented to the Select Committee alsointroduced fixed penalties and a power for officials toseize pedlars’ goods. The committee spent a lot of timetrying to discover why the four local authorities wantedthese powers. We were told that pedlars sell sub-standardgoods, but no evidence whatever was offered to provethis allegation, and we have no reason to believe thattheir goods are any better or worse than those sold bylicensed street traders. It was alleged that pedlarscreate a situation that attracts pickpockets, but again,no evidence was offered. It was also said that pedlarscause obstruction of the highway. Little evidence forthis allegation was offered apart from a small numberof cases where wide and expanding trolleys had beenused.

The witnesses who spoke for the local authoritieswere somewhat unconvincing. We heard evidence frompedlars that many council officers and the police areignorant about the 1871 Act, and we also heard muchevidence of a bullying culture on the part of council

officials towards honest and hard-working pedlars. Iconcluded that the real reason why these councils wishto exempt themselves from the 1871 Act is that theyare control freaks who resent the freedom that pedlarsenjoy. I also suspect that there is pressure from licensedstreet traders, who compete with the few pedlars intheir area and who pay considerably more than apedlar’s licence for their trading pitch. However, forthe extra fees that licensed street traders pay, they getthe benefit of a fixed pitch where they can trade allday without having to move on. If they think thatpedlars get an unfair advantage, there is nothing tostop them applying for a pedlar’s licence themselves.

The committee made several important amendmentsto the Bills. Pedlars will still be able to operate on thestreet in the designated areas provided that their trolleysdo not obstruct the highway. The amendments setmaximum dimensions for the trolleys to bring clarityto this issue. The amendments reduce the number ofreasons that a local authority can use to designate anarea. We deleted the seizure powers, which we thoughtcould easily have been abused by council officials. Weadded a requirement for better training of councilofficials on trading laws and a requirement for localauthorities to make their rules and designated areasclear on their websites. We also constrained the valueof fixed penalties. Therefore, we have turned what Ibelieve to have been four bad Bills into four not so badBills. We have removed or neutered their most repressiveaspects.

I have to say that, if it had been down to me alone, Iwould have made only one amendment to each Bill,and I would have done that with the help of thenearest shredder. But in deference to my more experiencedcolleagues on the committee, I have agreed to a set ofamendments that reduce the detrimental impact ofthese Bills, and it is the amended Bill that is before theHouse today.

3.55 pm

Lord Gardiner of Kimble: My Lords, perhaps I mayacknowledge at the outset the considerable efforts ofthe noble Lord, Lord Bilston, and pay tribute to hisdetermination to see these Bills make progress. Thenoble Lord’s patience is remarkable. I should also saythat your Lordships’ House is indebted to the committeefor its extremely thorough work, and it is very clearthat my noble friend Lady Knight of Collingtree hasbeen both kind and firm. The result of the committee’swork is that the Bills are in better shape.

My understanding is that the Government do notnormally seek to intervene in private legislation, buton this occasion they have done so in order to take fullaccount of the impact of the European services directive.As many of your Lordships will know, the servicesdirective aims to make it easier for services businessesof all types, including retailers of goods such as streettraders and pedlars, to set up and trade anywhere inthe European Union. Restrictions on trading must bethe minimum necessary and can be allowed only wherenecessary to defend overarching public interest objectivessuch as public safety and public order. This meansthat licensing and registration systems must be justifiableon the evidence and effective in securing the public


[LORD GARDINER OF KIMBLE]interest. Blanket bans will not be allowed if there areless restrictive ways of achieving the desired objectiveand there must be no discrimination in favour ofUK-based or local traders.

The Government are currently consulting on changesto the national legislation on street trading and pedlaryin order to take account of the directive. The sameconstraints apply to local legislation. I should say atthis stage that this is not a case of the UK beingobliged to introduce onerous new regulations againstits will. The services directive is fundamentally a pro-enterprise measure designed to build the single marketand successive Governments have supported this kindof deregulation.

In October 2011, during the Committee stage ofthese Bills in your Lordships’ House, the Governmentraised their concerns about the compatibility of theBills with the services directive, in particular Clauses 4and 5 of the Bills. As a result of the concerns raisedboth by the committee and the Government, Clauses 4of the Bills were totally removed and Clauses 5 wereadequately amended. As the Government’s concernshave been addressed, the Government have no objectionto the further progression of the Bills through this House.

If your Lordships will permit, I would like to say afew words about the Government’s further plans inthis area, and I am reassured that noble Lords havealready welcomed much of what has already been saidin this regard. As has been mentioned, the Government’sconsultation on draft regulations to amend the nationalstreet trading regime and repeal the UK-wide PedlarsActs of 1871 and 1881 was published on 23 Novemberand will run until 15 February next year. On conclusionof the consultation period, the Government will fullyconsider the views of the respondents before a final setof draft regulations is laid in Parliament. The Governmentare open to amending local legislation through theseregulations at the same time, if the relevant localauthorities so wish. Referring to the point made by thenoble Lord, Lord Blair, the Government have asked inthe consultation that local authorities ensure that theyscreen their legislation. If they identify provisionswhich require amendment, they can use the Government’sregulations to make the changes. I will also refer to thepoint made in different ways by the noble Lord, LordGlasman, and by my noble friends Lord Strasburgerand Lord Lucas, about the historic—indeed ancient—roleof pedlars. In my view as a rural man, this relates tothe analogy of acorns growing into oaks of commerce.My noble friend Lord Lucas referred to foundingbusinesses and we must surely encourage this.

The Government will watch carefully to see if thenew legislation creates particular problems for localauthorities and if they emerge, the Government areopen to considering further changes to national legislation,if appropriate. However, on this occasion I think thebalance has been struck correctly and I reiterate theGovernment’s continued thanks to the noble Lord,Lord Bilston, and to the committee for their work ingetting this matter right.

4.01 pmLord Bilston: My Lords, I sense that the House

wishes my reply to be brief. I can be brief, in the sense

that a great deal of the meat of this important questionhas been dealt with by the members of the committee.Every member of the committee made the point that Imade at the outset: that it is due to the able chairmanshipof the noble Baroness, Lady Knight, and the integrityand wisdom of the committee in bringing forward thepoints and amendments that it made, that a fine andfair balance has been struck between the needs ofpedlars and those of legitimate market traders andlocal authorities. I entirely accept the stricture of thenoble Lord, Lord Blair, that there is a long way to go.However, it is not for the want of people like myselfurging previous Governments to take hold of thisissue and deal with it, as we did at Second Reading.We now understand consultation will take place inorder to have a national solution which will be dealtwith in a national way, rather than with these privateBills.

As we have heard, anomalies will now arise, becauseBills have been passed giving greater powers to localauthorities in this matter than are being given in thefour Bills we are debating today. The way that theseBills have been dealt with creates anomalies and that iswhy we always wanted a proper national solution fromthe Government of the day. I hope this will beforthcoming. I again thank the noble Baroness, LadyKnight, and all the members of the committee forworking in B-flat harmony to bring about this happyconclusion for the four local authorities for whom weare moving these Bills and for the pedlars who willhave a sense of fairness and justice awarded to them. Icommend the Bill to the House and thank all nobleLords for their participation.

Amendments 1 to 3Moved by Lord Bilston

1:Page 1, leave out “and touting”

2:Clause 2, page 2, line 13, leave out “Valley”3:Page 2, line 22, leave out “street” has the same meaning as in

Schedule 4 to the 1982 Act.”

Amendments 1 to 3 agreed.

Bill passed and returned to the Commons with amendments.

Leeds City Council BillThird Reading

4.05 pm


Nottingham City Council BillThird Reading

4.05 pm


Reading Borough Council BillThird Reading

4.05 pm


453 454[LORDS]Canterbury City Council Bill Reading Borough Council Bill

Draft Cumbria (Electoral Changes) Order2012

Motion of Regret

4.06 pmMoved By Lord Liddle

That this House regrets that the draft Cumbria(Electoral Changes) Order 2012 has been producedwith inadequate consultation with the CountyCouncil and other interested parties; without asimultaneous review of the district council wardboundaries with the consequence that the electoratewill be confused as to their local representation;and with serious flaws in the process conducted bythe Local Government Boundary Commission forEngland (LGBCE) that specifically contravene therequirements of the Local Democracy, EconomicDevelopment and Construction Act 2009 that theLGBCE base their recommendations on populationforecasts for five years after the Order comes intoforce, given that the LGBCE admit they do nothave the legally required information for 2017.

Lord Liddle: My Lords, I beg to move the Motionof Regret in my name on the Order Paper. I apologiseto the House for having to raise this matter on theFloor, but it is an important one because the LocalGovernment Boundary Commission for England hasbehaved, I am afraid, in what I consider to be abureaucratic and insensitive way and has not obeyedits own rules. On all sides of the House, there issupport for the principle that boundaries of constituencies,county divisions and borough wards should be set bya process that is independent of party politics and thatthose boundaries should be reviewed periodically toensure broad equality of representation. However, thecontention of this Motion of Regret, and my reasonfor moving it, is that there were very serious flaws inthe way that the Local Government BoundaryCommission for England acted in relation to theboundaries of Cumbria County Council.

There are two points about Cumbria that need tobe stressed. First, you are dealing with a very sparselypopulated county, with very stable communities withvery strong local identities which need to be respectedin any review of local boundaries. In my own hometown, Carlisle, which particular part of it you werefrom—such as Denton Holme, where I was from, orStanwix—defined what kind of person you were. Theselocal identities are very important.

Secondly, and this is a more important point aboutthe process, it is a part of the country where there istwo-tier local government. Personally, I regret thatand am in favour of a single-tier authority, but I knowthere is debate about that. If you have two tiers oflocal government, it is important that they marrytogether. The problem that we have with two-tier localgovernment is that for most of the public, the districtsare the focus of local representation and democraticvoice, but it is the county council that has the moneyand the powers and provides most of the services.There is already confusion about who is responsiblefor what in this two-tier system and it greatly adds tothe confusion if, in revising boundaries for the county

council without at the same time revising boundariesfor the district, you end up with different bases ofrepresentation.

This could have been done differently. The order wehave before us also considers town council boundaries,and there is absolutely no reason why the district andthe county could not have been considered together.Instead, what appears to have happened was a mechanical,computer-driven process of equalising the wards bydrawing lines on maps—which, incidentally, no localpeople can actually read when they try to print offthose maps—but also a process that was withoutregard for local community ties.

Again, I cite an example from the city that I knowbest. Ever since my childhood there has been a wardon the west side of Carlisle round the area of theBrunton Park football ground, called St Aidans, andthis has completely disappeared. The area where myparents lived for most of their lives, which is calledCurrock, is being split in two and half of it is beingamalgamated with another part of town that is quitedistinct from this area. These are bureaucrats whohave applied computer principles; they are not peoplewho have looked at local communities.

It also seems strange to introduce a wholly new setof boundaries within four or five months of the electionsfor the county council next May. People will discoverthat councillors who have represented them for decadesno longer represent them. This simply adds confusionfor confusion’s sake. This was a rushed job, in my view,and also did not comply with the legal requirementsthat the Boundary Commission is supposed to takeinto account when it revises boundaries.

There is a requirement to take into account populationforecasts for five years for each of the wards. The LocalGovernment Boundary Commission for England didnot have that information available. It had informationfor the population forecasts for the districts only up to2016, when the law requires it to have forecasts upto 2017. It used those population forecasts pro rata toeach ward rather than looking at the circumstances onthe ground in each ward. Of course, that informationwould have been available to the Boundary Commissionif it had done the district boundaries at the same timebecause the district councils, as the planning authorities,hold the detailed information about what developmentsare likely in the coming period.

I am moving this Motion because I believe that theBoundary Commission has behaved with a lack ofcommon sense. It has exceeded its authority and refusedto admit its error. While it is right that the BoundaryCommission should be independent in its judgmentsof boundaries, it cannot be independent of the statutesthat govern its operation, nor can it be independent ofscrutiny if it behaves in an arbitrary and bureaucraticway. I hope that this Motion will give the BoundaryCommission an opportunity to think again. I beg tomove.

Lord Campbell-Savours: My Lords, I only wish thatthe Government could have rejected the product ofthis review before bringing this before Parliament. Thetruth is that no one anywhere in the county of Cumbriaasked for this review at district, town or county level.

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[LORD CAMPBELL-SAVOURS]Indeed, I quote the Conservative leader of CumbriaCounty Council in his letter to the Commission on the8 September 2010:

“I am concerned that the review of Cumbria County Council’sdivisional boundaries is to take place in the next few weeks. Thatthere is a need for such a review … I do not contest”.He goes on to express his “considerable reservations”as to the limited nature of the review, the lack of a fullconsultation with the county council about the natureof any meaningful review that should take place.

There was one small problem in the county, oneward—Dalston and Cummersdale, near Carlisle—whichhas led to all this public money being spent, and itcould have been resolved by some minor decisionsbeing taken in the structure of county council wards.The county has provoked an anomalous position withoverlapping district boundaries, which will probablyprovoke an equally unnecessary district boundary review,which no one wants and on which no one wants tospend public money, leading to the further use ofdistrict and county authority resources.

4.15 pmIf the review were to take place—in my view, and

that of most people in the county, it should never havetaken place—it should have been done in conjunctionwith the districts, following consultation. If that hadbeen the case, it would probably have been many yearsbefore any review had been undertaken and a lot ofpublic money would have been saved. As Mr EddieMartin, the Conservative leader of the council, put itin the same letter to the Local Government BoundaryCommission for England, this review“is an unnecessary distraction which we could do well without”.

My contribution today is to ask a series of questionsto which, if they cannot be answered at the DispatchBox now, I would like answers in writing so that theycan be circulated within the county. First, what hasbeen the cost to the Local Government BoundaryCommission for England of this review, which everyonebelieves was totally and utterly unnecessary? Whatwould have been the cost if, at some later stage, when itwas finally necessary, the review had encompassedboth district and county authorities? What would havebeen the saving to the Cumbria council tax payer?

My noble friend Lord Liddle raised the question ofSchedule 2 and the projections for 2017, which werenot taken into account because the data for 2017 werenotavailabletotheLocalGovernmentBoundaryCommissionfor England. It simply guessed. In an e-mail to theLabour leader of Cumbria County Council, Mr StuartYoung, on 31 July 2012, the commission stated:

“As explained previously, the Commission has had to make anumber of assumptions to make good the lack of detailed forecastsat polling district level from your Council. Nevertheless, theCommission judged that the forecasts, such as they were, gavesufficient basis to proceed with the review and settled its finalrecommendations in May. The final audit we chose to undertakesince has not given any cause to alter the view that the figures arefit for purpose, within an acceptable range of inherent futureuncertainties”.That is not what the law requires. The law requiressomething far more accurate: a description of what thestatistics would be in 2017, but with that reference to,“an acceptable range of inherent future uncertainties”,

the Local Government Boundary Commission forEngland somehow believes that it is meeting therequirements of the law.

My next question is: is it actually meeting therequirements of the law? Does not its decision toproceed in that way in the county of Cumbria haveimplications for all future Local Government BoundaryCommission for England reviews in all other countiesnationally? I am sure that all county authorities will beinterested in the Minister’s response. Furthermore, Iwould like to know what constitutes an acceptablerange. That should be qualified for the benefit ofothers in future.

I turn to the local responses to the review. Again,they turn on the issue of public money. I have here ane-mail from Egremont Town Council. Yes, these arevery parochial issues to be raising in the House ofLords, but the point about this debate is that what weare doing in this order has implications for othercounties throughout the country. The concerns beingexpressed by the two local councils to which I intendto refer may well be mirrored in other authorities inthe event that their reviews are carried out on a similarbasis.

“Egremont Town Council object to the proposed change inthat it will result in the parish of Egremont being divided into4 divisions, this, we feel will add an additional financial burden onthe Parish as more polling stations will be needed at an averagecost of £1,000 per station”.

We are talking here about a parish council with almostno money available to it having this additional expenditureimposed upon it. The e-mail continues:

“The proposals create an Egremont East Ward that hasapproximately 5 houses which seems ludicrous. It is disjointedwhat we have and will create a polling day nightmare that willprove very confusing for many when on one sheet they will bevoting for a Parish Councillor for Egremont East,

and then it refers to overlap with other wards in thesame area.

I have another letter here from Maryport TownCouncil, where it equally expresses its concerns. It is aletter to Sir Tony Cunningham, the MP for Workington,expressing its concern to him:

“The Council asked that I write to you expressing its dissatisfactionwith the proposals for a north/south split of the Maryport areawards rather than the current east/west split arrangements. TheCouncil considers that the current arrangements are perfectlyadequate and that the arguments for the proposed arrangementare not strong enough to merit a change from a division that isworking perfectly well”.

There is no politics in this; there is no gain to anypolitical party. It is all being done neutrally, but whatis happening is that relationships built up betweenconstituents and their council representatives, sometimesover decades, are being smashed to bits, ruined anddestroyed because of the turn of a pen of a bureaucrat,probably sitting in an office in London, who has noimmediate knowledge of what is going on withinparticular wards in the county of Cumbria.

I only wish that it had been possible to stop thisprocess proceeding. I do not know what the legalposition is. I presume that now that this order is goingthrough it will all be implemented. However, the LocalGovernment Boundary Commission for England shouldrealise that sometimes it should simply stop what it isdoing, because no one wants what it is doing. It is

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forcing local authorities to incur public expenditurewhich they can ill afford at this time. The reality is thatthe Local Government Boundary Commission forEngland seems unstoppable; it seems just to keep ongoing irrespective of pressures at a local level. I canonly put it this way: if Carlisle were burning, the LocalGovernment Boundary Commission for England wouldstill be drawing up wards for that town. That showsthe nature of the problem.

Lord Judd: I am glad to support my noble friendLord Liddle in bringing this Motion before the House.It is difficult to think of a county in which there is astronger sense of tradition and community than Cumbria.It is very deep indeed—partly, of course, because it isright out there to the west of the country and not part,perhaps, of the mainstream of the United Kingdom,but very much a county with its own sense of identity.That sense of community in the county is built on astrong sense of community in the local communitiesof which the general community of Cumbria is comprised.

When I look at what has happened and listen to mynoble friends, with all their experience—much longerthan mine—of the county of Cumbria, it is clear that,if one had set out to try to disrupt something which isgood, healthy and robust in the life of Cumbria, onecould not have done much better than to introduce theill considered and insensitive proposal before us.

It is impossible to speak to this subject withoutmaking reference to what has been going on withrespect to constituency boundaries as well. People arein a real state of muddle about where they belong,where their loyalty is, who is representing them and forwhat. For democracy to succeed, it is essential thatpeople are absolutely clear about who they are holdingto account and who is representing them in the localauthority, the county and nationally.

I believe that the Motion and the passion withwhich it has been introduced are related to the heart ofdemocracy. It is an illusion to think that one can havea healthy democracy made up simply of individualsgoing to the polling station and voting. A healthydemocracy is made up of individuals finding theirplace in the community, discussing with fellow membersof that community what the issues are, makingrelationships and making strong representations together.The heart of democracy lies in that community lifeand, on the basis of that life, on then being able tohold people meaningfully to account, not just onelection day but throughout the periods between elections.

I am certain that we need to think very carefullyabout what is being done on boundaries in so manydifferent contexts; the measures are destroying thesense of community that is an essential element in ahealthy, thriving democracy. These proposals certainlydo not put that right.

I am glad to see that a Liberal Member of thecoalition is going to reply to this debate. If the LiberalDemocrat party prides itself on anything, it is itshistory of involvement in the community and its activityin community politics and the rest. I am sure that thenoble Baroness will have listened to every word thathas been said and will cheerfully and willingly undertaketo ensure that this entire serious matter is reconsidered.

Lord Clark of Windermere: My Lords, I shall notdetain the House for more than a couple of minutes; Ijust want to participate in this debate that my noblefriend has initiated. I agree very much with him aboutthe strength of community in the county—not only inCumbria, though, but in other countries as well—while starting from the opposite end: I am not infavour of a unitary authority covering such a vast areaas Cumbria. However, I am in favour of a two-tiersystem of local government. Because of that, I amconcerned about this recommendation from the LocalGovernment Boundary Commission for England, whichseeks to address only the issue of the county electoralboundaries, not the local ones. We all know that oneof the problems of democracy at the moment is theidentification of individuals with their council. Thisjust adds another area of confusion where there aredifferent boundaries for the two-tier system of government.

I submit that these proposals were made too late forthe election beginning next May; they were laid on31 July this year. There has been practically no publicitywhatever in the county of Cumbria. I doubt whether1% of the electorate know anything about them, andthey are going to get quite a shock when the electioncomes next May.

Lord Harris of Haringey: My Lords, this is a livingChamber and I believe that procedure evolves all thetime among your Lordships. I therefore find myself ina rather strange position—because the Local GovernmentBoundary Commission for England, set up under the2009 Act, is independent of the Government—of havingdrawn the short straw in responding both to my noblefriend’s Motion of Regret and to the comments madeby my noble friends Lord Campbell-Savours, LordJudd and Lord Clark. A quadrumvirate of people Irespected more would be extremely difficult to find,but it is important for your Lordships to understandthe context in which these changes have been putforward by the Local Government Boundary Commissionfor England.

The commission was set up with the specific andsole remit to review electoral arrangements of councilsagainst statutory criteria of electoral equality, givingfair weight to the votes of all electors in a council area;community identity and interests; and effective andconvenient local government. It carries out its functionsby relying on a mixture of analysis and judgment.

4.30 pmWhat we have here, as has been outlined, is a

circumstance in which there has been considerableconflict during the course of this review betweenCumbria County Council and the commission. I findmyself in the position I have often watched withamusement, when people at the government DispatchBox defend material over which they have had noinfluence whatever.

However, that does not necessarily mean, as mynoble friend Lord Campbell-Savours is inclined tosuggest from a sedentary position behind me, that theposition is indefensible. My noble friend Lord Campbell-Savours and others have said that the county councilhas never wished for this review. The advice I have

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[LORD HARRIS OF HARINGEY]received is that it is the council’s present leadershipthat has never wished for this review. At every stagethe county council has challenged these boundarychanges and sought to block their implementation.However, the commission has a statutory responsibility.The Act gives the commission power to conduct areview where it judges it desirable, whether a councilwishes it or not. The commission has intervened inCumbria because its well established criteria of electoralfairness indicate that it should.

The reason is that there is a significant level ofelectoral inequality for local voters. My noble friendLord Campbell-Savours has specifically referred tothe ward of Dalston and Cummersdale, which includes33% more electors than the average for the county—notthe lowest, but the average. That is a degree of electoralvariance which, against the criteria applied universallyby the commission, is unacceptable. It means that thevalue of the vote in that area varies very considerablydepending on whether you live in that division or oneof the neighbouring divisions. As the commission hasa duty to ensure fair votes at local elections, it neededto carry out this review.

Lord Campbell-Savours: Did it have an obligationto carry out a review of the whole county on the basisof a single complaint about Dalston and Cummersdale?

Lord Harris of Haringey: My understanding is thatyou cannot make a small change without there beingrepercussions elsewhere, but in any event the difficultyarises because of the nature of the dialogue betweenthe council and the commission.

As I said, the Act gives the commission the powerto conduct the review whether or not the councilconcerned wishes it to happen. One can understandthe reasons behind that. Clearly, a council might wantto maintain the status quo because it suited the membersof that council so to do. I accept the comments thathave been made that this is not the circumstance inthese areas. The Act lays down that the council “must”assist the commission by supplying necessary information.

However, I am informed that in resisting the review,the council has in practice failed to comply with itsduty to supply information. Clearly, one way in whichthe council could have moved forward is what happensvery frequently with reviews of local government divisions:the county council or the council concerned putsforward its own set of proposals, which the boundarycommission then measures against those criteria to seewhether or not it applies.

Lord Campbell-Savours: I am sorry to correct mynoble friend, but I understand that the county councilwas more than helpful. The problem was at districtlevel, so I think that he has been badly briefed by hiscommission.

Lord Harris of Haringey: As I have said, I am in theposition of so many Ministers before the DispatchBox in that I have not got access to the primarymaterial. However, I am told that, universally in thesecircumstances, the county council provides the information

on population projections because it has the materialacross the county area. When the districts were askedwhether they had comments, they were not able tocomment on this because, they said, all the informationon the projections was held by the county council. Sowe have this information, and we have to make thebest of what we have before us.

Of course, the commission would have been readyto contemplate the much bigger and more complexreview necessary to consider the district councils aswell, but only if there had been a reasonable consensuson that being the way forward. Within the individualdistricts, there were not the same electoral disparities.There has never been that consensus. As I said, thedistrict councils do not present electoral inequalitiesto merit the review in their own right.

A number of noble Lords have criticised the qualityof the consultation. As a matter of course, the commissionproceeds carefully through public consultations oncouncil size. The quality of the maps has been criticised.My understanding is that the council was given thefull mapping in electronic form, which would haveenabled the council, had it so wished, to disseminateand generate local maps in whatever form and asflexibly as it wished.

My noble friend has suggested that the commissionwas unstoppable in its approach. The reality is that, asa result of the representations made by the countycouncil, the commission extended its usual consultationperiods, allowing in total 32 weeks, or eight months—avery generous definition of consultation for those ofus who are used to systems of government consultation.It allowed six weeks’ consultation on the total numberof councils required; 12 weeks of inviting submissionson electoral division patterns, which would of coursehave been the point at which the county council couldhave come forward with a proposal that would havedealt with the single anomalies; and then a further 14weeks on draft recommendations for new electoralboundaries. By most normal definitions, that is ampleopportunity for people to have their say. My advice—again, it may be challenged—is that the county councildid not contribute. Its representations were directedonly to challenging or delaying the review.

The council has also challenged the adequacy ofthe electoral projections used in the review, yet thesewere the projections that it supplied. It complainedthat because electoral registration is a district councilresponsibility, it could not be expected to do better.The commission responded that in no previous casehas a county council insisted, like Cumbria, that itcannot or will not supply the requested information.That said, I am advised that the commission recognisedthat questions might be raised on the council’s figures,and took steps to mitigate any ill effects. It judged thecouncil’s overall growth projections reasonable, andnot indicative of unusual volatility in the number ordistribution of electors over the coming years. It adjustedfor known developments. Above all, in drawing electoraldivisions, it secured high levels of electoral equality oncurrent registration figures. That is important. If therewere subsequent variations, the fact that there was thishigh level of accuracy at this stage would mean that itwould be very unlikely that, over time, the imbalancewould become too great.

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The council says that the final recommendationswill be defective because it had no worked projectionsfor 2017. The commission has the council’s ownprojections for six years to 2016, which would normallyhave covered the five years from the completion set inthe Act. The only reason for the delay in completingthe review was the extension of the consultation as aresult of the county council’s own resistance—meaningthat, in this case, the commission had no specificprojections for the final year. However, the Act saysthat the commission,“must have regard to any”

likely changes, and the commission has explained howit has done so.

Projections are necessarily inexact and the commissionresists the council’s attempt to import into the Act thespecific requirement to project figures for each year.My understanding is that if the council had persistedand wished to challenge it, it could have made a legalchallenge. Indeed that would be the only normal remainingmechanism left to it. It chose not to, maybe because itcould not afford to do so or maybe it received advicethat the case was not as strong as it should be.

My noble friend Lord Campbell-Savours listed aseries of questions, most of which, in terms of thespecific costs, I am not in a position to answer. In hispowerful contribution about the nature of democracy,my noble friend Lord Judd made some very validpoints. Democracy is based on local representativeselected by local communities where there is an affinitybetween those communities and those who representthem. However, to achieve that affinity and electoralfairness requires a dialogue at local level and it is clearfrom the discussion that we have had in your Lordships’House this afternoon that in this instance that dialoguewas not as successful as it normally is in other cases.

I hope that on the basis of what has been said withregard to the commission’s rationale and the extensionsto the consultation it provided, my noble friend LordLiddle will feel able to withdraw the Motion in hisname. I also hope that the commission will read verycarefully the comments that have been made andreflect on their implications both for the way it conducteditself in this case but also in the way it conducts itselfin future boundary reviews.

Baroness Garden of Frognal: I thank the nobleLord, Lord Harris, for his contribution, and clarifyand confirm that these are matters for the LocalGovernment Boundary Commission for England. It isnormal procedure in such cases that the Governmentdo not take a position.

Lord Liddle: My Lords, I thank my noble friendLord Harris of Haringey for his robust reply to ourMotion of Regret. He has done the Local GovernmentBoundary Commission for England proud; I am onlysorry that there does not appear to be anybody fromthe commission here to have listened to it. Before I sitdown, there are a couple of points that I wish tocorrect.

There is nothing political about this. There wasunanimity between the Conservative and Labour memberson Cumbria County Council that they did not want

this boundary review to proceed. They were not tryingto stop it for reasons of party advantage but becausethey thought it was a completely unnecessary exerciseat a time of great austerity when vital services arebeing cut. They did not want to have to waste theirtime on it. Frankly, the boundary commission couldhave dealt with the problem of the overexpansion ofthe electorate in one ward by simply making somemarginal adjustments, such as putting the 1,500 votersinto adjacent wards, without having to go through thewhole process of a full-scale boundary review, whichno one in the county really wants and which, on theeve of an election, has had disruptive effects in termsof local representation and community identity.

I thank my noble friend Lord Harris very much formaking the case for the boundary commission; I onlyhope that the boundary commission listens to thisdebate and will in future take note of what has beensaid about how it should proceed. I hope it will acceptthat responsibility. On that basis I am prepared towithdraw my Motion of Regret.

Motion withdrawn.

Civil Legal Aid (Merits Criteria)Regulations 2012Motion to Approve

4.44 pmMoved By Lord McNally

That the draft Regulations laid before the Houseon 29 October be approved.

Relevant documents: 10th Report from the JointCommittee on Statutory Instruments

The Minister of State, Ministry of Justice (LordMcNally): My Lords, in moving the draft Civil LegalAid (Merits Criteria) Regulations 2012, I shall speakalso to the draft Legal Aid, Sentencing and Punishmentof Offenders Act 2012 (Amendment of Schedule 1)Order 2012. The Civil Legal Aid (Merits Criteria)Regulations 2012 set out the merits criteria both forapplications within the scope of the civil legal aidscheme, which are described in Part 1 of Schedule 1 tothe Legal Aid, Sentencing and Punishment of OffendersAct 2012, and for exceptional funding cases that falloutside that schedule.

The merits criteria are those that the director oflegal aid casework must apply in deciding whether anindividual qualifies for civil legal services. When thedirector delegates his functions under the regulationsto providers or his employees, they will also be requiredto apply these criteria. The criteria include both generalmerits criteria and specific merits criteria. Specificmerits criteria are applied for particular types of casewhere the general criteria are considered to be toostrict or where bespoke criteria are appropriate forparticular types of case.

Noble Lords may be aware of the funding codecreated under Section 8 of the Access to Justice Act 1999.These regulations replace that funding code. The fundingcode criteria are based on a list of factors set out inSection 8 of the Access to Justice Act 1999. Theseinclude the importance of the case to the client, theprospects of success and the likely costs. The regulations

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[LORD MCNALLY]before us are based on a list of similar factors set outin Section 11(3) of the Legal Aid, Sentencing andPunishment of Offenders Act 2012.

The criteria must also reflect the principle that, inmany disputes, mediation and other forms of disputeresolution are more appropriate than legal proceedings.I hope that this is a principle we all share. Our approachin making these regulations has been broadly to retainthe existing merits criteria. In our consultation onlegal aid reform we consulted on one significant changeto the current funding code criteria; namely, that legalaid will be refused for any individual case which issuitable for a conditional fee agreement or CFA. Thatis reflected in Regulation 39(b).

At present that funding code requirement is disappliedfor judicial review cases, claims against public authoritiesand claims for clinical negligence. We have removedthese exceptions. We believe that our limited resourcesshould not be focused on cases where alternative optionsfor funding exist. The Legal Services Commission, orthe Legal Aid Agency as it soon will become, hassignificant experience in determining whether a CFAis likely to be a real alternative. If funding is refused onthis basis, an applicant can ask for a review of thatdecision. If they still are not satisfied, they can seek anindependent appeal.

The noble Lord, Lord Pannick, has tabled a regretMotion regarding Regulation 53(b). This states thatthe regulation will substantially reduce the availabilityof legal aid in public law cases because the word“reasonable” has been omitted in relation to othermeans of challenging the relevant decision. I am assumingthat this is in comparison to Regulation 39(d), whichraised concern in the House of Commons.

Let me first explain what this regulation provides.Regulation 39(d) concerns alternative dispute resolution,such as complaints systems which might allow theclient to resolve the dispute without issuing proceedings.The director has a wide discretion to decide whethersuch alternatives are reasonable in the circumstances.This criterion applies to public law, as well as otherclaims.

By contrast, Regulation 53(b) is about alternativeroutes to address the problem predominantly throughproceedings. No concept of reasonableness is neededhere because if there is an alternative route to resolvingthe problem in proceedings, that should be taken. Thisis because judicial review should be a tool of lastresort. We recognise that the equivalent provision inthe current funding code may on its face appear wider.However, in accordance with its published guidance,the Legal Services Commission has in practice appliedthis provision so that if there is an alternative appealor procedure that addresses the problem, legal aid willnot be granted for judicial review. Regulation 53(b)therefore reflects current working practice.

The Government made clear in Committee in theHouse of Commons that if pursuing an administrativeappeal or other procedure meant that the individualcould not obtain the remedy they needed, the directorof legal aid casework would have the flexibility tofund. This is because the regulation specifically refersto alternative routes that “are available”. The director

would need to interpret this in a realistic way. Wherethe director of legal aid casework found that alternativeproceedings could not provide the remedy that theclient needs, funding for a judicial review would not berefused under this criterion. I stress that this pointwould be put beyond doubt in published guidance.

However, the noble Lord, Lord Pannick, and othershave expressed concerns about this matter, and othershave expressed very strong anxieties about how wehave framed this provision. I am not convinced thatsuch anxieties are justified, but I will listen to whatnoble Lords have to say and see if, in my reply, I canmove further to meet those anxieties and concerns.

I turn now to the Legal Aid, Sentencing andPunishment of Offenders Act 2012 (Amendment ofSchedule 1) Order 2012. The noble Lord, Lord Bach,will speak to his Motion shortly, but I would like toexplain first what the order does. This order makeslegal aid available in relation to a review by the First-tierTribunal where it has identified an error of law in itsown decision on a welfare benefit appeal. It alsobrings into scope certain applications as required bythe 2007 Hague Convention on the InternationalRecovery of Child Support and Other Forms of FamilyMaintenance. Finally, it addresses a technical issue inrelation to legal aid for judicial review.

The first aspect of the order makes available adviceand assistance in relation to a review by the First-tierTribunal where it has identified an error of law in itsown decision on a welfare benefit appeal. This followsa commitment made by the Government duringCommons consideration of Lords amendments of thethen LASPO Bill to explore whether there was a wayfor independent verification to be used to identify anyFirst-tier Tribunal welfare appeals which involved apoint of law.

Of course, appeals to the First-tier Tribunal onwelfare benefits matters are appeals against anadministrative decision of a public authority. This isquite different from an appeal to the Upper Tribunal,where one must identify an error of law arising fromthe decision made by the First-tier Tribunal in order tobring the appeal. To appeal to the First-tier Tribunal,the appellant need only set out their reasons for disagreeingwith the public authority’s decision in plain language.I understand that many appellants will wish to questionwhether the public authority has applied the law correctly.But this is precisely the job of the tribunal: to decidewhat the correct facts are and how the law should becorrectly applied to them.

The Motion of the noble Lord, Lord Bach, againstthis order suggests that the Government have notfulfilled the undertaking given during the passage ofthe then LASPO Bill in this area. The then LordChancellor said at that time that he would “explorethe options” available for a system of independentverification. I repeated the same assurances to thisHouse, stating that we were,“committed to doing further work to see how we might providefunding for those appearing before the First-tier Tribunal whosecase also turns on a point of law”.—[Official Report, 23/4/ 2012;col. 1557.]

That is exactly what we have done. We have given veryserious consideration to the various options forindependent verification. We have come to the conclusion

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that imposing an additional task of verifying whethera case involved a point of law on either the judiciary ofthe First-tier Tribunal, the successor to the LegalServices Commission or the Department for Workand Pensions would be unworkable. This is because itwould have resulted in significant extra administrativeand cost burdens. We do not consider it right toimpose these burdens in the current economic climate.

It is also important to remember that legal aid willnot be limited to welfare benefit cases in this area only.We have retained legal advice and assistance for appealsunder the Equality Act 2010. We have retained legaladvice and assistance for reviews before the First-tierTribunal, as I indicated. We have retained legal adviceand assistance for applications for permission to appealto the Upper Tribunal. We have retained legal adviceand assistance for substantive appeals in the UpperTribunal. We have retained legal advice, assistance andrepresentation for onward appeals to the Court ofAppeal. We have retained legal advice, assistance andrepresentation for onward appeals to the SupremeCourt. We have retained legal advice, assistance andrepresentation for welfare benefit judicial reviews. It isimportant to stress that at no point in progressing ourlegal aid reforms did we say that it was our intentionfor all welfare benefit First-tier Tribunal appeals toreceive legal aid. The Government’s position throughouthas been that in these economic times we need totarget legal aid at cases of the highest priority, where itis needed most. That was what the LASPO Bill wasabout. This is what we have done.

I turn briefly to the second aspect of the order,which brings into scope certain applications to meetour international obligations under the Hague Convention2007. The convention sets out certain requirements forthe provision of legal aid in relation to the recognition,enforcement or establishment of a decision in relationto maintenance, and there are reciprocal arrangementsfor signatory countries. We expect it to come into forcein April next year. The convention is broadly equivalentto the EU maintenance regulations for which servicesare already made available under Schedule 1 to theLASPO Act. Most countries that have signed up tothe convention will already be covered by the EUmaintenance regulations—with a few exceptions, suchas Norway.

The third part of the order addresses a technicalissue in relation to legal aid for judicial review. In ourconsultation response on legal aid reforms, we confirmedthat legal aid would be available for judicial reviewsubject to a few specific exclusions. That remains ourposition. It is reflected in paragraph 19 of Part 1 ofSchedule 1 to the LASPO Act, which puts withinscope legal aid for judicial review in almost any areabar the exclusions debated and agreed by Parliament.However, an arguable effect of how the LASPO Act isdrafted is that judicial review may be in scope for anyarea of law listed in Schedule 1, despite the exclusionsin paragraph 19. This order simply makes a technicalamendment to ensure that judicial review is governedexclusively through paragraph 19, and that the specificexclusions have the intended effect. I hope that thisexplanation has been helpful and I commend theorders to the House. I beg to move.

Amendment to the Motion

Moved by Lord Pannick

As an amendment to the above Motion, at end toinsert “but that this House regrets that Regulation 53(b)will substantially reduce the availability of legal aidin public law cases because the word ‘reasonable’has been omitted in relation to other means ofchallenging the relevant decision”.

Lord Pannick: My Lords, I tabled a Motion ofRegret because the Civil Legal Aid (Merits Criteria)Regulations will very substantially restrict the availabilityof legal aid in public law cases, particularly judicialreview. In his very helpful speech, the Minister indicatedthat he would listen very carefully to this debate andthat he might be able to move further in his reply.Therefore, I will explain the problem in the hope thathe will be moved if not by me then by the manynoble—and noble and learned—Lords who are limberingup to express their concerns on this issue.

The problem is caused by Regulation 53(b), whichstates that legal aid for a public law claim will beavailable only if the director of legal aid casework issatisfied that the individual has exhausted all administrativeappeals and other alternative procedures which areavailable to challenge the decision before bringing apublic law claim. Therefore, the director will have nodiscretion. Alternative procedures must be exhaustedbefore legal aid is available to bring the legal challenge.The problem is that in many of these cases—whetherthey are judicial reviews, housing appeals or habeascorpus claims about people in detention—it is simplynot reasonable to expect the litigant to exhaustother procedures and appeal mechanisms beforegoing to court. The other procedures may take monthsand sometimes years to arrive at a conclusion. Theymay involve no power to grant an interim remedy toprotect the position of the claimant—for example, ifthe claimant is challenging the removal of housingprovision in the services provided or the removal ofservices which have been given to him or her to addressa mental health problem. The courts themselves recognisethe force of this point. If you want to bring a judicialreview in the High Court, you must exhaust otherremedies except if the court is satisfied that the alternativeprocedures are less effective or less convenient.

5 pmThe vice of Regulation 53(b) is that it will prevent

the director granting legal aid if an alternative procedureis available, even if the director is satisfied that thealternative procedure is less effective than judicialreview. Indeed, the bizarre effect of Regulation 53(b)will be that legal aid will be least available in the caseswhere it is most needed because the potential litigantfaces an urgent problem which requires an urgentcourt order and he or she cannot wait for the otherprocedure to be exhausted.

The previous rules set out in the Legal ServicesCommission funding code, to which the Ministerreferred, address the issue perfectly sensibly. They saythat legal aid,“may be refused if there are administrative appeals or other procedureswhich should be pursued before proceedings are considered”.

467 468[3 DECEMBER 2012]Civil Legal Aid Regulations 2012 Civil Legal Aid Regulations 2012

[LORD PANNICK]So far as I am aware, that wording has caused nodifficulties because it confers a proper discretion thatallows the funding body to require the use of alternativeprocedures only if they are equally effective or appropriatein the circumstances of the case. The Minister mentionedthat there had been consultation on another aspect ofthe change in regulations, but as far as I am awarethere has been no consultation on the change indicatedin Regulation 53(b).

Nor can it be said that this problem can be remediedby implying into Regulation 53(b) the word “reasonable”.The reason that is very difficult is that other provisionsof the regulations not dealing specifically with publiclaw claims state that alternative remedies must first beexhausted but only where they are reasonable alternatives.That is what Regulation 39(d) says on the standardcriteria for obtaining legal aid. I repeat that the difficultywith Regulation 53(b) is that it omits the word“reasonable”, therefore suggesting that there is anobligation to exhaust all other procedures, howeverunreasonable it may be to require the person to usethose other procedures, before legal aid is granted.

The Minister suggested that Regulation 53 wasconcerned “predominantly” with alternative courtproceedings. The problem with that approach is thatRegulation 53(b) speaks of first exhausting,“all administrative appeals and other alternative procedures”—

all, not some. Indeed, “administrative” suggests aprocess other than a judicial determination. The Ministerin any event said that Regulation 53(b) is concerned“predominantly”with cases where there is an alternativecourt procedure, so he recognised that the regulationwould also cover other cases. Even if the Minister isright that Regulation 53(b) is concerned predominantlywith alternative court proceedings—and it is not—sometimes a judicial review is more appropriate thanan appeal to a tribunal because, for example, thetribunal may lack the power to make an interim orderwhich the claimant urgently needs.

The other point made by the Minister today was tosuggest that, under Regulation 53(b), the claimant hasto exhaust other procedures only if they are “available”,which he said provides the necessary “flexibility”.However, with great respect, that is no answer. Theproblem is not that the administrative and otherprocedures are not available; it is simply that they areless speedy or less effective than going to court for animmediate legal remedy. The Minister’s final point wasthat guidance will be issued on this matter, which willof course be very welcome. The problem is that guidancesimply cannot cure the enactment of a duty imposedon the director to refuse legal aid.

The Minister will know that a large number ofexpert organisations, including the Constitutional andAdministrative Law Bar Association, Mind and theLegal Aid Practitioners Group, have drawn attentionto the defect in the drafting of Regulation 53(b). Thisrestriction on legal aid in public law cases, aboutwhich so many people are concerned, is not, as Iunderstand it, designed to advance any deliberatepolicy of the Government. We are not concerned herewith any policy dispute. I say that having had a veryhelpful meeting with the Minister last week in which

he and his officials listened very carefully to the concernsthat I, together with other noble Lords, expressed. Itwould be very surprising if there were any policydispute here, because the regulations are designed toimplement the Legal Aid, Sentencing and Punishmentof Offenders Act 2012. The then Lord Chancellor,Mr Kenneth Clarke, gave an assurance in the otherplace during consideration of amendments to thatlegislation made by this House. I remind your Lordshipsof what the assurance was. Mr Clarke said that,“we are continuing legal aid in all cases involving judicial review,so legal aid is available to someone who is trying to have a welfaredecision judicially reviewed. That applies to every kind of judicialreview, because we do not think that the Government or a publicbody should be resisting a claim about abuse of their powers froma litigant who cannot get legal advice. This is not an easyconcession to make, because quite a lot of people who seekjudicial review are not instantly popular with all sections ofsociety, but we still give them legal aid”.—[Official Report, Commons,17/4/12; col. 277.]

I say to the Minister that the unhappy effect ofRegulation 53(b) will be that legal aid will becomeunavailable in practice for judicial review and otherpublic law cases where there are other less effectiveand slower procedures available. I therefore very muchhope that in his reply the Minister will be able to move,and that he will be able to assure the House thatamending regulations will be brought forward to curewhat is undoubtedly a serious defect in Regulation 53(b).

Before I beg to move, I will say something about thefatal Motion of the noble Lord, Lord Bach, because,as I understand it, it is being debated together with myregret Motion. The Motion tabled by the noble Lord,Lord Bach, concerns another set of legal aid regulations.The issue here is distinct; it is access to legal aid forlegal advice at First-tier Tribunal level. As the nobleLord will explain, this was a very controversial matterduring the passage of the legislation earlier this year.Although most cases in the First-tier Tribunal concernthe factual application of the law, some of them raiseimportant points of law. They are very often highlycomplex points of law which the claimant cannot beexpected to address without legal advice. Mr Clarkegave an undertaking, to which the noble Lord, LordBach, will refer.

I am very disappointed by the provision now madein those regulations. As I understand it—and it is acomplex matter—legal aid will be provided at first-tierlevel only where the tribunal has already decided thecase and recognises that it has made an error of law orseeks representations on whether it has made an errorof law. If I may say so, that is a very odd way ofaddressing the issue because it opens the legal aid dooronly after the tribunal recognises that the legal horsehas bolted, or may have bolted. I cannot understandwhy those regulations do not adopt the much moresensible and practical course of conferring a power—adiscretion—on the chairman of the First-tier Tribunalto certify, on looking at the appeal, that it raises apoint of law on which it would be appropriate for theclaimant to receive legal aid for advice purposes.

I shall, of course, listen very carefully to the Minister’sanswers to the Motion in the name of the noble Lord,Lord Bach, and I very much hope that the Ministerwill be able to move on my regret Motion. I beg tomove.


Lord Bach: My Lords, I rise to support the nobleLord, Lord Pannick, in the amendment that he hasjust moved, and also to speak to my Motion which Iwill move at the appropriate place. Before I speak tomy amendment, perhaps I may say that I supportunreservedly the amendment in the name of the nobleLord, Lord Pannick, to the Civil Legal Aid (MeritsCriteria) Regulations. All noble Lords who have hadthe benefit of listening to his speech will have seen thelogic and force of what he had to say. I suspect thatthere is no serious argument but that he is correct. Ilook forward, if it is necessary, to supporting him inthe Lobby later on.

What I am doing with my Motion is to ask theMinister to withdraw the order that I have prayedagainst—namely the Legal Aid, Sentencing andPunishment of Offenders Act 2012 (Amendment ofSchedule 1) Order 2012—so that it can be reconsideredas a fresh order when it is laid again. I am not seekingto go behind the Act of Parliament. I still believe thatmany parts of it are entirely wrong and an enormousmistake, but whether I like it or not, Parliament haspassed it. It will come into force on 1 April 2013 andwe will have to see what the consequences are, but thatis not the point today.

5.15 pmThere are two main grounds for my request for the

order to be withdrawn and they are linked together. Ifthe order is not withdrawn, I will ask the House todecline to support it. That is why my amendment canbe described as fatal, although in my view it is rathertoo emotive a term and is a somewhat misleadingdescription because the Government can always comeback with something that is acceptable to the House.So-called fatal amendments may be rare, but they arenot that rare in this House. We have had 27 since 2000instigated by Peers of all parties and of none. Indeed,I am in good company today in moving a fatal Motionbecause no one less than the Minister himself movedone—some time ago, let it be said—and pressed it to avote. I also feel more content about moving a fatalMotion as I happen to have discovered that the Leaderof the House, who is not in his place at present, hasalso been known to support such Motions in the past.

My first ground, and one that I hope will appeal toall parliamentarians, is that Her Majesty’s Governmentundertook on 17 April this year in the House ofCommons to bring forward secondary legislation toallow eligible appellants to a First-tier Tribunal legalaid if their appeal is based on a point of law, butthat in the event the Government have failed tohonour this undertaking and are offering instead, asthe noble Lord, Lord Pannick, has just said, a muchnarrower and, in the words of Citizens Advice, a“completely inadequate” alternative. Again, in thewords of the Citizens Advice briefing: “It would appearthe Government is not making any commitment at allto provide legal aid for people to prepare appeals tothe first-tier tribunal, even when that appeal is on apoint of law”.

Let me take your Lordships back to the other placewhich, on 17 April, was involved in ping-pong, as it isdescribed these days, with this House. Three weeksearlier, the noble Baroness, Lady Doocey, had successfully

moved an amendment that would have allowed legalaid for legal advice for welfare benefit preliminaryreviews and hearings; in other words, the position thathas prevailed for many years in this country and issupported by a wide consensus from all political parties.She won her amendment by 39 votes. Her Majesty’sGovernment wanted to overturn the Doocey amendment,but faced a similar amendment from the honourableTom Brake MP. It was a critical moment for thishighly controversial legislation. The Brake amendment,if pressed, could well have passed the House of Commonsand the Government would have lost a central plankof their Bill.

The Government needed to make a meaningfulconcession on First-tier Tribunals to avoid defeat. Thethen Lord Chancellor accepted the argument that ifSecond-tier Tribunal, Court of Appeal and SupremeCourt appeals, all of which can be made only onpoints of law, can attract legal aid, then it is logicalthat welfare benefit cases should attract legal aid at theFirst-tier Tribunal as well, so that any point-of-lawcase in the First-tier Tribunal is legally aided. In such acase it would be absurd not to allow the appellant at aFirst-tier Tribunal at least some legal help or advice toprepare for their point of law appeal. The then LordChancellor stated:“just as we have accepted the argument about legal issues in theupper tribunal, we could of course do so if the same thing arisesin the lower”—[Official Report, Commons, 17/4/12; col. 226.]—

meaning the lower tribunal.Anyone present at that debate in the House of

Commons that day—and I was sitting in the Peers’Gallery myself—was in no doubt that there was anundertaking to find a way to give appellants in pointsof law cases legal aid. The intention to do this wasunderstood by everyone on all sides present in theChamber. Certainly Tom Brake thought so. In agreeingto withdraw his amendment, he said:

“I also welcome the Justice Secretary’s clarification that it isthe Government’s clear intention that, whether the points of laware for the upper or lower tribunals, these cases should be fundedby legal aid”.—[Official Report, Commons, 17/4/12; col. 243.]

There was a “clear intention”. What happened nextwas that the Lords amendment of the noble Baroness,Lady Doocey, was overturned, and on 1 May the Billbecame law. Many of us thought at the time that theconcession did not go far enough, but whether it didor did not, none of us imagined what would follow.

On 18 September, the Parliamentary Under-Secretaryof State at the Ministry of Justice, Mr Jeremy Wright,made a Written Ministerial Statement to another placein which he set out the Government’s solution to theconcession. This is what is in Article 3 of the orderbefore us this afternoon. The solution, I argue, israther shocking. Instead of allowing legal aid in pointsof law cases at First-tier Tribunal, the Governmentwill not allow any such thing. Instead, only in theextremely rare cases where, following the First-tierTribunal decision the tribunal itself says it has madean error of law and sets up a review to decide what todo about it, will legal aid be even possible. In order toget to this stage, an appellant who has lost at First-tierTribunal would have to draft his or her notice ofappeal. This is an appellant who has received no legalhelp. Remember: this is about points of law, not about


[LORD BACH]facts. So an appellant has received no legal help, nolegal advice prior to or during the First-tier Tribunalor worked with a notice of appeal after the First-tierTribunal. If the solution applies to anyone, it will be tovery few people for a year.

Why have the Government given up and come upwith something so different and so much less thanthey undertook? My guess is that the official asked tocome up with a solution was told that it should notcost anything, even though the cost of the concessionwould have been minimal—perhaps about £5 millionat £160 a case. I will remind the House that this isapproximately one-twentieth of what the policecommissioner elections have cost this country. Whateverthe reason, my amendment is based on the belief thatno Government—whatever their colour—should beallowed to get away with this. An undertaking toParliament, even one made in extremis, must be kept.If it is not, then Parliament should insist. This is not aparty point. Yes, I am proud to sit on these Benches,but it would not matter which Government of whatevercolour were involved. Parliament should just not betreated like this. It is not common sense.

Briefly, my second reason for this amendment isbound up with the first. A very large number ofappellants at First-tier Tribunal are disabled peopleappealing against decisions by the Department forWork and Pensions, whether in relation to employmentand support allowance, disability living allowance orindustrial injuries. Others appealing are often workingmen and working women who have been the object ofother wrong decisions about benefits which they areentitled to. All these appeals are vital to the citizenswho bring them. That is why early, inexpensive legaladvice has been so important. It means that hopelesscases do not clog up the tribunals and that appellantscan put their case better.

I have to accept that in the vast majority of caseslegal aid will no longer be available after 1 April.However, many of the minority of cases that involvepoints of law are brought by disabled appellants and ithas got to be common sense, and just, that they shouldreceive some—some—legal advice. How can they beexpected to know or understand the legal points thatarise in their case? The Government agreed with thatproposition in April; for some reason they do not now.Surely they should think again, and that is what I amasking them to do. In due course I will seek to movemy amendment.

Lord Mackay of Clashfern: My Lords, I will speakin relation to both these matters; not in order ofimportance but in the order in which they were taken,so I will speak first to the amendment of the nobleLord, Lord Pannick.

As I understand it, what the noble Lord, LordPannick, finds difficult is Regulation 53(b), whichrequires that the director whose job it is to decide suchmatters has to be satisfied that,“the individual has exhausted all administrative appeals andother alternative procedures”,which are available to challenge the act, omission orother matter,“before bringing a public law claim”.

That is not just judicial review; it is quite a wide areaof law, including habeas corpus jurisdiction, as thenoble Lord, Lord Pannick, mentioned. However, thisis not the whole of this matter. It is interesting that it isRegulation 53, because I think that the original rule ofthe Supreme Court that brought in judicial review wasOrder 53. It is a strange coincidence, but not particularlyimportant. What is important is that, apart from whatI have just read, the beginning of Regulation 53 requiresthat,“the Director must be satisfied that the criteria in regulation 39(standard criteria for determinations for legal representation) aremet”.So Regulation 39 has to be met before you come tothis regulation at all.

The noble Lord, Lord Pannick, briefly referredto Regulation 39. It includes this provision at sub-paragraph (d), requiring that,“the individual has exhausted all reasonable alternatives to bringingproceedings including any complaints system, ombudsman schemeor other form of alternative dispute resolution”.I understood my noble friend Lord McNally to suggestthat that only applied to a limited number of alternativeprocedures—but it says “all reasonable alternatives”. Icannot see how it is possible to have Regulation 39,with that provision in it, and Regulation 53(b), whichrequires that that regulation is accepted, and alsoadds this. The two seem to be contradictory. It is notjust the point that the word “reasonable” is used inRegulation 39; it is incorporated into Regulation 53 atthe beginning. It simply does not make sense. That isthe short and long of it.

5.30 pmThis matter was looked at by the Secondary Legislation

Scrutiny Committee in its 14th report. On page 15,paragraph 44, it says:

“The Committee noted some variations in the terminologyused in the Regulations and expects the guidance to make absolutelyclear why these distinctions are made. For example, regulation 39(d)”—the one I have just read—“includes a test of reasonableness requiring the individual to have‘exhausted all reasonable alternatives to bringing proceedings’whereas regulation 53(b) does not include a similar test andrequires the individual to have ‘exhausted all administrative appeals’,which would appear to be a higher threshold”.Regulation 53(b) does not include a similar test, butRegulation 53 as a whole does because Regulation 39is incorporated at the beginning of Regulation 53.Therefore the matter is quite clearly set out as acomplete contradiction within Regulation 53 itself.

In my submission, Regulation 39(d) includes allalternatives, as it says, and the same is true ofRegulation 53(b). The obvious solution is to deleteRegulation 53(b) altogether and leave Regulation 53(a)as the only additional requirement. I hope that mynoble friend will feel able to do that because I cannotaccept the view of the Secondary Legislation ScrutinyCommittee that guidance can solve this matter, becauseRegulation 53(b) is not alone as part of Regulation 53because Regulation 39(b) is in it as well. The guidancecannot resolve a dispute—or at least a difference—onthe terms of the statutory regulations. That is not thefunction of guidance. The guidance is supposed toexplain what the regulations mean. However, it is hard


to explain two different contradictory tests in the samearea. That is beyond the scope of any guidance thatcould be offered.

The amendment in the name of the noble Lord,Lord Pannick, is well taken. Obviously, my noblefriend does not need to withdraw these regulationsbecause they deal with quite a lot of other things, buta simple amending regulation would solve this problem.I rather got the impression from my noble friend thatthe intention was that reasonable alternatives wouldbe taken into account in Regulation 53(b), although itwas not expressed. The difficulty is that when thecontrary is expressed earlier on in the same regulationthe difficulty is extreme. If a Minister has given anundertaking to Parliament, a regret Motion seems theright way to bring that to the attention of the Housewhen the regulations are in question.

I turn to the amendment in the name of the nobleLord, Lord Bach. If I have understood the situation,and I am very capable of being corrected—very susceptibleto being corrected is perhaps what I should say—onthis matter, the regulation to which the noble Lord,Lord Bach, refers is complicated. It allows a person legalaid under the regulation if he is invited to make arepresentation on requesting a review. My impressionis that any appellant will be entitled to ask for a review.If the appellant asks for a review and he is invited tomake representations, he will have legal aid to do that.However, if he is not asked to make representationsand the tribunal goes on to make a decision on the reviewwithout his representations, the second branch comes inand he is entitled to legal aid. If I have understood theset-up correctly, where there is a challenge to a decisionof the First-tier Tribunal, that is done by representationsto that tribunal, and in that situation the regulationspermit legal aid—as far as I understand them.

Lord Bach: With the greatest of diffidence, I rise totry to explain the situation as I see it. The respect Ihave for the noble and learned Lord is well known. Myunderstanding is that what the Government proposecomes at the end of the First-tier Tribunal hearing.Therefore, leading up to the First-tier Tribunal, whetheror not on a point of law, there would be no advice atall to the appellant. During the tribunal hearing therewould be no advice to the appellant. Only if theappellant after the event decides to ask for facts andreasons and, after that, puts in a notice of appeal, willthere be the slightest chance that he might get legal aidat that stage.

Lord Mackay of Clashfern: With great respect, thenoble Lord’s own explanation shows that what happensis that the First-tier Tribunal makes a decision andthat is one in a very large number of decisions. Ifsomebody wants to make a representation against thatdecision, asking for a review, the tribunal can inviterepresentations at that stage; if it does, the applicant,as long as he was the original appellant, can get legalaid. If, on the other hand, the tribunal decides, “We donot want representations, we know that we are right”,it goes ahead with the review and comes back to thesame decision; because an application has not beenopened with right of representations at that stage, thesecond branch of the regulation gives legal aid. That ishow I understood it but I may be wrong.

Lord Bach: I am sorry to come back, but it is only ifthe tribunal finds an error of law. An error of law hasto be found by it first; then a review takes place. It isonly in those circumstances, which are very rare indeed,that legal aid could be available at post First-tier Tribunallevel. The other thing they might do is appeal to theSecond-tier Tribunal, when other considerations wouldarise. However, it does not and cannot happen in everycase. As I understand it, an error of law has tobe found by the First-tier Tribunal after it has made itsdecision.

Baroness Doocey: My Lords, I support the amendmentproposed by the noble Lord, Lord Bach, because I believethat the Government’s present proposals will becatastrophic for many thousands of people. Duringthe passage of the Bill, provision for legal aid fundingand advice for assistance in welfare benefit appeals madeto the Upper Tribunal on a point of law was includedin the legislation. The Government also conceded thatthe same point of principle should apply tothe consideration of points of law by the First-tierTribunal. The Lord Chancellor said, in reference toFirst-tier Tribunals:

“We are quite open to the argument for ensuring that we havelegal representation when there is a legal issue that we cannotexpect a lay person ordinarily to argue”.—[Official Report, Commons,17/4/12; col. 226.]However, the Government have honoured neither thespirit nor the letter of that commitment. The conditionsthey have laid down for legal aid to be availablerequire so many planets to be in conjunction that, inpractice, it is doubtful that the vast majority of claimantscould ever meet them.

My prime concern is the needs of disabled people,who will be disproportionately affected by the removalof welfare benefits from the scope of legal aid. By notconsidering whether a point of law is involved otherthan when a further appeal is being pursued, theGovernment are effectively denying legal help to asignificant proportion of disabled people whose appealcases could nonetheless be considered to raise a pointof law.

According to the Government’s own impact assessmentfigures, restricting legal aid to cases where the First-tierTribunal itself identified that it erred in law wouldkeep legal aid to just 696 welfare benefit cases in lowertribunals. That represents only a tiny proportion ofthe 135,000 welfare benefit cases each year. Of those135,000 cases, 78,000—nearly 60%—involve disabledpeople who currently rely on legal aid for welfarebenefit appeals.

What makes the situation worse is that the Governmentare in the middle of a major overhaul of the welfarebenefits system. Millions of claimants will be reassessedand moved on to different benefits. During the transitionperiod, disabled people will increasingly need expertlegal advice to challenge inaccurate decisions abouttheir benefits. The lack of legal aid to pursue anappeal in the first place will mean that disabled peopleare unlikely to reach the stage where they can get legalaid, as the vast majority of claimants are unlikely torecognise a point of law.

Legal aid for welfare benefit claimants costs anaverage of £150 a case. There can be significant


[BARONESS DOOCEY]consequences if disabled people do not receive thebenefits to which they are entitled, causing considerablefinancial strain and pushing many of them into poverty.Their long-term costs in terms of demands on thehealth and welfare system are likely to be an awful lothigher than £150 per head.

As I have argued on previous occasions, the removalof legal aid from welfare claimants is fundamentallyunjust. The paltry savings will prove to be a falseeconomy. The Government’s latest proposal has madea bad policy worse. I urge the Minister to reconsider.

Baroness Lister of Burtersett: My Lords, I am veryhappy to follow the noble Baroness, Lady Doocey,who has contributed so much to our discussion ofprevious legislation on this issue. I shall speak to theamendment to the Schedule 1 order, but I also stronglysupport what the noble Lord, Lord Pannick, said onthe other amendment.

My noble friend Lord Bach made a powerful case.He speculated on why the Government have renegedon their commitment. The only answer that we havereceived is that the Government say that it is notfeasible. I wonder why not. Today, the Minister hasargued that it is because of administrative costs, but inmy book, administrative costs and feasibility are notthe same thing.

Citizens Advice has proposed a number of optionsto make a reality of the Government’s commitmentsand made representations on them to the Government.Are those options among those which the Governmenthave reviewed—the Minister referred to a review inpassing? Were they considered not to be feasible? If so,why not? Was the suggestion made by the noble Lord,Lord Pannick, considered not to be feasible? If so,why not? Unfeasibility is a vague response. CitizensAdvice referred to the Government’s proposal as“irrational”. It criticises the fact that there has been noconsultation on it. Can the Minister explain why hasthere been no consultation?

I finish by referring to an e-mail that I received thismorning from a member of the public. She does notstand to be affected by the measures. She calls herselfan ordinary woman, “nothing special”, but she ismotivated by concern for her fellow citizens—in particularthose who are sick or disabled. She refers to the fearthat many such people now feel. She writes:

“I am pleading with you … to be fair and just when you‘discuss’”,the regulations. She finishes:

“I have never felt so strongly about anything before so forgiveme if I am departing from normal protocol. All I know andbelieve is that this is wrong and it needs to be stopped”.How right she is.

5.45 pmLord Woolf: My Lords, I been trying to limber

up, and I hope that I am now able to follow whathas been said by my noble friend Lord Pannick andmy noble and learned friend Lord Mackay ofClashfern. I agree with every word that they said withregard to the amendment to the Civil Legal Aid (MeritsCriteria) Regulations, which are the subject of theregret Motion.

In order to understand the context, it is necessaryto know that judicial review is, of course, subject toprinciples which have been judge-made. Judicial review,in the form that it is now, is a judicial invention ofwhich we are extremely proud. We are proud of itbecause the object of the exercise is to ensure, inparticular in relation to public law proceedings, thatthe appropriate procedure is adopted, having regardto the issues raised.

At one time, it was thought—again, by decisionof the House of Lords in the well known case ofO’Reilly v Mackman, that it was always necessary touse judicial review in public law proceedings. It wasthen found in practice that that led to satellite litigationover whether the right procedure had been used or thewrong procedure. The courts sought to produce watertightcompartments. Fortunately, that was only a temporarystage in the development of judicial review. The nextstep was to adopt a much more sensible and realisticapproach, which involved proceedings being dealt within the most sensible and reasonable way. Although thephrase that judicial review should be used only wherethere was no alternative remedy was retained as asimple method to identify one of the principles, thelaw had developed beyond that. It was made clear byauthority after authority that that was subject to therequirement that it should always be reasonable toadopt the procedure which was proposed: judicialreview.

Regulation 53(b) contains the statement that is inaccord with the general principle of exhausting alternativeprocedures, but does not refer to the fact that that isnot a rigid limitation, but reflects the nature of theprocedure, which requires the court to adopt a reasonablecourse in considering the matter. As has been pointedout by both my noble and learned friend, Lord Mackay,and my noble friend Lord Pannick, that approach ofthe courts is almost impossible to adopt as a matter ofinterpretation because of the language of Regulation 39(d).An additional reason to those which have been givenfor accepting my noble friend Lord Pannick’s Motionand amending Regulation 53(b) is that if that is notdone, the procedures in the courts and the procedurefor granting legal aid will be out of sync; they will bein conflict. That cannot be a sensible position. Litigantswill be forced not to do the reasonable thing, which iswhat the Civil Procedure Rules require, because theywill not have legal aid if they do that, but to adopt anunreasonable course and bring proceedings by judicialreview and then get legal aid. That cannot be a sensiblecourse.

I hope the Minister, having heard the argumentbefore the House, will accept the invitation which hasbeen made to consider the matter again. I would bevery happy to adopt the amendment suggested by thenoble and learned Lord, Lord Mackay, but would,perhaps, suggest that if it is thought preferable toamend Regulation 53(b), what was intended, I believe—orwhat, at any rate, it should state—could be achievedby inserting into paragraph (b), “the individual exhaustedall administrative appeals and other alternative procedureswhich it would be reasonable for him to adopt tochallenge the act, omission or other matter beforebringing a public law claim”.


I should have said that my noble and learned friendLady Butler-Sloss intended to speak and asked me toindicate that she supports the arguments advanced bythe noble Lord, Lord Pannick, and those which I havejust advanced.

Lord Goldsmith: I want briefly to support bothamendments. So far as the amendment moved by thenoble Lord, Lord Pannick, is concerned, it is notnecessary to say very much after a former Lord Chancellorand a former Lord Chief Justice have both criticisedthe order as it stands because of the way it operates indifferent ways. I can summarise my view in relation toit very briefly. This order already recognises that theremay be “reasonable” and “not reasonable” alternativeprocedures. It does that in Regulation 39. However, ifone then reads Regulation 53(b), it is very clear thatthe word “all”must be read as meaning “all”. Therefore,if one expands the meaning, what is being said as itstands is that there will not be legal aid unless theindividual has exhausted all reasonable and unreasonablealternative procedures. As soon as one poses the questionthat way, it becomes absolutely plain that it must bewrong to impose that obligation. I do not think it isnecessary to say anything more than that to summarisewhy the noble Lord, Lord Pannick, and the noble andlearned Lords, Lord Mackay of Clashfern and LordWoolf, are absolutely right.

Let me turn to my reasons for supporting my noblefriend Lord Bach in his amendment. I recall very wellthe clear and powerful way in which the noble Baroness,Lady Doocey, moved the amendments which led tothis particular issue. They were strong and supportedby a majority of this House. I have read the debate—though I did not listen, as my noble friend Lord Bachdid, to the debate itself—which took place in the otherplace. It seems clear to me that what was being saidwas that a way would be found to enable legal aid to beprovided in the first tier where there were points oflaw. The concern expressed by the Government wasthat they did not want that to be a point of law justbecause it was so stated by the claimant or the claimant’slawyer. That is clear in column 266. However, theGovernment have not ended up with that at all. Theyhave ended up with something which appears—if myunderstanding of the way the procedure works isright, and it follows that of my noble friend LordBach—to mean that legal aid does not come into thepicture until after the event. That may be appropriatein certain other circumstances, but not here.

What one needs in these circumstances is the abilityto identify a point of law which will be relevant andnecessary for a particular applicant—particularly aclaimant of the sort to which the noble Baroness,Lady Doocey, referred—to be able to put that point oflaw before the tribunal. I fully endorse her point thatmost claimants do not recognise a point of law whenthey see it. I suppose that as a practising and paidlawyer, I am quite pleased, on the whole, that that isthe case, although I do not actually practise in thisarea. The point is this, however, and I ask the Ministerto answer this question: why could the way theGovernment limit this not be by the chairman ofthe tribunal identifying the point and certifying it atthe outset rather than waiting until after the event?

There is one point which connects these twoamendments, and it is what drives me to want topersuade the House to support them. In LASPO, wewere faced with changes which, for many of us, werevery difficult to accept. The Government put themforward on the basis of economic necessity. However,there was a strong belief that there were cases wherejustice required that there should still be some opportunityfor legal advice to be taken and used. In these particularcases—public law and cases involving claimants withdisabilities, for example—the Government are failingto give effect even to that limited, modest exceptionthat they were prepared to allow. I very much hopethat the Government will think again in the light ofthis debate.

Lord Phillips of Sudbury: In the light of what I amgoing on to say to my noble friend Lord McNally, Iwould first like to say that the whole House wellunderstands the exigency that led to the LASPO Bill.However, as my noble friend Lady Doocey forcefullypointed out, and it cannot be repeated enough, in therealm of social welfare law, there is a singular obligationon us as parliamentarians to will the means of accessingthose benefits. Unless we do that, everything thatParliament does is a charade or a sham; because it iscynical on our part not to give the people most in needin our blessed country—the poor, those lacking inself-confidence, those without a scintilla of understandingof the law and those who can scarcely read a Bill andunderstand it—the real opportunity to access the benefitswe are proud to bestow on them. It puts this realm ofpublic expenditure into a special bracket. There arevery few areas of expenditure, I suggest, that reallycome within that narrow purview.

It was interesting to hear the noble and learnedLord, Lord Goldsmith, talking about lawyers lookingforward to these rather nuggety issues in social welfare—itwas a joke of course—but the reality is that no lawyergoes into the realm of social welfare law to line his orher pockets. I can tell the House that only the mostsocially minded lawyers subject themselves to practisingin this field.

I hope my noble friend Lord McNally will acceptmy next point. In all the fields of law, there is nowheremore complex than the forest of social welfare legislation.It runs to hundreds and thousands of pages. It isutterly futile to pretend that the ordinary bloke canbegin to put together the grounds for going to thedirector to ask for support to launch an appeal if he orshe has got to understand the legal background andlegal prospects, because that is way beyond the capacityof all but a very small number.

My final point is this. When the noble and learnedLord, Lord Mackay of Clashfern, was five minutesinto his speech, I wondered whether he had, bymistake, picked up my notes. Every single word he saidabout the clash between Regulations 39(d) and 53(b)was absolutely the same as what I was going to say.The only thing I would add to it—and this is addressedto my noble friend Lord McNally—is that, as thenoble and learned Lord, Lord Mackay, made clear,Regulation 39(d) is expressly imported into Regulation 53,but the language in Regulation 39(d) and Regulation 53(b)is not consistent.


[LORD PHILLIPS OF SUDBURY]That raises further problems. If things proceed as

they are, for example, it is unclear what is meant bythe word “unavailable” in Regulation 53(b). It is alsonot apparent to me how to construe the words inRegulation 53(a),“appears to be susceptible to challenge”,

with the word in the following subsection (b),“procedures”, which are available to challenge. Therefinements in the language and, I believe, the confusionare such as to render this part of the regulations not fitfor purpose. I very much hope that my noble friendwill be able to give the House an assurance at the endof this debate that there will be amendments to theregulations hot on the heels of the passage of thesame.

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Lord Beecham: My noble friend is to be congratulatednot only on bringing this amendment to the House butalso on being elected Peer of the Year. At this rate hemay turn into the Hilary Mantel of your Lordships’House; she of course has won her second Man Bookerprize, and it may be that next year my noble friend isawarded with his accolade again. I will speak briefly tohis amendment before turning to that of the nobleLord, Lord Pannick.

The Opposition entirely support the case made bymy noble friend, particularly because, embedded inthe Government’s approach and reflected to somedegree in today’s debate, there is some confusion betweenpoints of law and errors of law for the purpose ofthese regulations. The Citizens Advice briefing helpfullymakes this distinction clear. It says:

“Furthermore in devising this whole policy Government appearsto be confusing ‘points of law’ with ‘errors of law’. Whilst themajority of first tier welfare benefit appeals turn on ‘points offact’ such as financial and other circumstances … many cases doraise significant legal issues over statutory interpretation (ie socialsecurity regulations), legal tests for disability”—

as referred to by the noble Baroness, Lady Doocey—“or disputed application of … precedents etc. The tribunal makingan error of law which may be subject to a right of appeal is amuch narrower concept”.

We have to bear that distinction in mind when weighingthe strength of the case made by my noble friend. Itwill be the very exceptional case, as the noble Baronesspointed out, that may qualify for that description ofan error in law, which of course has to be self-certifiedby the tribunal itself—a peculiar process, one mightthink. We are certainly not in the position that theMinister mentioned in the debate in the House ofCommons when he talked about 440,000 cases. Thatnumber is inconceivably large and, in my view, can bedismissed. Certainly, though, probably a good dealmore than 650 cases could potentially arise if thedefinition were to deal with points of law. I hope that,bearing in mind the assurances given on the earlieroccasion by the former Lord Chancellor, the Housewill support my noble friend’s amendment.

I also support the amendment moved by the nobleLord, Lord Pannick, and supported by the noble andlearned Lord, Lord Mackay, as I understand him.Indeed, there is a peculiar relationship betweenRegulation 53 and Regulation 39, but in my view it

goes somewhat beyond the matter identified by thenoble and learned Lord. In addition to the potentialclash with Regulation 39(d), it strikes me that problemsarise in relation to two earlier parts of that regulation,paragraphs (a) and (b). I remind noble Lords that allthese matters have to be borne in mind when dealingwith Regulation 53. Under Regulation 39(a) the directorhas to be,“satisfied that the following criteria are met … the individual doesnot have access to other potential sources of funding (other thana conditional fee agreement) from which it would be reasonableto fund the case”.That is a fairly open-ended requirement. Regulation 39(b)says that the director has to be satisfied that,“the case is unsuitable for a conditional fee agreement”.Suppose, though, that it was suitable for a conditionalfee agreement; that of course does not necessarilymean that a conditional fee agreement is available.Suitability and availability are not the same thing.That reinforces the noble and learned Lord’s pointthat there is an inconsistency between Regulation 39taken as a whole, not just in relation to Regulation 39(d),and Regulation 53. I hope that noble Lords will beconvinced by that element.

There is a further matter that I need to touch on.The thrust of the Government’s proposals is to reducethe reliance on judicial review. We have to be concernedabout this in view of recent pronouncements aboutthe Government’s desire to reduce substantially thenumber of cases that can be advanced by that method,which is of course a principal method of holding theExecutive to account. This is just one potential example,but I think that noble Lords will want to pay particularattention to it, having regard to the category of peoplewho will be most affected by it. We should not losesight of the fact that this may be part of a process ofrestricting access to judicial review that will go wellbeyond this particular category. In my submission,that is an additional reason for noble Lords to supportthe amendment moved by the noble Lord, Lord Pannick.

Lord Mackay of Clashfern: My Lords, am I right orwrong in thinking that any appellant who is unhappywith the decision of the First-tier Tribunal can ask itto review the decision?

Lord Beecham: Assuming that the appellant has theknowledge of that procedure, he might ask it to reviewits decision, but the review will amount to nothingunless the tribunal convicts itself, as it were, of anerror in law. If it makes that mea culpa then under theGovernment’s amendment there is a potential for legalaid to be granted, but not otherwise.

Lord Elystan-Morgan: My Lords, I support bothamendments. I am sure that it is not necessary for meto add my voice to the very distinguished contributionsthat have already been made in this regard. Bothamendments turn upon undertakings that have beensolemnly given—and, no doubt, in the best faith—bythe right honourable Kenneth Clarke. I accept thatcompletely. If there has been mischief, it has probablybeen the mischief of mandarins thereafter in trying insome way to release him in some way from an undertakingthat he solemnly and sincerely gave.


The other feature that is common to both amendmentsis that they deal with situations where preliminarymachinery is set up before a person can qualify forlegal aid. In both cases, in my view, that machineryimposes such a burden upon the potential applicant tomake his or her case virtually impossible—in otherwords, a total denial of what otherwise would be a fairand just application by that person.

In the circumstances, bearing in mind the weight ofauthority that has been projected towards the Governmentin this case, it would be a very rash Minister who didnot concede the obvious points made in the amendmentmoved by the noble Lord, Lord Pannick. If the nobleand learned Lord, Lord Mackay, is correct about theinteraction of Regulations 39 and 53, and if it be thatRegulation 53 in this regard is totally and absolutelygoverned by the relevant provision in Regulation 39,then that is it—the Government do not lose onemillimetre advantage, because that situation has alreadybeen covered and fully determined. However, if that isnot the case, then it seems that the argument put sopowerfully by the noble and learned Lord, LordGoldsmith, must have come into play. That is that thedirector could come to the conclusion that indeed allreasonable avenues had been pursued but that therewere unreasonable avenues that had not been pursued.That would be an absurdity and a miscarriage ofjustice. It is either one or the other.

As far as the amendment of the noble Lord, LordBach, is concerned, it seems to me that there again isan irrefutable case. I am not at all clear what triggersthe situation where there would be a review by the firsttribunal. Would it be something entirely within thediscretion of that tribunal, or would it be on application?If it is within the discretion of the tribunal, it is a verystrange situation that a tribunal is invited to considerwhether it is in error.

Of course, I draw the distinction that has alreadybeen pointed out by the noble Lord, Lord Beecham.There is a world of difference between a point of lawand an error of law. When a judge has adjudicated in acivil case and is invited to grant leave to appeal, he isnot saying, “I am wrong”, or, “I am sure that I amwrong, please appeal”. What he is saying is that thereis a point of law that is properly arguable. That is avery different situation from a tribunal which says,“We are wrong”. In fact, I do not know of any othercircumstance where such machinery exists in law, but Iam sure I will be corrected with regard to that.

The basic principle that we are concerned with hereis that legal advice on a point of law should belong tothe beginning of an action, not to the end of it. Somuch anguish will be saved by a very modest expenditure.I believe that so much money from the public pursewill be saved because there are undoubtedly downstreamcosts which will be massive in scale in relation to this.However, above all it is a question of miscarriage ofjustice.

We think of miscarriage of justice as a situationwhere a tribunal has come to an utterly wrong decision.It is not limited to that at all. A miscarriage of justiceoccurs where a person has a just, meritorious case, andon account of lack of money is unable to have thatcase properly adjudicated. If you ask any decent citizen

of this land, whatever politics or total lack of politicshe or she may have, “Do you believe in a miscarriageof justice?”, we all know what the answer would be.

Lord Marks of Henley-on-Thames: My Lords—

Noble Lords: Minister!

Lord McNally: I have never been so popular.

A noble Lord: It won’t last.

Lord McNally: I heard that as well. I am verygrateful for the contributions to this debate and notleast for all the free legal advice I have been given. Ithas been a useful debate and I have listened verycarefully to the points made. A number of noble, andindeed noble and learned, Lords have raised the issueof judicial review. The difference is in approach betweenRegulations 53(b) and 39(d).

As I said earlier, the Government believe that thecurrent drafting of Regulation 53(b) meets the concernsraised both here and in another place. However, havinglistened to the arguments that have been put forwardtoday, I recognise the strength of feeling that theregulation has provoked. I make it clear at the outsetthat it has never been our intention to cut off legal aidfor all judicial reviews. The noble Lord, Lord Beecham,was just setting a hare running about other plans forjudicial review. In our view, this provision has beenmisunderstood.

That said, I have heard the anxieties that have beenforcefully expressed about this provision. In the lightof that, I believe we should put the situation beyonddoubt by setting it out in the regulation. Therefore,having listened carefully and having consulted withcolleagues, I can tell the House that, once these regulationsare made, the Government will bring forward as soonas practicable, and in any event well before April 2013,amending regulations to revise Regulation 53(b). Theseregulations will introduce discretion into Regulation53(b) so that the director of legal aid casework willhave the express power to grant legal aid for public lawclaims, even if the alternative routes have not beenexhausted, if he none the less considers that such anappeal or procedure would not be effective in providingthe remedy that the individual requires. This wouldclearly address the situations that are causing nobleLords concern. It would, for example, put beyonddoubt that legal aid for judicial review would beavailable where the claimant required urgent interimrelief and this could not be provided in any other way.

I hope this will meet the concerns of the nobleLord, Lord Pannick, my noble and learned friendLord Mackay of Clashfern, and others. Indeed, wewill have the time to consult noble Lords about thewording of the amending order that I will bring forwardin the new year. I hope that in the light of that thenoble Lord will not press his regret Motion.

6.15 pmLord Reid of Cardowan: My Lords, for those of us

who have experienced neither legal training nor legalpractice but who have listened to the very articulate


[LORD REID OF CARDOWAN]and understandable critique by many noble and learnedfriends, can the Minister answer this question for me?I very much welcome what he has said. Is it implicit inwhat he says that, whatever discretion is given, it willnot only come into effect if the First-tier Tribunaldecides that it has made an error in law? That wasexplicit in many of the critiques which have come out.Is that conditionality now removed?

Lord McNally: My Lords, I, too, am not a lawyer. Ithink that the noble Lord is asking what comes next,and that relates to the second order, not the first one,which the noble Lord, Lord Pannick, asked about. Iwill try to cover the point which he has raised when Iget to that.

As I said, there was never any attempt on our partto change the rules as far as judicial review wasconcerned. However, when a former Lord Chancellor,a former Lord Chief Justice and a former AttorneyGeneral tell you that it needs clearing up, I think it isonly wise to see whether it can be cleared up, and thatis what we will do.

Moving on, I have explained in detail how we havelistened to the concerns of this House—in particular,in extending legal aid in welfare areas. I have neverhidden the fact that the LASPO Bill was a very difficultBill involving some difficult choices. I can rememberanswering questions at this Dispatch Box two yearsago, when we first launched the consultation. I saidthen that, if you have a system which is targeted tohelp the poorest and most disadvantaged in yoursociety and you are forced to make cuts in that system,you are going to affect the poorest and most disadvantagedin your society. I have never hidden that fact.

The idea that LASPO was nothing other than avery difficult Bill is again before this House. Many ofthe arguments that have been deployed tonight weredeployed during the passage of that Bill. However, Iremind this House that the LASPO Bill is now an Actthat went through both Houses of Parliament andcarries with it financial implications that have to beconsidered when discussing any changes to it. There isno infinite pot of money available and we have tothink very carefully about how taxpayer-funded moneyis spent. The Bill was therefore designed to ensure thatpublic funding remains available for the most seriouscases and for those who need it most. In making harddecisions and tough choices, we have listened to theconcerns of some of the very same Peers who havespoken today, and we made changes during the passageof the LASPO Bill.

Not for the first time, the noble Lord, Lord Bach,claims that the Government have not listened. I takethis opportunity to set the record straight. I remindthe House of the Government’s original proposal followingthe consultation on Proposals for the Reform of LegalAid in England and Wales. Our response to the consultationstated that,“it remains the Government’s view that legal aid should beremoved for welfare benefits cases, as proposed in the consultation.However, it will be retained for judicial review of welfare benefitdecisions, and for claims about welfare benefits relating to acontravention of the Equality Act 2010 that are currently funded,as proposed in the consultation”.

That was our starting point. Since then, we havemoved considerably from that position in response toarguments deployed in both Houses. During ping-pongon the LASPO Bill, having listened carefully to thearguments, we agreed to make available legal aid foradvice and assistance for welfare benefit appeals on apoint of law in the Upper Tribunal, including forapplications made to the Upper Tribunal for permissionto appeal. In addition, we agreed to make legal aidavailable for advice, assistance and representation forwelfare benefit onward appeals in the Court of Appealand Supreme Court. The order before us today makesa further concession which is not insignificant.

It may be helpful if I illustrate how this will work.An individual will make an appeal to the First-tierTribunal against an administrative decision of a publicauthority. If the appeal is unsuccessful, the claimantcan request a statement of reasons for the decision.The appellant can then apply to the First-tier Tribunalfor permission to appeal to the Upper Tribunal. Atthis point, the First-tier Tribunal must consider whetherto review its own decision if it considers that it haserred in law, and legal aid for advice and assistancewill now be available in relation to that review. If thetribunal decides not to review, the next step is for theFirst-tier Tribunal to decide whether to grant or refusepermission to appeal to the Upper Tribunal. Wherethe tribunal refuses permission to appeal, the appellantcan then apply directly to the Upper Tribunal forpermission to appeal. Again, legal aid will be availablefor an application for this stage of the process. Ifpermission is granted by the Upper Tribunal, thenlegal aid is again available for the substantive appealbefore the Upper Tribunal.

Therefore, it is wrong and misleading to suggestthat we are not making legal aid available in respect ofpoints of law. As I mentioned in my opening remarks,we considered this matter in great detail following thedebates during the passage of the Bill. We have exploredevery possible option to find a workable solution. Ourconsidered assessment is that other methods ofindependent verification would have proved unworkable.We did consider the CAB proposals but we felt thatthey would create unreasonable cost and administrativeburden. The cost is important. We have never tried tohide the fact that part of the exercise was for legal aidto make a contribution to the cuts in the spendingreview for the Ministry of Justice, a department whichspends money only on prisons, probation, court servicesand legal aid. The proposals would have placed burdenson the successor to the Legal Services Commission,the tribunal judiciary and the Department for Workand Pensions.

In the Government’s impact assessment we identifiedthat, in 2009-10, we funded 135,000 instances ofwelfare benefits legal advice. If the judiciary had toconsider up to 135,000 interlocutory applications forlegal aid, the impact on the tribunal service wouldbe severe, and it could lead to serious delays in theresolution of other cases. Similarly, if the Departmentfor Work and Pensions or the successor to the LegalServices Commission had to consider that largenumber of cases before they could be funded, itwould result in a significant extra administrative


and cost burden. We do not believe it right to imposethese additional burdens in the current economicclimate.

We have therefore decided on the approach set outin the order. This would impose no additional burdenson the tribunal judiciary because it must already considerwhether to conduct a review on receipt of an applicationfor permission to appeal against a finding of theFirst-tier Tribunal. The tribunal can conduct a reviewonly if it is satisfied that there has been an error of lawin the First-tier Tribunal’s decision.

Baroness Mallalieu: If the position is, as we haveheard during this debate, that the noble and learnedLord, Lord Mackay, a former Lord Chancellor, andmy noble friend Lord Bach, a Queen’s Counsel, cannotagree on the interpretation of the wording of Article 3of this order, is it not clear that people who have nolegal qualification and are going to have to look at itto see whether they can obtain legal aid are going to becompletely mystified? Whatever the merits or otherwiseof the order which the Minister is addressing now, thisis badly drafted, unclear and needs to be looked atagain.

Lord McNally: I do not accept that. I accept thatthe lawyers may have glossed the patch a little, asthe noble Lord, Lord Reid, acknowledged. We arediscussing various complex matters of its operation. Igo back to the point that our initial intention was totake welfare out of legal aid—something that thenoble Lord, Lord Bach, has opposed from the verybeginning; I understand and appreciate that. Thatdoes not take away the fact that we have argued ourcase through both Houses of Parliament and put anAct on to the statute book. This is about implementingthat Act.

It is clear that the Government have listened. Wehave compromised. However, we can go no furtherwith concessions which impact the fundamentalobjectives of our reform: to focus legal aid on thehighest-priority cases while delivering the essentialsavings needed to address the deficit which is threateningthis country’s stability.

I was at a conference the other day where thenoble Lord, Lord Bach, used a term which he mayhave been saving up for his final remarks. He saidthat next year we face a “perfect storm” in terms ofwelfare, in that we are indeed carrying through theLASPO reforms and the welfare reforms at thesame time. That is going to introduce strain.However, the perfect storm would be if we lost controlof our currency and economy, and if we lostmarkets. That is when the people whom we have heardabout today, whom people want to protect, wouldreally feel the full blast of economic problems. We aretrying to—

Lord Howarth of Newport: I am grateful. The nobleLord used to tell the House that taking welfare benefitsout of the scope of legal aid would save £25 million,but we know also that his department is dumpingall kinds of costs on other departments through thehealth consequences and the damage to vulnerablechildren living in circumstances of great poverty.

What is the noble Lord’s assessment now of the netcontribution to reducing the deficit made by his policyof removing access to justice for some of the neediestpeople in our society? Does he still think that it is£25 million? Does he think it is less? Does he thinkthat that is the crucial difference that is going to avertfiscal disaster?

Lord McNally: I do not believe that these mattersremove access to justice. I notice that an organisationcalled MyLegal put out quite a long briefing, theinteresting bit of which was on the last page, whereit said that Ken Clarke had said these measureswould cost £25 million. The briefing said that thatwas wrong and that it was £14 million. The nobleLord, Lord Bach, said that it would cost only £5 million.What I do know is that it will have a cost. When Iam carrying out my other responsibilities in theMinistry of Justice and I am suddenly told by thisHouse, which has no responsibilities in the Ministry ofJustice, that I have to find £5 million, £15 million or£25 million, there are decisions that must be made.I sit on boards where people lose their jobs andwhere the management of these changes is extremelydifficult. I have never tried to hide that but I ask thisHouse to have a sense of responsibility. We came upwith a concession after a lot of exploration and talkswith departments and various boards. It is a narrowconcession but it comes on top of a whole range ofother concessions which we believe retain legal aid in avast swathe of the process of welfare and which wethink is in keeping with the promises we made toParliament.

I ask this House not to go further in voting on this.I must make it clear that, if the amendment is carriedand this concession is lost, the Act is still an Act ofParliament and will still be implemented in April butwithout this concession. I would consider that a ratherpyrrhic victory.

Lord Pannick: My Lords, I am very pleased thatthe Minister has agreed to bring forward amendingregulations that will deal with Regulation 53(b) and Ithank him for considering the points that have beenmade in the debate. He mentioned that the regulationswould focus on whether the alternative remedy iseffective. I hope that when he and his officials readthe record of this debate, they will see that the concernis that the criterion should state that the issue iswhether the alternative remedy is a reasonable oneto use in all the circumstances. It is not just aquestion of efficacy; it is also a question of speed andconvenience, for example. The Minister indicated thathe would consult noble Lords who have expressedconcern about this. I very much hope that he will takefurther advantage of the free legal advice availablefrom, in particular, the noble and learned Lords, LordMackay of Clashfern, Lord Woolf and Lord Goldsmith.I would be very happy to act as their junior in thisrespect. On that basis, I beg leave to withdraw myamendment.

Amendment to the Motion withdrawn.

Motion agreed.


Legal Aid, Sentencing and Punishment ofOffenders Act 2012 (Amendment of

Schedule 1) Order 2012Motion to Approve

6.33 pm

Moved By Lord McNally

That the draft order laid before the House on29 October be approved.

Relevant document: 10th Report from the JointCommittee on Statutory Instruments

Amendment to the MotionMoved by Lord Bach

As an amendment to the above Motion, leaveout from “that” to the end and insert “this Housedeclines to approve the draft Order laid before theHouse on 29 October as it does not fulfil theundertaking given by Her Majesty’s Governmenton 17 April; and will mean claimants, including adisproportionate number of disabled people, willnot receive legal help on a point of law in first-tiertribunals relating to welfare benefits thus denyingthem a fair hearing on point of law cases”.

Lord Bach: My Lords, I spoke to my amendmentearlier in the debate and the House will be relieved tohear that I have very few words to say at this stage. Mycase is this: how can it be right that there is automaticlegal aid for any client who gets to the second-tier orupper tribunal—the Court of Appeal and the SupremeCourt—on a welfare law case but no automatic rightto legal aid for first-tier tribunals? You can get to thesecond-tier tribunal or the Court of Appeal orthe Supreme Court only on a point of law. If that isthe position, how can it be right that at a first-tiertribunal, when a client has a point of law, they shouldnot be allowed some legal advice before the first-tiertribunal commences—in other words, before the first-tiertribunal or during it? It is no use being able to get it atthe very end of the first-tier tribunal in very remarkableand odd circumstances.

The Government seem to believe that was appropriatelogic because that is the concession they were generousenough to make in the House of Commons on 17 April2012. But they have not kept to that concession. Theyhave come up with something much more vague;something that will happen in very, very few cases.

I am very grateful to the Minister for the time hehas taken with this and to all noble Lords who havespoken on my amendment. When the Minister answereda question from me the other day he said:

“I want to make sure that we maintain a legal aid system thatwill remain one of the most generous in the world and focus it onthe most needy”.—[Official Report, 27/11/12; col. 90.]

Can noble Lords think of anyone who is more needythan the sort of person that the noble Baroness, LadyDoocey, was describing—a disabled person who hasundergone some of these tests in order to get her or hisbenefits, who is not happy with the result, thinkssomething has gone wrong and wants to appeal? Whatthe Government are intending is that that person

should not have the ability to get legal aid in order toappeal to the first-tier tribunal even when the matter isa point of law which they cannot be expected to knowor understand. It defies logic and fairness to suggestthat kind of process should continue.

All we are asking is that the Government withdrawthis Motion, which they are clearly not prepared to dotonight. If they will not withdraw it, I shall ask theHouse, in a completely non-partisan spirit, to declineto give approval to this Motion tonight and invite theGovernment to come back with a slightly more generousorder that looks after the type of person the nobleBaroness, Lady Doocey, was telling us about earlier inour debate.

Lord McNally: My Lords, we are almost on theverge of another financial Statement by the Chancellor.I have made it clear that the noble Lord must not lurethe House into an idea that following him into theDivision Lobby will produce a better offer because itwill not.

Lord Bach: Is the noble Lord saying that he will notcome back with anything on this matter if this amendmentis carried? I think that that is a threat that the Houseshould be very wary of accepting at such a late stage inthe debate.

Lord McNally: It is not a threat. I just do not wantthe House to make a decision on such an idea. This isnot the Committee stage of a Bill. The order relates towhat is already an Act of Parliament. If we do notbring forward another order in this area, the Actsimply will go through. I want the House to be awareof that fact.

Lord Bach: There is a framework Act of Parliament,passed by Parliament, which I have never sought to gobehind. These orders add flesh to those bones. This isa very important order. In any event, the Governmentwould have to have some kind of order on thesematters. On this occasion, the Government have, ineffect, not kept with the intention that they certainlyhad in the House of Commons. By announcing whatthey did in the Commons, they managed not to lose avote and to get the Bill through. As a consequence, it isa serious matter.

Lord Phillips of Sudbury: I am grateful to the nobleLord, Lord Bach—I almost said “my noble friend”,which he is. My noble friend Lord McNally has notcommented on the noble Lord’s fundamental assertionon which, for me, the strength of the case rests;namely, that the former Lord Chancellor made a clearundertaking which is now not being kept. Would it notbe helpful to the House for the noble Lord, LordBach, to ask my noble friend Lord McNally for hiscomment on that?

Lord Bach: That would be a fair question to thenoble Lord, Lord McNally, who has had everyopportunity to answer it and has chosen not to.

Lord McNally: I will answer it—I answered it in myremarks. The Lord Chancellor said that he would takethe matter away and use his best endeavours. I haveseen the exchange of papers with the DWP, the Legal

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Services Commission and the Administration on whetherthis could be done. We have come back with our bestendeavours. This casual throwing around of betrayalfires the troops up for voting but it simply is not true.

Lord Bach: I would not dream of using the wordbetrayal as regards this matter. The noble Lordmisunderstands me completely. It is not a betrayal.The governing party in the House of Commons saidthat it intended to do something and, in that way,managed to get an adverse amendment withdrawn. Ithas come up with a solution but the solution is not theconcession that it made in the House of Commons.That is the fact of the matter. It is a much narrowersolution and it is deeply unsatisfactory for those whoare interested in how the poor, the disabled and thevulnerable are looked after in our society and theirrights to access to justice.

For that reason, I ask the House to decline toapprove this order, so that the Government can thinkagain and come back with an order which we can allaccept. I beg to move.

6.41 pm

Division on Lord Bach’s amendment.

Contents 201; Not-Contents 191.

Amendment agreed.

Division No. 1

CONTENTS

Aberdare, L.Adams of Craigielea, B.Ahmed, L.Anderson of Swansea, L.Andrews, B.Armstrong of Hill Top, B.Bach, L.Bakewell, B.Barnett, L.Bassam of Brighton, L.

[Teller]Beecham, L.Berkeley, L.Best, L.Bichard, L.Bilimoria, L.Billingham, B.Bilston, L.Blair of Boughton, L.Borrie, L.Bradley, L.Brooke of Alverthorpe, L.Brookman, L.Browne of Belmont, L.Browne of Ladyton, L.Campbell-Savours, L.Carter of Coles, L.Chandos, V.Christopher, L.Clancarty, E.Clark of Windermere, L.Clinton-Davis, L.Collins of Highbury, L.Corston, B.Coussins, B.Crawley, B.

Davidson of Glen Clova, L.Davies of Coity, L.Davies of Oldham, L.Dean of Thornton-le-Fylde,

B.Deech, B.Desai, L.Donaghy, B.Donoughue, L.Doocey, B.Dubs, L.Elder, L.Elystan-Morgan, L.Evans of Temple Guiting, L.Evans of Watford, L.Farrington of Ribbleton, B.Faulkner of Worcester, L.Filkin, L.Ford, B.Foster of Bishop Auckland, L.Foulkes of Cumnock, L.Gale, B.Gibson of Market Rasen, B.Golding, B.Goldsmith, L.Gordon of Strathblane, L.Gould of Potternewton, B.Grey-Thompson, B.Grocott, L.Guildford, Bp.Harries of Pentregarth, L.Harris of Haringey, L.Harrison, L.Hart of Chilton, L.Haskel, L.Haworth, L.

Hayter of Kentish Town, B.Healy of Primrose Hill, B.Henig, B.Hilton of Eggardon, B.Hollick, L.Hollis of Heigham, B.Howarth of Newport, L.Howells of St Davids, B.Howie of Troon, L.Hoyle, L.Hughes of Stretford, B.Hughes of Woodside, L.Hunt of Kings Heath, L.Irvine of Lairg, L.Janner of Braunstone, L.Jay of Paddington, B.Jones, L.Jones of Whitchurch, B.Jordan, L.Judd, L.Kennedy of Southwark, L.Kennedy of The Shaws, B.Kerr of Kinlochard, L.King of Bow, B.King of West Bromwich, L.Kinnock, L.Kinnock of Holyhead, B.Kirkhill, L.Knight of Weymouth, L.Layard, L.Lea of Crondall, L.Liddle, L.Lipsey, L.Lister of Burtersett, B.McAvoy, L.McDonagh, B.Macdonald of Tradeston, L.McIntosh of Hudnall, B.MacKenzie of Culkein, L.Mackenzie of Framwellgate,

L.McKenzie of Luton, L.Mallalieu, B.Mandelson, L.Mar, C.Martin of Springburn, L.Masham of Ilton, B.Massey of Darwen, B.Maxton, L.Meacher, B.Mitchell, L.Moonie, L.Morgan, L.Morris of Aberavon, L.Morris of Handsworth, L.Morris of Yardley, B.Noon, L.Nye, B.O’Neill of Bengarve, B.O’Neill of Clackmannan, L.Ouseley, L.Palmer, L.Pannick, L.Patel of Blackburn, L.Patel of Bradford, L.Pendry, L.

Peston, L.Pitkeathley, B.Plant of Highfield, L.Ponsonby of Shulbrede, L.Prashar, B.Prescott, L.Prosser, B.Quin, B.Radice, L.Ramsay of Cartvale, B.Ramsbotham, L.Rea, L.Reid of Cardowan, L.Rendell of Babergh, B.Robertson of Port Ellen, L.Rooker, L.Rosser, L.Rowlands, L.Royall of Blaisdon, B.St John of Bletso, L.Sandwich, E.Sawyer, L.Scotland of Asthal, B.Sheldon, L.Sherlock, B.Simon, V.Smith of Basildon, B.Smith of Finsbury, L.Smith of Gilmorehill, B.Snape, L.Soley, L.Stern, B.Stevenson of Balmacara, L.Stoddart of Swindon, L.Symons of Vernham Dean, B.Taylor of Blackburn, L.Taylor of Bolton, B.Temple-Morris, L.Thornton, B.Tomlinson, L.Tonge, B.Triesman, L.Tunnicliffe, L. [Teller]Turnberg, L.Turner of Camden, B.Uddin, B.Wall of New Barnet, B.Warner, L.Warnock, B.Warwick of Undercliffe, B.Watson of Invergowrie, L.West of Spithead, L.Wheeler, B.Whitaker, B.Whitty, L.Wigley, L.Williams of Baglan, L.Wills, L.Wilson of Tillyorn, L.Winston, L.Wood of Anfield, L.Woolf, L.Woolmer of Leeds, L.Worthington, B.Young of Hornsey, B.Young of Norwood Green, L.

NOT CONTENTS

Addington, L.Ahmad of Wimbledon, L.Alderdice, L.Allan of Hallam, L.Anelay of St Johns, B. [Teller]Arran, E.Ashton of Hyde, L.Astor of Hever, L.Attlee, E.

Baker of Dorking, L.Bates, L.Berridge, B.Black of Brentwood, L.Blackwell, L.Blencathra, L.Bonham-Carter of Yarnbury,

B.Bowness, L.

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Brabazon of Tara, L.Bridgeman, V.Brinton, B.Brittan of Spennithorne, L.Brooke of Sutton Mandeville,

L.Brookeborough, V.Brougham and Vaux, L.Browning, B.Burnett, L.Buscombe, B.Byford, B.Caithness, E.Cathcart, E.Cavendish of Furness, L.Chalker of Wallasey, B.Colwyn, L.Condon, L.Cope of Berkeley, L.Courtown, E.Craig of Radley, L.Craigavon, V.Crickhowell, L.Cumberlege, B.De Mauley, L.Dear, L.Dholakia, L.Dixon-Smith, L.Dobbs, L.Eccles, V.Eccles of Moulton, B.Eden of Winton, L.Edmiston, L.Elton, L.Empey, L.Erroll, E.Faulks, L.Fearn, L.Feldman of Elstree, L.Fink, L.Fookes, B.Forsyth of Drumlean, L.Fowler, L.Framlingham, L.Fraser of Carmyllie, L.Freeman, L.Freud, L.Garden of Frognal, B.Gardiner of Kimble, L.Gardner of Parkes, B.Geddes, L.German, L.Glasgow, E.Gold, L.Goodlad, L.Goschen, V.Grade of Yarmouth, L.Green of Hurstpierpoint, L.Hamilton of Epsom, L.Hanham, B.Harris of Peckham, L.Henley, L.Heyhoe Flint, B.Hill of Oareford, L.Hodgson of Astley Abbotts,

L.Howard of Lympne, L.Howard of Rising, L.Howe, E.Howell of Guildford, L.Hunt of Wirral, L.Hurd of Westwell, L.Hussain, L.Hussein-Ece, B.Inglewood, L.James of Blackheath, L.Jenkin of Kennington, B.Jenkin of Roding, L.

Jolly, B.Jopling, L.King of Bridgwater, L.Kirkham, L.Knight of Collingtree, B.Laming, L.Lee of Trafford, L.Lexden, L.Lingfield, L.Liverpool, E.Loomba, L.Luce, L.Luke, L.Lyell, L.McColl of Dulwich, L.Mackay of Clashfern, L.MacLaurin of Knebworth, L.McNally, L.Maddock, B.Maginnis of Drumglass, L.Marks of Henley-on-Thames,

L.Marland, L.Marlesford, L.Mawhinney, L.Mawson, L.Mayhew of Twysden, L.Montrose, D.Moore of Lower Marsh, L.Morris of Bolton, B.Moynihan, L.Naseby, L.Neville-Jones, B.Newby, L. [Teller]Newlove, B.Noakes, B.Northover, B.Norton of Louth, L.Oakeshott of Seagrove Bay, L.Palmer of Childs Hill, L.Palumbo, L.Parminter, B.Plumb, L.Popat, L.Randerson, B.Rawlings, B.Razzall, L.Redesdale, L.Renfrew of Kaimsthorn, L.Ribeiro, L.Roberts of Conwy, L.Roberts of Llandudno, L.Rodgers of Quarry Bank, L.Rogan, L.Ryder of Wensum, L.Sassoon, L.Scott of Needham Market, B.Seccombe, B.Selborne, E.Selkirk of Douglas, L.Selsdon, L.Shackleton of Belgravia, B.Sharkey, L.Sharples, B.Shaw of Northstead, L.Sheikh, L.Shephard of Northwold, B.Shrewsbury, E.Shutt of Greetland, L.Smith of Clifton, L.Spicer, L.Stedman-Scott, B.Stephen, L.Stewartby, L.Stoneham of Droxford, L.Stowell of Beeston, B.Strathclyde, L.Taylor of Goss Moor, L.

Taylor of Holbeach, L.Teverson, L.Tope, L.Tordoff, L.Trimble, L.True, L.Tugendhat, L.Tyler, L.Tyler of Enfield, B.Ullswater, V.Verma, B.

Wakeham, L.Wallace of Saltaire, L.Wallace of Tankerness, L.Walmsley, B.Warsi, B.Wasserman, L.Wei, L.Wheatcroft, B.Wilcox, B.Younger of Leckie, V.

Motion, as amended, agreed.

Palestine: United Nations GeneralAssembly Resolution

Question for Short Debate

6.52 pm

Tabled By Baroness Royall of Blaisdon

To ask Her Majesty’s Government what discussionsthey have had with the Palestinian Leadership inthe light of the outcome of the debate on theResolution on the status of Palestine within theUnited Nations at the United Nations GeneralAssembly on 29 November.

Baroness Royall of Blaisdon: My Lords, like allMembers of this House, I believe that the two-statesolution is and must be the solution to the Israeli-Palestinian conflict; that is, a safe and secure Israelliving alongside a viable and sovereign Palestinianstate based on 1967 borders, with agreed land swaps,with Jerusalem as the shared capital of both states andwith a just, fair and agreed settlement for refugees.

However, as both the Foreign Secretary Mr WilliamHague and my right honourable friend Mr DouglasAlexander have said countless times over the past fewweeks:

“Time is running out for a two-state solution”.

The news that Israel has seized more than $120 millionof the tax revenues it collects on behalf of the PalestinianAuthority has made the situation much more dangerous,as has the announcement that Prime Minister Netanyahuhas authorised the construction of 3,000 new homesand settlements and the speeding up of 1,000 existingplanning permissions. Indeed, the UN Secretary-Generalhas said that this could be,“an almost fatal blow to remaining chances of securing a two-statesolution”.

Last week, there was a massive vote at the UNGeneral Assembly in favour of Palestine moving froman observer entity to an observer state at the UnitedNations. There were 138 nations in favour, includingFrance and Spain; nine against; and 41 abstentions,including the United Kingdom. This was a strongglobal signal in favour of an independent Palestinianstate. It also happened to reflect the views of theBritish people: 72% of respondents in a recent YouGovpoll said that they were in favour of recognising thePalestinian state, and only 6% were against. EphraimSneh, a former Israeli Deputy Defence Minister, saidbefore the vote that,

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“Abbas’s statehood bid can be a game-changer if the Americanand Israeli governments respond prudently. Or it can be anothermissed opportunity—and a potentially disastrous one at that—ifthey respond punitively to a remarkable Palestinian achievementat the UN General Assembly”.

Sadly, prudence has been abandoned by the IsraeliGovernment.

We strongly believe that the British Governmentwere wrong not to support the Palestinian resolution.It is one of the steps to achieve and negotiate atwo-state solution. The fact that we abstained was anabdication of responsibilities to both the Israeli andPalestinian people, most of whom wish to live inpeace. The vote was also an important means ofdemonstrating support for President Abbas, crucial atany time but especially in light of the most recentconflict in Gaza, in which the power and influence ofHamas were enhanced. The Palestinians not only wantedPalestine to be recognised as a state—a prerequisite, Isuggest, for a two-state solution that is impossiblewhen only one side is recognised as a state—they alsowanted a strong leader. They, like the world, wantedtangible proof that diplomacy works better than rockets.

In the House of Commons last week, Mr Haguesaid that Government relations with President Abbaswere excellent. Indeed, I hope that they are. However,I wonder what the Palestinians think of our positionnow that the feared retributions have begun. I have nodoubt that the Middle East will be a priority forPresident Obama in his second term of office. However,the UK’s abstention will not have helped—quite thecontrary—and it will have diminished our position asa global leader in the eyes of the world.

Before the vote, the Foreign Secretary said thatrecognition at the UN risked paralysing the peaceprocess, but for far too long there has been onlyparalysis and no process. There has been continuedsettlement building, and continued rocket attacks, butno process. I utterly condemn the rocket attacks fromGaza. Like many parliamentarians, I have visited Sderotand spoken with the Israelis whose lives are blightedby rocket attacks—and constant fear. However, I havealso seen the settlements, which I utterly condemn andwhich are against international law. Each house builtentrenches the Israeli occupation of Palestine andmakes Israel and its people less, rather than more,secure.

Last week’s announcement that some of the newconstruction would be in E1 has alarmed the globalcommunity. E1 is a five-square mile controversialdevelopment on the outskirts of Jerusalem that wouldpartly divide the West Bank and would hugely complicateefforts to create a contiguous Palestinian state. FormerIsraeli Prime Minister Ehud Olmert has called it,“the worst slap in the face of a US President”.

I welcome Mr Hague’s comments that:“Israeli settlements are illegal under international law and

undermine trust between the parties. If implemented, these planswould alter the situation on the ground on a scale that makes thetwo-state solution, with Jerusalem as a shared capital, increasinglydifficult to achieve”.

Mr Hague is absolutely right. I understand that Israel’sambassador has been called to the Foreign Office for ameeting with Alistair Burt, the Minister for the MiddleEast. Clearly this is the right thing to do, but it will not

undo the damage done to Britain’s standing on thisissue as a consequence of its misguided abstention.The Minister will know that there has been much pressspeculation today that our ambassador in Tel Avivcould be withdrawn. I would be grateful for clarification.What discussions has the Foreign Secretary had onthis issue with the noble Baroness, Lady Ashton, theEU’s High Representative?

It is said that Mr Netanyahu is taking these actionswith one eye on the elections in January. I suggest thatthe crisis in the Middle East is too important for thearea to be used as a political football. Indeed, it isterrifying. Then, of course, there are the tax revenues,collected by Israel on behalf of the Palestinian Authority,which Israel has refused to hand over and which it willreview on a monthly basis. This punitive action isintolerable and again exacerbates tensions and frustrationsrather than enhancing the safety and security of Israel.In the past, when Israel has frozen the monthly revenuesof the Palestinians it has resulted in the late paymentof salaries for thousands of public servants in theWest Bank and Gaza.

I wholeheartedly condemn violence but is it anywonder that the level of anger is heightened when menand women can no longer provide for their families?These tax revenues are not gifts to buy treats; they aremoneys owed to the Palestinians on which they relyfor their day-to-day existence. I would be grateful ifthe Minister would say what representations theGovernment have made to the Israeli Government onthis critical matter, and what discussions they havehad with Secretary of State Clinton.

I have no doubt that the Saudis and other friends ofthe Palestinians in the Arab world will do what theycan to assist financially. This would be an understandableand welcome short-term solution for the Palestinians,but it cannot be sustainable for any of the partiesconcerned, including Israel. I wonder what the BritishGovernment will do on the issue. For the past fouryears there has been a near-total cessation of terroristactivity in the West Bank, partly as a result of co-operationbetween the Israel Defence Forces and the Palestiniansecurity forces, organised by Lieutenant General KeithDayton’s team. However, if the Palestinian economycollapsed as a result of external economic pressures,the situation could easily be reversed and Israel wouldbecome even more vulnerable.

The vote in the UN last week demonstrated that theworld wants a solution to the Israeli-Palestinian conflict:a two-state solution in which both states live in securityand with dignity. Whereas recognition of Palestine asa state by giving it observer status at the UN is apositive step forward, the subsequent announcementsby the Israeli Government are a deeply worryingdevelopment that could jeopardise hopes for peace.The UK’s ill judged abstention at the UN was supposedto secure continuing influence with Israel, but there islittle evidence of that strategy working. I now urge theGovernment to co-ordinate their actions with Europeanpartners so that further steps can be taken to helpensure that Israel complies with international law anddemonstrates a commitment to peace. Most urgently, Itrust that all efforts will be made to ensure that PrimeMinister Netanyahu hears this message loud and clearwhen he meets Chancellor Merkel in Berlin on Wednesday.

495 496[3 DECEMBER 2012]Palestine: UN General Assembly Palestine: UN General Assembly

7.01 pm

Lord Alderdice: My Lords, I commend the nobleBaroness for securing a debate at this time on an issuethat transcends all party differences. On 29 November1947, the United Nations voted in Resolution 181—with33 for, 13 against and 10 abstentions: in other words,voted very powerfully—for the establishment of theState of Israel. It also wanted to see the establishmentof a Palestinian state. On 29 November 2012, theUnited Nations voted again, and 138 out of the now193 member states voted for the possibility of movingtowards a new member state. They did not declare thatit was a state, only that it was moving towards being astate.

Who voted against? Panama, Palau, Nauru,Micronesia, the Marshall Islands, the Czech Republic,Israel, the United States and Canada. How is it possiblethat the State of Israel, which was brought into beingby an overwhelming majority vote in the United Nations,has contrived over the subsequent years to so lose theconfidence of other member states that it finds itselfwith so little support in its opposition to the perfectlyreasonable demand for a Palestinian state?

The peace process has been paralysed for years.There has been no peace process for years. I speak assomeone who spends a considerable amount of timeworking on this issue and on events in the region.Huge changes are taking place—and they are not forthe better. The world has changed. I do not think thatsome of our colleagues in this country, in Israel andcertainly in the United States realise that the world hasalready changed. It is the kind of change that tookplace in the run-up to, and after, the First World War.The balance of power is different. Changes take placebecause of changes in technology. Having massivemilitary power in the old sense no longer cuts it. It nolonger stops or starts major political change.

It is said by many in the Israeli establishment thatthere is no partner for peace. Therefore, what is theobjection to recognising a nascent state that can becomea partner for peace? If there is to be a partner forpeace, and if the complaint is that Palestinians arefragmented, surely this creates the opportunity for thevarious elements in the Palestinian state to cometogether—for Hamas, Fatah and others to become apartner for peace. However, I think that we have gonebeyond all of that. It is no longer clear that a two-statesolution is possible. If it is not, there are only twoother obvious possibilities that I can see. One is asingle state, which manifestly cannot be a Jewish stateif it is democratic. The other is some form of chaosand war in the region. It is wholly possible that that iswhat we are looking at: we are sliding into a regionalwar.

What is the alternative? It is that we look to aregional process to create stability in the region. NobleLords will not be at all surprised that I speak aboutsuch a process because I have been banging on about itfor years. I have not for years seen the possibility ofIsrael and the Palestinians negotiating an outcome,and I do not any more see the United Statesproviding a particularly useful role in achieving it.There was a time when it could have. There was a timewhen the European Union could have played a role of

this kind, but it is so intent on focusing on its internalproblems that it has not been able to provide any kindof useful contribution to the peace process. There is agreat urgency about the development of a regionalprocess to save us from regional chaos and to give thepossibility of the establishment of a Palestinian stateliving in peace and stability alongside the State ofIsrael.

In this regard, I say with great sadness that ourcountry this time is on the wrong side of history. Thisis a serious error of judgment. This was an opportunityto rescue the reputation of this country in a regionthat has not been impressed by the military adventuresof the past 10 or 15 years. It was an opportunity forour country to say clearly that we support our friendsin the State of Israel but that we do not give them aveto on our policy, or who we talk to, or who we areprepared to engage with. I do not expect my friends totell me who I can and cannot talk to; I expect them tocome along with me to talk to people. If my friendssay they want a partner, I try to establish a relationshipwith that partner. Instead, we as a country find ourselvesclosing in, in a way which—whatever our IsraeliGovernment colleagues say—is not good for Israel,never mind for this country.

I spent the past weekend organising two internationalconferences in London. At the second was a verysenior Israeli—a senior, very Jewish, very Israeli Israeli.His commitment to his country, in diplomatic, political,academic and security terms, had been, he said, “mywhole life”. I asked him what he thought of the vote.He said: “Israel should have supported the vote. Itshould have made it clear that it wants a partner forpeace and wants to give Palestinians an opportunityto get together as a state to be a partner for peace”.Recognition of a developing Palestinian state does notdefine its boundaries; that is part of the problem. Itdoes not describe its population; that is part of theproblem. It does not tell us how we are going to relatethe various different Swiss-cheese parts of its territory;that is part of the problem. However, it does give apartner with whom to engage in a peace process.

It saddens me greatly, and frightens me greatly, thatwe face such dangerous times in that region, fromwhich we will not escape. On this occasion ourGovernment did not do the right thing for the country.I hope that they can review their approach, not interms of the vote, as the vote is past, but in terms ofhow we engage to ensure a regional process towardsstability. Otherwise we will, I fear, observe a regionaldescent into chaos.

7.10 pmThe Lord Bishop of Guildford: My Lords, I am very

grateful to the noble Baroness, Lady Royall, for raisingthis urgent, peace-threatening question. Your Lordshipsmay be aware that the right reverend Prelate the Bishopof Exeter, together with the Roman Catholic bishop,Bishop Declan Lang of Clifton, had written to theForeign Secretary in some regret at the UK’s abstentionfrom the UN vote on Palestine’s non-member observerstatus. They—and all of us on these Benches, irrespectiveof our views on voting or abstention—urge Her Majesty’sGovernment to do everything possible to revitalise thestalled peace process in the Middle East.

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I am particularly grateful that the last speechhighlighted the importance of a regional peace discussion.We understand the desire to urge all parties to desistfrom actions—such as a Palestinian appeal to theInternational Criminal Court—which would make arestart of discussions, whether completely internationalor more regional, more difficult. Yet is there not adesperate need to signal that there must be a wayforward through international law, which the newPalestinian status surely indicates, lest despair of atwo-state solution, or any other solution, lead to theresumption of violence such as the firing of rocketsfrom Gaza, which has already been alluded to? Thatcould slide into the regional war to which the nobleLord, Lord Alderdice, has just alerted us.

My stress on a solution grounded in internationallaw is a point which the right reverend Prelate theBishop of Exeter would have made had he been in hisplace. He is in fact visiting some of his flooded churchestoday. This stress enables me warmly to welcometoday’s news from the Foreign Office of the summoningof the Israeli ambassador to meet the Minister withresponsibility for Middle East affairs. Afterwards aspokesman mentioned the Government’s potential “strongreaction”to Saturday’s announcement of Israel’s buildingplans between east Jerusalem and the West Bank.These plans seem, to my judgment, an absolute roadblockto the resumption of any progress and any newnegotiations. There are many things on either sidewhich could threaten the only real option for peace—theresumption of discussions, which is the only real optionfor security for Israel, as has already been mentioned.Continued building on the wrong side—the wrongside in international law; the wrong side of the greenline—is, in my view, the most serious threat of all.

7.13 pm

Lord Janner of Braunstone: First, my Lords, I apologise:I did not realise that the debate was going to start sovery early. However, I am honoured and delighted tobe here.

During my career and personal life I am proud tohave worked, and continue to work, for both Jews andArabs who are in Israel and the neighbouring countries.I have spent much of my time building bridges betweentheir communities—working together on our similaritiesand differences, discussing how we live, and, moreimportantly, discussing how they can live happily together.That is why I believe it is essential that we work tosupport both Israel and Palestine to reach a two-statesolution where the Jewish have their state—Israel—andthe Arabs have their own state: Palestine. The Palestinians’win at the United Nations General Assembly showshow many countries also agree that they deserve tohave their own state. However, the remaining numberof noes and abstentions demonstrates how the resolutionstill needs to be both discussed and developed.

Our Government did not vote yes. Last Thursdayin the United Nations they abstained, showing how wein Britain do not completely dismiss the Palestinians’rights but acknowledge that there are a number ofissues that must be spoken about in order for ourGovernment to agree wholly to the increase in Palestine’sstatus at the United Nations.

The shadow Foreign Minister, Douglas Alexander,spoke in the other place in a debate last Wednesdaybefore the UN vote. He said:“what I believe will be an overwhelming majority of the 193members of the UN General Assembly in voting for enhancedobserver status for the Palestinians. That vote can, and must, senda powerful signal to the Palestinians that diplomatic efforts andthe path of politics, not the path of rockets and violence, offer theroute to a negotiated two-state solution”.—[Official Report, Commons,28/11/12; col. 230.]

That is what we must all hope will occur.As this House knows, only a week before this vote,

Gaza and Israel were in conflict with rockets flyingfrom both sides, and, sadly, there were casualties onboth sides. Since Israel left Gaza in 2005 countlessrockets have been fired from Hamas-run Gaza, andHamas uses innocent citizens to hide behind. We mustall acknowledge Israel’s right to defend its own country.We cannot ignore that Israel, like Palestine, has a rightto exist. Hamas saw the results on 29 November as avictory. It is important for the Palestinian people butHamas is not there to benefit its people. It is not theGovernment; it is a terrorist group that uses it owncitizens as shields to hide its operations. It is a groupwhich publicly announces the annihilation—theannihilation—of the State of Israel.

Whether you say shalom or salaam, it is this word—which means peace—to which we must always return.We must all work together for peace in that area. Howdo the Government consider the UN results on thestatus of Palestine will encourage them to go back tothe negotiations when they have refused to take part inthe past two years?

Before I finish, I would like to tell a fable of aLondon man who once went to a law society andasked to be recommended to a one-armed solicitor.“Why one-armed?”, asked the official. “Because,” theman replied, “I am sick to death of lawyers saying, onthe one hand this, and on the other hand that”. Thatwas a perfectly good reason for wanting somebodywith one hand. On the one hand, if you do notrecognise that others have a case, you will lose yours.On the other hand, if you do not put your case firmly,then you will not be an advocate for long. And withoutany hands, you certainly cannot clap. One Hand AloneCannot Clap is the name of a book that I wrote someyears ago about Israel and the Middle East. It isimportant that we acknowledge that you cannot basearguments or work for peace with only one side. Noone would argue against the rights for the Palestinianpeople to have their own home, and this is also so truefor Israel. We must all learn to clap together and tolive happily and peacefully side by side.

7.18 pm

Lord Palmer of Childs Hill: My Lords, the nobleBaroness, Lady Royall, asked a very important andinteresting Question. My noble friend Lord Alderdicereferred to the United Nations vote in 1947. Manypeople seem surprised that the UK abstained in thevote to upgrade the status of Palestine at the UN.However, students of history will appreciate—this hasnot yet been pointed out—that this abstention followsthe precedent of Britain abstaining in the 1947 vote onthe UN partition plan leading to the creation of the


[LORD PALMER OF CHILDS HILL]State of Israel. Some things do not change. It hasalways been a foregone conclusion at this time of theUnited Nations that a large majority of nations, includingthe Islamic and non-aligned states, would vote infavour of the UN’s de facto recognition of Palestinianstatehood. Some things have changed since 1947.

We can achieve the desirable result of a Palestinianstate alongside a secure Israel only by joint negotiationsbetween the two parties. I quote from a newspaper thisweekend, which stated:

“Mr Abbas has said he will not return to talks, which werebroken off in 2010, without a freeze in settlement building,ignoring Israeli calls for a resumption of negotiations withoutpreconditions”.

I am against the expansion of settlements. However,even an amateur prophet could have predicted that theIsraeli reaction to the UN vote would be to announcethe approval of construction of new settler homes.The E1 proposed area which the noble Baroness, LadyRoyall, referred to only has preliminary zoning andplanning. Although that is bad enough, it is not actuallyin the building stage.

I hope that Her Majesty’s Government will stressto the Palestinian leadership—which is the point ofthe noble Baroness’s Question—that if it wants to stopthe building, it had better get to the negotiating tableas quickly as possible. Surely Mr Abbas does not wantthe same said about him as was said about Mr Arafat:that he lost no opportunity to lose an opportunity.The man who said that, Abba Eban, an Israeli ForeignSecretary, also once said that if Algeria introduced aGeneral Assembly resolution that the world was flatand Israel had flattened it, it would pass 100 to 10 withabout 50 abstentions.

President Abbas is requesting recognition for astate half of which he does not even control. SinceHamas took power in Gaza in 2006, Mr Abbas, as faras I know, has not visited there even once. The resolutionpushes further away the prospects for peace. The onlyway to achieve peace is through direct negotiations,and I hope that my noble friend the Minister willstress this to both sides. Unfortunately for ordinaryPalestinians, they will see little gain from the UNachievement. The Gaza Strip will remain under therule of Hamas. The move seems more likely to undermineprospects for reviving the peace process, as describedeloquently by my noble friend Lord Alderdice, exceptfor one redeeming feature; namely, improving PresidentAbbas’s reputation on the Arab street. Not negotiatingwith Israel has been Mr Abbas’s choice in recent years,whether due to his distrust of Israel or due to his ownunwillingness to make compromises. The move to theUN looks more like a continuing strategy to avoidnegotiations and not a way to revive them.

When Mr Abbas first laid out his ambitions 18 monthsago in the New York Times, he made it clear that hewould use Palestine’s new status to try to confrontIsrael in international legal forums. That is not exactlyconducive to peace. More than ever, Mr Abbas neededa domestic political win. This has only been heightenedsince the recent conflict between Israel and Hamas.The Palestinian Authority had become largely irrelevantin the international theatre until the UN vote.

It must be noted that, in the past, the quiet co-operationbetween Israel and the Palestinian Authority has ledto some genuine progress—not enough by a long waybut some at least. What is needed is a de-escalation oftensions and a period in which each side commits,publicly or privately, not to take steps which antagonisethe other, whether it is expanding settlements, which Idisagree with absolutely, on the Israeli side, or unilateralmoves in international organisations or legal bodieson the Palestinian side—and of course a cessation ofhostilities from either side of the border.

If I was a public adviser to the Israelis, I certainlywould not have advised them to announce the buildingof more settlements and a holding-back of taxationrevenues. Perhaps I would have advised them toconcentrate on what Israel does internationally inhelping with world relief. When a massive earthquakestruck Haiti, Israel was one of the first and mosteffective responders, using its undoubted technologicalknow-how and experience for the benefit of others.Perhaps noble Lords have forgotten that, during Israel’sstay in Haiti, the medical delegation treated more than1,110 patients, conducted 319 successful surgeries anddelivered 16 births including three in Caesarean section.The IDF search and rescue force also performed verywell. On irrigation projects around the world—thenoble Lord, Lord Alderdice, spoke about the conferencethat he organised the other day—Israel is a worldleader in water technology to develop new water sources,use the water that we have most efficiently and recyclewaste water. We need more desalination plants aroundthe Middle East and not just in Israel. On aid oradvice to other regimes, according to MASHAV, anIsraeli organisation, Israel has used its expertise totransform agriculture from traditional subsistence tosophisticated market-oriented production. It is for thisreason that many countries in the developing worldhave sought partnership with Israel in addressing theiragricultural challenges. Since 1958, MASHAV hastrained in Israel and abroad almost 200,000 courseparticipants from approximately 140 countries andhas developed dozens of demonstration projects worldwidein fields of expertise.

If I were one of those mythical public relationsconsultants, perhaps I would also talk about the life-savingtechnology which has emanated from Israel. It is hardto know where to start. Hadassah University and theWeizmann Institute have produced scientists and Nobellaureates responsible for the research and developmentof important medical advances and life-saving techniques.Israel leads the world in stem cell research, with importantbreakthroughs in repairing tissues and organs damagedby Parkinson’s disease. Teva Pharmaceutical Industries,headquartered in Israel, is the largest generic drugmanufacturer in the world and has made an incredibleeffort in helping to combat diseases such as multiplesclerosis and Parkinson’s disease. Israel has brokenground in fertility treatment. There is the neuromedicalelectrical stimulation system, a glove-like device thatcan help paralysed people; there is imaging technology;and there is help for cancer patients and nanotechnology.

The responses from Israel on settlement expansionand tax revenues do not help, but they must be seen ina context where the Palestinians refuse to sit andnegotiate and have taken a unilateral step which aggravates


the situation. Israel has said time and again that itwants a two-state solution, as referred to by the nobleLord, Lord Janner. I ask Her Majesty’s Governmentand all parties to do as my noble friend Lord Alderdicesaid and work to a regional solution where all partiesget people to the negotiating table. It is not too late todo so. There is a chance for a two-state solution, but itis up to us, Her Majesty’s Government and otherGovernments to help by getting the two sides to thattable to negotiate before it is too late.

7.27 pm

Lord Judd: My Lords, it is obviously a time whenwe should all turn our minds to how we take thingsforward. However, in our concern about how we takethings forward, it is also important to have somehistorical context for what has happened, and it is along story.

We have special responsibility in this country towardsIsrael because we were one of the principal powersthat played a key part in bringing Israel into existenceand we must therefore not betray our responsibility inthat context. It is also important to remember that,historically and objectively, no people paid a higherprice for the creation of the State of Israel than thePalestinian people. It is important therefore to seeboth sides of the argument in history, because it is notjust a current crisis that we face but a deeply rootedhistory.

I do not happen to believe that the West and ourown country under successive Governments have beeneven-handed in their approach to this situation, when,if any issue in the world demanded even-handedness,it was this one. We have been pro-Israeli, and historywill read the message very clearly. We may try topersuade ourselves that we were not letting down thePalestinians but we were, repeatedly. Where has ourvoice been on the blockade, on the screwing of theeconomy of Gaza? In two or three years’ time, the oneremaining aquifer in Gaza will collapse, because spareparts have not been allowed in through the blockadeto maintain it. Ninety per cent of the water in Gaza isnot fit for human consumption. The schools, the health,and the economy of Gaza have been screwed.

Almost exactly a year ago I was in the West Bankand Jordan, and up until then I had not realised quitewhat the settlements meant. They are not just a fewnice settlements—Israeli suburbs in the West Bankand Gaza—but fortified encampments with securitygates. Palestinian life is absolutely distorted. Peopleare humiliated day after day as they pass through thesecurity gates, where they are treated rather brusquely,to say the least. Farmers are able to get to their landand back again only at certain specified hours. I askedwhat would happen if a farmer had a heart attack.The UNRWA people told me, “Well, somebody wouldhave to get on to us, and we’d have to try to negotiatean arrangement with the Israelis so that the gates wereopened to allow the people back”. We have not facedup to the realities of what is going on.

Another issue worries me very deeply. I recall howin 1967 I was in Israel for the duration of the war. Italked to Israelis then, who said to me, as they listenedto militant, pro-Israeli language being broadcast into

the country in the excitement of everything that wasgoing on, “It’s all right for these people, but we’ve gotto make a future with our neighbours and all thepeople in the region”. Israelis said that to me. Sincethen Israelis have refused to serve in the armed services,because they will not be part of what is going on, andother Israelis have made brave stands against thesepolicies. Our absence of even-handedness has let downthose brave and courageous Israeli people who havetried to advocate an alternative policy for their country.

We have to look to the future. We must not suddenlyswitch from our responsibilities. History will not allowus to do that. But it is because we have specialresponsibility for the creation of the State of Israelthat we must always speak honestly and bluntly aboutwhat really matters for Israel’s survival. The truth ofthe matter is that the present policies of Israel—andwe all know this—could not be better designed toundermine the future prospects of the people of Israel.They prolong the danger and the threats that willaccumulate.

How will we approach the future? Reference hasbeen made to the need for a regional approach, whichI am sure is right. We must have a regional approachto secure the future. However, a regional approachcannot impose a solution. No one can impose a solution.The solution will have to be generated by the Palestinianand Israeli people. That is where it will come from. Wehave an example in our own history, that of NorthernIreland. If it is to work, it must have the commitmentof the key parties, which will mean a readiness to talkto people with whom it may not be very easy to talk,just as we learnt that we had to talk to the politicalwing of the IRA if we were to make progress. Thatwas critical.

However, we also learnt something else in thatprocess in Northern Ireland: that we must keep anypreconditions to an absolute minimum because theywill only distort everything, and they will not beowned by the participants. Some of the things that asoutsiders we see as obviously essential must comefrom the participants in the negotiations, who have tocome to those conclusions themselves. They must gothrough a process of learning in the negotiations thatgo on. I am sure that the noble Lord, Lord Alderdice,would agree with me that that is exactly what happenedin Northern Ireland.

We should also be encouraging and supportingthem in practical co-operation. The conference onwater organised by the noble Lord, Lord Alderdice,which I was so glad to be able to attend, was a veryinteresting example of this. It demonstrated how wecan help them to get into practical situations in whichthey see their mutual interdependence.

The most important point of all is that a negotiated,lasting, enduring solution will have to be inclusive. Itwill have to draw in the widest possible cross-sectionof people. It is nonsense, and stupidity, to refuse to seethat Hamas has to be part of the solution. This can nolonger be tolerated, because of course it becomes aself-fulfilling prophecy. It undermines any chance ofemerging moderate or more enlightened leadership inHamas, and plays right into the hands of the extremists,who are there, and who will use Hamas for their ownirreconcilable ideological religious—or other—objectives.


[LORD JUDD]This will take a lot of imagination. What is tragic—and

I use the word in the real Greek sense—about the votelast week is that we marginalised ourselves. I hope thatmy noble friend, who introduced the debate with aparticularly good speech, will not mind my saying thatthe Question refers to talks with the Palestinian leaderssince the vote. I cannot imagine that we are very highon the Palestinians’ list of priorities for talks at thisjuncture.

7.36 pm

Lord King of Bridgwater: My Lords, I have notpreviously been involved in the debates on Israel andPalestine and the issues arising from them. I am extremelygrateful to the noble Baroness for introducing thisdebate, because I wanted to express simply, as somebodywho is much more of an observer than many of theexperts who have spoken already, the great concernthat I have about the situation.

I am progressively more alarmed about this region,which has already been referred to being in turmoil atthe present time. This situation does not threatenmerely continuing bitterness and violence betweenIsrael and the Palestinians but threatens the region,and may threaten ourselves, in terms of world peaceand stability, the possible involvement of the UnitedStates, and the consequences of events in Iran. Anumber of developments here pose the greatest dangerto us. I have always supported the State of Israel andits existence. However, the current actions of the IsraeliGovernment imperil the State of Israel itself. Voices ofconcern and friendship have a duty to speak out at thistime.

The New Statesman had a headline this week, thatMr Netanyahu risked condemning Israel to perpetualwar. The awful thought, in such a dangerous world, ofthe risk of continuing and escalating conflict of thiskind, must concern us all. This is a time when Israelneeds support. The noble Baroness referred to thevote in the United Nations, which was 138 to nine. Ofthe nine, as the noble Lord, Lord Alderdice, quoted, Ihad to look up who two of them were. One of themwas Palau, which has a population of 20,000; anotherwas Nauru, which has a population of 10,000; and theMarshall Islands came swinging in with a majorityvote of 68,000. That is three votes in the UnitedNations with a smaller vote than the Isle of Wight in aconstituency election. France, Italy and Spain cameout against Israel, supporting the adoption of observerstatus for the Palestinians, while Germany, Holland,Australia and the United Kingdom abstained. I mustsay to my noble friend that I was disappointed that weabstained. I understand why the Foreign Secretarymade that decision, but the Israeli reaction since hasbeen a real slap in the face for him and others who hadhoped for a more moderate response.

I say to the many noble Lords who express strongsupport for the State of Israel: does anyone in Israelstill care about what the rest of the world actuallythinks? It is deeply depressing at the present time. Wehave seen Mr Netanyahu going to America, snubbingthe American President and marching straight off intoa meeting of AIPAC, where he got a heroic reception,as he would. Against that background, it is deeply

worrying. The Israelis are losing the support of countriesthat would have supported them strongly in the past. Ihad these thoughts even before the announcement ofthe disastrous reaction to the vote in the United Nations.Although the noble Lord, Lord Palmer, rather glossedover the decision to go ahead with preparations for E1and the impact these have had on East Jerusalem,along with tax withholding and going ahead withmore settlements, I certainly understood why BanKi-Moon said that it would be an “almost fatal blow”to hopes of peace. I am not sure that the presentIsraeli leadership under Mr Netanyahu actually hasany intention of ever going forward with a two-statesolution. I am afraid that that is the impression hegives outside the country. Everyone goes along with it,saying “That’s our policy”, but I am not sure whetherhe is ever going to move on it.

I much appreciated the speech of my noble friendLord Alderdice. He and I know very well the old cry,“Not an inch and no surrender”, which I had shoutedat me often enough in Northern Ireland, along withpeople trying to hit me over the head, but we knewthat it was not the way out of the problem. Progresshad to be made on both sides and, as the noble Lord,Lord Judd, said, it had to involve the people on bothsides. They have to understand their best interests. Nosensible Israeli wants to be in a state of perpetual war.The Israelis cannot want to be in that continuingsituation, and no Palestinians want to find themselvesin the present miserable situation.

Against that background, the scale of change thatis taking place in the world and in that region cannotbe overstated. I have seen, and no doubt so has Israel,the visits that are now being paid to Gaza. The PrimeMinister of Egypt has been to Gaza, as has a seniorrepresentative or perhaps the Emir of Qatar. Seniorrepresentatives from Bahrain have been there, andnow I see that Mr Erdogan of Turkey is talking aboutgoing as well. These developments are profoundlysignificant. Whether these decisions and the reactionsto them are to help the election campaign ofMr Netanyahu in January—we are promised the electionof an even more hawkish coalition—is not known, butone does weep very seriously, not least because we stillhave the elephant in the room in the shape of Iran andits nuclear weapons. One wonders what kind of approacha more hawkish coalition might take to that.

I will just add this. I used to visit America on behalfof Northern Ireland, and I found that many of theexpat Irish—the Irish lobby—were much more inclinedto scream “No surrender” or “A united Ireland at allcosts”, and then I would talk to the Irish-Americanpoliticians like Ted Kennedy, Daniel Moynihan or TipO’Neill, and they were the sensible ones. Charlie Haugheyused to be picketed when he went over because theIrish lobby there thought he had sold out on Irishindependence. The British ambassador to the UnitedStates would say to me, “The green lobby, the unitedIreland lobby, is jolly strong over here, but it is not apatch on the Jewish lobby”. The truth is that theJewish lobby in the United States has done no serviceto Israel and it has done no service to the standing ofthe United States in the region. Let us think back towhen President Clinton could stand between Mr Rabinand Mr Arafat. He was seen as an impartial assister


towards peace. America is now seen to be one-sided,voting against the Palestinian resolution and no longercommanding confidence. A nation of the power andscale of the United States could easily be a tremendousforce for good in the region.

I believe that we are in a serious and rapidly developingsituation, one that makes the world more dangerous.For all who care about the future of Israel and itscontinuing existence, and not least providing a civilisedlife for all those in the region, it is desperately importantthat they realise that a change of course must beundertaken. They must get rid of all the conditions,sit down and try to find a genuine approach towardsa two-state solution, or I fear for where the futuremay go.

7.45 pmLord Phillips of Sudbury: My Lords, I had something

of a conversion experience, I suppose it might becalled when, like many, I went to Israel, the West Bankand Gaza for the first time in 2001. Up to that point Ihad read of the declining circumstances in Palestine,but I was and remain inexorably concerned about thesecurity of Israel. For my whole adult life I have beenan inveterate supporter of that country. I am a hugeadmirer of Israel in all sorts of ways, just as I am ofthe Jewish community in this country. It was notnecessary for my noble friend Lord Palmer of ChildsHill to remind us of the philanthropic tendencies ofJews. In this country they have an unrivalled record ofphilanthropy. The tragedy is that a great country and agreat people have so demeaned themselves and behavedin a manner that is not just contrary to internationallaw but contrary to simple morality and decency that Igenuinely believe that they are now on a suicide path.They are losing former friends and, I suspect, ordinarycitizens across the world in droves. That is a tragedy.

I was so committed to the survival of Israel that theonly time I have ever offered to fight for anyone was in1973. I wrote to the Israeli embassy here, but fortunatelyfor me the state of Israel was rather effective at rebuttingthe attack and I was not called up. When I first went tothe region I could not believe my eyes. Anyone in theHouse who has not been there and who doubts thehorrors of both the West Bank and Gaza should go. Iam always surprised at how many of my Jewish friendshave not been to either of those places, but in a sense Ido not blame them because I think they realise howunhappy it would make them to do so. I have beenfour or five times over the past decade, and I alwayswork with Jewish charities and marvel at how braveand brilliant they are. I would mention Ir Amin,B’Tselem, Machsom Watch and a number of others.Machsom Watch is comprised of 500 middle-classJewish women who go out on rota every day to standat the checkpoints and observe the conduct towardsthe humiliated and harassed Palestinians, and at nightthey put what they have seen on the web. What arestraint that is. A woman who took me to a checkpointsaid that she was called in by one of the commandingofficers. He said, “We are both Jews and we should notbe arguing about this”, but then she noticed on thewall behind his head a sign that read, “Our task is tomake life as impossible for the Palestinians as we can”.That about says it all.

I turn to the circumstances prevailing in Gaza. Wehear a lot about Israel getting out of Gaza and theGazans messing up their opportunities. Well, for themajority of those concerned, getting out of Gaza wasvery much a utilitarian decision. Maintaining 8,000-plussettlers in Gaza was simply beyond the scope of thestate of Israel and was counterproductive. Today, thesituation is appalling. I will read out some statisticsthat I have dug out. According to UNWRA, 38% ofGazans are poor, 44% are food insecure, and 80%depend upon food aid. Gazan poverty is the world’sworst, but the only one created deliberately. The blockadehas caused 17% more Gazans to be in the poorestcategory since 2005. More than a third of them—andmore than half the young people—are unemployed.Hundreds of factories stand idle and they produceexports only at the rate of 3% of the level before thetrouble. Eighty-five per cent of their fishing groundsand 35% of their agricultural land cannot be accessedbecause of restrictions. Eighty-five per cent of schoolsare run on double shifts, because others have beenbombed. Ninety per cent of the water is contaminated.It is rather ironic that my noble friend talked about theprowess of Israel in water production when it hasdecimated the water supply in Gaza. As a result, over50% of children have chronic diahorrea. Gideon Levy,in an article in Haaretz in July, told of the way water isused in the West Bank as a tool of colonisation. Hewrote this dreadful account:

“The Civil Administration is supposed to take care of thepeople’s needs. But it does not stop at the most despicablemeasure—depriving people and livestock of water in the scathingsummer heat—to implement Israel’s strategic goal: to drive themfrom their lands and purge the valley of its non-Jewish residents”.

One needs at this point to repeat—and go onrepeating—that Israel is split from top to bottom. Onequarter to one-third of Israelis, by other people’scalculations, are totally opposed to what is going on inPalestine. Would that they were sitting here and speakingon the side of all, or most, of the speakers tonight. Ihave met some of these people, and they are brave,because they are subject to huge pressure. They arecalled self-hating Jews, I believe.

The noble Lord, Lord Judd, said—absolutely rightly—that our Government have employed double standardstowards Israel for decades, and it has got worse, notbetter. Thank goodness that after this latest scandalof, I think, 3,000 new colonists in East Jerusalemcutting East Jerusalem off from the West Bank by theE1 block, the Foreign Secretary has at last come outwith a firm statement. I have been in this House since2008, and I cannot tell you the number of times thatwe have had statements from spokesmen fromGovernments of all persuasions which add up tonothing. There is never any action. My feeling is thataction is not just in the interests of the Palestinians orof peace in the Middle East, let alone in the widerworld, it is in the interests of Israel itself. That is whatdrives me on this issue and makes me unwilling tohedge about and avoid the charges of anti-Semitismwhich always follow plain speaking on this subject, Iam afraid to say.

I feel passionately that our Government, havingmade a start at what I call plain speaking in relation toplain facts, should pursue that path and if necessary


[LORD PHILLIPS OF SUDBURY]be independent of the United States, which is in aparticular relationship with the huge and powerfulJewish community there, as the noble Lord, LordKing, vividly explained. We must be independent anddo what we think is right for Israel, the Palestinians,the Middle East and the peace of the world. If we dothat, a lot of people in Palestine will listen to us.

In 2006, I had a meeting with Dr Ismail Haniyeh,one of the hate figures, who is the leader of Hamas inGaza. I have to say I was immensely impressed by theman. Unless I have lost all my touch for understandingthe reactions of people, I was impressed. I spent anhour with him man to man. He is dying for an openingand for some encouragement because he never gets adividend for anything Hamas does, except morecolonisation and more repression. There is hope to behad if we as a country can be brave with our policy,and I hope that the Government will carry on fromwhere they now are.

7.55 pm

Lord Williams of Baglan: My Lords, I welcome theopportunity to speak in this debate. I declare aninterest as a former British official in the Middle Eastand as a UN Under-Secretary-General in that region.The noble Lord, Lord Palmer, referred earlier to thegreat Israeli diplomat Abba Eban, who once notedthat the Palestinians never missed an opportunity tomiss an opportunity. Now the boot is on the otherfoot. The Israeli Government have elevated a significantdiplomatic setback in the UN—one in which it wassupported by only one out of the 27 members of theEU—into a significant regional and international crisis.I fear that the hard-line stance of the current Governmentis resulting in a haemorrhaging of support for Israelitself. The noble Lord, Lord Palmer, referred to supportfor the resolution from Islamist and third world countries.The fact is that all the democracies of the world, withthree exceptions—the United States, Canada and theCzech Republic—voted against Israel or abstained.That in itself is a stunning development in the historyof diplomacy in the Middle East, and one that Israelneeds to take careful note of. Never has its isolationbeen so marked.

It says a lot of Israel and of the Israeli press thatthese developments are followed closely and in a criticalway. The newspaper Haaretz this morning is morescathing of the Israeli Government than many of theremarks made by noble Lords. Even the centristnewspaper, the Yedioth Ahronoth, is critical of PrimeMinister Netanyahu’s policies and where they areleading Israel. Many noble Lords, including the nobleLord, Lord Alderdice, have referred to the regionalelement of peace. Where do we stand on that? Israelhas peace treaties, of course, with two Arab countries:Egypt and Jordan. Those peace treaties are beingsorely tested these days. It is very difficult for ademocratically elected President of Egypt, MohammedMorsi, to stand up and argue to his people that thispeace treaty is right and must be adhered to. Jordan,wisely guided by King Abdullah, is also suffering greatstrains, and I fear there is no doubt that the majorityof Jordanian public opinion is quite critical of thosepeace treaties.

We have heard much about Gaza. Where haveIsraeli policies led there? I will tell you: next week,Khaled Meshaal, the leader of Hamas, will enterGaza, and he will enter as a victor in the eyes ofPalestinians. I do not think Abba Eban would recogniseIsraeli diplomacy today. Israel must rescind the actionsannounced by its Government in the last 48 hours:namely the declaration of more and more settlements—another 3,000 dwellings—and that planning will beginfor settlement in E1, the land block between EastJerusalem and the heart of the West Bank. Everybodyknows what that means. It is meant to be the end ofthe possibility of a Palestinian state. If that were notenough, $120 million—£75 million—of taxes owed tothe Palestinian Authority have been seized by theIsraeli Government in the past few days. Prime MinisterErdogan—a strong critic of Israel—will also visit Gazasoon. This is not diplomacy, and it is not diplomacythat is serving the state of Israel. Time, in my experience,is running out for a two-state settlement. We would allbitterly regret that and, most of all, it would causegreat pain for the state of Israel.

8 pm

The Senior Minister of State, Department forCommunities and Local Government & Foreign andCommonwealth Office (Baroness Warsi): My Lords, Iam grateful for the opportunity to respond for theGovernment to this debate, brought by the nobleBaroness, Lady Royall, about the discussions that wehave had with the Palestinian leadership in light of thePalestinian resolution at the UN General Assemblylast week. It is an important and timely debate and Iwelcome it. I know the Israeli-Palestinian conflict is amatter of great interest to the House and, as always,involves great emotion and sincerity of views on allsides. Achieving a two-state solution to the Israeli-Palestinian conflict is one of this Government’s topinternational priorities.

The UK has long been clear that we support anegotiated settlement, leading to a safe and secureIsrael living alongside a viable and sovereign Palestinianstate, based on the 1967 borders with agreed landswaps, with Jerusalem as a shared capital of bothstates and with a just, fair and agreed settlement forrefugees. That is the only way to secure a sustainableend to the conflict, and it has wide support in thisHouse and across the world.

However, there has been a dangerous impasse in thepeace process over the past two years, as referred to bymy noble friend Lord Alderdice. The pace of settlementbuilding has increased, and we have seen new andconcerning reports of this in recent days. Continuedrocket attacks on Israel and continued settlement buildinghave resulted in frustration and insecurity deepeningon both sides and the parties have not been able toagree a return to talks.

We are grateful to Egypt, the United States andthe UN Secretary-General for their role in bringingabout a ceasefire in Gaza last month. We now needto build on this to bring about a lasting peace,including, as my noble friend Lord Phillips of Sudburysaid, the opening up of the blockade in Gaza for tradeas well as for aid; and, of course, also an end to thesmuggling of weapons. The crisis in Gaza and tragic


loss of Palestinian and Israeli life show why the regionand the world cannot afford a vacuum in the peaceprocess.

The frustration felt by many ordinary Palestiniansabout the lack of progress in the peace process iswholly understandable. We condemn illegal settlementactivity in the West Bank and East Jerusalem, becauseit threatens the very viability of the peace process anda two-state solution that we all support. After manydecades, the Palestinians still do not have the statethey aspire to. That is why we have consistently askedIsrael to make a more decisive offer to Palestiniansthan in the recent past, and have also called on Palestiniansnot to set preconditions for negotiations.

We agree with my noble friend Lord Palmer thatthe parties must get back to the negotiating table. Onlytoday, our consul-general in Jerusalem conveyed thisview to the chief Palestinian negotiator. The only wayto resolve the dangerous impasse in the peace processis a rapid return to credible talks. This is the Government’sguiding principle, and it was this concern that determinedthe Government’s approach to the Palestinian resolutionat the UN General Assembly last Thursday. Nevertheless,we respect the course of action chosen by PresidentAbbas. There is no doubt that he is a courageous manof peace. Let me be clear: we want to see a Palestinianstate and look forward to the day when its people canenjoy the same rights and dignity as those of any othernation. That is why we stress the urgency of negotiationsleading to a two-state solution.

Noble Lords, including my noble friend Lord Kingof Bridgwater, raised questions and concerns aboutthe assurances that the Government sought from PresidentAbbas and the position we took in relation to the vote.The Government, I suppose, judged that these assuranceswould help facilitate a return to negotiations. However,our priority now is to try to restart those negotiations.We call on all parties to show the political will necessaryto achieve this. We will redouble our efforts to restartthe peace process and continue our strong support forthe two-state solution. As I have said to this House onmany occasions, and indeed only recently, 2013 will bea crucial year for the Middle East peace process. Wehave urged Israel to avoid reacting to the resolution ina way that undermines the peace process and a returnto negotiations. The Foreign Secretary spoke to theIsraeli Foreign Minister on Friday and the IsraeliDefence Minister on Saturday. He made clear that wewould not support a reaction that sidelined PresidentAbbas or risked the collapse of the Palestinian Authority.

We are therefore extremely concerned by the decisionof the Israeli Cabinet to approve the building of 3,000new housing units in illegal settlements in the WestBank and East Jerusalem. This Government, alongwith our European partners, have consistently madeclear that settlements are illegal under internationallaw and undermine trust between the parties. Ifimplemented, these plans would alter the situation onthe ground on such a scale that it would make thetwo-state solution, with Jerusalem as a shared capital,increasingly difficult to achieve, if not impossible. Theright reverend Prelate the Bishop of Guildford wasright to raise settlements as a pivotal issue. Such plansundermine Israel’s international reputation and create

doubts about its stated commitment to achieving peacewith the Palestinians. We need urgent efforts by theparties and by the international community to achievea return to negotiations, not actions that will makethat harder.

In all the conversations that the UK has had withPalestinian negotiators, and those that the DeputyPrime Minister and the Foreign Secretary have hadwith President Abbas in the past week, relations havebeen excellent. That deep friendship will continue. Thefinancial and political support that the UK gives, withvery strong cross-party support, to the PalestinianAuthority, which is among the foremost in the world,is understood well by the Palestinian Authority andwill, of course, continue. We want the PalestinianAuthority to succeed and we believe that PresidentAbbas is the best interlocutor that Israel will have tobring about peace. We continue to be in regular contactwith the Palestinian Authority, and officials in ourconsulate-general in Jerusalem had meetings in Ramallahtoday to reinforce the UK’s firm commitment to andsupport for the Palestinian Authority. My right honourablefriend Mr Burt is planning, possibly this evening ortomorrow, to speak to the Palestinian chief negotiator.

We have been clear that we deplore the recentdecision of the Israeli Government to build 3,000 newhousing units and to unfreeze development in the E1block, and the confiscation of this month’s clearancerevenues. This threatens the viability of the two-statesolution. On Saturday, the Foreign Secretary publiclycalled on the Israeli Government to reverse this decision.In common with steps taken by other European partners,including France, the Israeli ambassador to Londonwas formally summoned to the Foreign Office thismorning by my right honourable friend the Ministerfor the Middle East, who set out the depth of the UK’sconcerns about the recent Israeli decision.

The noble Baroness, Lady Royall, asked whatrepresentations had been made to Israel on theconfiscation of customs revenues. The Minister for theMiddle East conveyed our serious concerns about thisdecision to the Israeli ambassador this morning. Thenational security adviser, Sir Kim Darroch, reinforcedthis concern to his Israeli counterpart when they spokethis afternoon. The noble Baroness, Lady Royall, alsoraised the question of what consultations we have hadwith the noble Baroness, Lady Ashton. We have had anumber of consultations with key international partnerssince Friday, including with the office of the nobleBaroness, Lady Ashton, and with the US Administration.We note the strong statements of the noble Baroness,Lady Ashton, and Secretary of State Clinton on theseissues.

My noble friend Lord Alderdice raised importantpoints based on greater experience. I am grateful forhis contribution and also for the tone of his contribution.It is of course right that a regional initiative is important.Egypt’s success in relation to the Gaza ceasefire is justone great example of this, but I am sure my noblefriend will agree with me that the US must now step upto the mark, as real progress will be made only with itspositive involvement.

The noble Lord, Lord Janner, is right when he saysthat the future has to be agreed through diplomacy,not rockets. The recent conflict in Gaza left 160


[BARONESS WARSI]Palestinians and six Israelis dead. That is not the wayforward. The noble Lord, Lord Judd, raised importantissues, noting that in order to lay the foundations forfuture agreement, we must understand history. I agreethat an even-handedness in this matter is as much inthe interests of Israel as of the Palestinian people. Thenoble Lord, Lord Williams of Baglan, also raised theissue of settlements. I hope he feels that I have dealtwith that already.

Palestine is now a non-member observer state at theUnited Nations but, sadly, the situation on the groundremains the same. The only way to give the Palestinianpeople the state they deserve, and the Israeli peoplethe security they are entitled to, is through a negotiatedtwo-state solution. That requires both parties to returnto negotiations, Israel to stop illegal settlement buildingand Palestinian factions to reconcile with each other.

The past month has highlighted the fragility of thesituation in the Middle East and the coming year willprove crucial if peace is to be achieved. Urgency isrequired to ensure that we grasp the opportunities thatwill be presented. We encourage the US, with thestrong and active support of the UK, the EU and theinternational community, to show decisive leadershipand do all it can in the coming weeks and months todrive the process forward.

If progress on negotiations is not made next year,the two-state solution could become impossible toachieve. That is why the Foreign Secretary has said tothe US Secretary of State, Hillary Clinton, that suchan effort would need to be more intense than anythingseen since the Oslo peace accords. We are ready tothrow our support behind this to find a solution to theconflict before it is too late.

Legal Profession: RegulationQuestion for Short Debate

8.10 pm

Tabled By Baroness Deech

To ask Her Majesty’s Government what assessmentthey have made of the efficacy of the regulation ofthe legal profession.

Baroness Deech: My Lords, I declare an interest asthe chairman of the Bar Standards Board and as anon-practising barrister. I have regulated several enterprisesin my time, but I have been fortunate in only everregulating those which I am convinced do good andwith which I am familiar and well briefed. This Housespent many hours last year debating the merits of andneed for public bodies, and the principles aired thenare ones that we need to be reminded of tonight.

The background to regulation of the legal professionis simple to grasp, and it is quite different today fromthe situation that prevailed when the governing statute,the Legal Services Act 2007, was conceived and passed.Simply, it is the lack of legal aid and affordability.That is no problem for those who go to the thrivingcommercial side of the Bar, but the average wageearner often finds the expense of legal advice beyondhis means, in part because of the built-in cost ofregulation. The effect on the profession is dire too, for

the very large numbers of the Bar who do, arguably,the most socially valuable work, in criminal and familylaw, are seriously affected, because payment for regulationhas to come out of their own pockets. This worksagainst mobility and diversity, for the altruistic youngpeople who qualify and want to come to the Barcannot earn the modest living they once relied onwithout the legally aided work, at the very time whentheir higher education debts have peaked.

The Legal Services Act, which governs my work, isgrounded in the 2004 report by Sir David Clementi onthe regulatory framework of legal services. He wasconcerned with the then over-complex existing regulatoryframeworks and with complaints handling, although,to be fair, that was more relevant to the solicitors’branch than the Bar. He was trying to reconcileliberalisation, allowing competition and access to flourish,with protecting the public, with special focus on complaintshandling. His report led to the Legal Services Act 2007.

Consumerism was the other motivating factor behindthe Act, but that policy was formulated in 2000, in anentirely different economic climate, following the Officeof Fair Trading report about competition in theprofessions. This was all before the crash of 2007-08 inthe financial world and its dreadful results. Thatdemonstrated the failure of financial regulation, which,with hindsight, might have affected the principles behindthe Legal Services Act. It was once thought that thedivision between clearing banks and merchant banksshould go, and that there should be a free market ofunfettered competition and deregulation. I am noeconomist but I would not be alone in pointing outthat the meltdown and bank collapses resulted, andthe Financial Services Authority seemed to have nopower to prevent any of this or stop any innocentsfrom losing. Indeed, that super-regulator is about tobe dismantled. Legal regulation was developed withoutregard to this history and its risks have yet to play out.

Under the 2007 Act, the profession is overseen bythe Legal Services Board. Its powers are devolved tosome extent to the front-line regulators—for thesepurposes, the Bar Council and the Law Society, whichhave separated out their regulatory and representativefunctions. Therefore, the Bar Council represents barristersand the Bar Standards Board regulates them; the LawSociety represents solicitors and the Solicitors RegulationAuthority regulates them—not to mention six otherregulators. For the purposes of this debate, I willconcentrate on the Bar and the solicitors, of whomthere are 10 times as many, and I am married to one ofthem.

Proper regulation, in the public interest, is absolutelyvital but it needs to be balanced against cost andexisting resources, and performed efficiently. It doesnot take much to see that, rather than sorting out themaze of regulation, the statute adds to it; there may beover-regulation, duplication of regulation and competitiveregulation, none of it cost-capped. The cost of theLegal Services Board and its demands are seriousissues, for the practitioners have to fund it, as well asthe other projects it has required—quality assessmentof advocacy, an education review, diversity data collectionand the Office for Legal Complaints. More than that,it is arguable that the Bar was caught up in the

513 514[LORDS]Palestine: UN General Assembly Legal Profession: Regulation

slipstream of the criticisms that were levelled at thehandling of complaints by solicitors, and the heavystructure of the 2007 Act is not suited to as small aprofession as the Bar.

When the Legal Services Bill was introduced in2006, the regulatory impact assessment calculated theannual running costs of the Legal Services Board,which is the super-regulator overseeing the specialisedones, at £3.6 million. However, the total borne by theentire legal profession up to now is £19.5 million, withanother £50 million for the Office for Legal Complaints.The cost falls on clients and, in the case of legallyaided clients, on practitioners. That is due to duplicationof work through micro-management of regulatorsand the pursuit of objectives more akin to a marketregulator than an oversight public interest regulator,as was mandated by Parliament.

I echo the fears of Sir Sydney Kentridge whenregulation of the legal profession was first advanced afew years ago. He feared an increase of power of theGovernment to control the legal profession through agovernment-appointed body, but he was confidentthat the Lord Chancellor would ensure that the Barwas protected. Sadly, as I have learnt at internationalconferences, the outside world sees the independenceof our legal profession as diminished by regulation.

The 2007 Act laid down eight regulatory objectivesin no particular order. Some conflict with others inpractice. Therefore, a margin of appreciation clearlymust be left to front-line regulators to decide whatsteps to take. It is not clear from the statute whoseview would prevail in case of disagreement betweenthe Legal Services Board and the front-line regulators.Nevertheless, history has shown that one objective—promoting the interests of consumers—has been elevatedabove the others by the super-regulator, and in so doingit sees it as its task to “direct” rather than “assist”—theword chosen by Parliament—the front-line regulators.

Excessive focus on the consumer interest may be tothe detriment of the professional interests and standardsupheld by the lawyers. Commercialism is not everything,although one wants legal advice to be available andaffordable. Certain services, such as education, healthand the law, are beyond market value. The publicinterest must prevail. It does not seem to me that thepublic will be well served if there is authorisation for anew category of partly qualified or underqualifiedproviders of legal services who offer only one service—forexample, will writing, which cannot really be confinedto a small area.

Too many new projects are being imposed by thesuper-regulator on the front-line regulators withoutdue regard to cost, need and effort. For example,outcomes-focused regulation does not work well forthe rules of conduct of the Bar, because court litigationis a process-driven system, where the rules are notmerely means to an end but an end in themselves andintrinsic to the rule of law itself.

Let us take referral fees. They are seen by the entireBar as unethical, restricting competition between lawyersand denying the client freedom of choice. They arelikely to be illegal under the Bribery Act 2010, but thefront-line regulators are being told to retain themexcept where specifically banned by law, in the face ofevidence that they are a bad thing.

Another example is that the members of the Barhave been told that, when they first meet a criminalclient in the cell, they must give that client on a pieceof paper directions as to how to complain. Therecould not be a worse moment at which to do it. Nowthere is required detailed collection of barristers’ equalityand diversity data, which go beyond the Government’srecommended approach, in that they require data onsexual orientation and socio-economic status. Theyare to be collected chambers by chambers, yet manychambers have fewer than 10 members, which makescollection of such data very sensitive, because anonymitymay easily be breached. The Bar’s preference for aggregatecollection of such data across the profession wasrejected.

The Bar Standards Board does not dispute the needfor proper regulation, but it should be proportionate,affordable and effective. We were disappointed thatthe Ministry of Justice’s triennial review of the LegalServices Board did not address those concerns directly.The opportunity will present itself again in thequinquennial review of the 2007 Act.

The noble Lord, Lord Carlile, who cannot be in hisplace this evening, has said, in support of what I amsaying, that the regulation of the legal profession iscluttered and bureaucratic. It may not have gained theconfidence of the profession or the public.

At this stage in the implementation of the Act andthe introduction of alternative business structures,there remains a role for the Legal Services Board, butnot many more years should pass without an overhaulof the complications introduced by the Act in establishinga super-regulator. I hope that the Lord Chancellorand the Ministry of Justice will start a discussion withthe profession and identify a simpler, cheaper andmore balanced future.

8.21 pm

Lord Faulks: My Lords, I begin by declaring aninterest. I am a practising barrister. I was a head ofchambers for nearly a decade until relatively recentlyand I am a former chairman of the ProfessionalNegligence Bar Association.

I shall make a few observations about the positionof the Bar. My noble friends Lord Gold and LordPhillips of Sudbury will no doubt speak about thesolicitors’ profession. When I started to practise, theBar was lightly regulated, the profession was muchsmaller, chambers were much smaller, circuits hadmore power and influence, and most senior barristersproceeded to some form of judicial post. The standardof ethics was extremely high, but there were undoubtedlysome restrictive practices which needed to change.Those practices, together with the considerable increasein the size of the profession and the way it functioned,called for examination.

Following the report of Sir David Clementi, theBar Council carried out his central recommendation:that there should be a split between the regulatory andthe representative elements of the Bar Council’s work.It therefore established the Bar Standards Board. Themembers had extensive experience of regulation andcorporate governance and were appointed on Nolanprinciples.

515 516[3 DECEMBER 2012]Legal Profession: Regulation Legal Profession: Regulation

[LORD FAULKS]It would be inaccurate to say that the Bar, a still

small and independent profession, universally welcomedthe arrival of the board but, since it has been set up,there has been a growing respect for what it does.There have inevitably been increasing demands onchambers in terms of record-keeping, compliance withregulation and a variety of measures that the boardhas imposed on the profession to secure high standardsand ensure that the Bar functions in a way that reflectsthe public interest.

The key to the respect that the BSB commands isthe evidence-based approach adopted by the boardand the sense among barristers that it has taken thetime and trouble to understand the Bar and the way itpractises, both its weaknesses and its strengths. Theneed for a super-regulator, or oversight regulator, tooversee the approved regulators like the BSB has notbeen seen by the profession to have any obviousjustification—to put it mildly—particularly when itseems to involve sets of chambers duplicating many ofthe obligations placed on them by the BSB and increasingstill further the cost of compliance.

What is the proper role of the Legal Services Board?As the Legal Services Bill was going through Parliament,a number of parliamentarians expressed the fear thatthe LSB might be heavy-handed and would not allowapproved bodies such as the BSB, once they wereoperating effectively, to get on with the job. Reassurancewas provided by the then Government. For example,on 13 June 2007, Bridget Prentice MP, the ParliamentaryUnder-Secretary of State in the Department forConstitutional Affairs, said:

“It is important that the oversight regulator does not micro-manageand second guess the actions of the approved regulators, asMembers on both sides of the Committee will agree”.—[OfficialReport, Commons, Legal Services Bill (Lords) Committee, 13/06/07;col. 95.]

This is a reference to the work of the Joint Committeeon the Draft Legal Services Bill, to which Sir DavidClementi had said in evidence that there should be“minimal interference” by the LSB in the work of theapproved regulators.

I have had the opportunity of reading the BarCouncil’s response to the triennial review of the LSBby the Ministry of Justice, together with the LSB’sresponse. To the disinterested observer, I recommendreading these two documents. The arguments of theBar Standards Board are compelling. Those of theLSB are rich with regulatory language, not easilyunderstood by the general reader, and include a greatdeal of self-justification. They also indicate a desire toplay an increasing role in the regulation of the legalprofession. The response concludes with an observationabout a review of the 2007 Act:

“Any significant change to the current settlement in advanceof such a review will divert effort unnecessarily from the currentchallenging delivery agenda”.

This does not sound very much like what Parliamenthad in mind for the Legal Services Board.

I will give the House an example of where theLSB clearly wishes to have a significant involvement inthe way the legal profession functions, which is inrelation to legal education. The chair of the LSB

observed in his Lord Upjohn Lecture in 2010 that thecurrent framework for legal education and trainingwas,“simply not fit for purpose”.

In his own 2012 Lord Upjohn Lecture, Lord Neuberger,the president of the Supreme Court, made this observationabout David Edmonds, the chairman of the LSB, andthe Legal Education and Training Review:

“I cannot share the view which David Edmonds was reportedin the Guardian as expressing in March this year, namely that hewould be ‘extremely disappointed’ if the LETR only made minorrecommendations. That suggests a conclusion that major reformis both necessary and proportionate, reached in the absence ofany evidence and analysis. But surely we should wait for theevidence, the analysis of that evidence, and the conclusions drawnfrom that analysis before we start talking of disappointment orthe nature of the appropriate recommendations. We should all besurely approaching the Review and its outcome with an openmind”.

No doubt the observations of the chairman would besaid to be consistent with one of his goals in the LSB’sdraft strategic plan for 2012 to 2015, which was,“to reform and modernise the legal services market-place in theinterests of consumers, enhancing quality, ensuring value formoney and improving access to justice across England and Wales”.

The LSB clearly has very significant regulatory ambitions.Who pays for the increasing regulation? The cost

falls on practitioners and very harshly on those whoare starting and who depend on the publicly fundedfees which are steadily reducing in their true value.Smallish sets of chambers with a high BME quotientare particularly hard hit. For those not dependent onpublicly funded work, the cost of regulation—muchof which, in my view, is unnecessary—will ultimatelyfall upon the consumer of legal services, who will haveto pay more for the increasing infrastructure that isnecessary in chambers in order to comply with theburden of regulation.

Barristers are, frankly, bewildered by some of therequirements imposed by the LSB. The inept requirementby the LSB that barristers should inform their layclients at the point of first instruction of their right tomake a complaint to the chambers and, as necessary,to the legal ombudsman, shows very little understandingof the way barristers actually practise and an insensitivityof the circumstances in which a client sees a barrister.Similarly, the requirement by the LSB that quality andassurance should extend to practitioners’ advisorywork reveals a complete ignorance of the way in whichthe profession works—not to say a failure to graspfundamental principles of law in relation to the privilegewhich attaches to instructions given to barristers. Theseexamples and many more illustrate the perils of havinga non-expert lay regulator attempting to devise rulesof conduct for practice by members of the legal profession.

Barristers understand the need for regulation andfor public confidence in the legal system. However, itshould not be forgotten that the legal profession isheld in high regard throughout the world, as is oursystem of justice, and results in considerable benefit tothe economy of this country. We should take considerablecare before ripping up the model.

I am sure that the Minister will accept, as do theGovernment, that regulation needs justification andthat our economy generally has been overburdened by

517 518[LORDS]Legal Profession: Regulation Legal Profession: Regulation

unnecessary and inappropriately onerous regulation. Iurge the Minister to support post-legislative scrutinyof the effectiveness of the Legal Services Act, particularlythe scope of the LSB’s activity.

I congratulate the noble Baroness, Lady Deech, forbringing forward this important question to yourLordships’ House. I applaud her contribution to theraising of standards at the Bar and endorse all that shehas said so ably in today’s debate.

8.30 pm

Lord Phillips of Sudbury: My Lords, I, too, thankthe noble Baroness, Lady Deech, for bringing thissubject before the House. I confess that I received here-mail warning us of all this only this morning, so mycontribution may be lacking in coherence, but I willmake a few points if I may. I started full-time in asolicitors’ office—admittedly, as an office boy—55 yearsago, and have seen an astonishing transformation overthat time in the regulation and, I believe, the ethos ofwhat is still called a profession. When I started therewas a maximum of 20 partners; you could have onlypartnerships, not limited liability; there was no advertisingand no conditional fee arrangements; referral feeswere not permitted; and, above all, there were no suchthings as “alternative business structures”, that charminglydenominated abortion that we now have among us.

Sadly, I must be honest and say that I do notactually think that solicitors are any longer membersof a profession. I think that we are just anotherbusiness. Thank the Lord, integrity is still largely to befound within the solicitors’ branch of the profession,but I do not see it long maintaining itself becausethe structures within which we now function havebecome so commercialised and driven by bottom-lineconsiderations that it is unreasonable to expect integrityto survive organically—in rather the same way, I amafraid, as the City, little by little, has lost its valuesbase. I agree with what the noble Baroness said aboutthe big bang and its consequences

I feel that we are going down a blind alley inthinking that more and better regulation can maintainthe essential integrity without which we are no longerofficers of the Supreme Court and handmaids tojustice but something a great deal less and, in someways, quite threatening. I say that with great reluctancebut cannot avoid it. I was the only solicitor member ofthe committee set up under Sir Sydney Kentridge, andhe had a very lively belief in the ethos of the profession—aset of values, if you like, autonomous to each practitioner,without which the whole structure could not survive.

The truth now is that we are deep in regulation—Iwould say, as have others, overregulation or inappropriateregulation. I looked at Halsbury’s Laws of Englandthis morning and found to my amazement that thereare two volumes on the professional regulation oflawyers—1,196 pages of stuff about it. When I started,I doubt that there were 60 such pages. The life of thelawyer today—I can speak only of the solicitors’profession—is unbelievably bureaucratic. There issomehow a belief that if you are forced to write asix-page letter to a client before you start work, thatwill somehow improve the work, or that some of theforest of internal bureaucracy that now prevails in big

firms can maintain those essential elements withoutwhich there can be nothing.

I look to the regulatory objectives of the 2007 Act.I may say that I was one of the very few Members ofthe House of Lords—in fact, I may have been the onlyone—who was flat-out opposed to the part of the2007 Act that set up the alternative business structure.But as has already been remarked, the eight regulatoryobjectives are not entirely internally consistent. Whenyou think that the eighth of them is,“promoting and maintaining adherence to the professional principles”,of which there are five, it all adds up to a not entirelyclear set of guidelines for the young person enteringthe profession. Above all, integrity should surely trumpeverything. I do not think the word appears in theeight regulatory objectives.

I leave my few remarks at that. I warn against thebureaucratisation that attempts to set the values forthe practitioners. Up to a point, of course you have tohave a complaints mechanism; of course you have tohave somebody who can strike down the few badapples and maintain that integrity. But I believe, ashad been said by the two previous speakers, that weare not at the point where we are doing the regulatoryprocess the best we can. In fact, going back to thedrawing board—as I think was the phrase of the nobleLord, Lord Faulks—might well be what is needed.

I have not embarked on the alternative businessstructure, except to say that if anybody thinks that youcan have a law firm 70% or 80% owned by whoever thehell you like and that that is not going to impactdirectly on the ethos of that enterprise, they are livingin cloud-cuckoo-land. There are 120-plus applicationsnow for ABS status and it is already observable thatthese big combines are going to be driven first, secondly,and thirdly by profit, profit, profit. It is all about thebottom line, just as in the City. Everything else can gohang. The notion of informal pro bono work is, I amafraid, inconsistent with the values that will bring intoexistence the vast majority of these alternative businessstructures. I would like a re-examination of them assoon as is feasibly possible, because they are a real nailin the coffin of professionalism.

8.37 pmLord Gold: My Lords, I start by thanking the noble

Baroness, Lady Deech, for bringing this debate forwardthis evening. Perhaps like the noble Lord, Lord Phillips,I was somewhat sceptical of the Legal Services Actand what was intended by it, but I was not here then.Maybe I would have joined in voting against it. But weare where we are, and we must have a properly regulatedlegal profession that ensures that all providers of legalservices meet high standards of competence and behaviour.This is even more important now as the first alternativebusiness structures start providing legal services. Ishare the concerns of the noble Lord, Lord Phillips,about where that takes us, but we will see.

The present system reflects the proposals in Sir DavidClementi’s 2004 report, as we have heard from earlierspeakers, for which there was general parliamentarysupport on all Benches as well as support from boththe Law Society and the Bar. High on Clementi’srecommendations was the separation of representativeand regulatory functions.


[LORD GOLD]The Legal Services Board was created to provide

oversight of a variety of different regulators to ensurethat the right regulatory objectives are achieved and tosecure some independence from the Government. Thecurrent regulatory framework has been in place onlysince 1 January 2010, when the Legal Services Boardtook on the majority of its powers under the LegalServices Act. In a review published in July this year,the Ministry of Justice was supportive. It concludedthat the LSB should continue to deliver its functions inits present form. Recommendations for some improvementto its corporate governance were made but, by andlarge, it was to carry on operating as before.

Despite the endorsement from the Ministry of Justice,there has been some criticism of the LSB. We heardsome this evening. The noble Baroness, Lady Deech,indentifies criticisms made by the Bar Standards Board,notably that there is overregulation and duplication,leading, among other things, to unnecessary cost whichinevitably is being picked up by the consumer. Whilegenerally supportive, the Law Society, representing120,000 solicitors in the UK, is also critical. It believesthat the LSB has not got the balance right and that theobjective to promote competition in the provision ofservices is given greater emphasis than improving accessto justice, encouraging an independent, strong, diverseand effective legal profession and promoting andmaintaining adherence to the professional principles.

The regulatory arm of the Law Society, the SolicitorsRegulation Authority is a bit more supportive, butalso believes that the balance is not quite right at themoment. The SRA approves of the LSB’s emphasis onputting the consumer and public interest at the heartof regulation and its role in the appropriate co-ordinationof standard setting across the various front-line regulators.The SRA also considers that the Legal Services Boardhas made significant progress in achieving its objectives,including making the market more diverse, as seen inthe licensing of ABSs, and developing a regulatoryregime that is both independent and transparent. However,the SRA believes that the LSB now needs to workclosely with regulators to develop a commonunderstanding of its role. It considers that the LSBmust focus on properly developing its oversight roleand, in doing so, reduce its approval, enforcement andinvestigatory functions. However, the SRB acknowledgesthat there have been improvements.

The main thrust of the complaint against the LSBis whether it is truly performing the role of oversightregulator, which was what was intended, or whether, inthe words of the Bar Council, there has been “missioncreep”, with the LSB now duplicating and overlappingthe work of the front-line regulator, micro-managingthe activities of those regulators it is meant to oversee.Front-line regulators, such as the SRA, are much morein touch with the profession, so why should we deferto something much more remote, where I do notbelieve that there are any legal practitioners involved?Critics claim that this duplication and the LSB’s micro-management have greatly increased the cost burden. Itseems, from other speeches this evening, that that isindeed supported. Although it might be said that thefact that there is some tension between the LSB andthe regulators over which it has oversight, or at least

some of them, is not a bad thing—it might keep bothsides on their toes—the extent of the serious criticismsthat are being made suggests to me that we really needto look again at the balance.

I have spent the past two years immersed in theworld of corporate governance. This has demonstratedto me that finding the right balance is key. Whilebusinesses must adopt a proper governance regime, itis essential that governance does not take over anddamage the very business that the organisation ispromoting. So those responsible for regulation mustbe practical and sensible in their outlook. Regulationfor regulation’s sake cannot be right. Any regulationthat is put in place must be appropriate and proportionateto achieve the required result. Its purpose must beunderstood and supported by those being regulated.

I am also sure that, if at all possible, finding theright balance should be achieved through greater dialogueand perhaps compromise between the relevant parties.Those concerned may need to demonstrate that theyunderstand the issues raised by the other parties andare willing to be flexible. In the perfect world, byworking in partnership and accepting that each sidemay be making valid points, the LSB and the regulatorswill be better able to deliver excellence in the regulationof legal services. This is far better than seeking toimpose a solution on the regulators or the LSB. However,I understand there has been considerable dialoguebetween the LSB and the regulators and that littleprogress has been achieved. That is unfortunate andharmful to the legal profession and the administrationof justice.

Under the circumstances something more is needed;it has been suggested that even late on there should bepost-legislative scrutiny of the effectiveness of theLegal Services Act in order to test whether the originalobjectives have been achieved. I suggest to the Ministerthat this is something that should now be looked atseriously. The Bar Council wants such a review, and Ido not think that the solicitors’ profession would havemuch difficulty in supporting it. Despite this, I thinkthat the LSB has a continuing role, particularly as wehave alternative business structures coming into place.Until we see where that actually takes us and howthese new bodies operate, the LSB should remain, butI think the sort of review I have mentioned is necessary.

8.46 pm

Lord Mackay of Clashfern: My Lords, it seems along time since Burns Night 1989 when I introducedGreen Papers about the reform or control of the legalprofession. Your Lordships who are old enough willremember that these Green Papers provoked a certainripple of interest from the judiciary and others. Therehave been great changes since then. In formulating theGreen Papers we were principally, although not entirely,dealing with what looked like anticompetitive practicesin the legal profession. To what extent a particularpractice is anticompetitive is quite a difficult question.For example, it was thought that preventing the legalprofession advertising was anticompetitive; I am notsure that the legal profession is better today with thekinds of advertisements you see on the television andin the newspapers. What one characterises as


anticompetitive may, in fact, be something to do withthe quality, independence and integrity of practitioners.If I am a reasonable member of a legal profession, Isurely do not need to make my way forward by criticisingmy fellow practitioners. Relationships created in thecourse of professional work should, in my view, be theprincipal recommendation for a professional person.

Matters have since moved quite a distance. In myfinal proposals, which went through as an Act ofParliament, judges were given an important role in thecontrol of the legal profession, which worked prettywell for a time. Gradually, the influence of judges wasreduced until it disappeared altogether from the formalaspects of the regulation and eventually new standardswere set up. I believe that the late Lord Nolan was thefirst to point out the need for a division in the Barbetween its regulatory and representative functions,particularly in relation to the charges levied by the BarCouncil for being a member of the Bar. If it wasregulatory, it could be compulsory, whereas if it wasrepresentative, it should be voluntary. “No taxationwithout representation”might be an adapted expressionfor what he said.

It is also important to remember education in thisconnection. It was important in my judgment, and Iremain of the view that it was probably correct, that areasonably efficient system of education was requiredto maintain the professional quality of the Bar and ofthe solicitors’ profession.

It seemed to me, and I still take this view, that thedifferent branches of the legal profession have differentchallenges to face. Therefore, I am glad that the BarStandards Board, the Solicitors Regulation Authorityand the other regulators which exist now in the legalprofession have independent existence. I rememberdiscussing the need for differences with Sir DavidClementi. I think he did not fully agree with my pointof view, which was why he suggested this overarchingsupervisory body for the legal profession as a whole.He thought that the legal profession should be regardedas a whole, and I could see the force of that. I alsothink that overspecialisation in the legal profession isdetrimental to its success as a proper organ in thegeneral affairs of our country.

We must recognise that it is important that the legalprofession should be independent. In recent days, wehave heard a little about regulation in relation toanother independent part of our economy with afairly heated argument on one side and on the other.That was part of the burden of the debate that we hadon the Green Papers on that marvellous Friday, whichI certainly remember with great—what should I say?—anxiety as to whether I was doing the right thing.

As I have said, education is important. In thisconnection, I would be glad if the Minister wouldcomment on a report that I have recently read that theCollege of Law has been transformed, no doubt withthe authority of the Privy Council, into the Universityof Law. I always thought that a university was supposedto be an institution which had perhaps not absoluteuniversality but at least covered a few disciplines,including medicine and the like. But the University ofLaw seems to have only one discipline as its subjectmatter.

Lord Phillips of Sudbury: Is it not also true that theuniversity which emerged from the College of Law is aprofit-making entity? I rather think that it is.

Lord Mackay of Clashfern: I am just about to cometo that point. I understood that the something orother—I am not sure exactly what—of the College ofLaw has been sold to a commercial organisation,which I assume has a profit motive in it. I do not thinkthat it is a charity. However, the university would be acharity, at least under the ordinary definition of charitywhich prevails as an institution for the advancementof education. I would be glad to know a little aboutthe Government’s policy in relation to having the legalprofession taught, and a university financed, by aprofit-making organisation. I am not against profit forprofit’s sake at all but, hitherto, universities have notbeen regarded primarily as institutions set up forprofit, except for the profit of those who profit from them.

The noble Baroness, Lady Deech, has led the BarStandards Board with tremendous distinction. I senseda certain amount of frustration in her remarks thisevening about the way in which really efficient standard-setting for the Bar can be damaged by unnecessaryand sometimes overcomplicated interventions by thosewho do not quite share the same objectives as the BarStandards Board. I feel that the same may be somewhattrue in the solicitors’ branch of the profession.

I hope that the Government will take very seriouslythe suggestion that this whole area should be subjectto post-legislative scrutiny. The Joint Committees ofthis House and the other place have shown themselvesto be very valuable in scrutiny of legislation. Post-legislativescrutiny of this legislation, which is so fundamental tothe success of our free legal profession, is now due.

8.55 pm

Lord Goldsmith: My Lords, I shall speak briefly inthe gap and have alerted both Front Benches to this. Itis a pleasure to speak after the noble and learnedLord, Lord Mackay of Clashfern, because it wasprobably as a result of the innovations and reformsthat he has referred to that I first became involved inquestions relating to the regulation of the legal profession.I have now been involved in this for more than 20 years,both nationally and internationally. I was chairman ofthe Bar during the first year that it faced competitionfrom solicitors in terms of rights of audience andwhen it for the first time had to succeed on the basis ofits merits and not on the basis of restrictive practices.

I want to spend two minutes underlining a veryimportant point raised by the noble Baroness, LadyDeech. It is not the question of whether there shouldbe regulation for the legal professions; of course thereshould. It is not the question of whether the regulationshould be for the public interest; yes, it should. It is notthe question of whether regulation should be carriedout purely by lawyers—the body which the nobleBaroness, Lady Deech, heads has a majority of non-lawyers on it. Those are not the issues. Rather, theissue is: what is it that the Legal Services Board isdoing? This came about when I was fulfilling a differentrole as a member of the Government who introducedthe Legal Services Act. I did not have direct responsibility


[LORD GOLDSMITH]for that; that was the Lord Chancellor. However,obviously I knew well what was going on and expressedmy views at the time. We tried to make clear to bothsides of the legal profession, and indeed to the otherlegal bodies, that the Legal Services Board was notgoing to be an alternative regulator. It was to be anoversight regulator which had to be there as a backstopin case the regulators themselves—the Law Society,the Bar Council and the two bodies that they setup—were not doing their job.

I am still involved in the regulation of the legalprofession as a bencher at Gray’s Inn and a member ofits management committee—a constituent part of theway in which the profession operates. I have a growingconcern about whether the Legal Services Board ismicromanaging and suffering from mission creep, whichis almost inevitable whenever a body is set up. I know,because I have seen the operation, that the nobleBaroness is not a pushover as far as the Bar is concerned;absolutely not. I have seen her berate—very nicely butstill enormously effectively—Lord Justices of Appealwho were quivering, not realising what they had donewrong. When she does that it is very good for theprofession and for the public. What is not neededalongside that is a body which thinks that it has thesame responsibility—it is not there in the backgroundbut is forward. The Bar Council said in a briefing thaton the important public issue of the extension ofdirect access the Legal Services Board sent 14 pointsthat it wanted to see addressed in any submission onthis question. If that was the case, it was over eggingthe role.

I have a single question and a single proposition forthe Minister. Will he say, having heard from the nobleBaroness, that the Government will take on the questionof having a proper review of what the Legal ServicesBoard is doing? Many people with experience, frominside and outside the profession, will be able to assistin relation to that. It is important. As the noble andlearned Lord, Lord Mackay, said, what matters at theend of the day is the independence of the legal profession.That needs to be safeguarded as well as the publicinterest, efficiency and the other things that nobleLords have referred to.

8.59 pm

Lord Hunt of Kings Heath: My Lords, this has beena very interesting, although short, debate. At the momentwe are thinking very much about regulation of themedia. Whatever the outcome of the current debate, inmost sectors of the economy it is generally acceptedthat there should be statutory regulation of the affairsbeing conducted within them—and, where the professionsare concerned, by the individuals who practise in thatsector. However, there is much less consensus aboutthe right regulatory approach.

The noble Baroness, Lady Deech, said thatcircumstances had changed considerably in the pastdecade since the architecture of the 2007 Act wasformed—and, indeed, many years after the noble andlearned Lord, Lord Mackay, first put his mind to theserather difficult subjects. She was right to say that theeconomic climate is different, both in the country andfor the profession; and she was surely right, too, when

she pointed to some of the experiences of regulators inother sectors. She mentioned financial services. I willmention the health service sector, where the existenceof the long-standing—almost long-running—inquiryinto Mid-Staffordshire has moved on from what happenedin the hospital to look at the role of the variousregulatory bodies, and at whether collectively they didthe right thing or whether there were gaps, shortcomingsor tensions between them.

It is absolutely right for us to have this debate andto discuss regulation within the legal profession. I amsure that the Government will welcome the opportunityto state their views and perhaps to reflect on some ofthe comments that have been made about the need forthem to think in the next two or three years about howto take their views forward. I listened with greatinterest to the comments of the noble Lord, LordPhillips, on ownership structure in the profession. Ireadily recognise that there have been huge changesover the past decade. However, in my experience of theNational Health Service, doctors in particular as wellas other parts of the profession are able to maintainprofessional standards within a large organisation. Iam not persuaded that it is impossible within newownership structures for there none the less to be astrong ethos that will be very much underpinned bythe principles set out in the 2007 Act, and by theregulatory framework that comes from it.

Lord Phillips of Sudbury: Does the noble Lord nothave concerns that an organisation that buys lots oflaw firms is likely to be interested only in what it canscrew out of them? That is not consistent with anyview of professionalism.

Lord Hunt of Kings Heath: Of course, in thedevelopment of the kind of organisations to which thenoble Lord refers, profit will be a core concern. However,one could look to other sectors where people areinvolved in seeking profit and point to professionalswho practise to the highest quality, usually underpinnedby regulatory functions. I do not subscribe to thenoble Lord’s view that ownership structure per se willchange the professional ethos of people working inthe sector. I understand his concerns on the matter,but surely he will recognise that even if you are workingin a sector where the objective clearly is profit, it is stillperfectly possible to act in a responsible and ethicalway. Even before the ownership structure changes, itwas my understanding—although I am a novice inthese matters—that barristers none the less wouldseek to earn good income if they could.

Lord Phillips of Sudbury: I am most grateful to thenoble Lord for seeing that I was hovering. Lawyeringis a very particular business. It is not like manufacturingtins of beans. It has all sorts of social and ethicalissues at the heart of it. Unless you can allow a lawyerto give full vent to his or her social purpose, theposition of the lawyer as the gatekeeper to justice isimpeded.

Lord Hunt of Kings Heath: Having been a Memberof your Lordships’ House for 15 years, I now recognisethe special characteristic of lawyers, and I rejoice in it.I have only five minutes left and perhaps I ought topress on.


Clearly it is important to ensure that professionalregulation works effectively. It should not be overlybureaucratic and it should uphold the independenceand integrity of the profession. We should be veryproud of the whole legal services profession in thiscountry, the fact that it is recognised globally and thatlegal services are a huge export for this country. Clearlywe should do nothing that undermines the strength ofthe legal services industry in that regard.

I supported the passage of the Legal Services Billin 2007. Although the Legal Services Board has comein for some criticism in your Lordships’ Housetonight, we should recognise the progress made by theboard under the chairmanship of David Edmonds.We should also recognise that the board will bepublishing its inaugural assessment of the effectivenessof each of the approved regulators, including theSolicitors Regulation Authority and the Bar StandardsBoard. It might have been better if this debate hadbeen timed after we had seen the outcome of thesearrangements.

The triennial review to which the noble Lord, LordGold, referred has suggested that there is a continuingrole for both the Legal Services Board and the Officefor Legal Complaints. The next review will take placein 2015. The suggestion by the Bar Council and anumber of noble Lords for post-legislative scrutiny,which I would always support as a matter of principle,might be better timed to coincide with the next triennialreview around the 2015 mark so the two might runconcurrently.

I have noted noble Lords’ concerns, and particularlythe Bar Council’s concern and criticism of what theydescribe as mission creep by the Legal Services Board,citing micromanagement, duplication and overlap ofregulatory activities and unnecessary cost. These haveto be guarded against. I understand the total cost ofthe LSB start-up and first three years’ running costs ofjust under £20 million is not insubstantial, although itis modest compared to many other regulatory bodies.The noble Baroness, Lady Deech, commented onexamples of where the LSB is considered to have goneoverboard, and mentioned equality and diversity datacollection. My understanding is that the LSB—as itsaw it—gave best practice advice on how that collectioncould be done anonymously and made it clear thatthere should be no compulsion on individuals to takepart. The consultation was explicit that the reason forgoing beyond the blanket survey was so that clientsand potential employees could see the diversity make-upof individual firms and chambers. I am not going toargue one way or the other, but it is important that wealso hear the viewpoint of the Legal Services Board.We have tended to hear from one side.

Baroness Deech: My Lords, perhaps I might explainin response to the noble Lord. There is obviously noobjection to collecting diversity data across the entireprofession of 15,000; the Bar has done it for a while. Itwas difficult to collect data from chambers wherethere were perhaps only 10 people. Even if it is anonymous,identifying someone by ethnicity or sexual orientationwould of course be very easy. Because a unit is sosmall, that encourages people not to participate. I amafraid that our practical arguments in that respect

were simply rejected, with the outcome, I believe, thatrather fewer data are collected than might have beenthe case if we had been able to organise it ourselves.

Lord Hunt of Kings Heath: My Lords, I am surethat the House is very grateful to the noble Baronessfor that explanation. As I said, I do not seek to argueone way or the other. However, I suggest that in anydebate on these matters, it is important that the viewsof both bodies are heard by your Lordships’ House.

Lord Goldsmith: My Lords, in those circumstances,I wonder why my noble friend does not agree thatwhen you have the sort of comment that has comefrom a regulator—from the noble Baroness, LadyDeech—saying there is a problem, he does not nowsupport a review to see whether there is a problem ornot.

Lord Hunt of Kings Heath: I am most grateful tomy noble and learned friend for that remarkably helpfulintervention. We have just had the triennial review bythe Ministry of Justice. Another one will take place inthree years’ time. The Bar Council has put forward theproposal that there should be post-legislative scrutiny,and again, I have no doubt that your Lordships’House will want to give that every consideration,because most noble Lords strongly support the conceptof post-legislative scrutiny. The question is when itwould be best done. I suggest that it might be bestdone in parallel with the 2015 triennial review, whichwould allow a little more time for both these bodies tosee if they can meet together and work out a moreconstructive relationship. That ought to be the outcomeof both tonight’s debate and discussions between thetwo bodies.

9.12 pm

Lord Ahmad of Wimbledon: My Lords, I begin bythanking the noble Baroness, Lady Deech, for securingthis debate. The excellence of the UK’s legal professionis well recognised worldwide, and rightly so. The regulatoryframework is a key factor in ensuring that these highstandards are maintained. I would add—looking towardsthe noble and learned Lord, Lord Goldsmith—thatwe meet once again at a late hour. However, thequality rather than the quantity of speakers is animportant issue when it comes to the legal profession.

Before addressing many of the interesting pointsmade by the noble Baroness and other noble Lords, Iwould like to talk briefly about the regulatory frameworkfor lawyers in England and Wales and the reformsintroduced in the Legal Services Act 2007. I wouldsimply highlight, as the noble Lord, Lord Hunt, sorightly said, some of the positive elements that wehave seen, accepting the challenges that we have facedsince the introduction of the Legal Services Act. Whenwe talk about regulation, let me assure you that, assomeone who spent 20 years in the City of Londonand in financial services, the word “regulation”resonatesquite loudly in my ears.

The Legal Services Act 2007 had three key aims: amore effective and simplified regulatory framework; amore effective and independent complaints-handlingsystem; and more effective competition within legal


[LORD AHMAD OF WIMBLEDON]services. I turn to the first of those. In January 2010 wesaw the new regulatory framework become operational,with the Legal Services Board—which several nobleLords have mentioned this evening—getting up andrunning. The role of the Legal Services Board is setout in statute. It is an independent body providing—thisis the crucial word—oversight regulation of the frontlineapproved regulators. The approved regulators remainresponsible for the day-to-day regulation of their membersunless, of course, they are found to be failing in theirregulatory duties, in which case the Legal ServicesBoard has a number of powers to intervene to ensurethat effective regulation is maintained.

The second key reform is the creation of the Officefor Legal Complaints which administers the LegalOmbudsman scheme. Last year it dealt with over80,000 inquiries, and of those some 7,455, close to10%, were directly resolved. It acts as the single pointof contact for consumers unhappy with the servicethey have been provided by a lawyer. I would add thatthere is an informal resolution procedure which seesaround 35% of cases handled in this way.

The third and final key reform is the new alternativebusiness structures regime which allows different typesof lawyers to work together with other professionalsand to accept external investment and ownership. Thisshould allow them to explore new ways of structuringtheir businesses to be more cost-effective, efficient andinnovative. We hope that it will lead to more choice,improved standards and more competitive costs forconsumers. While we are happy to see a diverse rangeof alternative business structures emerging, we are notsaying that you need to be an alternative businessstructure; we are saying that we have given you theflexibility to practise as a sole practitioner, traditionallaw firm or alternative business structure. So far, over40 firms have taken the opportunity to become alternativebusiness structures, and it is particularly encouragingto see the diversity of firms involved, ranging from asimple husband and wife partnership to the Co-op.

So much change in such a short space of timemeans that this has been a steep learning curve for allinvolved, and this has inevitably led to challengeswhich several noble Lords have talked about in thedebate. Let me address first the issue of proportionateregulation. My noble friends Lord Gold, Lord Faulksand Lord Phillips all alluded to it in their contributions.What is important is that the Legal Services Boardand the approved regulators work together constructivelyto ensure that regulation is proportionate, ensures thatconsumers receive excellent standards of service, andthat the opportunities provided by the Act in terms ofcompetition and innovation are realised. Indeed, theissue of being proportionate to the role of the LegalServices Board was a point well made by the nobleBaroness, Lady Deech. The Legal Services Board hasbeen one of the key drivers of the reforms, partlydriven by its statutory duties. I appreciate that thepace over the past two years has meant that, as withmost new frameworks, there has been a lot of consultationand change, and while the benefits of all of thesechanges have yet to be realised, we are well on our wayto seeing the more competitive and innovative sectorthat the Legal Services Act first envisaged.

My noble friend Lord Phillips talked about theeight objectives and said that he was not sure whetherhis contribution was going to be coherent and clear. Ican assure my noble friend that he certainly was bothcoherent and clear. Perhaps I may draw his attentionto one of the objectives, which is,“to promote and maintain adherence to professional principles”,

which are defined in subsection (3)(a) as,“that authorised persons should act with independence and integrity”.

The complexity of regulation is always an issue,and a key part of the new framework has been theseparation of representative and regulatory functionsas required by the Act. This led to the introduction ofnew bodies in addition to the Legal Services Board,the Solicitors Regulation Authority and the Bar StandardsBoard, which in turn has led to a comment made byseveral noble Lords that the new framework, ratherthan simplifying things, has actually added to thecomplexity. It is vital that consumers have confidencein the legal profession. To that end, regulation of theprofession should be effective and not unduly influencedby its representative role. Without that, there is therisk of accusations of lawyers protecting their own. Sowhile we have seen new regulatory arms emerging,that has been an important step in maintaining—thatword again—the integrity of the profession. Also,before the new regime was established, a number ofdifferent organisations were involved in the regulationof the profession. While I take the point made by thenoble Baroness, Lady Deech, about self-regulation,there was still some oversight. My noble friend LordPhillips of Sudbury also mentioned this point. TheLord Chancellor used to approve rule changes, and insome cases rule changes had to be approved not onlyby the Lord Chancellor, but by other bodies, leadingto the criticism that the length of time taken to processsuch changes was unduly long.

The new regime streamlines this system by makingall rule changes the responsibility of the Legal ServicesBoard. Rule change applications must be dealt with ina timely manner and the Legal Services Board has thepower to exempt certain rule changes, fast track rulechanges and in more complex changes seek additionalviews. The latter is not aimed at redoing the work ofthe approved regulator, but rather at looking at thechanges objectively and providing helpful and constructivefeedback.

Baroness Deech: I appreciate what the Ministersays, but he must accept that there is need to investigatethis. Rule changes now go through an even moretortuous process than was the case before. If thefront-line regulators have responsibility, then theirrule changes ought to be accepted without the impositionof ideology and various approaches which are notnecessarily seen as the right way forward for a branchof the profession. Examining the way that rule changesare approved or held up is really important and I amnot sure we can wait three years for that.

Lord Ahmad of Wimbledon: I thank the noble Baronessfor her question and I agree with her. It is importantthat those in the profession contribute to the effectivenessof how these rule changes are implemented. I take onboard what she says and I hope that some of the


proposals we are putting forward will address theissues. I note the concerns expressed by my noblefriend Lord Faulks and the noble Lord, Lord Hunt,about mission creep on the part of the Legal ServicesBoard. As I said at the outset, the important issue isabout the terms of reference: what was the LegalServices Board set up to do? Earlier this year, theMinistry of Justice conducted a triennial review of theLegal Services Board and the Office for Legal Complaints.Based on this, let me assure your Lordships that, onthe responses received—including those from the approvedregulators—the review concluded that, while it is stillrelatively early to assess the full impact of the LegalServices Board, its functions are still needed and shouldcontinue to be delivered in their current form.

This was a view supported by the Bar StandardsBoard and the Bar Council. We must remember thatthe Legal Services Board is independent of governmentand it is not for us to dictate how it operates. Itsfunctions are clearly set out in the 2007 Act. However,it is clear that there has been a real need for anoversight regulator to drive the reforms set out in theAct. In doing so, it has fulfilled the important role thatonly an oversight regulator could have. Those whoresponded to the triennial review recognised the valueit has brought. Following the feedback we have received,the chairman of the Legal Services Board wrote to theMinistry of Justice confirming that his board is alsoconsidering the responses made so far.

I am conscious of time, but turning to specificquestions, my noble friend Lord Gold raised the issueof micromanagement and corporate governance. TheLegal Services Board recognises that important challengesare emerging from the triennial review and acceptsthat there are things it needs to address. These willinclude more detail on its draft business plan for2013-14, and proposals will include reviewing the approachto requests for changes to regulatory arrangementsand designation processing, and refining the approachto research funding. Priorities will be included in thedraft business plan. Increased understanding of thecost of regulation, not just the cost of the LSB but thefull cost of practitioners, will also be looked at. Afurther issue was raised regarding the value for moneyof the Legal Services Board. Since the board becameoperational, it has recognised the need to keep its costsproportionate, and we have seen its running costsreduced year on year, from just over £5 million in2009-10 to £4.5 million in 2011-12. The combinedrunning costs of the Legal Services Board and theOffice for Legal Complaints were approximately£22 million, somewhat less than the cost of the complainthandling regime that was previously in place.

Various issues and questions have been raised interms of accountability and the post-legislative review.We are confident that for the here and now, the regulationof legal services is appropriate, but that does not meanit will remain so indefinitely. Given that the new

regulatory framework was implemented only in 2010,we still believe that it is in its infancy. The nexttriennial review is due in 2015 and will provide anotheropportunity to assess how the regulatory framework isperforming and whether the LSB’s functions are stillneeded in an evolved legal services market.

In conclusion, it is important to remember that thenew regulatory regime and governance arrangementsare still in their early stages, a point acknowledged byrespondents to the triennial review. I assure the nobleBaroness, Lady Deech, my noble friend Lord Faulksand other noble Lords that the Government are fullyengaged with the legal profession and other interestedparties in carrying out that triennial review. Duringthat process, we not only conducted a call for evidencebut held round-table events and one-to-one meetings.We will continue to engage openly with interestedparties as part of that. I also assure noble Lords,including my noble and learned friend Lord Mackay,the noble and learned Lord, Lord Goldsmith, and mynoble friend Lord Faulks, as well as the noble Baroness,that we will carry out post-legislative assessment ofthe Legal Services Act. That will look at the originalaims of the reforms and how far we have come inimplementing them, and we will be seeking furtherstakeholder views. Finally—

Lord Faulks: Before the noble Lord concludes hisremarks, can he help the House by saying whether onepossible outcome of the review will be that the Ministryrecommends that the LSB does not have any furtherfunction at all?

Lord Ahmad of Wimbledon: I thank my noble friendfor the question. That is a matter that will come up. AsI have already alluded to, this organisation is in itsinfancy and came about only in 2010. It is right thatwe look at this again at the time of the review in 2015.

Finally, I also assure my noble and learned friendLord Mackay, who talked of his Green Papers—andbeing green in your Lordships’ House, he was my veryown personal parliamentary Companion—that I heardwhat he said about the importance of education andhis particular question about universities and the Collegeof Law. I shall certainly refer that to my right honourablefriend the Universities Minister.

The reforms enabled by the Legal Services Act haveprovided a proportionate and effective regulatory regimethat remains, currently, fit for purpose. All those withan interest in the legal services market have an interestin ensuring that this continues. I thank the nobleBaroness—and indeed all noble Lords—for theircontributions this evening, with the assurance that wewill continue to look at this particular function and itseffective regulation, with all interested parties contributingto future reviews.

House adjourned at 9.27 pm.


Grand CommitteeMonday, 3 December 2012.

Enterprise and Regulatory Reform BillCommittee (1st Day)

3.30 pm

The Deputy Chairman of Committees (Lord Bichard):My Lords, welcome to the Grand Committee on theEnterprise and Regulatory Reform Bill. If there is aDivision in the House, the Committee will adjourn for10 minutes.

Clause 1 : The green purposes

Amendment 1

Moved by Baroness Worthington

1: Clause 1, page 1, line 6, leave out paragraph (b) and insert—

“(b) the advancement of initiatives with the purpose offacilitating significant improvements in natural resourceefficiency and energy savings;”

Baroness Worthington: My Lords, we should remindourselves why these green purposes are so important.This bank has been set up in order to facilitate investmentinto green projects and to help the UK to move to alow carbon economy. The definitions set out in the Billwill be the guiding principles by which the bank operates.The bank could definitely be sold off in the future;there are provisions in the Bill to enable this to happen,so these governing principles are very important andmust pass the test of time.

The amendment would introduce two changes tothe Government’s proposed wording in Clause 1(1)(b).First, a test of significance would ensure that projectsshowed a significant advancement in resource efficiencyor energy saving. We believe that this is important notbecause we do not trust the bank but, as I say, becauseof how it may change and develop in the future. Thetest of significance would prevent projects qualifyinglegally for support from the bank which deliver only avery marginal improvement in any project. It is notbeyond the imagination to see that under these definitionsof purpose you could secure support and funding for avery marginal improvement in the efficiency of acoal-fired boiler, for example. That is not the sort ofinvestment I think the Government are seeking; therefore,this part of the Bill needs tightening for the avoidanceof doubt.

It might be argued that this is illogical and that wewill not see a bank that is called the Green InvestmentBank investing in coal-fired projects. I have an exampleof how things can go quite illogically wrong whendealing with climate change and greenhouse gases.The global carbon market has an investment facilitycalled the clean development mechanism, under whichit is perfectly legal and possible to invest in slightlymore efficient coal-fired power stations in India toallow for European coal-fired power stations to carryon emitting. When we get into the world of sustainability,

climate change and emissions reduction, things canget a bit illogical. It is important that a lot of attentionis paid to these definitions and that we get them right.

The second change proposed in the amendment isto add a specific reference to energy savings. A verystrict interpretation of natural resource efficiency mightpreclude energy efficiency from electricity. Electricityis not a natural resource, it is manmade. Again, wewant to make sure, for the avoidance of doubt, thatthe bank is set up to focus on electricity and energysaving. We know that this is true because, of the fiveareas identified in the bank’s objects, two are aboutenergy efficiency—one for commercial entities andone to support the Green Deal. They are very importantfor electricity efficiency, and we are not convinced thatthe provision fits well with this definition. So weencourage the Government to reconsider the wordingof subsection (1)(b) on natural resource efficiency,because we do not think that it does what the Governmentwant it to do.

Finally, I have two questions for the Minister: whatis his definition of,“efficiency in the use of natural resources”?

Secondly, will he undertake to amend the wording tomake sure that energy saving, in particular electricitysavings, are included under these purposes?

TheParliamentaryUnder-Secretaryof State,Departmentfor Business, Innovation and Skills (Lord Marland): MyLords, here we go. We have nine days in Committee—I work it out at 36 hours—and what a way to start.What a pleasant surprise it is for me that the nobleBaroness, Lady Worthington, is dealing with thisamendment. I moved department to get away from herincisive grilling, but it has come back to haunt me.Nevertheless, I welcome very much seeing her oppositeme as she is much better looking than the noble Lord,Lord Adonis.

As always, this Bill will leave this House muchbetter for the great interrogation that this House willgive it, and I want to say in advance how grateful I amto all noble Lords for the time that they are about todedicate to this. I also thank the Opposition for theirco-operation throughout this process, the officials whoare in serried ranks behind me and of course my noblefriend Lord Attlee and others who will be in his placeand will have to listen to this response.

The noble Baroness poses an extremely reasonablequestion and I compliment her on her great knowledgein this field, almost unrivalled in many ways. We haveobviously had discussions on this issue with the chairman,the noble Lord, Lord Smith of Kelvin, and I wouldlike to read out his views on it from the SecondReading debate because I think that it sets a frameworkfor what we are going to talk about today. He said:

“We know that we are going to be held to very high standardson green issues in both the investments and our own operations.We welcome the requirement to report on carbon emissions andthe positive impact that our investments should have on reducingUK emissions. We will go further than the requirements ofquoted companies by reporting in detail on our portfolio. We willalso take the long-term view and have regard to the work of theCommittee on Climate Change. I ask noble Lords for support forthe Government’s broad definition of ‘green purposes’. Wasteand recycling—for example, anaerobic digestion—can have a

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[LORD MARLAND]positive impact, and it would make the Green Investment Bank’stask more difficult if there were changes in our mandate by anarrowing of the green definition”.—[Official Report, 14/11/12;cols. 1528-29.]

I think that I could stand here all night and make acase for this, but I could not do it better than thechairman himself, who has been appointed to run thisindependent bank. On that basis, I ask the nobleBaroness to withdraw her amendment because I thinkthe noble Lord has said everything that needs to besaid.

Baroness Worthington: I thank the Minister for hisresponse. I am slightly perplexed as I do not think thatthe quote from the noble Lord, Lord Smith, reallyaddress the questions that I have raised. We wouldagree with his point about not wanting to narrow thedefinition. It is important that we give ourselves flexibility,not least because we hope that this bank will bearound for a long time. Things will change during thetime that it is around and we do not want to overlyconstrain it. We are suggesting not to narrow thedefinition but to make it slightly more specific in itswording. I hope that that can be taken on board. If itis narrowing, it is only to add a test of significance,which, I think, is a legally important word that weshould not dismiss lightly. So I am happy to withdrawthe amendment, but on the basis that perhaps wecould think about these two questions a bit morecarefully. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendment 2

Moved by Lord Mitchell

2: Clause 1, page 1, line 11, at end insert—“(3) In undertaking investments in accordance with the green

purposes outlined in subsection (1), the UK Green InvestmentBank will identify opportunities in which small and medium-sizedenterprises may be awarded contracts.”

Lord Mitchell: My Lords, I stand here in sometrepidation, having heard the comments that the nobleLord, Lord Marland, made to my noble friend. Idread to think what he will say about me. Even beforeI had the position of shadow Business Minister, I havespoken consistently on the subject of SMEs, on howimportant they are to this country and on how theyrequire certainty, clarity and consistency. That is veryimportant as regards their ability, in the future, tomake a contribution to the growth of this country.

By way of a statistic, the UK has slipped from thirdposition to seventh in world green technologies and Ihope, with the introduction of the Green InvestmentBank, if it is properly constructed, that we will be ableto do better in this vital industry. The Green InvestmentBank should be an opportunity to help SMEs explicitly.I shall come back to that a little later but it is reallyimportant that SMEs—not just large companies—arehelped in this. In addition to its green obligations, it isimportant that there are investment obligations thatare vital to its work. A key part of its remit is boostinggrowth and creating jobs in the UK economy. Time

will rightly be spent talking about the policy and thefact that large companies need to make investments inour transition to a large green economy.

That was evidenced by the letter from seven of theworld’s largest energy and engineering firms to thePrime Minister, the Chancellor and the Secretary ofState for Energy and Climate Change, a couple ofmonths ago—companies such as Siemens, Alstom UK,Mitsubishi Power Systems, Areva, Doosan, Gamesaand Vestas. However, the importance of SMEs toeconomic growth cannot be underestimated. Accordingto the European Commission, 85% of net new jobs inthe EU, for example, between 2002 and 2010, werecreated by SMEs, with 23 million SMEs accountingfor 75 million jobs in the EU. The Bank of Englandhas recently released figures on funding for lendingand today there are a few quotes in the FinancialTimes, one of which came from Mark Swift who is aspokesman for EEF, the manufacturer’s trade body.He said,

“The challenge remains for UK lenders to re-engage withSMEs and support them with their investment plans in challengingeconomic times”.

John Walker, chairman of the Federation of SmallBusinesses has said,

“What is needed is more competition and choice for smallbusinesses to access finance”.

Time and time again, it is made clear that support forSMEs is key. We would like to see the Green InvestmentBank have SMEs in forefront all the way through.

More investment in SMEs could lead to a significantsaving in capital investment costs. In the case of offshorewind, recent research suggests that capital expenditurecosts could fall by more than a third during the courseof the next decade if more of the components weremade in the UK. SMEs face considerable start-upcosts, but an active Government, working with theprivate sector, could remedy that. The Green InvestmentBank has the potential to enhance green supply chainpossibilities, opportunities and capabilities. As we havediscussed many times, SMEs are struggling for investmentin the current climate, with negative net lending tosuch companies since the second quarter of 2011.While demand is down due to the depressed economy,there is clearly a problem with SMEs not gettingaccess to credit. A particular bugbear of mine is thatperhaps the Green Investment Bank could insist thateveryone it deals with and everyone it invests with hasa clear mandate for prompt payment of invoices.Nothing is better for an SME than knowing that it willget its money.

Last year’s Lords Science and Technology Committeereport on public procurement as a tool to stimulateinnovation also made it clear that SMEs still facedifficulties when government contracts are put out totender. We should ensure from the outset that the GIBhas a responsibility to help SMEs be part of the newgreen economy. This amendment encourages the GreenInvestment Bank to support investments that offerclear opportunities for British SMEs to be awardedcontracts. Does the Minister share our support for thepromotion of SMEs? I beg to move.

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3.45 pm

Baroness Turner of Camden: My Lords, I supportwhat my noble friend has just said in relation toAmendment 2. It is often contended that I do not careabout SMEs and that I care only about employmentrights. That is not true. From the standpoint of theprovision of employment, it is important that SMEsare protected. The Government ought to support thisamendment as it offers SMEs protection and support.One of the reasons why they are not always able tooffer employment is because they do not get the money—they do not get the contracts. This provision seeks toensure that everything possible is done to make surethat SMEs get the money and the opportunity to playthe part that many of them want to play in theprovision of employment. They can do that only ifthey have the necessary contracts and support indicatedin Amendment 2. I hope that the Government willaccept the amendment.

Lord Cotter: My Lords, I also support the thrust ofthe amendment of the noble Lord, Lord Mitchell,particularly as regards SMEs. I welcome his commentsregarding SMEs’ concerns around the payment ofdebts. The Minister will know that I and others haveoften raised this issue. It is important for SMEs to bedirectly involved but, where contracts are awarded tolarge contractors, small businesses have an importantrole in supplying those large contractors. To follow onfrom the point the noble Lord made about late payment,will the Minister once again renew efforts to ensurethat main contractors pay their bills to SMEs on timeand in due order?

Lord Bates: I, too, welcome this amendment but Ihave some questions about it on which I would like toput down some markers to which I hope the nobleLord, Lord Mitchell, and the Minister will respond.My questions concern the use of the term “SME” andhow we define a small and medium-sized enterprise.That definition differs in different parts of the world.For example, the European definition of a small enterpriseis one comprising between10 and 50 employees and amedium enterprise is one comprising between 50 and250 employees. It would be useful to know whatdefinition the noble Lord is using to define small andmedium-sized enterprises, particularly when we discussclauses further down the track. The businesses that Icall micro-enterprises, which are defined in Europeanterms as having below 10 employees, are the ones thatreally need help in accessing finance and are strugglingat present. Therefore, it would be helpful if the nobleLord told us the parameters and the definition ofenterprise that he is using when he is talking aboutSMEs.

Secondly, I wonder whether the amendment achievesthe ends that the noble Lord, Lord Mitchell, seeks. Weare talking here about incredibly capital-intensiveinvestments. I know from one of the first of thesebusinesses that was established in my home area in thenorth-east of England—an anaerobic digestion plant—that you are talking about a capital investment of£100 million. These are huge sums which would beoutside the reach of most businesses. Yet, as a result ofthe investment through the Green Investment Bank

announced just a couple of weeks ago, the project willgo ahead and there will be many jobs for micro-enterprisesand SMEs in the supply chain, particularly in theconstruction and operation of that plant.

Those are two questions that I hope that the nobleLord will take as being not at all critical of his amendment,which seeks to help SMEs and is correct in asking fora definition of who it is that we want to help.

Lord Marland: My Lords, of course the Governmentare very committed to SMEs, and I know that thenoble Lord, Lord Mitchell, who I can say lots of nicethings about, is a committed and good advocate fortheir cause. The noble Lord, Lord Bates, put his fingeron the pulse—it is about definition. However, I do notwant to get too deep into definition, thereby tying thehands of the bank too early on in its endeavours.

It is clear that the great challenge for any Governmentat the moment is to get the SMEs going. I know thisfirst hand, given that I am not only the Prime Minister’strade envoy but chairman of UKTI’s BusinessAmbassadors Group. This is our challenge—the beatingheart of Britain and getting the SMEs going. Therefore,in the context of SMEs, we have to look at what theGovernment are doing as a wider initiative, ratherthan be tied down. That is why we have established theFunding for Lending scheme, Capital for Enterprise,the Business Growth Fund, the Regional Growth Fund,and the Enterprise Finance Guarantee fund, whichhas already helped 18,000 SMEs. To a certain extent, itis working, because we have had the highest amountof new businesses established since records began.Some 460,000 start-up businesses have registered atCompanies House in the past 12 months.

However, I completely agree that this issue is anenormous challenge. In fact, my noble friend, is committedto this cause, as he is on late payments—an issue thatis fundamental to SMEs. He tells me that his maidenspeech was about late payments and commercial debt.He has a record of support for that case.

The noble Lord, Lord Cotter, has raised this subjecta number of times in the Chamber. Therefore, do notget me wrong. The Government are completely committedto helping SMEs. That is why, for example, inprocurement—one of the issues that I am involvedwith in government—we have insisted that 25% ofgovernment contracts should go to SMEs. An awfullot of work is going on. I do not want to be tooprescriptive in this area of the Green Investment Bank,but it is totally focused on this issue and looks at eachopportunity on its merits. Already, the bank’s smaller-scalefunds for waste and non-domestic energy efficiencyare already delivering investment for SMEs, such asthe £8 million announced last week alongside a Teeside-based SME. Work is already going on to support SMEs.

With that in mind, I hope that the noble Lord willagree to withdraw his amendment.

Lord Mitchell: I thank the noble Lord for his statementand, indeed, I thank all noble Lords for their contributionsto this debate. I take it as being broadly supportive ofwhat we are trying to do. That will come out in furtherstages of the Bill, but I take great heart from what isbeing said.


[LORD MITCHELL]I want to make two quick points. First, I cannot

emphasise enough the importance of certainty, notjust for SMEs but in the whole business environment.Certainty must be there. People are making decisionsand, in the green area, these decisions are for longerperiods than normal, particularly as regards the paybackperiod and the intensity of those decisions. We mustbe clear on this, and I will address that issue later whenI talk about borrowing powers for the bank. Secondly,of course we cannot tie the Government’s hands toomuch, but a definitive statement in the Bill on the needto invest in SMEs is important. I beg leave to withdrawthe amendment.


Amendment 3Moved by Baroness Worthington

3: Clause 1, page 1, line 11, at end insert—“(3) The Bank shall set out annual targets for the reduction in

greenhouse gas emissions achieved by its investments.”

Baroness Worthington: My Lords, I am afraid that Iam going to continue the theme that I started with thefirst amendment. These amendments are designed tomake the purpose of the bank unequivocal. Theamendments create a duty to assess the impact of theGreen Investment Bank’s decisions on the ClimateChange Act 2008.

The rationale for this is that, as we just discussed,the stated purposes under Clause 1 can be widelyinterpreted. That is not to say that they will be, butthey can be. We are writing law and we ought to try tomake it as future-proof as possible. We believe that,given that at the moment the scope includes a provisionthat the bank can fund increased efficiency of naturalresources, we need something that is much more specificabout the impact of the bank as a whole on ourclimate change targets. It would still be possible for thebank to go down an investment path, which would betaking us out of line with the trajectory of emissionsreductions required under the Climate Change Act.That is the purpose for tabling the amendments.

Specifically, Amendment 4 makes an explicit linkbetween the bank and provisions under the ClimateChange Act. It sets out the context within which thebank operates. Yes, the Bill already states that one ofthe purposes is to reduce emissions, but it then goes onto water that down by talking about investment innatural resource efficiency. So for the avoidance of anydoubt, we want a link created that makes it absolutelyclear that the bank and our climate budgets are linked.

It is very important that we have that wider contextbecause, if you look at this very narrowly, emissionsreductions at the scale of a project or single investmentare one thing, but then when you look at the totality ofwhat the bank is doing, there ought to be an explicitlink to the broader context. That broader context isthe need to reduce our emissions; our legally bindingtargets and carbon budgets.

These are challenging targets and they requiregovernment as a whole and all governmentinstruments to work in tandem to deliver them on

time. Making this link with the bank helps fully toalign the bank’s purposes with the meeting of thoselegal objectives.

The specific reference in the amendments requires alink to be taken into account of the advice from theCommittee on Climate Change. This is important.Greenhouse gas reduction is a complicated business. Itis very technical and we do not want the bank to haveto reinvent wheels. There is a body of experts thereand it would be wise to create a link between the two.For example, the bank may be thinking of setting itselfgreenhouse gas reduction targets, as was mentioned ina Guardian article recently. The CEO of the bank,Shaun Kingsbury, was quoted as saying he was goingto introduce “transparent” measures for measuringCO2 and the impact that the bank is having on CEOShaun Kingsbury was quoted as saying he was goingto introduce transparent measures for measuring CO2and the impact that the bank is having on CO2. This isan area which will require quite a lot of technicalunderstanding of various aspects of how you accountfor greenhouse gas emissions. The Committee on ClimateChange is the leading source of advice on this and itwould strengthen the bank’s position if it had anexplicit link to that committee and had a duty toconsider the advice created by the committee.

A specific example might be where we are trying tountangle whether investments are generating emissionreductions that are additional or not under the termsof how you account for greenhouse gas reductions.Many of our sectors in the UK are covered by existingcaps and existing regulations. Counting of those is notstraightforward and we believe that there would be agreat deal of merit in the advice that the Committeeon Climate Change provides to the Government onthese technical and quite complicated issues beingmade available to the Green Investment Bank and itsboard. I know that one of the concerns that theGovernment may have in accepting these amendmentsis that it might increase the likelihood of judicialreview, but we do not believe that it is a genuineconcern. Obviously, judicial review on procedural issuescan be taken irrespective of these links here, andintroducing the requirement for the bank to co-ordinateitself with the Climate Change Act would reduce therisk of JR. It would give the bank a clear procedurethat it can follow and should give it good comfort thatit is on the right track if it follows this procedure. Sowe hope that the risk of JR will not be the primaryreason why the Government might seek to oppose theamendment. If the Minister does not believe that theamendments are needed, would it not be good to alignthe Green Investment Bank with the Climate ChangeAct? Perhaps he could say a bit more about that,because it is at the heart of the matter to align ourlegislation so that ultimately we achieve our objectives.

4 pm

Lord Teverson: My Lords, before I speak toAmendment 4, I should say that it is a great pleasureto deal with a Minister who understands the area ofenergy and climate change, which part of this Billdeals with. He knows the area well, so I am sure thatour debates this afternoon will be extremely productive.


I also welcome the fact that the Green InvestmentBank comes at the beginning of the Bill, because it isan important part of making growth really happen inthis country.

I also commend the list of green purposes; individually,they are excellent in terms of greenhouse gas emissionreductions, natural resources and natural environment,biodiversity and environmental stability. I could notwrite a better list myself. However, what we are tryingto do here is to get absolute clarity over whether this isa list that includes them all or whether you can pickone off for investment, and ignore the rest. I verymuch interpret this—and I presume that this is howthe Bill was drafted by the Government—as a way ofensuring that at least one is met, but not necessarily allthe others. To have the whole list as obligatory wouldbe unrealistic.

What I and the other co-sponsors of the amendmentare trying to do is to tie it into the climate changeelements—the carbon and other greenhouse gasreductions—as being a necessary part of the investmentprogramme. I refer not to individual investments, butto the investment strategy and programme of the bankas a whole. That is why the amendment places a legalduty on the board to assess the impact of the bank’sinvestment strategy on the Climate Change Act, whichis an absolute anchor point for all this work, and amission of this Government and the previous Governmentin terms of that global challenge. It is also to ensurethat there is a duty on the board to have regard to theadvice and reports of the Committee on ClimateChange. My noble friend Lord Deben is not heretoday, but I am sure that he would like the fact that wewish to pay particular attention to this independentbody that was set up specifically to advise governmentin this key area. Furthermore, it is to prevent theboard from adopting or amending an investment strategyunless it is satisfied that the implementation of theproposed investment portfolio will increase the likelihoodof UK carbon budgets and targets being met.

I apologise to the Minister for the fact that theproposed new clause has so many subsections and isso long, but it anchors the bank and legislation notjust to the advice of the Committee on Climate Changeand its work but to the real area of greenhouse gasemissions and the Climate Change Act, which hasbroad consensus of all parties—as it did in the lastParliament and does in this one. I hope that in thatway we can ensure that this legislation is absolutely fitfor purpose.

My noble friend the Minister mentioned the remarksmade by the noble Lord, Lord Smith of Kelvin, atSecond Reading. I have huge respect for the nobleLord, Lord Smith, and I commend and congratulatethe Government on his appointment; he is exactly theright person to do this. I would just suggest thatperhaps post-appointment he might be rather keenerto make sure that his board is not inhibited in any wayin the decisions that it would like to make. I think thatone looks at this in a slightly different way post-appointment, as chair of an organisation, from pre-appointment and as a member of the legislature. It isbeholden on us to look independently, from a bird’s-eyeview, to make sure that we have our purpose right.

I am sure that the noble Lord, Lord Smith of Kelvin,is right in the vast majority of his remarks, but I thinkthat here there is a need for a little more future-proofingof how operations might work, as I am sure that atsome point in the long and glorious career of thisbank there will be chairmen other than the nobleLord.

Lord Marland: My Lords, I have a sense of deja vu,thinking that I am still in the Department for Energyand Climate Change—where, of course, the GreenInvestment Bank was largely initiated, so I am extremelykeen that it gets off on the right footing for that reasonalone. I believe that my noble friend Lord Teverson,who always speaks so eloquently on the subject, actuallyanswered the question that he posed himself. We couldnot have written a better list if we had tried. Myconcern is that we would get into definition overkill aswe take this Bill through the House.

My noble friend mentioned that the reduction ofcarbon is not relevant on the individual investments,but it is at the top line. I would respectfully—I emphasisethat word for the noble Lord—point out that it is thefundamental investments that will reduce carbonemissions. It is only at the top level—I see the nobleLord, Lord Oxburgh, sagely nodding his head—thatyou will achieve the carbon reduction. The Governmentare very heavily committed to this. It is no accidentthat the noble Lord, Lord Stern, was on the advisoryboard that set up the bank and that was advising at alllevels. As a result of that, the noble Lord, Lord Smith,has made it clear that the bank will have a very highregard—as it should—for the Energy and ClimateChange Committee because it is fundamental for theGovernment and for the future of the business. However,I exercise a word of caution, because there are importantactivities that are clearly green but do not necessarilyreduce greenhouse gas emissions—for example, recyclingand improvements in water quality. We would wantthis bank to invest in such activities, I am sure, but thatwould not necessarily reduce carbon emissions.

I have not mentioned a judicial review in my line ofinquiry because I think it is far more important thatthis Committee gets this into the right shape ratherthan for it to be directed by a judicial review. However,the bank’s board has agreed—across the board—thatthe bank will voluntarily report on greenhouse gasimpacts on its investments. This is in addition to therequirement for the bank to report on the greenhousegas emissions associated with its own activities. So itcomes as no surprise to all of us, after discussions withthe noble Lords, Lord Adonis and Lord Smith ofKelvin, that it is absolutely at the heart of what thebank is doing. I hope that that gives confidence tonoble Lords and I therefore respectfully ask them towithdraw their amendment.

Baroness Worthington: My Lords, I thank the Ministerfor his response. We do not doubt that many parts ofgovernment are fully on board with the need forinvestments to deliver low carbon economy to meetour Climate Change Act 2008 targets. However, it willnot have gone unnoticed that this certainty is notshared by everyone in the Government. Unfortunately,


[BARONESS WORTHINGTON]there is an atmosphere of uncertainty about policyand direction of travel. There is a great deal of differencebetween taking strategy A or strategy B to meet ourtargets. We could go through a whole host of investmentsand incremental technologies or incremental shifts infuels that we use, or we could go down a different pathand take a far more innovative and cleaner route. Thetrajectory of emissions would be very different as aresult.

Choices are available and the body that we havecreated to advise us on that is the Committee onClimate Change. We believe that there will be a greatdeal of benefit in having closer ties between the GreenInvestment Bank, which I hope will be a delivery agentand will start to get pounds spent and concrete poured,and the legal structures that we have in place that helpus to determine the path that we shall take. That isthe purpose of the amendment and I am happy towithdraw it.


Clause 1 agreed.

Amendment 4 not moved.

Clause 2 : Designation of the UK GreenInvestment Bank

Amendment 5

Moved by Lord Stevenson of Balmacara

5: Clause 2, page 2, line 1, after “State” insert “has laid beforeParliament a copy of the Bank’s articles of association and astatement confirming that she”

Lord Stevenson of Balmacara: My Lords, Amendment 5stands in the name of my noble friend Lord Adoniswho is unable to be present this afternoon for personalreasons. He will return for later stages of the Bill.

This is a probing amendment and it is one of anumber of amendments in which we seek to engagethe Committee in thoughts about how the public-facingaspects of the new bank can be best discharged,particularly in relation to Parliament. The aim of thisamendment is to argue that, prior to designation,Parliament should have an appropriate opportunity toscrutinise the articles of association of the bank. Itfurther makes the point that the scrutiny that needs tobe done should be done by Parliament, and not simplyby the Secretary of State, who is identified in the Billas having responsibility. After all, we are talking aboutthe document which sets out the various contentiousissues in the management of the company, vis-à-visthe interests of the shareholders.

The main purpose of the clause that we seek toamend is to ensure that two key governance constraintsare imposed on the bank in a way that is consistentwith its status, which, as we know is that of a CompaniesAct 2006 company, albeit one whose shareholding iscurrently owned 100% by the Government. Once thosetwo conditions have been met, the Secretary of Statemay designate the bank by order. Designation will

trigger the application of Clauses 3 to 6, including thepower in Clause 4, for the Government to then fundthe bank over the long term.

The first condition required for designation is thatthe Secretary of State should be satisfied that thebank’s statement of objects in its articles of associationis drafted in terms that will ensure that the bankengages only in activities that contribute to the statutorygreen purposes that we examined when debating Clause 1.As is usually the case with a Companies Act company,the bank’s statement of objects frames the duties ofthe bank’s directors. The specific issue raised in thisamendment is that as well as making a statement thatthe Secretary of State is content that the bank’s greenobjectives are being met in full, the articles themselvesare laid so that Parliament can see them and discussthem.

I accept that the Companies Act structure is flexibleand indeed it has allowed the Bank to be establishedeven though the enabling legislation is far from complete.The chair, the noble Lord, Lord Smith, spoke aboutthe bank and his role during the Second Readingdebate in your Lordships’ House so we are aware thathe is in place, and the bank was launched recently inEdinburgh.

So we have a rather complicated piece of constitutionalpositioning to get right. On the one hand, the operationsof the bank have to be done under the CompaniesAct, and the institution will have a well understoodoperational framework to guide it. On the other hand,the body could not exist without government supportand government funding, and with that surely comesaccountability to Parliament. In effect, our amendmentprovides a constitutional limitation on the purposesand the range of the company’s activities, which allowsParliament its say, so that directors are directly awareof what the shareholders think. However, I have a fewquestions for the Minister on the implications that thisamendment has for the rest of this clause.

4.15pmSubsection (2) requires that the Secretary of State,

and we think Parliament, must be satisfied that theGreen Investment Bank’s articles of association willensure that it engages only in activities that achieveone or more of the green purposes set out in Clause 1.Subsection (3) sets out the important second conditionthat the Secretary of State must give the Green InvestmentBank an undertaking that it will operate independently—the so-called “operational independence undertaking”—toallow the directors to carry out work and makeinvestments without interference from the Government.Subsection (4) states that such an order may not bemade unless the Green Investment Bank is whollyowned by the Crown.

The Government’s helpful document, Update onthe Design of the Green Investment Bank, states:

“The Department for Business, Innovation and Skills, via theShareholder Executive (ShEx) will be the GIB’s sole shareholder”.

On page 21, the Government state:“The GIB will initially be owned by the Government and will

operate as a separate institutional unit at arm’s length and withfull operational independence”.


I want to focus on the word “initially”. In thecontext of that document, and given subsection (4), isit the Government’s express intention to sell shares inthe Green Investment Bank, at any time? Can theMinister give us an idea about the sort of circumstancesunder which Crown ownership of the bank could bediluted? How does Clause 2(4) reconcile with Clause 4(1)?It might be helpful to the Committee if I explain thatthis latter provision states:“the Secretary of State may, with the consent of the Treasury, givethe UK Green Investment Bank financial assistance at any timewhen the Crown’s shareholding in it is more than half of its issuedshare capital”.

In addition Clause 4(3)(d) states that financial assistanceis possible for,“the purchase of share capital of the Bank”.

Will the Minister, therefore, say a little more aboutthat, and explain the circumstances under which theGovernment would want to purchase shares in a bankwhich, according to legislation, they already own?

It may well be that the Government have no plansto sell the Green Investment Bank, but as was acceptedin the other place, this Government cannot tie thehands of future Governments or Parliaments. So,again, it would be helpful if the Minister would confirmthat there are, as far as he is concerned, no circumstancesin which the Government would envisage such a sale.

Finally, I wonder if we can just get some words ofcomfort from the Minister on the question of gettinglong-term private investment into the green sector. Itwas openly admitted in the other place that enablingprivate capital to acquire shareholdings of the companywould be a measure of the success of the bank. Iassume, therefore, that that is why the legislation containspowers to enable the opportunity for the injection ofprivate capital directly into the bank. But how doesthat give the market the confidence that the UK GreenInvestment Bank, currently “wholly owned by theCrown” will be an enduring institution? It was clearthat one of the main determinants of success in thisarea will be convincing people in the financial andenvironment markets about the sincerity of theGovernment’s intention that the Green InvestmentBank is here for the long term.

In trying both to eliminate the possibility that privatesector organisations could by taking a stake jeopardisethe designation of the bank, while leaving themselvessome wriggle room so that some time down the trackpart-ownership of the bank could be sold, the Governmentmay inadvertently have given the impression that thebank is not there for the long term. It would be helpfulif the Minister could reaffirm the position as he sees it.I beg to move.

Lord Brooke of Sutton Mandeville: My Lords, Ihave a short technical question for the Minister and,conceivably, for the noble Lord, Lord Stevenson. It isconcerned with the final word in Amendment 5: “she”.My recollection is that when we moved to havingSecretaries of State as the title of those people whoheaded departments, it was so that “Secretary of State”in legislation could be interchangeable betweendepartments. My interest is whether if you use theword “she”you run the risk of fracturing that particular

arrangement or whether there is a convention containedin the use of the words “Secretary of State” thatallows the gender to be circumscribed in that way.

Lord Marland: I thank noble Lords, especially thenoble Lord, Lord Stevenson of Balmacara, for theirwords. The Government agree that there must beparliamentary scrutiny of the bank’s statement ofobjects and particularly in terms of its green purposesas part of the process of designation of the bank. Thatis why in another place we tabled an amendment tothat effect. However, we do not believe that there is aneed to separate out the statement by the Secretary ofState. I will try to respond to the question asked by mynoble friend Lord Brooke on the Secretary of State ina minute because with his years of experience ingovernment—I am playing for time now—he knowsfar more about this particular thing than I would everdream of knowing, but I will come to that in a minute.

The Secretary of State is satisfied that the bank’sobjectives are consistent with the green purposes becauseClause 2(2) already provides that he cannot lay a draftorder before Parliament unless he is so satisfied. I amalso happy to give noble Lords the commitment thatGovernment will make available to Peers and to Membersof the other House a copy of the bank’s articles ofassociation when the draft order is laid so that all canbe made transparent.

The noble Lord, Lord Stevenson, asked about thesale of shares. This Government are committed to notselling the relevant shares but, unfortunately, thisGovernment cannot legislate for a Labour Government,for example, if they wished to sell the shares. I am surethe noble Lord knows that better than I do. It wouldtherefore be wrong to try to impose things on futureGovernments. We will be in power for a very longtime, but just in case we are not, the Opposition maychoose to change the law if they come to power.

As a general point on outside investment, one ofthe things I have noticed as I have travelled the worldis the clear desire of international companies to comein alongside the Green Investment Bank as co-investorsbecause the integrity of the board that has been set up,its skills and knowledge and the leadership Britain hasshown under this Government and the previous one interms of green credentials and green expertise hasmeant that we are seen as a centre of excellence. If thenoble Lord, Lord Smith of Kelvin, were standinghere, I know he would say that there is huge scope forinvolving international companies to invest in thebank. I really do not think that that is a problem.

I have no idea what the response to the noble Lord,Lord Brooke, is, so, if I may, for once, I shall requestthe pleasure of writing to him about something whichis not to do with cricket. I hope that with thatexplanation—

Lord Stevenson of Balmacara: Before the nobleLord sits down, I should make it clear that I wasagreeing with him, as he has played it back to us, thatthe present Government cannot tie the hands of futureGovernments. However, my question was deeper thanthat. It was: why is there so much in this designationclause about the way in which the shareholding is to be


[LORD STEVENSON OF BALMACARA]managed going forward? The noble Lord has not dealtwith that particular point. That was the purpose of myremarks on this section. We have a situation wherecurrently this is a 100% owned company. The Governmenthave made a great virtue of the fact that that is thecase and, indeed, we welcome that. In his latest remarks,the Minister has alluded to the fact that the reasonthat investment may flow into the bank is preciselybecause it is owned by the Government and the investorcommunity, for whatever reasons, is supportive of theview that it is the Government leading this that givesthem the security and the risk reduction that they arelooking for. We may come back to this on a lateramendment. So why all this stuff about what happensbelow a shareholding of 50%? We are told in a laterclause that the Government are not able to fund thebank if their own shareholding drops below 50%.Does that imply that there is a plan that we have notbeen told about, or is it just a precautionary measurein the event that terrible things might happen andother decisions are taken?

Lord Marland: I can deal with that immediately. Itis a very good point. We have no current intentions tosell this—I absolutely underline that fact. We have nocurrent intentions to do so during this Parliament aslong as we are in power. I hope that that very clearstatement satisfies the noble Lord. I readily understandthat that has to be clear.

Lord Stevenson of Balmacara: I thank the nobleLord for those additional remarks and for sayingearlier in his response that he would lay copies of thearticles of association in both Houses when it comesto reviewing the designation process. We look forwardto seeing them because they will help considerably.

I am afraid that I cannot respond very positively tothe former Secretary of State, the noble Lord, LordBrooke. I did not pick up this point when I wasreading, but I am so completely gender-blind in thesematters that I simply read the word as one that described,in a personal way, the Secretary of State for the timebeing. However, he will have noticed, as we all did,that throughout his response the Minister referred tothe Secretary of State as “he”. Perhaps we have aproblem that we should all reflect on.

Lord Jenkin of Roding: Perhaps I can help with thisquestion. Since the 1880s, it has been a matter ofinterpretation of statutes, and I was certainly taught atlaw school that the male embraces the female. It hastherefore always been said that you used the term“he”, which meant, in the appropriate context, “he orshe”. The result is that statutes and, presumably,amendments do not need to use the words “he or she”each time. My noble friend will find when he takesadvice on this later that it is a well established principleof statutory interpretation, if I may repeat it, that themale embraces the female.

Lord Marland: I am grateful to my noble friendLord Jenkin of Roding for explaining that. In fact, itcoincides with a note that has just been passed to me

affirming it. There are two issues, of course. First, ourcurrent Secretary of State is a he, and, secondly, werefer to each other as, “My Lords”. I hope that thatmeans I do not have to write to the noble Lord, LordBrooke, on the subject—although I am always delightedto do so.

Lord Brooke of Sutton Mandeville: My Lords, I ammost grateful to my noble friend Lord Jenkin ofRoding. I was, in fact, previously aware of that. I wasraising the question of why the word “she”had suddenlyappeared. I did not wish to embarrass the OfficialOpposition by directing the question at them, so Idirected it at my noble friend.

Lord Stevenson of Balmacara: My Lords, I agreethat this is now a score draw. With that, I beg leave towithdraw the amendment.


Clause 2 agreed.

Clause 3 agreed.

Clause 4 : The UK Green Investment Bank:financial assistance

Amendment 6

Moved by Lord Teverson

6: Clause 4, page 3, line 10, at end insert—

“(f) a proportion of proceeds due to the UK Government asa result of the auctioning of emission permits under theEuropean Union Emissions Trading Scheme.”

Lord Teverson: My Lords, I shall speak also toAmendment 11. Here, I am trying to be as helpful as Ican be to the Minister in trying to find ways in whichwe can make this investment bank even more effectivein finding ways of providing finance. We will comelater to the arguments about lending.

There are two obvious areas where we could assistthe Government and the board of the Green InvestmentBank, when appropriate. I absolutely agree that theworst thing that we could do is try to shovel outthrough this bank too much money too quickly andallow it to lose its reputation in terms of investmentappraisal and doing the right thing. It should build upthat reputation over a sensible period. However, giventhe need in the United Kingdom for investment ingreen matters and energy, we know that £3 billion,although it is a lot of money to all of us, will not lastindefinitely. We therefore need to start thinking aheadnow. Two areas should be considered.

My first amendment refers to the European EmissionsTrading Scheme. I remind the Grand Committee thatthere is a list in subsection (3), which states:

“It may in particular be given by way of …”.

We are not therefore talking about hypothecation ofthe ETS revenues. We are saying that this is one of theareas where the bank and the Government may lookto facilitate funding of this bank. It is an extra piece of


the armoury for the bank and the Government thatcould be, but not necessarily has to be, used—althoughI think it would be a very good idea. I remind nobleLords that the EU-ETS is coming to the end of itssecond phase. In fact, at the end of this month thatphase will end and we will move into phase three.In phase two, the Government have already raisedsome £1.3 billion-worth in sales of so-called EUAs, orunits of European Union—forgive me, I have forgottenwhat the A stands for.

Baroness Worthington: Allowances.

4.30 pm

Lord Teverson: Thank you very much indeed. Infact, last month the Government already had theirfirst auction of phase three allowances. They made£34 million and sold 6.5 million EUAs at ¤6.62 perunit—a terrible price in terms of carbon pricing butnot a bad price, given some of the other prices thathave been found. Unfortunately and regrettably, sincethen the price has fallen below ¤6. The GermanGovernment have sold some as well more recently andthat price fell. There is an intention to auction inexcess of 50 per cent of these allowances in phasethree and once auctioning starts, it seems that will beone of the ways in which the price will go up becausethe free issue has ended.

I would also hope that the Government’s intentionto raise the bar on 2020 carbon reductions to 30 percent will be successful. That would also mean that thenumber of these allowances would decrease in themarket. This seems to be an obvious revenue stream,some of which could be used towards reinvestment—I am not saying that it must be—of those carbonreduction revenues into green growth and into makingsure that that whole process is reinforced.

I must apologise to the Grand Committee in thatAmendment 11, on a second area, has a mistake in it.In subsection (3), at the very end, it should say Clause 1instead of “section 1” and I apologise to noble Lordsfor that. I have been looking for a way in which, whenthe time is right, we could lever extra money into theGreen Investment Bank without having all the effectsof increased public debt, which is why the current£3 billion comes from asset sales. It means that therehave to be other ways of finding that money, with allthe borrowings, but the debt is not changed. As Iunderstand it, it would be absolutely the same as forthe Nuclear Liabilities Fund, which is currently worthsome £8.6 billion. Again, this is a way in which thefirepower of this bank could be increased quitesubstantially without the effect on public debt thatother forms of fundraising might have. It would notrequire outside borrowing by the bank and would takeover the trustees’ functions.

I do not know how many of your Lordships haveread the excellent report by Professor Gordon MacKerron,Evaluation of Nuclear Decommissioning and WasteManagement, which came out earlier in the year. I amsure that my noble friend the Minister was closelyassociated with it, given his responsibilities in thatarea. Very importantly, it makes the point that at themoment the vast majority of that £8.6 billion has to be

invested in the National Loans Fund for a very lowreturn. I would be interested to learn from the Ministerwhether he or his officials know what that current rateof interest is. Professor MacKerron was clearly particularlyconcerned at the low rate of return. On understandingthe net present value of the fund’s existing liabilities,he said,“though its current rate of accumulation is significantly less thanthe discount rate applied”,

which was 3% . He went on:“Whether the fund will be able to meet all the … liabilities will

depend on a range of factors (in addition to whether the currentapproach to its investment regime are maintained)”.

He questioned whether putting that cash into theNational Loans Fund would maintain a sufficientvalue for the decommissioning costs of the existingnuclear fleet. There is a simple solution to that as well:the purpose of the Green Investment Bank is not onlyto invest in green infrastructure but to create a propercommercial return from its investments, so we have adouble-win situation here. We increase the firepowerof the Green Investment Bank quite substantially andalso make it far more certain that the NLF will be ableto meet its liabilities and not put the liability back ontaxpayers, as would happen otherwise in future. So wehave a double success. I beg to move.

Lord Jenkin of Roding: My Lords, I have somedoubt about the proposed new clause of which mynoble friend has just spoken. The Nuclear LiabilitiesFund very properly seeks to avoid the situation thatthe country got into over many years when largenumbers of nuclear installations of one sort of anotherwere left to be decommissioned and their radioactivematerials dealt with, and there were no funds available.One is always astonished at the huge amounts ofmoney that have to be set aside to satisfy the obligationsthat are now being discharged to decommission thesenuclear plants safely and effectively. My noble friendLord Teverson may contradict me on this, but I believethat it is intended entirely to be confined to thatpurpose; it is intended to be there when it is neededand nuclear establishments come to be decommissioned.When my noble friend says that this increases thefirepower of the Green Investment Bank, what doeshe mean? Is it intended that the fund should be investedin other green projects, which may or may not achievethe return expected when the fund was invested? Iwould have thought that that would risk defeating thepurpose of the Nuclear Liabilities Fund.

The question of the rate of interest that should beearned on that fund is something that the Ministermay wish to look at. I had not refreshed my memoryof Professor MacKerron’s report, and I was gratefulto my noble friend for reminding me what was in it. Ofcourse, it is a very low rate of interest, as he has rightlysaid. But the fact of the matter is that this is ahypothecated fund; it is there for a particular purpose,and the idea that it could be used by the GreenInvestment Bank to invest in something else that mightproduce a higher return risks prejudicing the absoluteand essential purpose for which it has been set up—namely,to meet the costs of decommissioning nuclear plantswhen they are available. I hope that the Minister willgive some indication that he will look at this proposal


[LORD JENKIN OF RODING]in the proposed new clause with some suspicion, becauseI believe that it might be misconceived. I apologise tomy noble friend Lord Teverson for putting it in thatform, but I feel very strongly about this.

One of the best things that the previous Governmentand this Government have done is to make sure thatfuture nuclear liabilities will not fall on the taxpayerbut are regarded as a proper cost of those who investin nuclear installations, power plants and so on. Thatis what it is intended to do. It is a very wise thing to do,and I hope that it will not be prejudiced by diverting itto some of the other purposes of the Green InvestmentBank that noble Lords have talked about this afternoon.

Lord Wigley: My Lords, I apologise for coming inrather late, but I am in good time for the amendmentthat I wanted to catch up with, Amendment 11, and tofollow on from the question regarding nucleardecommissioning. I live in a part of north-west Waleswhere there are two nuclear power stations. Trawsfynyddnuclear power station stopped generating two decades ago.It now employs some 600 people on decommissioning,more than it ever employed when it was generatingelectricity. The message that comes home from that isthe uncertainty with regard to the cost of decommissioningand the length of time, and the need, therefore, to havefinancial cover for that.

This becomes particularly relevant with regard tobe new reactor that is likely to be forthcoming withHitachi at Wylfa in Anglesey. There is considerablesupport in Anglesey for the renewal of the nuclearpower station. But the one reservation that peoplewould have is if there were uncertainty as to theeventual decommissioning and the resultant costs arisingfrom that station, particularly if in the private sectorthe company running it were to go out of existence.There needs to be a cast-iron guarantee with regard tofunding for that purpose in order to maintain thegood will towards the building of that new reactor atWylfa. It is needed in energy terms and in terms ofinvestment in the local economy in north-west Wales.

Therefore, the amendment goes to the heart ofsome very important aspects of nuclear power. WhereasI have a considerable amount of sympathy with theamendment in terms of the green bank and developinggreen alternative sources of electricity, that has to goon side by side with the nuclear dimension. Whateversettlement is finally reached it has to encompass bothsides of that equation.

Baroness Worthington: My Lords, I welcome theamendments tabled by the noble Lord, Lord Teverson,if for no other reason than that they encourage us tohave a wider debate about how this bank can operateand gain access to finance. This is important in thecontext that we need to see a huge upscaling of investmentinto the UK’s low carbon infrastructure. It is estimatedthat around £220 billion and £330 billion is neededover the next decade, and historic levels of investmenthave been very low at only £6 billion to £8 billion. Weneed to be thinking creatively about how we canmassively increase the available revenues for the bank.It is unfortunate in that context that the Government

have set out on this path with at least one arm tiedbehind their back by preventing borrowing. We willcome on to talk about that as we move through theamendments.

In the context of having set up a bank and putting arelatively low amount of money in to start, thenputting in a hurdle against borrowing further, it isimportant for us to think creatively. In fact, it forces usto think creatively so I very much welcome theamendments of the noble Lord, Lord Teverson, whichraise two very interesting ideas.

The EU ETS is a complex piece of legislation, but itcreates a new asset class in that it creates allowancesthat have a financial value. I am not sure how they aremanaged because maybe that falls between DECCand the Treasury, but I suspect that we are not managingit as well as we could be. In addition to thinking aboutthe revenues that we have gained directly from theauctions, how about thinking about the allowancesthemselves as assets that can be used to secure loans?They clearly have a financial value but as the nobleLord, Lord Teverson, suggested, sadly their value atthe moment is low because we simply have anoverabundance of these allowances.

I welcome the creation of the Green InvestmentBack if for no other reason than it now means that wehave a smart set of individuals drawn largely from theprivate sector—from banks and financial institutions—who I am sure can, if they put their minds to it, comeup with various clever mechanisms for raising finance.I urge the Minister and his department to say to thenoble Lord, Lord Smith, and his board, “Let’s thinkcreatively and open up this debate. We have an emissionstrading scheme that creates this asset class. How couldwe use it to increase the level of investment into thethings that we want to see built?”.

On the second suggestion regarding the NuclearLiabilities Fund, I share some of the concerns of thenoble Lords, Lord Jenkin of Roding and Lord Wigley.But again, it shows we are thinking creatively. I understandthat a financial fund needs to be available for the timeof decommissioning, but the nuclear profile of ourstations is fairly clear. We may have life extensions andwe all know in advance when that money is needed.I do not see any danger therefore in using some of thatto raise more finance and create wealth in the interimas long as we are managing it correctly. So I welcomethe amendment; it opens up an interesting debateabout how we currently manage money in government.Now that we have created essentially a Government-ownedbank, I hope that over time and, as the noble Lord,Lord Teverson, was very keen to stress, when the rightmoment occurs, we will see this bank stepping intomuch more interesting territory. We look forward tothe Minister’s comments on that point.

4.45 pm

Lord Teverson: My Lords, as we are in Committee,perhaps I could come back on my noble friend LordJenkin’s important areas. I can reassure him on boththose items that we would be better off if this amendmentwas passed. First, the MacKerron report is quite clearthat the current rate of investment going into theNational Loans Fund almost certainly will mean that


its liabilities cannot be met, so we have to find anotherway to do this. The Green Investment Bank is not afund to give away money; it is there to commerciallyinvest, alongside other commercial investors. It couldbe perceived as being a greater risk perhaps—I willcome on to why it is also a lesser risk—but also asproviding a sensible return with a very sound government-backed institution to do the investment, and I thinkthat is good. Furthermore, this fund has to invest itsmoney in the National Loans Fund. That is a euphemism;what it actually means is that it has to give it all to theTreasury. So the Nuclear Liabilities Fund at the momentis similar to unfunded state pensions. It goes in there,but to take the money out will have the same impact aspaying pensions into the future. While it is a discreteamount that is accounted for, it just reduces the nationaldebt. That is all that it does on the current terms.

In fact, how secure is that? Yes, there is an accountingmechanism, and my noble friend is absolutely rightthat the sins of the past are huge in terms of thosefunds having been lost during the process of changesin the nuclear industry and its ownership over the pastcouple of decades. First, this amendment would makeit far more certain that this fund will be able to meet itsliabilities in the future. Secondly, we, as taxpayers andas citizens, would know that that money is in a placewhere we can actually see it, see its value, see that it isdifferent and separate out of the Treasury from thenational debt and, as the noble Baroness, LadyWorthington, said, we can predict decommissioningof nuclear plants far enough in advance to craft theinvestment and our exit strategies around those financialneeds.

Lord Jenkin of Roding: As we are in Committee, Ihope that I can say a couple of words about this. Thenuclear industry is, of course, building up this fund aspart of the Government’s policy to make sure that theliability for decommissioning does not again fall onthe taxpayer. It has recognised this, and it follows thesame pattern as one has seen increasingly in the offshoreoil and gas industry, where funds now have to be putaside so that when the oil rigs are decommissioned,again that does not fall on the taxpayer but is part ofthe cost that has to be built into the supply of the oilor gas and therefore met by the investor. I think thatmy noble friend Lord Teverson may be confusing twomatters. I use the phrase again: this is a hypothecatedfund. It is not like the pension fund. There never was aseparate fund for that. It is simply that the pensioncontributions from, for instance, the teachers’ pensionfund have simply been paid to the Government, andthe obligations are met, of course, by the taxpayer outof the fund. There has never been any question oftrying to balance the one against the other. This isquite different. This is a fund that is being set up andfunded by the industry. It has to be built up whileplants are operating—not just when they arecommissioned—so that, at the end, when they come tobe decommissioned, which may be 50 or 60 yearsahead, the fund is there. They have invested in it so thecost will not fall on the taxpayers. It is a separate,hypothecated fund. It may make the green bank lookbigger because it will have more money but it cannotdo anything with it other than get a rate of interest.

My noble friend shakes his head, but if they are goingto start investing in green industrial ventures and soon, it seems to me that that would be a breach of trustto those who have built up the fund. It may be thatthey can hold it and, as it were, guarantee the payment,but the minute that they start investing it themselves, itseems to me that that is risking the whole purpose forwhich the fund has been set up.

A separate issue is whether there is an alternativemethod of investing in the Nuclear Liabilities Fundthat might get a slightly more realistic rate of interest.That is a separate matter, but it seems to me that tomake it part of the loan capital of the UK GreenInvestment Bank would be a breach of trust, as Isuggested, against the firms that are building this upperfectly properly. They agree, they recognise it, andthey know that they do not want to go back to theprevious position, but they want the fund to be availableto finance the decommissioning of the plants whenthe time comes.

Lord Marland: My Lords, perhaps I can deal withthis quite swiftly. Both the ETS and the NLF, theNuclear Liabilities Fund, reported to me in my previousdepartment so I have a rough idea of what is going on.Let us deal with the EUAs and the ETSs first. I also siton the government assets committee and we looked atselling some of our EUAs. We drew the conclusionthat the price was not right, the market was not bigenough and we would not be able to get a substantialfigure into the market. However, as the noble Lord,Lord Teverson, rightly says, an opportunity may comealong later.

Clause 4 permits financial assistance to be providedin any form,“as the Secretary of State, with the consent of the Treasury,considers appropriate”.

If we were able to do it and if—that is a big “if”—theTreasury agrees, the Secretary of State could divertfunds into it. Amendment 6 permits the Governmentto use a proportion of revenues from auctioning emissionpermits to fund the bank. There is already provisionwithin that.

This is creative thinking and I am very grateful tomy noble friend for that because he is a great creativethinker. I turn to the Nuclear Liabilities Fund. Clearly,as the noble Lord, Lord Jenkin, quite rightly said, twothings are going on here. One is that this is a fund thatis committed to nuclear liabilities; it is committed tothe nuclear industry and, therefore, it has a range ofopportunities in the nuclear industry in which it couldinvest. The noble Lord, Lord Wigley, referred to Wylfaand other investments in new nuclear. I had discussionswith the chairman of the NLF about developing thefund into nuclear investments, including, for example,a MOX plant, which is something that we were committedto when I was in the department and, indeed, newnuclear. That is entirely for the NLF to decide foritself.

The problem I have with the NLF diverting fundshere is that this is an investment bank and it is what itsays. There is no such thing as a guaranteed investment.Some investments go up and some investments godown and if the NLF lost money, co-venturing with


[LORD MARLAND]the Green Investment Bank on things that it did notunderstand, of course the liabilities would not be met.Despite the fact that we may consider it a very boringreturn on the investment at the moment, it is plannedto match some of the liabilities. But I do not want thenoble Lord, Lord Teverson, to go away thinking thatactually the NLF is enhancing its investments, butthink that it has enough on its plate with the nuclearindustry.

Therefore, given the commitments that I have madeon Clauses 4 and 6, I hope that, despite the fact thattwo very important points have been raised—and I amgrateful to my noble friend Lord Jenkin of Roding,who has expertise in this field—the noble Lord willwithdraw the amendment.

Lord Teverson: I thank my noble friend the Ministerfor his response. I fully accept that the EU ETS moneyroute is not precluded by the Bill as it is, and I supposethat it would be nice to have it on the list as a nudge ora reminder to the Treasury that it was a possible flow.That was all that the amendment did, but it would tiein well with the philosophy of the carbon market andtrying to recycle money into helping the greening ofthe European economy and the UK even more.

Baroness Worthington: It struck me that the revenuesfrom the EU ETS auctions would be considerable,even at this depressed carbon price. How much moneywill the auctions raise in the next few years, and howdoes that compare to the £3 billion that has been putup as a stake for the bank?

Lord Teverson: I read an estimate somewhere ofabout £1.3 billion a year. But it all depends on thecarbon price. That is the key thing, and we do notknow that.

Lord Marland: Perhaps I can help. It depends onthe market, which is not there at the moment to buy it.We investigated and got a lot lower offer than £6.62 forthe price. That is six months ago, and I cannot rememberwhat figures were involved. I am sure that we couldinvite the Department of Energy and Climate Changeto provide some information in the normal course. Itdepends on a willing buyer and the price at which theyare sold.

Baroness Worthington: I have done some back ofthe envelope calculations, and at about 100 milliontonnes it will be in the region of £1 billion or £1.5 billion.That is not an insubstantial amount of money, and itwill rise in time, which would mean that the bank’sinitial deposit was paid back by those auctions in lessthan three years. That is an important context for thediscussion.

Lord Teverson: I thank the noble Baroness for hercomments. It is certainly an area that I would like tocome back to. I agree with my noble friend thatputting all the Nuclear Liabilities Fund into the GreenInvestment Bank might not be the best way in whichto spread the portfolio, although it would be evenworse to put it back into the nuclear industry itself.That would be a bit like the Mirror Group reinvesting

the pensions funds in itself, or whatever it did. Thearea needs looking at, and a broader investment strategyfor the NLF that included a sensible investment in abank like this, would be a good way forward.

I will continue to look for opportunities to help theGovernment and hope that we can have furtherconversations about this—but I beg leave to withdrawthe amendment.


5 pm

Amendment 7


7: Clause 4, page 3, line 10, at end insert—“(3A) The Secretary of State shall consult on additional

forms in which the Bank may raise investment funding, includingthe issuance of bonds.

(3B) The Secretary of State shall consult the Bank ofEngland granting the Bank access to the Quantitative Easingprogramme.

(3C) The Secretary of State shall report to Parliament on theresults of a consultation under subsections (3A) and (3B) nolater than 12 months following enactment.”

Baroness Worthington: This, as noble Lords can see,is a probing amendment but continues on the theme.We are trying to address a market failure in the creationof this bank. There has been a financial crisis and, aswe emerge from it, it is clear that commercial banklending is going to be further constrained. The BaselIII requirements will mean that the recapitalisation ofbanks will discourage them from holding longer-termloans on their balance sheets, which will potentiallyincrease costs. That means a reduction in loans, just atthe time when we need to see more money flowing intothese solutions. Things are getting much more difficult.

In that context, it is important that we have a bankthat can help to compensate for the increased constraintscoming in the private sector. Yet, as I have mentioned,we have created a bank that, sadly, is constrainedbecause it has a relatively small amount of startingcapital. I am not saying that it is easy to spend money,and we should not just be seeking to spend it rapidlyand not wisely. However, we must weigh up the scaleof the challenge with what we are creating. It alsoforces us to think about how we are going to increasethe leverage of that finance and ensure that it is seen togrow to the kind of levels that we need.

Our amendment is along similar lines to theamendment of the noble Lord, Lord Teverson, andtalks about two other ways in which finance couldpotentially be raised. We would encourage theGovernment to consult on these. We are not sayingthat we have a final, detailed position on this, but theseare fertile areas for exploration. The bond market ishuge, as I am sure that noble Lords are aware. As yet,the bond market is largely untapped for low carboninvestment because, by its nature, it is fairly conservativeand seeks out asset classes with a long track record ofdelivery. Time is needed to develop new assets, andthat requires expertise.


This is exactly what we hope is being created in theGreen Investment Bank—a new set of experts whocould help to create the sorts of asset classes thatenable private-sector bond market participants to comein behind and start to invest in them. That is why wehave tabled the amendment. There is no shortage ofprivate sector investment looking for safe and credibleinvestment vehicles. The fact that the bank is, underthis legislation, a wholly owned non-departmentalbody is attractive, so this is an important area for it.There is a good fit here as regards bond issues; theytend to have a long lifespan, which is exactly whatsome of these infrastructure projects will have. Bytheir very nature, it is infrastructure that will be herefor a long time.

We therefore encourage the Minister to think aboutbonds as a mechanism for raising finance. In particular,I have learnt a reasonable amount today about coveredbonds. This is an interesting mechanism that couldhelp to raise finance without adding to the publicdebt. In effect, we would create a new class of coveredbond, which would give comfort to investors by providinga double security on the loans. The UK’s coveredbond legislation could be examined to see how it couldbe adapted to encourage investment in green and lowcarbon technologies.

The other matter on which we would like to consultis quantitative easing. That is also an obvious way inwhich we potentially could create mechanisms for agreater flow of finance into this bank. We understandthat it is not the Government but the Bank of Englandthat controls it, but we also know that there are closeties between them, and this area could also be veryfertile and is definitely worthy of consultation. This iswhy we have tabled amendments on these importantissues. I beg to move.

The Deputy Chairman of Committees (BaronessPitkeathley): Amendment proposed:

“Page 3, line 10, at end insert”,the words as printed—but not quite as printed, becausethere is a typo in the fourth line. After:

“The Secretary of State shall consult the Bank of England”,we need to insert the word “on” before,“granting the Bank access to the Quantitative Easing programme”.

Lord Teverson: I had not noted that. Perhaps Ishould change my whole speech because of it.

The whole area of bonds issuance is important. Infact, it was looked at in some depth by the EnvironmentalAudit Committee in the other place, together withgreen ISAs. It is a method, which I know the Governmentand the Treasury are very keen on, to use money frompension schemes in particular to invest in the UK andin areas of quick growth. Although I am sure that mynoble friend the Minister will go through the wholequestion of whether these would be government-guaranteed bonds and the effect that would have onthe public accounts, I believe that this is an importantarea of fundraising. It is one that could, with thelength of investment in these sorts of projects, appealvery much to the pension industry and pension funds,which have large amounts of money, as we know, toinvest successfully. This would be a good way of movingforward and I am sure that the Government haveconsidered it a great deal.

I would like to ask the Minister whether theGovernment have thought further about the area ofgreen ISAs and about involving not just fund managersand corporates, as one would do with bonds, butordinary people to support the purposes of this bank.I note that some 18 million people have ISAs at themoment. That is one in three adults. Some £220 billionis invested by individuals in ISAs, which clearly haveall sorts of tax breaks that are attractive to individualsavers. Both these financial instruments could reallymake a difference in terms of the Green InvestmentBank and green ISAs. You could get a public andpersonal commitment to this cause and create extraemployment and growth in the UK.

Lord Brooke of Sutton Mandeville: My Lords, Ihave a small technical question. The official Oppositionindicated, in the noble Baroness, Lady Worthington, aclear understanding that it was the Bank of Englandthat was consulted on quantitative easing, but I have aquestion for my noble friend. If he were so minded asto grant this amendment, would we need a consequentialamendment in the context of the reference to theconsent of the Treasury in subsection (4)?

Lord Marland: I am very grateful for this probingamendment, which goes back to the creative thinkingon how we can get more money into the Green InvestmentBank. The point is that we have committed to invest£3 billion up to 2015. That is a set figure and we haveset out our stall. It has been agreed by the Commissionand any change would require state aid, which is apretty significant process and which would take time.So the allowance of bonds or ISAs, which are incrediblyvaluable things, will not, I am afraid, be achievablewithin the timetable up to 2015. For the purposes ofclarity, however, we are interested in exploring this—andwhy would we not be? We will be looking at this anddebating it further. Clearly, we are not going to getinvestment into this bank unless it starts to get a trackrecord, which most bond and ISA investors wouldwant to see. When the bank has its track record up andrunning, we will carry on with this.

Of course, we would need another amendment interms of Bank of England quantitative easing and soforth. We would need an awful lot more than that, letus be fair, because it is way beyond my pay grade tostart discussing such figures and such immense subjectsof finance. I am grateful for the suggestions. Werecognise that they are constructive and we would liketo carry on the dialogue over time. With that, I hopethat the noble Baroness will withdraw her amendment.

Baroness Worthington: I thank the Minister for hisresponse. A consultation would certainly help to fleshout some of these ideas and may bring forward evenmore. I would encourage the department to reallythink about how we can start a creative dialogue aboutsuch mechanisms. We have had four in front of ustoday, which are worthy of discussion. They are bigtopics in themselves, so a formal process would help usto understand some of the issues.

It slightly worries me when I hear that quantitativeeasing is above the Minister’s pay grade. We are notdoing a marginal thing here; we are talking about


[BARONESS WORTHINGTON]investment in UK infrastructure. We have seen governmentannouncements about a £40 billion stimulus of investmentinto infrastructure. If it is £40 billion, why can only£3 billion of that be put into the Green InvestmentBank? We should not treat this as marginal. It shouldbe centre stage in our stimulus package and in gettingour economy back on track. That is why £3 billion isnot enough and why we need to think about ways ofgetting it to be a much larger sum. A consultationwould be very welcome, thank you. I beg leave towithdraw.


Amendment 8

Moved by Lord Teverson

8: Clause 4, page 3, line 21, at end insert—“(7) It is the duty of the Secretary of State to provide the

European Commission with State aid notification concerning theintention to allow the Bank to borrow, including borrowing fromthe capital markets.

(8) The duty in subsection (7) must be fulfilled no later than31 December 2013.

(9) In the event the European Commission approves the Stateaid notification concerning borrowing, it is the duty of theTreasury and of the Secretary of State to permit the GreenInvestment Bank to begin borrowing from the capital markets nolater than 30 June 2015, or, if State aid approval has not beenreceived by that date, no later than one month from the date ofapproval.”

Lord Teverson: My Lords, now we get on to one ofthe core issues around the Green Investment Bank,which is its ability not just to lend its own capital orfunds but to be able to multiply them up, perhaps indifferent ways, and to use that as leverage to enable itto be a bigger investor than it would be from its ownresources. Of course, this rather comes back to thatcliché of whether the Green Investment Bank is actuallya bank or a fund. We know that any corporate plc canborrow money—that is its function—but what it cannotdo without going through a further procedure is toborrow it and then lend it out as well, because that getsit into the area of financial services and the FinancialServices Authority’s authorisation there.

This amendment seeks to recognise that there is aperiod during which this bank has £3 billion and hasto earn respect through having a track record andcredibility in its functions. My noble friend the Ministerwas absolutely correct on this. That is enough for it toget on with in the first couple of years. Yet we know,through the amount of time that it has taken to get towhere we are on the Green Investment Bank, thatdecisions take a long time. To get state aid takes a longtime. To get authorisation under the Financial ServicesAuthority and its successors as they will then be—thatmay be the Prudential Regulation Authority for abank—takes a number of years, so we have to prepareby thinking about those issues now. We cannot do thatonce we get to 2015. In this amendment, we are sayingthat by 2015 we need to start going through thoseprocedures, many of which will not be in the Bill. Lotsof other preparations will need doing as well, apartfrom state aid, to make sure that by 2015 the bank can

take on extra firepower—I apologise to my noblefriend Lord Jenkin if he does not like my using thatword.

This is about the bank’s ability to invest and tochange the economy; to get this green growth that wewant and know to be available; and to deliver jobs,growth and carbon reductions. It will be able to do thisonly by being able to leverage extra investment, apartfrom the investment it will have from its co-investorsof £3 billion in the first three years. I do not see how itwill be able to fulfil its mission and proper functionwithout being able to increase its ability to lend beyondthe likely Treasury resources.

I realise and understand entirely the Government’sconcern about the public balance sheet and publicdebt. The Chancellor has said that this borrowingcannot take place until the proportion of debt to GDPhas started to decline. It is a fundamental mission ofthe coalition to do that. However, getting to thefundamental question, I would ask this particularly.When the Green Investment Bank was launched on28 November, which was last week, I received a statementsaying that it will make £3 billion available for greentechnology and become a valued and integral part ofthe UK’s financial infrastructure—absolutely. It goeson to say that it is similar to Germany’s own developmentKfW Bank. We hope so, although the KfW Bank hasa ¤400 billion asset value. The big difference betweenthe two is that the borrowing of the KfW does notappear on the public balance sheets, whereas it isenvisaged that the borrowing of the Green InvestmentBank, as it is currently structured, will.

5.15 pmIt is important that we explore how we might find

our way around this public expenditure constraint andmanage it, so that we can move ahead despite thatconstraint. I would ask my noble friend the Ministerwhat the current advice of the Office for NationalStatistics is in this area as to whether the activities ofthe Green Investment Bank will be part of the publicbalance sheet and what conversations have taken placethere. All similar banks and institutions have to performto European accounting standards—rule 95, I think itis. That is true of KfW and other investment banks, aswell as the Green Investment Bank, so I do not understandwhy we are so constrained in the UK whereas withother European investment banks that is not the case.Why can we not apply standards that others do to thataccounting standard? I am not asking for regulatoryevasion but for regulatory avoidance in this area as itseems to be completely in the national interest, whichis something that we like to defend, particularly withinthe European Union.

The fundamental part of this amendment asks howwe can increase this bank’s investment ability for it tobe successful and get the sort of growth that the CBIsays is available through the green sector. A key way inwhich to do that is by borrowing on markets. Wecannot wait beyond 2015 to do that. Unless we havean immovable public expenditure constraint—althoughI would argue that there might be another way ofbalancing that in other areas, and we have talked


about some alternatives—surely we can find a way toget this bank correctly off the balance sheet as ourEuropean competitors are doing. I beg to move.

Lord Skidelsky: I support the amendment proposedby the noble Lord, Lord Teverson. I would have putmy name down on it if I had had the upfront certaintythat I would be able to be here. The noble Lord has hitthe nail on the head; the bank will not be allowed toborrow until the national debt is a declining proportionof national income. The Government’s debt reductiontarget is already three years off, so on current plans theearliest date at which the bank would be allowed toborrow would be not 2015 but 2018—and it may notbe 2018 either. We are faced with the prospect of abank that will not be allowed to borrow in any foreseeablefuture, and that borrowing restriction will underminethe bank’s ability to support the targets for reducinggreenhouse emissions as stated in the Climate ChangeAct 2008.

We are setting up a public bank uniquely withoutthe ability to borrow, and the noble Lord, Lord Teverson,is right in saying that that is not the model for KfW.According to the Deputy Prime Minister, it should beable to attract about £15 billion of co-investment. Inother words, the bank would pay 20% of a project andthe co-investors stake the remainder without the bankitself having to borrow. That would be a way roundthe borrowing restriction.

If the Green Investment Bank were allowed toborrow now at a conservative leverage, it would beable to leverage its £3 billion up to £18 billion. If theDeputy Prime Minister is right, that £18 billion wouldin turn be able to attract up to £90 billion in privatesector co-investment, so these are the possibilities thatwould be opened up by easing that borrowing requirement.There is a huge difference between an investment of£18 billion over five years and an investment of £90 billion.

The problem this amendment is designed to addressis that the debt may not fall for a long time, so theGreen Investment Bank may not be allowed to borrow.It is not just a question of the problems of start-up, towhich the noble Lord, Lord Teverson, rightly alluded;the problem is that the Government’s policy is not welldesigned to reduce the national debt. I have arguedthis point for a number of years because a policy ofdeficit reduction is not the same as a policy of debtreduction.

To conclude, the amendment would enable the GreenInvestment Bank to borrow by 2015, irrespective ofwhat is happening to the national debt, and potentiallyearlier if there were a need to boost growth. Thismeans starting the EU state approval process as soonas possible. For that reason I give my enthusiasticsupport to the approach of the noble Lord, LordTeverson.

Baroness Ford: This is a really interesting amendment,which also touches on the previous amendment. I amnot sure that I support the amendment of the nobleLord, Lord Teverson, but not because I do not supportits intent. I think it is hugely important that the GreenInvestment Bank, if it is to have any attraction, is

better capitalised than the Government are proposing.However, allowing the bank to borrow is one thing,but you have to ask, who would lend to it?

Before I came into your Lordships’ House, I spentmany years in the capital markets. The capital marketswill not lend to this bank unless one of two thingshappen: either it is guaranteed by government—plainly,that is behind the Government saying that they have towait for a certain period—or it has a strong balancesheet of its own. No one will lend to it just on the basisof thinking that it is a great idea in the same way thatno one will buy a bond unless it is backed by a cashflow. That is what the bond market buys; it buys cashflows. It does not invest in speculative infrastructure,however worthy. Therefore, it is really important thatwe do not get carried away by just wishing that thingswere different, and that we push the Government tocome forward with practical propositions about increasingthe funding available to this bank. Until there is atrack record there and until there are infrastructureprojects that are capable of securing a rating from therating agencies, there will be no bond issuance, anduntil it has a very strong balance sheet or the Governmentgive a guarantee to underpin that balance sheet, therewill be no lending from the capital markets either.I hate to pour cold water on this but we have toconnect with reality here.

Lord Teverson: I thank the noble Baroness verymuch for that contribution. I should point out that theborrowings of KfW, which is owned by the Germanländer and the federal Government, are guaranteed bythat Government and still manage to escape publicsector classification. I thank the noble Baroness verymuch for bringing up that point, which I forgot tomention.

Baroness Ford: KfW is covered by the covered bondregime, which we do not have in the United Kingdom.

Lord Oxburgh: My Lords, I, too, support theamendment. I shall not detain the Committee byrepeating the points that have been excellently madeby previous speakers. It is simply worth pointing outthat, because we are signatories to a variety of Europeanconstraints on emissions reduction and because wehave our own Climate Change Act, inevitably therehas to be massive investment in green infrastructure inthis country over the coming decade. We managed tolose out almost completely, if you like, in the previousphase, when we saw significant investment in, forexample, onshore wind in this country, where virtuallyall the high-end technology came from abroad. Wereally have to be ready to cope with this requirementfor capital internally and in time.

I am sure that by the Minister’s bed he has a copy ofthe current, recently introduced Chinese five-year plan,in which he will remember that no less than a third ofthe objectives relate to energy management, energyefficiency, investment in renewables and low emissionstechnology. There will be a massive world market here,and we can drag our feet again or we can participate init. I see this amendment, taking on board entirely thepoint made by the noble Baroness, Lady Ford, as


[LORD OXBURGH]simply facilitating and making sure that we are therein time. Brussels has many virtues, but speedy reactionis not one of them. Getting on with this now will notonly begin to manage that problem but will indicateagain to the capital markets that the Government areserious.

Lord Skidelsky: Perhaps I could reply to the nobleBaroness, Lady Ford. Her point is absolutely right,but it is irrelevant. The purpose of the amendment isto allow the bank to borrow; it does not guaranteethat the bank will be able to raise the money.

Lord Bates: Can I dissent from the amendment? Ithink that it goes against the whole point of thelegislation. Indeed, it goes against the whole point ofthe Green Investment Bank, which is to stand in thegap of market failure within the capital markets inorder to get projects up and running and off theground. Where that is not possible, it provides a bridgeor an intervention, but only so that private sectorcapital can come in. As an example of that, I mentionedearlier the first investment that had come in to EarthlyEnergy, the anaerobic digestion plant in Teesside. As Irecall, the Green Investment Bank invested £8 millionthere. Immediately that attracted matched private sectorinvestment of £8 million. The total value of the projectis £100 million. That seems to be a classic example. Togo from zero to £100 million, clearly they would nothave been able to get the project off the ground, butthat measured intervention of £8 million unlocked aproject worth £100 million, which is exactly what theamendment proposed by the noble Lord, Lord Teverson,is trying to achieve. I am simply saying that it isalready happening under the present regime.

Lord Mitchell: My Lords, we have had some verygood contributions. In fact, my Amendment 9 justleads on from what the noble Lord, Lord Teverson,said, and we have a few additional points to makeabout it. First, I refer to what my noble friend LadyFord has said on this subject; she has a lot of experiencein this area and we should listen to her. We should alsolisten to the noble Lord, Lord Oxburgh. He has showna lot of passion for green technology in this country hehas said how important it is that we stop sittingaround and get on with it. I hope that that is taken onboard by this Government.

I suppose that what we are saying more particularlyis that this Green Investment Bank has to be a realbank and not a sham. I do not think that it is going tobe a sham, but it has to be a real bank with all theattributes of a real bank. Probably the most importantissue before this Committee today is its borrowingpowers. Without the capacity to borrow from thecapital markets for investment, the bank is no morethan a government fund. In fact, Transform UK hassaid:

“A bank that is not allowed to borrow cannot be described asa Bank, and investors will notice this”.

However, the amendment represents a compromiseand takes into account the strain on public sectorfunding, and we would not therefore support recklessand irresponsible levels of borrowing.

5.30 pmThe Bill has no provision for borrowing powers to

be introduced and the Government have failed toprovide the certainty that is required to encourageprivate investment. I return to the letter sent to theGovernment by Southern Energy and engineering firms,to which I referred earlier. They said that this matteris,“critically dependent on a long-term stable policy framework”.

The managing director of General Electric has said:“Our investment is on hold until we have certainty and clarity

regarding the policy environment that we are in. One of the mostimportant things for us is political certainty, so we can justify thebusiness and investment case for a facility in the UK. But wethink there are some [political] headwinds which do not help,especially in terms of … subsidies”.

I have already mentioned how important certainty isto investment.

The chief executive officer of Vestas, which is theworld’s largest maker of wind turbines said:

“The most important issue that our customers have is along-term policy framework—that is required to put in theseinvestments, which are huge … [But] we have not had reassurancefrom the government”.

A firm commitment to borrowing powers is lackingand without it private investors will not be convincedby the Government’s rhetoric. This will remain thecase, especially as the Government’s commitment tothe green economy appears to be diminishing as thisParliament progresses. Seven energy firms have saidthat recent noises coming from the Government havecaused them to reassess the level of political risk in theUK. Borrowing powers are therefore essential. Otheramendments, such as that of the noble Lord, LordTeverson, also recognise this.

It is worth emphasising why we are offering analternative. The Minister in the other place has madeit clear that the borrowing will be scored againstnational debt totals, and it is therefore reasonable totake this into account, although the aim is, of course,to get the bank borrowing as soon as possible. Shouldthe bank feel that the state of public finances in April2015 is likely to be such that it would not be suitablefor the bank to begin borrowing, it could presentParliament with a report containing alternative datesand its reasoning behind it.

I think that this is a sensible compromise that willreassure investors, which is what we all want to do,and reassure the private sector, while recognising theneed for fiscal prudence.

Lord Marland: My Lords, I say to the noble Lord,Lord Mitchell, that handwritten notes such as thosethat we old fogies use would be useful instead ofmodern technology. I am grateful to noble Lords forexploring this area. Clearly, those who have been ingovernment and those who have read the papers knowthat we are in very deep financial straits. This Governmenthave decided to start a bank against all odds, investing£3 billion in it in the next period, which is a tremendousachievement. We have been told to get on with it. Wehave done so and it is here before you now, with achairman and chief executive in place who are gettingon with it. On that point, I would like to quote whatthe noble Lord, Lord Smith of Kelvin, has said about


the state of affairs. I am very grateful to the nobleBaroness, Lady Ford, for her very constructive andpractical comments. The noble Lord said:

“We need to show government and private capital marketsthat we are a well run organisation with a good track recordworthy of the injection of more capital or, indeed, borrowingmoney in capital markets”.—[Official Report, 14/11/12; col. 1529.].

That is absolutely fundamental. No one is going tolend to this bank or provide borrowing unless it canshow a track record of prosperity. I can promise nobleLords that if we feel the need to borrow, we willapproach the stakeholder well before 2015.

On that point, the Government have given acommitment that we will seek state aid approval fromthe European Commission in respect of borrowingbefore the end of this Parliament. The noble Lord,Lord Skidelsky, very appropriately raised this. Wehave only just got this thing going but already we arestarting to move forward. As the noble Lord, LordOxburgh, rightly says, it takes a long time to achievethese things in Europe but we are playing that game;indeed, we are ahead of it.

However, I mention a word of caution, as, indeed,did the noble Lord, Lord Smith. I think that theoriginal budget of investing the first £775 million overthe next five months will be difficult to achieve. However,I am confident that we can do it. It is not as if there isa whole load of stuff piling up to be invested in at themoment. Of course, we know there are investmentsout there, but the budget will be difficult to achieve inthe first period. That shows that these things taketime; it takes time to build up a track record; it takestime to build up confidence in the markets; and ittakes time to build up co-investors, which will be theinitial endeavour of the bank.

The noble Lord, Lord Teverson, asked about KfW.Rules are rules and the noble Baroness, Lady Ford,mentioned that we cannot do it in this country. I thankher for that. The UK’s boundary for public financecovers the whole of the public sector, including centraland local government and public corporations. Thatreflects the approach of this Government and that ofprevious Governments. It is not something that we cansuddenly do and in this piece of legislation we are notgoing to change the rules of engagement.

Lord Teverson: This is covered in European accountingstandard 95. I do not see why we should put ourselvesat a disadvantage in that interpretation compared withother nations within the European Union who arecompeting for the same capital. That seems to me tobe tying our hands behind our back. We could use theexample of changing the rules in terms of Lloyds andRBS as regards public balance sheets and how, withthose banks, we made exceptions. I accept that this israther different, but we have a track record that saysthat we can change things. I do not understand why itis possible for our competitors to be unchallenged bythe European Court of Justice or the Commission interms of state aid where we risk being seen as beingsubservient rather than proactive. I would notaccuse the Minister of this—quite the opposite—butwe do ourselves down by appearing to be supine inthis area.

Lord Marland: I do not think that it is a question ofbeing supine. This is a government decision that hasbeen made by the coalition of which the noble Lord isa member. There are many things that people do notunderstand. The noble Lord, Lord Skidelsky, does notunderstand or agree with some of the policies of thisGovernment, but that is government policy.

Lord Skidelsky: I understand it but do not agreewith it.

Lord Marland: I apologise. It is good that my noblefriend understands it, because then he will not disagreewith it. That is the way that the Government have setout their stall. We have inherited a very substantialnational debt, but not in the same way in which theGermans have inherited the same problems. We haveinherited a grave financial situation and, quite rightly,the Treasury decided that it will not enhance that byfurther borrowing against our balance sheet. The evidenceproduced by the noble Lord, Lord Smith of Kelvin,would suggest that he does not feel under any pressurein terms of funds at this point. Of course, we must setout our stall, as I have said. We intend to seek EuropeanCommission approval for borrowing and we intend tofollow that process as soon as possible. I think that is avery good sign and I am delighted that there is someagreement in the room that we are doing that. I invitethe noble Lord to withdraw his amendment.

Lord Mitchell: Does the Minister have any thoughtsabout when this borrowing will come to pass?

Lord Marland: We have made it very clear that itwill not come to pass before the end of this Parliament.That is what prudent people do. They say, “I am goingto buy something and I am going to spend this amountof money”. We have said that we will spend only thatamount of money, but we have said that we will spend$3 billion on this project, which three years ago didnot exist.

Lord Teverson: Three billion pounds.

Lord Marland: Pounds, dollars, whatever you like.[Laughter]

Lord Teverson: My Lords, I thank my noble friendfor going through this. Can I just say what I am notsaying? I am not for a minute saying that we shouldimmediately rush into this. I said in my opening addressthat the bank needed to have a track record andcredibility. It needed to prove that it was good at whatit does. However, one thing that we all know, whetheryou have been in business or, as the noble Lord, LordOxburgh, said, you are involved in the EU, you have toplan well ahead and start making provisions for thelonger term. There is no better time to do that thanwhen you lay down legislation.

I was being very understanding in terms of the debtproblem. I am not talking about changing policy: I amtalking about testing rules. All Governments try to getaround rules, whether you call it PFI, PPP or whatever


[LORD TEVERSON]to get round public sector borrowing ceilings. I acceptthat. That is one of the reasons that we went into thecoalition and I am delighted to have done so. However,that does not mean that we then accept everything thatwe are told to accept, although I know that that is notin my noble friend’s nature either.

This is fundamental to making this bank work. Mynoble friend mentioned matched funding. Yes it is truethat there is already a considerable leverage, but that isa fund; the Regional Growth Fund does exactly that.That is why this would then be a green growth fund.However, it is not that: it is a Green Investment Bank.That is why, to get to our goal, we all need to find away around this. This will be a really important area toexplore constructively between now and Report. Inthe mean time, I beg leave to withdraw the amendment.



Amendment 10Moved by Lord Stevenson of Balmacara

10: Clause 4, page 3, line 21, at end insert—“(7) The Bank shall set out as part of its investment strategy a

target for the leveraging of additional private sector investmentby 31 March 2015 and annually thereafter.”

Lord Stevenson of Balmacara: My Lords, we havejust heard an interesting discussion about what theoverall financing arrangements for the bank will be.I was struck by the comments made by the nobleLord, Lord Skidelsky, who is not in his place, thateffectively the leverage on acquiring some form ofloan finance will be about six times and the subsequentleverage by bringing in third-party investment wouldbe a further five times. We are talking about a gapbetween the funds available within the bank of £3 billion,which is a huge sum, and we are grateful to theGovernment for finding that cash, but at a cost of£90 billion in terms of growth, jobs and SME support,which one has to bear in mind. So the amendmentfocuses on what seems to be the only possible way thatwe will fund support for the bank in terms of itsinvestment by getting co-investment from third partieswho might wish to join the bank, having signalled thatthese were investments that they wished to make.

Our attention was drawn to comments that weremade when the bank was opened in Edinburgh theother day, which has also been referred to by otherspeakers in this debate. Speaking at the opening of thebank’s headquarters in Edinburgh, the Business Secretarysaid that the Green Investment Bank,“will leverage private sector capital to fund projects in prioritysectors from offshore wind to waste and non domestic energyefficiency, helping to deliver our commitment to create jobs andgrowth right across the UK”.

The Secretary of State for Energy and Climate Change,Edward Davey said that:

“The Green Investment Bank will help attract the capitalrequired to allow the green economy to blossom, encouraginginvestors to market and kick-starting low-carbon and energyefficiency projects”.

So the aspirations are certainly there for this to be avery successful operation.

In the wake of the global financial crisis, it isobviously right that any financial institution now hasthe highest possible levels of transparency, accountability,scrutiny and banking ethics, so this amendment alsoaims to encourage the bank to publish a strategy inthis area and hence to encourage others to add theirinvestments with the bank.

5.45 pmI shall draw on a recently issued report by the IPPR

on the Green Investment Bank, Do It Now, Make ItBig. The authors argue:“We are leaving a period of market fundamentalism during whichit was assumed that markets would always work to allocateresources in the best way possible. There was no case for collectiveaction … unless a specific market failure could be identified. Suchfailures were supposed to be exceptional … Even if a marketfailure was identified, it was best handled by attempting minimalinterventions to regulate prices. Government failure was assumedto be more pervasive and deadly than market failure, so setting-upstate institutions was”,

a definite no-no. However, we are where we are andclearly the Government see no problem in setting upan independent institution in this case, which mustmean that they believe that the Green InvestmentBank can achieve more than the Government themselvescould do.

The case for green investment rests on the assumptionthat unless there is a collective decision to reducenational dependence on imported and increasinglyexpensive energy sources and to develop alternativesthat emit less carbon, it is more than probable thatinvestment on the requisite scale will simply not occur.Certainly, it is not occurring at present. Yet forecastingtechnologies and prices far into the future is extremelyhazardous and so, in the current climate, private companieswill hesitate unless there is clear policy leadership thatis backed up by the commitment of state funds.

Policies that are not supported by cash and contractsare all too susceptible to change, leaving investors highand dry, so there is a bit of a quandary. It may well betrue that there is no better time to undertake suchinvestment than at a time of idle manpower whencompanies want to invest rather than to produce,because demand is so low, and when the cost ofborrowing is very low by historic standards. Yet withoutgovernment taking the lead, where is the policy certaintyand the risk reduction that can come from such directaction? These are the points that I think my noblefriend Lady Ford was alluding to.

On the plus side, the green bank is at arm’s lengthfrom the Government, which is essential if the bank isto take technical and commercial risks, something thatis hard for the Civil Service to do. It can foster anecessary degree of pluralism in tackling the issues, asit can be agnostic on whether there is a right approachand it can support any well thought-out and preparedsubproject that meets its investment criteria. It canthereby catalyse and harness the variety and ingenuityof the private sector. Yet on the negative side, the UKGovernment are committing only a small proportionof the estimated £200 billion needed in this sector—I think that is the largest figure I have heard—and


have said that the bank cannot borrow for severalyears because they are giving top priority to reducingthe deficit. As it affects co-investors, the risk reductionstrategy cannot then be effective so will the privatesector come in to fill the gap? If it does not, what is theGovernment’s plan B for this bank?

Clearly, the question of who will invest with thebank and how much is crucial. In the absence ofgovernment permission to borrow, this form of privatesector investment in projects will be the only source ofleveraged funding for the green bank going forward,so it is absolutely vital to know what is happening.Hence the need for the bank to,

“set out as part of its investment strategy a target for the leveragingof additional private sector investment by 31 March 2015 andannually thereafter”.

I beg to move.

Lord Marland: I am grateful for that landscape ofthe new bank and the large elements of agreementfrom the noble Lord in drawing his conclusion. To cutto the quick, this is obviously about how we are goingto attract co-investment. In meetings with the nobleLord, Lord Smith—and with the noble Lord, LordAdonis, who sadly is not with us but we have discussedthis—he was very clear that this will not be a problem,as indeed I am because of a number of countries that Ivisited. There is a huge market out there. We had theKuwait Investment Authority over last week, whichwas celebrating being in the UK for 60 years. It readilyindicated that it would like to invest alongside us in thefuture.

On the timetable, I refer to the noble Baroness,Lady Ford, who indicated that she would agree thatthis is very much a matter of track record. No fundcan set up shop and on day one expect to be delugedwith investment, even if the board and chief executiveare very well recognised.

Baroness Ford: There are two concepts here and it isimportant to get clarity. Track record is important forco-investing. The noble Lord, Lord Teverson, is absolutelyright. At the moment, we have a green investmentfund. The way to get additional leverage from thatfund is by co-investing, and there have been lots ofgood examples in the past 25 years of different typesof bodies doing that in the United Kingdom. However,track record is important for co-investing. Howevergood your track record, unless you have establishedcash flows to sell in terms of a bond or balance sheetwith government underpinning, you will not getborrowing. There are two slightly different concepts.

Lord Marland: I could not have put it better myself.In fact, I could not have attempted to put it as well asthe noble Baroness did. It is absolutely clear, and itsets a clear mandate. We have already discussed thisissue, and it will come up again, but I am confidentthat there will be co-investment. At this point, I seethis as an enabler for co-investment. There are plentyof opportunities for green investment. I therefore invitethe noble Lord, Lord Stevenson, to withdraw theamendment.

Lord Stevenson of Balmacara: I thank the Ministerfor his comments and I share the support shown forthe success of the bank. However, I remain puzzled asto how it will make the transformation from the littleduckling that is alone to the wonderful swan that I amsure the Minister has in his mind as sailing calmlyacross the seas of international finance, sucking upinvestment from wherever it goes, flying off into thesunset with a raft of projects carefully tucked under itswings, and therefore being successful. I do not seethat, and we will return to this matter.

Lord Teverson: Perhaps I may ask the noble Baronessabout one matter. One of the things that I understandinvestment banks often do is raise bonds against projects.It is not a question of the recourse of liabilities tothem; they raise bonds on the asset value of theproject. There are ways of doing it in that way.

Baroness Ford: There are ways of doing it. I do notwish to detain the Committee and perhaps I shouldhave a cup of coffee with the noble Lord to explain; Imean that in a helpful way. Bonds are raised againstthe cash flows from projects. They are raised againstan infrastructure project only if the Government underpinit—hence, PFI.

Lord Brooke of Sutton Mandeville: I encourage theMinister to try to turn not a duckling, but a cygnet,into a swan. A cygnet, in banking and legal terms,would have a greater significance than a ducking.

Lord Stevenson of Balmacara: Perhaps I may respond.Since I joined your Lordships’ House, I have alwaysbeen impressed with the noble Lord’s grasp on literature.I am a little surprised that he did not pick up myallusion to the Ugly Duckling.

Lord Bates: Perhaps the noble Lord, Lord Stevenson,would agree with me that given that this is one of thelast chances we will have to discuss Clause 4, in therange of investment criteria or investment classes thatcan be made through the bank, whether they be grantsor loans, if the objective is to achieve leverage, it wouldseem sensible for more emphasis to be placed onlending money at a given rate, rather than giving itaway in the form of grants. Again, a preference shouldbe given to equity finance because it would also be ofpotential benefit to funds in the long run as thoseinvestments come to fruition.

Lord Stevenson of Balmacara: My Lords, the nobleLord makes a very good point and, in an early start-uparrangement, the last thing you want to be doing isdissipating your hard-earned capital. You should beusing it to recycle. However, that relates to the pointwe have been making, which is that leverage of about30 times the investment is achievable, but we do notseem to have the support of the Government in that.However, I beg leave to withdraw the amendment.


Clause 4 agreed.



Clause 5 : The UK Green Investment Bank:accounts and reports

Amendment 12Moved by Lord Stevenson of Balmacara

12: Clause 5, page 3, line 27, at end insert—“(2) The UK Green Investment Bank must ensure that—

(a) all studies or assessments conducted in the preparationof a business plan, and their accompanying terms ofreference,

(b) all written correspondence exchanged between theGovernment Shareholder and the Board, and

(c) all key operational documents, including internalworking documents of the Bank relating to investmentdecisions,

are made available on a website maintained in accordancewith the requirements of this section, subject to theexemptions specified in subsection (3).

(3) Information contained in documents required to be disclosedby subsection (2) may be withheld or redacted by the Bank wherein the reasonable opinion of a qualified person—

(a) its disclosure would prejudice the commercial interestsof any person (including the Bank),

(b) its disclosure would, or would be likely to, inhibit—

(i) the free and frank provision of advice to or withinthe Bank,

(ii) the free and frank exchange of views within theBank for the purposes of deliberation,

(c) its disclosure would otherwise prejudice, or would belikely otherwise to prejudice, the effective conduct of theBank’s business,

(d) a claim to legal professional privilege or, in Scotland, toconfidentiality of communications could be maintainedin relation to it in legal proceedings, or

(e) its disclosure—

(i) is prohibited by or under any enactment, or

(ii) would constitute or be punishable as a contempt ofcourt, and in all the circumstances of the case, thepublic interest in maintaining the exemptionoutweighs the public interest in disclosing theinformation.

(4) The documents specified in subsection (2) must be madeavailable on the Bank’s website or a website that is maintained byor on behalf of the Bank.

(5) Access to the documents specified in subsection (2) on thewebsite must not be—

(a) conditional on the payment of a fee, or

(b) otherwise restricted, except so far as necessary to complywith any enactment or regulatory requirement (in theUnited Kingdom or elsewhere).”

Lord Stevenson of Balmacara: My Lords, the purposeof the amendment is quite straightforward. I spokeunder the last amendment about the need for transparency,accountability, scrutiny and banking ethics, and theimportance that these now have, particularly afterthe last crisis. This is something that should apply tothe green bank. It is the first public bank to be createdin modern times, but it may not be alone, because weare aware that a British Investment Bank, or whateverit is to be called, is starting up. Therefore, we should besetting precedents for how it should operate as we goforward.

We suggest that the Green Investment Bank has thehighest standards of transparency both for theshareholders and the general public, which means that

we can have meaningful debate; assessment and scrutinyas to how the bank is being managed; its success inachieving its green purposes; the manner in which itarrives at investment decisions—and all subject to theimportant point of commercial sensitivities andconsiderations.

The amendment would ensure that all workingpapers and studies undertaken in the preparation ofthe bank’s business plan, as well as all writtencorrespondence exchanged between the Governmentand the board, were made available on a website thatwas freely accessible by the public. We do not want todo anything that compromises the bank’s ability tomake investments and consider matters of a sensitiveand commercial nature; that is why the amendment iscouched in those terms, to make sure that a full andfrank discussion of views can still take place betweenthe Government and the board, and that the bank canfully undertake its activities. I stress that we want theGreen Investment Bank to have the highest possiblestandards of transparency, accountability and scrutinyto the public and other stakeholders.

It is true that the bank falls under the CompaniesAct 2006, and is registered at Companies House as acompany with proper articles of association and soon, but our concern is not so much with historicreporting, because often these reports can be delayedfor six to nine months, but with allowing debate anddiscussion. A good example of this would be the rulesthat the Government are putting in place to ensurethat inappropriate bonuses and executive pay will berestricted. As the Committee will be aware, this Billwill change the powers of shareholders in deliberationson executive remuneration, although we do not thinkthat it goes far enough, as we will come to later. Thisamendment will ensure that the bank will be differentfrom other Companies Act companies in the sensethat debate about appropriate pay and the Government’srole in that would be flagged up on the website, andthere permit a wider debate before the mechanismsproposed in this Bill kick in. I beg to move.

Lord Marland: My Lords, this is an interestingamendment, but of course it goes way beyond theFreedom of Information Act 2000, which permits agreat level of self-disclosure and obligations that thebank must apply to because it is wholly owned by theGovernment. So the information will be readily accessibleas to bonuses and all the other things that the nobleLord reasonably requests. It is important that there istransparency in our current world of bonuses anddirectors’ pay, but we do not want to put an extraburden on an organisation that is already within theFreedom of Information Act. I hope that the nobleLord understands that and will perhaps withdraw hisamendment.

Lord Stevenson of Balmacara: My Lords, I dounderstand that and thank the Minister for pointingout how the Government are approaching this issue.I still regret that in some senses we are not takingadvantage of how one could use a more engageddiscussion with those who have responsibilities in this


area, notably Parliament. Having said that, I will readcarefully what the Minister has said. I beg leave towithdraw the amendment.


Amendment 13 had been withdrawn from the MarshalledList.

6 pm

Amendment 13A


13A: Clause 5, page 3, line 27, at end insert—“( ) The Bank shall publish in its annual report what proportion

of investments made in accordance with the green purposesoutlined in section 1(1) shall be allocated to proven technologies,and what proportion shall be allocated to innovative technologies;and shall make a proposal for these proportions over its forwardplan for the next three years.”

Baroness Worthington: My Lords, this amendmentis designed to try to elicit a few more comments fromthe Government on where this investment will betargeted—perhaps on the spectrum of entirely safecommercially proven technologies towards the moreinnovative end of the spectrum. It is prompted by areport about the launch of the bank from the CEO,Shaun Kingsbury, who, I suspect, in an effort to try tobegin the process of creating a track record for being asensible investor, said that only safe and proventechnologies would be invested in.

We are not critical of that as it makes sense, but inmuch of the literature about the setting up of the bankthere is a discussion of the desirability of investing inlate-stage innovation. We think that is important becauseit is about ensuring that this bank is doing somethingthat is not currently done in the market: it is addressinga market failure. The balance between investing inalready proven technologies and more innovative solutionsis crucial to the bank’s identity and to its success.Obviously it should not operate in the realms of riskyinvestment and venture capital investment but it oughtto operate in a space that has perhaps been overlookedby traditional investors. In that way, it would be addingvalue to the existing market.

We have tabled an amendment which is designed totry to tease out this area of the bank’s operations tomake the policy much clearer so that there is moretransparency. It is worth saying a few words aboutwhere late-stage innovation might occur. It is clearthat the Government are seeking to create a crowding-ineffect rather than a crowding out effect. That is aninteresting phrase and one that we should definitelyseek to achieve. We do not want to be competing withexisting private investments, but beating a path downwhich other investors can follow. That crowding in islinked with the concept of what is a late-stage innovation.The current list of technologies that the bank will beinvesting in is broad. There will be room for innovationamong those categories that have already been selected,but there are other technologies that are perhaps noton the list, which is slightly regrettable. I mention waveand tidal technologies because that is an area where

the UK could have a great potential to lead globally.We have exactly the right geography for these veryimportant technologies, which are not yet commerciallyviable. We know that the policy is coming and we lookforward to contracts for different mechanisms thatmight bring these technologies on. It would seem ashame to preclude those sorts of technologies fromthe list that the bank is looking at.

The amendment is asking for further clarity aboutwhere the bank will position itself compared withtried and tested technologies and more innovativeaspects, which might play more to the UK’s strengths.We would welcome the Minister saying a few wordsabout the bank’s attitude to that. Perhaps he couldalso talk about wave and tidal technologies as I thinkthose are hugely important for the UK. I beg to move.

Lord Brooke of Sutton Mandeville: I assume thatthe noble Baroness’s proposal is born of previousliterature. Could she tell the Grand Committee whatproportion has been given to innovative technologiesas against existing ones? We are an inventive nation. Inother words, what kind of percentage does she envisagewill emerge out of this plan?

Baroness Worthington: I do not have a number inmind. This is a newly created facility, which we have toexplore. As there has not been a previous example of abank like this being created in the UK, there is noprecedent on which to draw. Perhaps we could lookoverseas. We have had examples cited from Germany;there are similar banks in Portugal, Spain and Holland;and the Australians are in the process of setting uptheir own investment vehicle. I do not have an answer,but I am sure that, with some study, the departmentcould provide us with some guidelines or some examplesfrom overseas.

Lord Marland: I am sure that the noble Baronesswould agree that 20% would be a reasonable part ofthe bank’s investment. That is the right number because,as part of this agreement, the bank is permitted tomake 20% of its investment in other sectors, a key onebeing marine energy, which I know is of great interestto the chairman. It was also of great interest to me inmy previous department and is of great interest to thenoble Baroness. It uses our great attributes of tidesand waves. There is a lot of activity going on there. Wehave created marine parks, and I see this as a keyfuture. As I said, the bank has 20% of its fundsallocated to this area.

This is an interesting probing amendment. Butwhere I would resist movement in this direction, otherthan giving confidence to the noble Baroness, is that ifwe start using words like proven technologies, I am notsure that we can create the right definition. We allunderstand what the noble Baroness means. Goingback to the core of what the bank is set up to do, it isto demonstrate the ability to make both a positivereturn and a green impact. All those areas that thenoble Baroness and I know well would certainly fitinto this exciting new development. With that, I hopethat she will withdraw her amendment.


Baroness Worthington: I thank the Minister for hiscomments, which were reassuring. I think that 20%sounds about right, but who knows? The most importantfactor, which should not be overlooked in our desire tocreate this pedigree and track record is that there willbe times when we need to cut a path through otherwiseunexplored territory. There is a market failure outthere that this bank can address. By having a targeted,focused remit, I hope that it will find investmentopportunities that others have overlooked. I welcomethe comments from the Minister and I beg leave towithdraw the amendment.

Amendment 13A withdrawn.

Clause 5 agreed.

Clause 6 : The UK Green Investment Bank: documentsto be laid before Parliament

Amendment 14


14: Clause 6, page 3, line 35, leave out subsection (2) andinsert—

“(2) The Secretary of State must prepare and lay before bothHouses of Parliament a report on the activities and investmentsof the UK Green Investment Bank.

(2A) The Secretary of State must lay a report before Parliamentas provided for under subsection (2) within 12 months of thecoming into force of this Act, and annually thereafter.

(2B) The report under subsection (2) must, in particular,include or contain information about—

(a) the investments undertaken by the UK GreenInvestment Bank during this period,

(b) how the UK Green Investment Bank is achieving itsgreen purposes as set out in section 1,

(c) a value-for-money and efficiency statement,

(d) the identification and management of risk in respect ofUK Green Investment Bank objects and investments,

(e) how the UK Green Investment Bank is not duplicatinginvestments made in the markets, and

(f) how the UK Green Investment Bank has applied theMain Principles as set out in the UK CorporateGovernance Code.”

Lord Stevenson of Balmacara: My Lords, the mainaim of this amendment is to firm up how and in whatform the Secretary of State must prepare and laybefore both Houses of Parliament a report on theactivities and investments of the UK Green InvestmentBank. The amendment is largely self-explanatory, butit may be for the benefit of the Committee if I raiseone general and a couple of specific points.

As I mentioned before, relying on the reports generatedunder the Companies Act 2006 introduces significanttiming problems, as these reports will be generallyarranged for an AGM often some months after theyear end. A report for Parliament, if it were different,can be much more up to date and therefore morerelevant to those who have to discuss it. The focus ofCompanies Act reports are the stakeholders, mainly inconventional companies. These would be the dispersedinstitutional and private shareholders and not the

public interest represented by Parliament. It is thereforesensible to recognise that, although initially the Crowninterest will be the only shareholding interest, that willnot be identical with the public interest, and differentreporting might therefore be required.

Proposed new paragraphs (a) and (b) in the amendmentwould give Parliament a feel for the activity that thebank has been undertaking on the ground, and bringthe reality of the bank’s operations to life. It would beunusual for Companies Act reports to deal with specificinvestments in this way.

Paragraph (c) would assess the way in which thebank is achieving value for money for its investments,and draw parliamentary attention to value for moneyand efficiency—again an approach that would notcommonly be found in company reports.

Unusually for institutions in the public sector, thebank will have to be familiar with risk in all its formsand across its investments, and the wider economicclimate will also need to be referred to as well as theappetite that individual investors will have for risk.This is an important area that we think the reportshould deal with.

It would be of considerable concern if the GreenInvestment Bank were to displace investment alreadyavailable in the market, which we have already touchedon in our debate this afternoon. So a specific report inthat area would be helpful in understanding how thebank was progressing, and in assessing how successfulit was in the marketplace.

The final point brings us back to corporate behaviours,and assisting Parliament to judge whether the bankwas addressing concerns on such matters as pay andbonuses and ethical behaviours more generally.

I hope that the Minister will accept that with thisamendment we are trying to be helpful. We have somecommon ground in assisting Parliament in gettingmaterial which is better suited to its particular role. Ido not think that that will necessarily come out of thecompanies’ reports and I hope that the amendmentwill stimulate those who have to prepare them to comeup with more appropriate solutions for the reportingthat is necessary. I beg to move.

Lord Marland: The noble Lord, Lord Stevenson,probes again—quite reasonably, if I may say so. I justwant to make it clear that the Government, as themain shareholder—indeed, the only shareholder—willbe holding it to account at every angle. Also, Clause 5treats the bank as if it were a quoted company. Thereforeit is subject to the Companies Act, which imposesthree quite important criteria. First it will be requiredto produce a directors’ remuneration report, aboutwhich there will be more later in this Bill. It will berequired to publish its annual accounts and reports ona website. It will be required to produce an enhancedbusiness review, under which the directors must reporton matters such as main trends and factors likely toaffect the company’s business and environmental matters.We believe that that has enhanced transparency, publictransparency, in addition to the watchful eye ofgovernment in terms of getting return on our investment.I hope that satisfies the noble Lord on what I considera very important probing amendment.


Lord Stevenson of Balmacara: I thank the Ministerfor his comments. It is nice to see that my rating hasrisen from being interesting to being quite reasonablein what I am suggesting. I will look for an A probablyin sitting seven or eight, and perhaps even get an A+ atthe end. I look forward to that. In the interim, Iwithdraw this amendment.


Amendment 15

Moved by Lord Stevenson of Balmacara15: Clause 6, page 4, line 9, at end insert—“(5) The Secretary of State must make provision for an

independent expert review of the performance of the UK GreenInvestment Bank.

(6) A review under subsection (5) must be prepared every fiveyears following the commencement of this Act.

(7) An interim review shall be prepared no less frequently thanevery two and a half years.

(8) A review under subsection (5) must, in particular, includeor contain information relating to—

(a) an assessment of the UK Green Investment Bank’senvironmental performance in fulfilling the greenpurposes as set out in section 1,

(b) an analysis of the main trends and factors likely to affectthe future development, performance and investments ofthe UK Green Investment Bank,

(c) macro-economic analysis, including assessments ofdemand in the UK economy and international factorslikely to affect green investment and skills within therelevant industries,

(d) assessment of the competitiveness of the UK GreenInvestment Bank in securing competitive advantage forthe UK in green and low carbon economies relative toother countries, and

(e) recommendations to improve the UK Green InvestmentBank’s impact in fulfilling its green purposes in section 1.

(9) A review conducted under subsection (5) must consult—

(a) The Secretary of State for Energy and Climate Change,

(b) The Secretary of State for Environment, Food and RuralAffairs,

(c) The Committee on Climate Change,

(d) Ministers from the devolved administrations,

(e) investors and interested parties, and

(f) members of the public.(10) The Secretary of State, in the capacity of shareholder,

must provide such information as they consider reasonable toenable the person or body undertaking the review to fulfil therequirements of this subsection.

(11) A review under subsection (5) must be published and laidbefore both Houses of Parliament.”

Lord Stevenson of Balmacara: My Lords, Amendment15 brings to the attention of the Committee the suggestionthat if the reports that are being received by Parliamentare those which are mainly being generated within theCompanies Act register of reporting requirements,there may be some gaps in terms of independentreview. So the main purpose is to require such a reviewevery five years following enactment, and also to havean interim report.

I am sure that the Minister will again argue that thebank will have sufficient to do under the CompaniesAct, and that, as a public company falling within the

Freedom of Information Act, there is already a sufficiencyof reporting requirements for the bank. He may arguethat requiring any more might be regarded as otiose,but there are some reasons why I think the exportreport would be of value.

The rationale for setting up the bank is to bridge agap in understanding between the investor communityand those who wish to manufacture, develop andtrade in the green technologies. Surely a periodic reportof what the bank has been doing and how successful ithas been in fulfilling its purposes, a check on itscompetitiveness and a review of the main trends andfactors likely to affect its future performance wouldhelp bridge that gap and help improve the sector as awhole, leading to greater investment.

In a similar way the preparation of an externalexpert report would surely help the bank sharpen itsperformance and help improve its knowledge andunderstanding of the sector. It may well be that it hascollected the best and the brightest to work within thebank, but, even so, whenever there is an externalreport, there always is more that is achieved because ofthe preparation for that reporting requirement thanthere is perhaps by actually going through the process.So in that sense it would be an assistance to thecompany itself.

Thirdly, the existence of such a report would surelyassist those who would otherwise only be able to relyon the standard output of the bank under the CompaniesAct. With that, I beg to move.

Lord Marland: My Lords, this is an A+ amendment,without any doubt at all, something that I have neverachieved myself. So much was I taken with thisamendment that I invited my officials to contact thenoble Lord, Lord Smith of Kelvin, as chairman, toconsider this because I felt that it was such an A+amendment, from an A+ man and an A+ male, that itwas worthy of consideration. I hope it will satisfy thenoble Lord that the noble Lord, Lord Smith of Kelvin,has made it clear that the board will undertake anindependent review of its own performance each yearfrom the end of its first full financial year in 2014.I hope that that satisfies what I thought was anexcellent amendment, and I encourage the noble Lordto withdraw it.

Lord Stevenson of Balmacara: It is embarrassing tobe praised so quickly, and so young. Of course, to bethe very best of our universe you now have to go aboveA+ to A*+, at the risk of suggesting that there mightbe a further grade to which I might aspire.

Lord Marland: If the noble Lord is not satisfied, Ican big it up even more.

Lord Stevenson of Balmacara: I shall play my cardsslowly and see how we get on. The simple point that Iwas going to make was that the answer is exactly as Iwould like, and this will satisfy us in that respect. It isjust a question of what will happen to the report interms of public arrangements. Perhaps the Ministercould reflect on having a further exchange with the


[LORD STEVENSON OF BALMACARA]chair of the bank to see whether it would be somethingthat could be laid before Parliament. I do not thinkthat it would need a formal discussion or debate, but itwould be useful to have it in the Library at least, sothat it is available. If he could confirm that at somepoint, we would be grateful. I beg leave to withdrawthe amendment.


Clause 6 agreed.

6.15 pm

Amendment 16


16: After Clause 6, insert the following new Clause—“General disclosure requirements(1) The Freedom of Information Act 2000 is amended as

follows.(2) In Part VI of Schedule 1, after “The Great Britain China

Centre”, insert “The UK Green Investment Bank”.”

Lord Stevenson of Balmacara: This is my lastappearance in the Committee on this occasion. I haverisked the Minister’s wrath by suggesting that we needto think further about reporting, but I do not thinkthat this one will be as well received—but I will haveanother go.

The Green Investment Bank is already covered bythe Freedom of Information Act, and I accept that. Itwas discussed in another place, and I have read thatdiscussion. But it stuck in my mind that there were tworeasons why we need to revisit it. In the discussion inthe other place, the Government said that they believedthat the Freedom of Information Act, together withClauses 5 and 6, ensure that the bank will be subject toappropriate, extensive obligations to disclose informationand to report on its activities, which will ensure fulltransparency and accountability. I accept that, becausethe bank already qualifies as a publicly owned companyunder Section 6 of the Freedom of Information Act,which means that it is subject to the disclosure obligationsthat apply to public authorities. We also accept that,unlike most public authorities, not only is the banksubject to the Freedom of Information Act but it hasadditional, proactive reporting obligations under theCompanies Act 2006, which will be enhanced by Clause5. However, things may change. We had a discussionearlier on in Committee today at which the remoteprospect of changes of ownership in the bank wereraised. If those changes of ownership were such thatthe proportion of the bank owned by a future Governmentdropped below 50%, I doubt that FOI legislationwould still apply. So this is to future-proof something

for which there is a particular responsibility. At themoment, it is going to be wholly owned by the Crown,and the sole shareholder is the Government, so it isappropriate that the questions that may be put interms of FOI will be answered.

This bank is being set up in the wake of the biggestfinancial crisis the world has seen in modern times.That should, even if for no other reason, mean that weshould try to ensure that the new bank should have thehighest possible standards of accountability and reporting.I remind the Committee that the Secretary of State, inhis examination before the Environmental AuditCommittee on 2 February 2011, said:

“As Secretary of State in BIS, my ambition is to … developand deliver a GIB that is effective and transparent and affordable—those are our key criteria”.

Love or hate the FOI Act, it is here to stay, and isproving very effective in ensuring that the Governmentrespond to legitimate requests for information fromcitizens of the UK. We should do what we can topromote that view, and we should do nothing whichsets up barriers or creates uncertainty about whetherinformation is retrievable or not. In our view, therefore,there should be no objection to recording in the primarylegislation that it is quite clear that, as well as the classof institution it is, the bank itself, as long as it isretained, will be subject to FOI. I beg to move.

Lord Marland: My Lords, we have trodden thisground quite a lot so far. I think that the FOI is a verysignificant and far-reaching incumbence on a company,and on individuals in a country, as we have found out.There will be more later, but as I have said in the pastunder previous amendments the FOI Act is a verystrong regulatory thing. I am not going to play “whatif” scenarios, such as what if the bank is sold by aLabour Government in 10 years’ time, or anothercoalition time in five years’ time, because it is our taskto operate within the current government schemes andnot to tie the hands of future Governments if theywish to carry on with other things. But I totally acceptthe sentiment and look forward to further debates onthe subject. In the light of that, I hope that the nobleLord will withdraw his amendment.

Lord Stevenson of Balmacara: My Lords, I simplynote that perhaps in 10 years’ time, when we are on theother side and are debating similar issues, I will remindthe noble Lord of those points. However, I beg leave towithdraw the amendment.


Lord Gardiner of Kimble: My Lords, this may be aconvenient moment for the Committee to adjournuntil Wednesday at 3.45 pm.

Committee adjourned at 6.20 pm.


Written StatementsMonday 3 December 2012

CybercrimeStatement

Lord Wallace of Saltaire: My right honourablefriend the Minister for the Cabinet Office (FrancisMaude) has made the following Written MinisterialStatement.

On 25 November 2011, I published the UK CyberSecurity Strategy. In the strategy I committed to reportback on progress after one year, in particular on theachievements of the National Cyber Security Programmefor which my department has oversight. I am pleasedto present this report to both Houses today.

The strategy outlined how the internet has changedand shaped our lives. A year on from its publication,this transformation continues at pace.

The UK has been proclaimed as the most internet-based major economy, with one recent study statingthat the UK’s internet-related market is now worth£82 billion a year and rising*. The internet provides arich and fertile basis for industry, and small businessesin particular, to expand and grow.

Industry suffers at the hands of such threats. The2012 PwC Information Security Breaches Survey foundthat 93% of large corporations and 76% of smallbusinesses had a cyber security breach in the past year.With the cost for a security breach estimated between£110,000 to £250,000 for large businesses and £15,000to £30,000 for smaller ones, these are losses which UKbusinesses can ill afford.

And we are not immune in Government. Attackson government departments continue to increase.

The UK Cyber Security Strategy sets out our approachto tackling the threat. It clearly states four objectivesfor the UK:

to tackle cyber crime and to be one of the mostsecure places in the world to do business in cyberspace;to be more resilient to cyber attacks and better ableto protect our interests in cyberspace;to have helped shape an open, stable and vibrantcyberspace which the UK public can use safely andthat supports open societies; andto have the cross-cutting knowledge, skills andcapabilities the UK needs to underpin these otherobjectives.These objectives are delivered through the National

Cyber Security Programme which prioritises andco-ordinates work across Government and provides£650 million of new funding to improve the UK’scyber security capability.

We are making good progress against these objectivesand I am pleased to be able to report on some notableachievements.

Combating the threatsFirst, I would like to point to the work of GCHQ in

addressing cyber threats. Its work underpins our abilityto contend with the many challenges of the cyber age

that threaten our national security. We have invested innew and unique capabilities for GCHQ to identify andanalyse hostile cyber attacks in order to protect ourcore networks and services and support the UK’swider cyber security mission. I cannot reveal details ofthis work, but it has broadened and deepened ourunderstanding of the threat, helping us prioritise anddirect defensive efforts.

As part of this work, the MoD has established atri-service unit, hosted by GCHQ in Cheltenham. TheJoint Cyber Unit training and skills requirements havebeen established and it is currently developing newtactics, techniques and plans to deliver military capabilitiesto confront high-end threats.

The Security Service has developed and enhancedits cyber structures, focusing on investigating cyberthreats from hostile foreign intelligence agencies andterrorists, and working with UK victims. This informsthe work of the Centre for the Protection of NationalInfrastructure (CPNI) which is helping organisationsto improve their cyber security measures.

CPNI is actively influencing standards, researchingvulnerabilities and focusing on the key technologiesand systems of cyber infrastructure. As part of thiswork it has commissioned a major research programmefrom the University of Oxford with the aim of deliveringadvice, guidance and products to help reduce the riskof cyber attacks mounted or facilitated with the helpof company insiders.

In terms of protecting core government systems,work is being done across the public sector network tocreate a new security model for the sharing of services.This includes: a common and standardised approachto assurance—single sign-on—through an employeeauthentication hub; security monitoring; more effectivepolicing of compliance; and greater network resilience.

2012 saw the UK hosting one of one the greatestsporting events of our time. The London Olympicswas the first truly digital Games and, as such, werecognised the need to address potential cyber threats.We established unprecedented mechanisms for workinghand in hand with sponsors and suppliers to theGames in combating and managing incidents. Thelessons learnt from the event are informing our cybersecurity national incident management plans as we goforward.

Tackling cyber crime

The Government have invested in strengtheninglaw enforcement and prosecutors’ capabilities to prevent,disrupt and investigate cyber crimes and bring thoseresponsible to justice. The Police Central e-Crime Unithas trebled in size, three regional cyber policing teamshave been established, and training on cyber crime formainstream police officers has been designed. This isincreasing the capacity of the police to tackle cybercrime in line with the strategic policing requirementwhich was issued by the Home Secretary in July 2012.The Serious Organised Crime Agency (SOCA) hasincreased its cyber capability including the introductionof cyber overseas liaison officers and a number ofposts dedicated to mainstreaming cyber and digitalinvestigations across the organisation.

WS 41 WS 42[3 DECEMBER 2012]Written Statements Written Statements

The Police Central e-Crime Unit has reported thatit has exceeded its four-year operations performancetarget of averting £504 million of harm within the firstyear of the National Cyber Security Programme alone—preventing £538 million of harm at a return on investmentof £72 harm averted for every pound invested. Inaddition and in conjunction with partners, SOCA hasrepatriated over 2.3 million items of compromiseddata to the financial sector in the UK and internationallysince November 2011 with an estimated prevention ofpotential economic loss of over £500 million. In addition,The Crown Prosecution Service in turn is devotingmore resources to prosecuting cyber crime. As at theend of September 2012, the department was prosecuting29 live cyber crime cases.

Joint operations between the two units have nowbeen initiated as a first step towards their comingtogether in 2013 to form the National Cyber CrimeUnit of the new National Crime Agency. This willdeliver the next step in transforming law enforcementcapability to tackle cyber and cyber-enabled crimes.

National Cyber Security Programme funding hasenhanced Action Fraud to be the UK’s national reportingcentre for fraud and financial internet crime, operatingon a 24/7 basis. This enables reported incidents ofcrime to be developed into intelligence packages thatnational and local agencies can use for targetedenforcement activity. Over 12 months, Action Fraudreceived 46,000 reports from the public of cyber-enabledcrimes amounting to attempted levels of fraud of£292 million.

To further assist in tackling online fraud, HMRChas established a new cyber crime team to enhance thedepartment’s capability to tackle tax fraud by organisedcriminals. HMRC’s enhanced anti-phishing capabilitiesare now leading to the interception of five majorthreats a day and have helped the department to shutdown almost 1,000 fraudulent web sites in the past12 months.

Partnership with industry

Government cannot do this alone. We know thatindustry is the biggest victim of cyber crime andintellectual property theft through cyber crime ishappening on an industrial scale. In the past year wehave cast our net wide to work with industry, academiaand ever wider across the public sector to promoteawareness of the need to address cyber threats. Wehave produced and promoted a “Cyber Security Guidancefor Business” document for industry chief executives,which sets out how board members and senior executivesshould adopt a holistic risk management approach tocyber security in order to safeguard their most valuableassets, such as personal data, online services andintellectual property.

We have successfully completed a pilot governmentand industry information sharing initiative to providea trusted environment for organisations to shareinformation on current threats and managing incidents.This included around 160 companies across fivesectors: defence, finance, pharmaceuticals, energy andtelecommunications. Although industry to governmentand government to industry information exchange

worked well, most value was gained through the industryto industry engagement and this is informing how wetake this work forward.

Education, skills and awareness

We have been actively raising awareness amongindustry and the public about the problem so thatpeople take the simple steps to protect themselves anddemand better cyber security in products and services.Working with industry, we have been raising awarenessof cyber security threats among the general publicthrough initiatives such as the recent Get Safe OnlineWeek, which for the first time ran in conjunction withthe EU and US and Canadian partners, as part of adrive to establish a global cyber security month inOctober each year. The National Fraud Authority hasalso delivered targeted campaigns on online fraud,reminding people of the increasing threat of cybercrime. Over 4 million individuals were reached by theDevils in Your Details campaign in spring 2012. Inevaluation afterwards, two-thirds of those surveyedsaid they would change their behaviour as a consequence.

We are investing in skills and research so that wehave the capability to keep pace with this problem inthe future. The first eight UK universities conductingworld class research in the field of cyber security havebeen awarded Academic Centre of Excellence in CyberSecurity Research through the Engineering and PhysicalSciences Research Council. In addition, a new virtualresearch institute has been launched as a government/academia partnership. Its aim is to improve understandingof the science behind the growing cyber security threat.These initiatives help keep the UK at the forefront ofinternational research in this field.

Meanwhile we have taken steps to improve cybersecurity skills among young people and to widen thepipeline of talent coming into this field. BIS hascommissioned e-Skills UK to develop interactive learningmaterials on cyber security for GCSE students. Onehundred and twenty schools have already signed up touse the materials as part of the Behind the Screeninitiative. In November, GCHQ and the other intelligenceagencies launched a new technical apprenticeship schemewhich aims to identify and develop talent in schooland university age students. They aim to recruit up to100 apprentices who will be enrolled on a tailoredtwo-year foundation degree course. We have alsosponsored the Cyber Security Challenge UK in itswork providing advice, support and guidance for anyoneinterested in a career in cyber security, and to createopportunities for employers and previously unidentifiedtalent to come together. Since its launch in 2010, over10,000 people have registered with the initiative.

Ensuring that those in the field of cyber security getthe right training and education, GCHQ has establishedand is building on a set of certification schemes toimprove the skills and availability of cyber securityprofessionals. The Certification for Information AssuranceProfessionals scheme will help Government and industryto recruit cyber security professionals with the rightskills at the right level to the right jobs. It will alsoassist participants to build a career path and to havethe opportunity to progress through re-assessment asskills and experience grow.

WS 43 WS 44[LORDS]Written Statements Written Statements

International effortsThe nature of the internet means that we cannot

focus our efforts on the UK alone. Internationalco-operation is crucial. We have continued to promotethe UK’s vision of an open, vibrant and secure cyberspaceinternationally, for instance through our activecontribution to the Budapest cyber conference, and tobuild up a wide network of international partnerships.We have strengthened relationships with traditionalallies and have initiated discussions with a broad rangeof countries. We are also working with internationalpartners to improve co-operation to tackle cyber crimethrough legislation and operational work, and haveplayed a prominent role in international discussionson norms of behaviour and confidence buildingmeasures in cyberspace. In October, the ForeignSecretary announced the establishment of a CyberCapacity Building Fund for supporting cyber securityinternationally, part of which will create a new GlobalCentre for Cyber Security Capacity Building. Thiscentre will help to make UK expertise and technologyin this field available to international partners.

Reflecting the global nature of the cyber crimethreat, UK law enforcement agencies continue to workclosely with their international partners, throughpartnership building and joint operations. SOCA continuesto lead, with international partners, on the globalrepresentation of law enforcement interests to ICANN,the internet domain name organisation. Collaborationwith ICANN to amend the registrar’s accreditationagreement has assisted law enforcement in crimeprevention and detection. In April 2012, SOCA led aglobal day of action to tackle automated vending cartwebsites selling compromised financial data. Two arrestswere made in the UK and 70 websites taken downworld-wide, resulting in major disruption to organisedcrime groups’ activities.

A fuller list of achievements from the first year ofthe Cyber Security Strategy and work on the NationalCyber Security Programme can be found at www.cabinetoffice.gov.uk.

Future plansLooking forward, we are clear that there is still

much work to do. We will continue the work that isunderway, while regularly assessing it against priorities,and taking into account new and emerging threats.

We are reviewing our national approach to cyberincident management, particularly in the light of thesuccessful Olympics response outlined above. Ourintention is to move towards the establishment of aUK National CERT (Computer Emergency ResponseTeam). This will build on and complement our existingCERT structures, improve national co-ordination ofcyber incidents and act as a focus point for internationalsharing of technical information on cyber security.

In addition, a new Cyber Incident Response scheme,recently launched by CESG and CPNI in pilot form,will move to become fully operational in 2013. It is anHMG quality-assured service, provided by industry,that organisations can turn to for assistance when theyhave suffered a cyber security incident. The schemewill enable the UK’s emerging cyber response industryto grow, bringing further benefit to the UK in terms ofskills and business opportunities.

Working with the private sector to improve awarenessof the need for better cyber security continues to be apriority. We are now focusing our efforts on makingsure that the right incentives and structures are inplace to change behaviour in a sustainable way.Government departments and agencies are workingwith professional and representative bodies to ensurethe consideration of cyber security becomes an integralpart of corporate governance and risk managementprocesses. We are supporting the development oforganisational standards for cyber security so consumerscan identify those businesses with good cyber securitypractices.

Building on the successful Auburn pilot projectbetween Government and businesses, we are developinga permanent information sharing environment calledCISP (Cyber-security Information Sharing Partnership)to be launched in January 2013. This has been a jointindustry/government design. Initially, this will be opento companies within critical national infrastructuresectors, but we intend to make membership availablemore broadly, including to SMEs, in a second phase.

We are constantly examining new ways to harnessand attract the talents of the cyber security specialiststhat are needed for critical areas of work. To this end,the MoD is taking forward the development of acyber reserve, allowing the services to draw on thewider talent and skills of the nation in the cyber field.The exact composition is currently in developmentand a detailed announcement will follow in 2013.

On cyber crime, the Government will continue towork with the law enforcement community to enhancetheir capabilities, particularly through the creation ofthe National Cyber Crime Unit (NCCU), an integralpart of the National Crime Agency which, subject toparliamentary approval, will be established in October2013. The NCCU will bring together the capabilitiesof the Police Central e-Crime Unit and SOCA’s cyberteam to create an even more effective response to themost serious cyber criminals.

Alongside tackling the threat, the Government aredetermined to help seize the business opportunity incyber, promoting the UK cyber security industry bothdomestically and across the globe. To support this, weare today forging a new joint Cyber Growth Partnershipwith Intellect, the organisation which represents theUK technology industry. Central to this will be a highlevel group which will identify how to support thegrowth of the UK cyber security industry, with anemphasis on increasing exports.

To ensure the UK can continue to call on cutting-edgeskills and research, BIS and the Engineering andPhysical Sciences Research Council (EPSRC) will fundtwo centres of doctoral training (CDT). The centreswill call on a wide range of expertise to delivermultidisciplinary research and so help to provide thebreadth of skills needed to underpin the work of theUK’s next generation of doctoral-level cyber securityexperts. The two CDTs will deliver, in total, a minimumof 48 PhDs over their lifetime with the first cohort ofstudents starting in October 2013. These are in additionto 30 GCHQ PhD studentships also sponsored by theNational Cyber Security Programme.


We are also building cyber security into undergraduateuniversity degrees. We have partnered with the Institutionof Engineering and Technology (IET) to support andfund the Trustworthy Software Initiative which aimsto improve cyber security by making software moresecure, dependable and reliable. As part of the initiativea module has been developed to educate students ontechnical degree courses on why trustworthy softwareis important. This material is currently being pilotedat De Montfort University, the University of Worcesterand Queens University Belfast. The IET plans toexpand the pilot next spring. From 2015 education incyber security will be a mandatory component ofsoftware engineering degrees accredited by the Institution.

On the international front, we will continue toexpand and strengthen the UK’s bilateral and multilateralnetworks. Key opportunities to shape the future ofcyberspace in the year ahead will include the Seoulcyber conference, the report of the UN Group ofGovernment Experts on international security norms,OSCE (Organisation for Security and Co-operation inEurope) work on confidence building measures anddiscussions on internet governance in the lead-up tothe World Summit on the Information Society (WSIS).We will also play an active role in discussions on thenew EU cyber strategy.

Public awareness will be a priority: we need to warnpeople of the risks and what they can do to protectthemselves while ensuring that confidence in the internetis maintained. From spring 2013 we will be rolling outa programme of public awareness drives, building onthe work of GetSafeOnline.org and the National FraudAuthority. This programme will be delivered in partnershipwith the private sector and will aim at increasing cyberconfidence and measurably improving the online safetyof consumers and SMEs. We are working now tounderstand the online behaviour of different segmentsof consumers in order to prepare the ground for thesecampaigns and to ensure what we do is based onevidence on what works.

Meanwhile Government will be mainstreaming cybersecurity messages across the breadth of theircommunication with the citizen. For example, HMRCwill be automatically alerting customers using out ofdate browsers and directing them to advice on thethreat this might pose to their online security.

ConclusionFurther details on forward plans are available at

www.cabinetoffice.gov.uk.One year after the strategy’s publication a great

deal has already been accomplished in our aim ofprotecting UK interests in cyberspace and making theUK one of the safest places to do business online. Thisis not an issue for Government alone. Industry has thepotential to lose the most by not rising to these challengesso together we must work to address cyber threatswhich could undermine our economic growth andprosperity.

The past year has created an increasing momentumacross the UK at varying levels and across all sectorsin addressing a wide range of cyber security threats.We look forward to maintaining this pace, continuallyassessing our progress as we go forward. I will reportback on progress again a year from now.

* AT Kearney: The internet Economy in the United Kingdom

ECOFINStatement

The Commercial Secretary to the Treasury (LordSassoon): My right honourable friend the FinancialSecretary to the Treasury (Greg Clark) has todaymade the following Written Ministerial Statement.

A meeting of the Economic and Financial AffairsCouncil will be held in Brussels on 4 December 2012.We expect the following items to be on the agenda anddiscussed.

Banking supervision mechanismCouncil will seek to agree a general approach for

the Commission’s proposal for a single supervisorymechanism (SSM).

Revised capital requirements rules (CRD IV)Council will receive a progress report on the proposals

for revised capital requirements rules (CRD IV).

Economic governance—two packMinisters will seek to agree a general approach on

two regulations, which are intended to strengthenfiscal discipline and financial stability in the euro area.

Credit rating agenciesThe presidency will update Ministers on the political

agreement reached on the credit rating agencies 3(CRA3) dossier.

Macroeconomic imbalance procedure—Commissionannual report

Ministers will hold an initial exchange of views onthe alert mechanism report, the first stage in themacroeconomic imbalance procedure.

Annual Growth Survey 2013Council will hold an initial exchange of views on

the Annual Growth Survey 2013.

Issues related to the Economic and Monetary UnionCouncil will hold an exchange of views on issues

related to the economic and monetary union.

Implementation of the Stability and Growth PactECOFIN will seek to adopt council decisions relating

to Greece’s excessive deficit procedure.

Financial transaction tax (FTT)The presidency will brief Ministers on the state of

play as regards a proposal for a council decisionauthorising enhanced co-operation in the area of FTTby some member states. The UK will not participate inan enhanced co-operation FTT.

VAT Quick reaction mechanismMinisters will hold an orientation debate on a

proposal for amending a directive on the commonsystem of value added tax as regards a quick reactionmechanism against VAT fraud.

Annual report of the Court of Auditors on theimplementation of the budget for the financial year2011

The President of the European Court of Auditors,Mr Vítor Caldeira, will present to Ministers the annualreport of the Court of Auditors on the implementationof the budget for the financial year 2011.


Employee OwnershipStatement

TheParliamentaryUnder-Secretaryof State,Departmentfor Business, Innovation and Skills (Lord Marland): Myhonourable friend the Minister of State for EmploymentRelations and Consumer Affairs (Jo Swinson) hastoday made the following Statement.

Following the Chancellor’s announcement on8 October that the Government would create a newemployment status called employee owner, theGovernment have sought views on the practicalities ofits implementation. This measure is part of the Growthand Infrastructure Bill which is currently before theHouse of Commons.

The Government will publish their response to theconsultation shortly and copies will be placed in theLibraries of both Houses.

EU: Single MarketStatement

The Minister of State, Department for Business,Innovation and Skills & Foreign and CommonwealthOffice (Lord Green of Hurstpierpoint): I wish to informthe House that the Department for Business, Innovationand Skills has established the UK Single Market Centre,a national co-ordinating team responsible for monitoringthe functioning of the European Single Market.

The Single Market Centre will bring together ourwork on all the existing tools that support the functioningof the single market, including the internal marketscoreboard, SOLVIT (the problem solving mechanismthat seeks to resolve the misapplication of rules bypublic authorities), the internal market informationsystem, and policy responsibility for the point of singlecontact (the online licensing service for services directiveimplementation).

The objectives of establishing such a centre are togive greater visibility, and therefore focus, withinGovernment on improving the UK’s performance inimplementing internal market measures and to buildstronger links between single market policy and operationsto support our European policy through specific examplesof market barriers. Over time, I hope that the work ofthe Single Market Centre will increase awareness amongUK businesses and consumers of the support availableto them to trade and shop in the internal market.

The Single Market Centre will report annually onthe performance of the single market in the UK, andcopies of this report will be placed in the Library ofthe House.

Taxation: AvoidanceStatement

The Commercial Secretary to the Treasury (LordSassoon): My honourable friend the Exchequer Secretaryto the Treasury (David Gauke) has today made thefollowing Written Ministerial Statement.

The vast majority of people and businesses paytheir fair share of tax. However, the Government arefully committed to clamping down on those who avoidor evade paying their tax. The Government are todayannouncing a series of actions that are being taken totackle tax avoidance and evasion through domesticand international action: new investment in HM Revenueand Customs (HMRC), further developments on progressinternationally and more powers that will underpin theGovernment’s commitment to tackle avoidance andevasion.Theseannouncementscomeaheadof theChancellor’sAutumn Statement on Wednesday, 5 December.

New funding for HMRCThe Government are already investing over £900 million

in HMRC to secure an additional £7 billion of revenuea year, taking HMRC’s total compliance revenues to£20 billion in 2014-15. A further £77 million will beprovided to HMRC in this spending review periodfurther to expand its anti-avoidance and evasion activityfocused on offshore evasion and avoidance by wealthyindividuals and by multinationals. This investmentwill secure a further £2 billion in 2014-15, £22 billionin total. This is 70% higher than in 2010-11.

As a result of this new funding, HMRC will:accelerateworktoidentifyandchallengemultinationals’transfer pricing arrangements and further strengthenits risk assessment capability across the large businesssector. That will help to ensure that multinationalsdo not shift profits out of the UK and therefore paythe tax due in accordance with UK tax law;expand its Affluent Unit with 100 extra investigatorsand additional risk and intelligence staff to targetavoidance and evasion by the wealthy. Increasingthe number of specialist personal tax inspectors totackle offshore evasion and avoidance of inheritancetax using offshore trusts, bank accounts and otherentities, focusing in particular on the agents and taxintermediaries involved;increase capacity to tackle aggressive avoidanceschemes, including long-running cases involvingpartnership losses by creating a settlement opportunitythatoffersagooddeal totheExchequerandacceleratinglitigation against those that fail to take up thesettlement opportunity;create a new centre of excellence to develop acomprehensive approach to tackling offshore evasion.The team will be made up of HMRC staff andexternal experts who will look at how HMRC canbest use data to identify offshore tax evasion, reviewHMRC’s legal powers and work with other taxadministrations to close the net on offshore evasion.A comprehensive strategy on offshore tax evasionwill be published in spring 2013; andimprove its risking technology, including increaseduse of third party data. HMRC has today publishedClosing in on tax evasion: HMRC’s approach whichsets out how HMRC is using technology to tacklethose who break the law through tax evasion.Agreement with USAgroundbreakingagreementwiththeUS—theUK-US

agreement to improve international tax complianceand to implement FATCA—will significantly increasethe amount of information automatically exchangedbetween the two countries. The agreement sets a new


standard in international tax transparency and willfurther enhance HMRC’s ability to tackle offshoreevasion. The Government will look to conclude similaragreements with other jurisdictions.

Action to tackle the promoters of tax avoidanceschemes

Over the summer the Government published aconsultation document, Lifting the Lid on Tax AvoidanceSchemes, on a wide range of proposals to increaseinformation about tax avoidance.

The consultation involved constructive engagementwith a large number of representative bodies andbusinesses. It also demonstrated very strong supportfrom mainstream tax advisers for new measures tocrack down on those who market tax avoidance schemes.In response, the Government will bring forward proposalsto introduce significant new information disclosureand penalty powers that will go further than existing,general rules on the marketing of financial products

and consumer protection. The new powers will allowHMRC better to target the marketing of tax avoidanceschemes that pose a high risk to users and the Exchequer.

The Government will also strengthen the existingdisclosure of tax avoidance schemes regime throughlegislation in 2013 that will extend the range of informationthat must be disclosed to HMRC and impose additionalsanctions for non-compliance.

The introduction of a General Anti-Abuse Rule (GAAR)In December 2010, the Government asked Graham

Aaronson QC to lead a study that would considerwhether a GAAR could deter and counter abusive taxavoidance, while providing certainty, retaining a taxregime that is attractive to businesses, and minimisingcosts for taxpayers and HMRC. The GAAR theGovernment are now introducing will provide a significantnew deterrent to abusive avoidance schemes and strengthenHMRC’s means of tackling them where they persist.Guidance and draft legislation on the GAAR will bepublished in December.


Written AnswersMonday 3 December 2012

BeesQuestions

Asked by Lord Hoyle

To ask Her Majesty’s Government, in the lightof the decline in bee numbers, what assessmentthey have made of the future costs to farmers ofthe loss of pollination by bees. [HL3636]

TheParliamentaryUnder-Secretaryof State,Departmentfor Environment, Food and Rural Affairs (Lord DeMauley): HM Government recognise the importanceof all pollinators, including bees, and their value tobothfoodsecurityandsustainingthenatural environment.We are currently considering a range of evidence onthe state of bees and other pollinators in order todetermine what action is required.

Many of our agricultural crops and wild flowersrely on visits by insect pollinators (bumble bees, honeybees, solitary bees, butterflies, moths, flies, beetles,hoverflies) to produce seeds and fruits. Given theirimportant role as pollinators, the health, populationsize and diversity of these insect species are essential.for UK agriculture and for our natural ecosystems.

It is estimated that insect pollinators contribute£500 million per year to UK agriculture. The relativecontributions of the various species to this total valueis not known, although the UK’s National EcosystemAssessment (2011) suggested (based on numerical ratherthan field-based observations) that wild pollinatorscontribute a significant proportion of this total.

Asked by Lord Moynihan

To ask Her Majesty’s Government whether theywill introduce measures to support bee keeping, inthe light of the experience of damage to the beepopulation and its effects in 2012. [HL3643]

Lord De Mauley: Defra recognises that this has beena difficult year for beekeeping due to the poor summerweather. However, a number of measures are alreadyin place to support beekeeping. Since the HealthyBees Plan was launched in April 2009, the Food andEnvironment Research Agency (Fera), on behalf ofDefra and the Welsh Government, has been workingin partnership with beekeeping stakeholders on a numberof initiatives to deliver the plan’s objectives to improvehoney bee health.

Beekeepers also benefit from Defra’s bee healthprogramme under which Fera’s National Bee Unit(NBU) delivers a free inspection and comprehensiveeducation programme on a wide range of beekeepingissues. The aim of the programme is to control thespread of statutory pests and diseases and improvebeekeepers’ disease recognition and husbandry skills.

Details of the implementation of the Healthy BeesPlan and the Bee Health Programme are available onthe NBU’s BeeBase website.

In addition, advice for beekeepers is published onBeeBase in response to topical issues, such as informationon the importance of maintaining colony food levelsto avoid starvation, which was published twice duringthe poor summer.


To ask Her Majesty’s Government what assessmentthey have made of the role played in the die-off ofhoney bees in 2012 of pesticides, parasites, diseaseand poor nutrition; and whether they will increasethe research budget directed at combating diseaseand rejuvenating bee hives. [HL3644]

Lord De Mauley: The Food and Environment ResearchAgency’s National Bee Unit monitors colony losses aspart of its Bee Health Programme. The main factoraffecting honey bee health this year has been theexceptionally poor weather conditions. However, inseason colony losses were 5% of colonies inspected,which is similar to last year.

Defra is currently providing £2.5 million over fiveyears (from 2010-11) towards the £10 million InsectPollinators Initiative which is being jointly fundedwith the Scottish Government, the Biotechnology andBiological Sciences Research Council (BBSRC), theNatural Environment Research Council (NERC) andthe Wellcome Trust. The initiative’s projects are lookingat different aspects of the decline of insect pollinators.Of the nine projects being funded, two specificallyfocus on honey bees and six will benefit both honeybees and bumblebees.


To ask Her Majesty’s Government whether theywill take steps to address the findings of the BritishBeekeepers Association 2012 Honey Survey whichhighlighted a 72% drop in average yields. [HL3645]

Lord De Mauley: The British Beekeepers Association’s(BBKA’s) 2012 Honey Survey acknowledges that rainand cold weather this summer were the major factorsaffecting honey supplies. The BBKA also recognisedthat training and education of beekeepers is importantto enable them to deal effectively with adverseweather conditions such as have been experiencedthis year. A key objective of the Healthy Bees Plan,which was launched in April 2009 by Defra and theWelsh Government, is the improvement of beekeepers’husbandry skills to enable them to become more selfreliant. The Food and Environment Research Agencyhas been working in partnership with beekeepingstakeholders on a number of initiatives to deliver thisobjective.


To ask Her Majesty’s Government whether theNational Bee Unit will publish an assessment of the2012 honey production levels, the extent of notifiablediseases in United Kingdom honey bees during theyear, and new measures to address the managementof disease and varroa mite in bee colonies.[HL3646]

WA 97 WA 98[3 DECEMBER 2012]Written Answers Written Answers

Lord De Mauley: The Food and Environment ResearchAgency’s (Fera) National Bee Unit (NBU) has notmade an assessment of the 2012 honey productionlevels but recognises that that this has been a difficultyear for beekeeping due to the poor summer weather.

Details of the incidence of the notifiable diseases(European Foul Brood (EFB) and American FoulBrood (AFB)) in England, Wales and Scotland areavailable on the NBU’s BeeBase website.

Fera is currently reviewing the policies in place toaddress key pests and disease risks of honey bees andthe associated surveillance and implementationprogramme. This includes the management of thenotifiable pests and diseases and also endemic pests,such as the Varroa mite.

BenefitsQuestions

Asked by Lord Laird

To ask Her Majesty’s Government, in caseswhere they take responsibility for paying childbenefit to parents from Poland and the Republic ofIreland working in the United Kingdom havingleft children in their home country, whether thefull amount of child benefit or the differencebetween the United Kingdom and home countryrates is paid; and whether the benefit is linked tocontinuing payment of employee national insurancecontributions. [HL3504]

To ask Her Majesty’s Government whether theyhave conducted random checks on the existence ofchildren in the Republic of Ireland on behalf ofwhom child benefit is paid in the United Kingdom;if so, what percentage of claims were found to befalse; and whether they share details of fraudulentclaimants with their Irish counterparts. [HL3505]

TheCommercialSecretarytotheTreasury(LordSassoon):UK child benefit, in respect of children resident inPoland and the Republic of Ireland by virtue of ECRegulation 883/2004, will be paid at the relevant rate,whether at the UK rate or as a supplement and inaccordancewiththepriorityrules setout in that regulation.Where such a claim is made by a person who is employedin the UK, EC Regulation 883/2004 requires that theclaimant is subject toUKnational insurancecontributions.

All child benefit claimants are required to providedocumentary evidence of the child or children mentionedin their claim, such as an original birth or adoptioncertificate. In addition, in all UK child benefit claimsmade by virtue of EC Regulation 883/2004, HM Revenueand Customs will check the composition of the familywith the social security authorities in the EEA memberstate in which the family resides, including the Republicof Ireland. UK child benefit is not paid until theauthorities in the other member state have confirmedthe composition of that family. Member states havewell established procedures in place to ensure thatfamily benefits only go to those entitled.

Information about the percentage of claims in respectof children resident in the Republic of Ireland whichare rejected as fraudulent is not available. However,when necessary, details of such claims would be passed

to the authorities in the Republic of Ireland for furtherinvestigation in line with the exchange of informationprovisions in the EC regulations.

BurmaQuestions

Asked by Baroness Goudie

To ask Her Majesty’s Government whichorganisations and individuals have been approachedby the Foreign and Commonwealth Office withregard to meeting President Thein Sein of Burmawhen he visits the United Kingdom. [HL3575]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice (Baroness Warsi): The Prime Minister, my righthonourable friend the Member for Witney (Mr Cameron),issued an invitation to the Burmese President, TheinSein in June and this invitation remains outstanding.Therefore there have been no approaches as yet toorganisations or individuals with regards to any meetings.We believe such a visit would be a valuable opportunityto continue the Prime Minister’s dialogue with thepresident and to stress the need to resolve the manyissues outstanding as Burma continues on its path todemocracy.

Asked by Baroness Goudie

To ask Her Majesty’s Government which BurmeseGovernment officials have visited the United Kingdomin the past six months; and what were the reasonsfor their visits. [HL3576]

Baroness Warsi: U Soe Thane, Minister to the BurmesePresident’s Office, visited the UK from 7-9 Novemberto attend a Wilton Park conference hosted by theInstitute of Business and Human Rights and focusedon encouraging responsible investment in Burma.

Climate ChangeQuestion

Asked by Lord Donoughue

To ask Her Majesty’s Government, further tothe Written Answer by Baroness Verma on 8 November(WA 224) stating that Arctic temperatures haveincreased by almost twice the global average rate,how much have Antarctic temperatures changedsince (1) 1880, and (2) 1998. [HL3706]

TheParliamentaryUnder-Secretaryof State,Departmentof Energy and Climate Change (Baroness Verma): Thereis limitedobservationalcoverageof theAntarcticcontinentand surrounding ocean. There are no observationsavailable from before 1903, with reliable records onlyfrom 1957, the International Geophysical Year. Thus,it is not possible to answer (1).

Based on analysis of the HadCRUT4 land onlytemperature dataset which contains observations mostlyaround the edges of the continent, from a minimum of12 sites in 1957 to a maximum of 20 sites in the 1970s,the regional temperature trends are as follows:

1957 to 2011: 0.18 ± 0.06°C / decade; and1998 to 2011: 0.29 ± 0.21°C/ decade.

WA 99 WA 100[LORDS]Written Answers Written Answers

Linear trends above are based on year-to-yearvariability around trends described as auto regressive(AR1) processes.

You will note that over a short time period of14 years, the year-to-year variability of climate dominatesthe trend and leads to a comparatively large mean error.

ColumbiaQuestion

Asked by Lord AshcroftTo ask Her Majesty’s Government what is their

assessment of the statement of 15 November from theInternationalYoungDemocratUnion(IYDU)welcominga new effort for peace in Columbia. [HL3541]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice (Baroness Warsi): We agree with the statementby the International Young Democrat Union and stronglywelcome President Santos’s announcement of peacenegotiations with the Revolutionary Armed Forces ofColombia. The launch of peace talks is a courageousstep to bring the hope of peace for all Colombiansafter decades of conflict. The UK stands ready to drawon its experience in support of the Colombian peaceprocess as it progresses.

EmploymentQuestion

Asked by Lord BatesTo ask Her Majesty’s Government what was the

net number of jobs created since 2010 in (1) NorthEast England, (2) Yorkshire and the Humber, and(3) North West England. [HL3729]

Lord Wallace of Saltaire: The information requestedfalls within the responsibility of the UK StatisticsAuthority. I have asked the authority to reply.

Letter from Glen Watson, Director General for ONS,to Lord Bates, dated November 2012.

As Director General for the Office for NationalStatistics (ONS), I have been asked to reply to yourrecent Parliamentary Question concerning the net numberof jobs created since 2010 in (1) North East England,(2) Yorkshire and the Humber, and (3) North WestEngland (HL3729).

The ONS does not directly provide estimates for thenumber of jobs created, only the net change in totaljobs. These figures are produced from the ONS’Workforcejobs series.

The table below contains seasonally adjusted estimatesfor the number of workforce jobs for the requestedregions at 2010Q2 (June 2010) and 2012Q2 (June2012) and the net change between these two periods.Quarter 2 is used as it is regarded as the best annualindicator for workforce jobs. This measure includesemployee jobs, self-employed jobs, HM Forces andgovernment-supported trainees.

Workforce jobs (000’s) – seasonally adjusted

2010 Q2 2012 Q2Net

Change

North East 1,170 1,146 -24Yorkshire and The Humber 2,525 2,516 -9North West 3,388 3,378 -10

EU: TurkeyQuestion

Asked by Lord Dykes

To ask Her Majesty’s Government whether theywill seek an acceleration of possible European Unionmembership for Turkey; and, if so, how. [HL3490]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice (Baroness Warsi): Accession to the EU is acondition-based not a time-based process. Turkey hasmade clear its firm strategic commitment to accession,and successive EU councils have made clear that Turkeyis a candidate for full membership of the EU.

The UK remains Turkey’s strongest supporter inEurope. It is our ambition that progress will be made onthe accession process in coming months. We are workingwith partners to secure, for example, deeper foreignpolicy co-operation, expansion of the Commission’spositive agenda, and, ideally, opening of chapters. Weare also encouraging Turkey to accelerate plannedhuman rights reforms.

GazaQuestions

Asked by Lord HyltonTo ask Her Majesty’s Government what discussions

they are having with the Governments of Israel,Egypt, Turkey and Jordan about the prevention offurther violence in the Gaza Strip. [HL3501]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice(BaronessWarsi):Priortotheceasefireannouncementon 21 November, the UK was in contact with thoseinvolved in brokering an end to the violence, alongsidethe EU, US and other partners. The Prime Minister,my right honourable friend the Member for Witney(Mr Cameron), spoke to the Israeli Prime Ministerand Egyptian President and the Secretary of State forForeign and Commonwealth Affairs, my right honourablefriend the Member for Richmond (Yorks) (Mr Hague),has spoken to the Israeli, Egyptian, Turkish and JordanianForeign Ministers. We urged all parties to use theirinfluence to help avoid any further escalation.

We welcome the agreement reached on 21 Novemberto end hostilities. We have urged all sides to upholdtheir commitments, and paid tribute to President Mursiand the Egyptian Government for their intensive effortsand the leadership they have shown, as well as to USSecretary of State Clinton and UN Secretary GeneralBan Ki-moon for the role they have played. TheForeign Secretary spoke to Egyptian Foreign MinisterAmr on 22 November to express appreciation forEgypt’s efforts.


Asked by Lord Hylton

To ask Her Majesty’s Government whether theywill seek to work jointly with the Government ofthe United States to ensure a reduction of casualtiesin the current conflict in Gaza. [HL3502]

Baroness Warsi: The British Government are gravelyconcerned by the recent violence in Gaza and southernIsrael and deeply regret the loss of civilian life. Weconsistently called on those involved to avoid anyaction which risked civilian casualties and to abide byinternational humanitarian law. We conveyed thesemessages in public, and directly to those involved inbrokering an end to the violence, alongside our EU,United States of America (US), and other internationalpartners.

We welcome the agreement reached on 21 Novemberto end hostilities. We have urged all sides to upholdtheir commitments, and paid tribute to President Mursiand the Egyptian Government for their intensive effortsand the leadership they have shown, as well as to USSecretary of State Clinton and UN Secretary GeneralBan Ki-moon for the roles they have played.

This ceasefire is an important step towards a lastingpeace. The priority now must be to build on theceasefire and to address the underlying causes ofthe conflict, including more open access to and fromGaza for trade as well as humanitarian assistance, andan end to the smuggling of weapons. Above all, theloss of life over the past week has shown the urgentneed for a return to negotiations on a two-state solutionto resolve the Israeli-Palestinian conflict. The UKwill work urgently with the USA, the EU, our otherinternational partners and with Israel and the PalestinianAuthority, calling for a new initiative to restart thepeace process before the window for a two state solutioncloses.

Asked by Baroness Tonge

To ask Her Majesty’s Government what assessmentthey have made of the current state of the provisionof food supplies to Gaza. [HL3594]

Baroness Northover: As the Foreign Secretary saidon 21 November, we welcome the agreement reachedto end the hostilities in Gaza and southern Israel andurge all sides to uphold their commitments. Our currentassessment is that the provision of food supplies toGaza is not at crisis point but remains fragile.

Pre-positioning of stocks has meant that there iscurrently sufficient food, shelter items and medicalsupplies. The World Food Programme and UN Reliefand Works Agency, which are the two main organisationsconducting food distributions, each have approximately30 days of food pre-positioned in Gaza and distributionsare continuing normally. The UK is following thehumanitarian situation closely and stands ready torespond should the situation deteriorate.

Asked by Baroness Tonge

To ask Her Majesty’s Government what actionthey intend to take to help ensure that medicalsupplies are available in Gaza’s hospitals. [HL3595]

Baroness Northover: As the Foreign Secretary saidon 21 November, we welcome the agreement reachedto end the hostilities in Gaza and southern Israel andurge all sides to uphold their commitments. The UK isfollowing the humanitarian situation closely andmonitoring the situation in terms of access of essentialhumanitarian supplies to the civilian population inGaza.

A shortage in medical supplies predates the currentcrisis and remains a source of concern. However, evenwith the increased caseload of war wounded, ourcurrent assessment is that the health services in Gazaare providing a reasonable quality of care. The UKsupports the United Nation’s Office for the Co-ordinationof Humanitarian Affairs’ Access Co-ordination Unit,which works proactively with all partners to helpfacilitate the access of humanitarian staff and suppliesinto Gaza. The UK stands ready to respond shouldthe situation deteriorate.

GibraltarQuestion

Asked by Lord Pendry

To ask Her Majesty’s Government what measuresthey are pursuing with the Government of Spainfollowing the incursions by a Spanish warship intoGibraltar’s territorial waters on 13 November 2012.

[HL3474]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice (BaronessWarsi):Therewere twoserious incursionsinto British Gibraltar territorial waters (BGTW) on13 November 2012.

In the first incursion a Spanish naval ship conducteda prominent patrol through British Gibraltar territorialwaters lasting over two hours. Later on the same day,a Spanish customs vessel sought to apprehend aGibraltarian civilian boat in BGTW, forcing the RoyalGibraltar Police to intervene in order to safeguard thewelfare of the four occupants.

On 15 November the Permanent Under-Secretaryof the Foreign and Commonwealth Office summonedthe Spanish ambassador to the UK, in order to underlinethe Government’s concerns regarding these and otherrecent incursions into BGTW. As the Minister forEurope, my right honourable friend the Member forAylesbury (Mr Lidington), has stated publicly, wecondemn these provocative incursions and urge theSpanish Government to ensure that they are not repeated.We believe that it is in the interests of Spain, as well asGibraltar and the UK, to avoid any incident that maydamage the prospects of developing a harmoniousand collaborative relationship between Gibraltar andSpain. It is also in all parties interests to avoid incidentswhich could put at risk the safety of those operating inBGTW.

We remain confident of UK sovereignty over BGTWand fully committed to protecting the interests of thepeople of Gibraltar and their wish to remain underBritish sovereignty.


Government Departments: Recordsand Security

Question

Asked by Lord Laird

To ask Her Majesty’s Government, further tothe Written Answer by Lord Taylor of Holbeach on23 July (WA 104), what estimate they have made ofthe cost of answering the question in full. [HL3506]

TheParliamentaryUnder-Secretaryof State,Departmentfor Environment, Food and Rural Affairs (Lord DeMauley): There are two Written Answers in the OfficialReport to which the Question might be referring. Inboth cases, initial estimates of the cost of collectinghistoric information that had not been collected at thetime showed that it would exceed the disproportionatecost threshold.

Regarding security costs, such records are not heldcentrally. To bring the information together for coreDefra and its predecessor bodies for the period concernedwould be a major exercise and would exceed thedisproportionate cost threshold. Tracking the variousorganisational changes since 2000 and identifying thenecessary records would take considerable time andeffort. The process would be further complicated becausesecurity costs are often incorporated as elements withinother administrative costs such as facilities management.

Regarding the cost and purpose of temporary staff,data are held over various account codes includingsalary, pensions and expenses and multiple cost centres.These data would require substantial analysis to providethe answer to this element of the Question. Thereforethe cost of conducting this analysis would exceed thedisproportionate cost limit.

HousingQuestion

Asked by Lord Greaves

To ask Her Majesty’s Government, further tothe Written Answer by Baroness Hanham on 23 June2010 (WA 190), what conclusions they have reachedon the effectiveness of current enforcement powersavailable to local authorities in relation to emptyhousing, including empty dwelling management orders(EDMOs) and other measures, and on the civilliberties implications of EDMOs; and what advicethey have given to local authorities on the use ofEDMOs. [HL3516]

TheParliamentaryUnder-Secretaryof State,DepartmentforCommunitiesandLocalGovernment(BaronessHanham):Local authorities have a range of powers to protectlocal amenity and tackle danger or nuisance fromempty properties.

Notwithstanding, it is the view of Ministers thatthe last Administration’s empty dwelling managementorders were a disproportionate infringement of civilliberties. The coalition agreement makes a clear statementthat the British state had “become too authoritarian”

and pledged “to restore the rights of individuals in theface of encroaching state power, in keeping with Britain’stradition of freedom and fairness”. The right to propertyis a fundamental British liberty.

Under the coalition Government, such orders willbe limited to empty properties that have become magnetsfor vandalism and other forms of anti-social behaviourand generally fallen into a state of disrepair. A propertywill have to stand empty for at least two years beforean empty dwelling management order can be obtained;property owners will have to be given at least threemonths’ notice before the order can be issued, andthere should be community support for the proposedorder. This more liberal approach is a far more sensiblebalance between civil liberties, private property rightsand state intervention.

More broadly, this Government have initiated arange of practical policies and incentives to work withlocal communities to get empty homes back into use,as outlined in our housing strategy issued in November2011, a copy of which is in the Library of the House.

IndiaQuestion

Asked by Baroness Kinnock of Holyhead

To ask Her Majesty’s Government what is theirassessment of the current epidemic of dengue fever inIndia; and whether they have made representationsto the Government of that country about its response.

[HL3525]

Baroness Northover: The World Health Organisationin India says that despite the large number of cases ofdengue fever in the country, this is a seasonal upsurgerather than an outbreak situation. We are in constantdialogue with the Indian Government.

Iraq: Chilcot InquiryQuestion

Asked by Lord Lester of Herne Hill

To ask Her Majesty’s Government when the Chilcotinquiry is expected to report; and how much publicexpenditure has so far been incurred by the inquiry.

[HL3672]

The Chancellor of the Duchy of Lancaster (LordStrathclyde): I refer the noble Lord to my answer tothe oral question asked by the noble Lord, LordDykes, on 29 October 2012 (Official Report, col. 407)for information on the timing of the report.

The total expenditure incurred by the Iraq inquiry,from its establishment on 15 June 2009 to 31 March2012, is £6.1 million. The inquiry will publish itsexpenditure for 2012-13 in due course—the inquiry’spractice is to publish its expenditure after the end ofthe financial year.


Israel and Palestine: West BankQuestions

Asked by Lord Hylton

To ask Her Majesty’s Government whether theywill make representations to the Government ofIsrael against the transfer of existing residentsof Area C of the West Bank to Areas A and B.

[HL3463]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice (Baroness Warsi): The UK has encouraged theIsraeli Government to comply fully with their obligationsunder international law with regard to their actions inthe Occupied Palestinian Territories, including Area Cof the West Bank.

This is an issue of concern shared by our Europeanpartners. The European Union’s Foreign Affairs Council,in conclusions agreed on 14 May, called on Israel tomeet its obligations regarding the living conditions ofthe Palestinian population in Area C, including byhalting forced transfer of population. Together withour EU partners, we will continue to make this case tothe Israeli Government.

Asked by Lord HyltonTo ask Her Majesty’s Government whether they will

make representations to the Government of Israel notto proceed with the eviction of Bedouin communitiesin order to complete proposed developments inArea E1 of the West Bank. [HL3467]

Baroness Warsi: The UK has encouraged the IsraeliGovernment to comply fully with their obligationsunder international law and to ensure that any decisionreached on the movement of Bedouin communitiesshould be made with their full consent and not resultin a forcible transfer.

The UK position on Israeli settlements in the OccupiedPalestinian Territories is clear: they are illegal underinternational law and undermine the possibility of atwo-state solution to the Israeli-Palestinian conflictand those working for a sustainable peace. We look tothe Government of Israel to take all necessary steps toprevent settlement construction.

We, together with our European partners, will continueto follow the situation in Area C of the West Bank,including El, closely.

Justice: CompensationQuestion

Asked by Lord WigleyTo ask Her Majesty’s Government how many

people have received compensation for wrongfulimprisonment over the past 10 years; and howmuch money was paid in total. [HL3436]

The Minister of State, Ministry of Justice (LordMcNally):Thetablebelowshowsthenumberof applicationsfor compensation that have been accepted since 2001-02and the amount of compensation that has been paidout in the corresponding period. There is no correlationbetween the amount paid out in a particular year andthe number of applications accepted in that year.

NoApplications

Granted S133 Ex-Gratia Paid £M

2001-02 27 17 10 6.22002-03 36 25 11 8.22003-04 - 31 23 - 8 6.32004-05 47 39 8 6.52005-06 27 21 6 8.32006-07 28 23 5 12.32007-08 9 7 2 8.22008-09 7 7 0 12.62009-10 1 1 0 11.52010-11 1 0 1 11.32011-12 3 3 N-A 13.2

This information covers awards of Miscarriages of Justicecompensation made under either section 133 of the CriminalJustice Act 1988 or the ex gratia scheme (abolished by the HomeSecretary in 2008). These figures do not include compensationpaid by prosecuting authorities (i.e. the police) for wrongful arrestor unlawful imprisonment.The award of compensation for a Miscarriage of Justice does notdepend on the applicant having spent time in prison, althoughmost applicants will have done so.There is no correlation between the numbers of people who havebeen granted eligibility to the two schemes in any one year by theSecretary of State and the amount of compensation paid by theGovernment in that year. The amount of compensation payable isdecided, by the independent assessor, on the basis of informationsupplied by the applicant. This process can take some time.The table above shows that one applicant was found eligible forcompensation under the ex gratia scheme in 2010-11, two yearsafter the scheme was abolished. This application had initiallybeen refused, but the decision was reversed following JudicialReview proceedings.

LibyaQuestion

Asked by Lord Empey

To ask Her Majesty’s Government on what datesin 2012 they have discussed with the Government ofLibya the issue of compensation for United Kingdomvictims of terrorist attacks committed with weaponssupplied by the Gaddafi regime. [HL3523]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice (Baroness Warsi): Individual compensation claimsare being pursued on a private basis and the Governmentarenot involved innegotiationswiththeLibyanauthoritieson securing compensation payments. However, theForeign and Commonwealth Office provides facilitationsupport to a number of such private campaigns. TheGovernment have raised Gaddafi’s support of IrishRepublican Army (IRA) terrorism with the Libyanauthorities on numerous occasions, including this yearon 16 January, 16 February, 22 February, 6 July, 16 July,24 September, 3 October, 4 October, 10 October, and11 October. We also continue to encourage the Libyanauthorities to engage with representatives of UK victims.

The Libyan authorities are in no doubt of theimportance the UK attaches to resolving this and otheroutstanding bilateral issues arising from the actions ofthe Gaddafi regime.


PakistanQuestions

Asked by Lord Ahmed

To ask Her Majesty’s Government what is thetotal budget of the Department for InternationalDevelopment education awareness programme inPakistan. [HL3632]

Baroness Northover: The Transforming Educationin Pakistan programme has a budget of £20 millionfor 2012-15, equivalent to just around 3% of our totaleducation budget for Pakistan.

Asked by Lord Ahmed

To ask Her Majesty’s Government, further tothe Written Answer by Baroness Northover on20 November (WA 357), what assessment they havemade of the connection between the Mir Khalil-ur-Rahman Foundation and the Geo/Jang group inPakistan. [HL3633]

Baroness Northover: An assessment of the Mir Khalilur Rahman Foundation (MKRF) and its links withGEO TV/The Jang Group was undertaken prior toawarding an accountable grant. MKRF is an independentnot-for-profit organisation with its own bank account,independent processes and a separate board of directors.As stipulated in our accountable grant, MKRF ispartnering with a wide range of media outlets toensure optimal national reach, including Pakistan TV,Apna TV and Waseb TV.

Asked by Lord Ahmed

To ask Her Majesty’s Government, furtherto the Written Answer by Baroness Northover on20 November (WA 357), how the contract to engagethe Mir Khalil-ur-Rahman Foundation was awarded;and whether it was subject to competition. [HL3634]

Baroness Northover: The Mir Khalil ur RahmanFoundation (MKRF) was awarded an accountablegrant to implement the media campaign of theTransforming Education in Pakistan programme inresponse to a proposal it submitted. Accountable grantsare used by DfID to fund project activities withorganisations identified as non-commercial or not-for-profit organisations. They therefore do not require acompetitive tendering process.

All DfID’s programmes are subject to independentevaluation and rigorous monitoring to ensure UKtaxpayers’ money reaches poor people, secures valuefor money and delivers real results.

South SudanQuestion

Asked by Lord Alton of Liverpool

To ask Her Majesty’s Government what reportsthey have received of cases of hepatitis E, jaundice,cholera and malnutrition arising from food shortagesin the South Sudan refugee camps. [HL3601]

Baroness Northover: 1,204 cases of acute jaundicesyndrome have been reported in the refugee camps inUpper Nile State so far this year as a result of anoutbreak of hepatitis E. A total of 31 people died. Asmaller outbreak which began in Yida camp, Unitystate, has resulted in 47 recorded cases and two deathsin September. Active community awareness campaignsand hygiene promotion activities are being implementedto help reduce further transmission of the virus. InJuly 2012, rapid diagnostic test (RDT) results forpeople with severe acute watery diarrhoea indicatedthe possible presence of the bacterium responsible forcholera. However, after further laboratory testing inNairobi, cholera infection was discounted.

There have been no significant food shortages withinthe refugee camps. However, new arrivals to the campshave shown heightened malnutrition rates as a resultof food insecurity in Southern Kordofan and BlueNile states and the physical stress of walking longdistances to cross the border into South Sudan.Malnutrition rates in the camps have gradually fallenover the period July to October, as these new arrivalshave benefited from access to food and nutritionalprogrammes.

Sport: Disabled PeopleQuestion


To ask Her Majesty’s Government whether,following the London 2012 Paralympic Games, theyintend to introduce a comprehensive set of initiativesto promote and protect the interests of those withdisabilities. [HL3707]

TheParliamentaryUnder-Secretaryof State,Departmentfor Work and Pensions (Lord Freud): London 2012delivered a hugely successful Paralympic Games. Wemust now ensure that we convert this success into anenduring legacy. The Government are committed todelivering the full legacy benefits of the Olympic andParalympic Games. A Cabinet Olympic and ParalympicLegacy Committee, including Lord Coe in his role aslegacyambassadorandtheMayorof London,isco-ordinatingour programme and ensure that it delivers real andtangible benefits. Delivering a Paralympic legacy thathelps enable all disabled people to fulfil their potentialand to have opportunities to participate fully in societyis embedded in this work. This includes broadeningaccess to disabled sport, rolling out the Access for Allprogramme, using role models to inspire young disabledpeople to fulfil their potential, and engaging with themedia to help change attitudes and behaviours towardsdisabled people.

SudanQuestions


To ask Her Majesty’s Government how muchthey will contribute to the 2012–13 budget of theUnited Nations Mission in Darfur. [HL3480]


TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice (Baroness Warsi): As set out in Article 17 of theUnited Nations (UN) charter, UN member states arelegally obliged to pay their respective share towardspeacekeeping operations. As a permanent member, theUKexpectstopay,throughUNassessedcosts,approximately$82 million towards the total running cost of theUnited Nations Mission in Darfur (UNAMID) in UNfinancial year 2012-13.


To ask Her Majesty’s Government, following theuse of United Nations Mission in Darfur (UNAMID)helicopters to evacuate Sudanese armed forces, whetherUNAMID will offer medical evacuation services toall wounded combatants. [HL3481]

Baroness Warsi: As the United Nations Mission inDarfur (UNAMID) spokesperson made clear at thetime of the evacuation, providing medical assistanceforms part of the UNAMID mandate. UNAMID hasalso in the past provided medical evacuation servicesfor both the Sudanese army and rebel forces. Provisionof these services is made on a case by case basis,decided by UNAMID, and could also be provided forwounded civilians and combatants in the future. However,given logistical constraints, it would be unrealistic forthe mission to be able to do so for all woundedcombatants and civilians.


To ask Her Majesty’s Government, following theuse of United Nations Mission in Darfur (UNAMID)helicopters to evacuate Sudanese armed forces, whetherUNAMID will offer medical evacuation to woundedcivilians in Darfur. [HL3482]

Baroness Warsi: As the United Nations Mission inDarfur (UNAMID) spokesperson made clear at thetime of the evacuation, providing medical assistanceforms part of the UNAMID mandate. UNAMID hasalso in the past provided medical evacuation servicesfor both the Sudanese army and rebel forces. Provisionof these services is made on a case by case basis,decided by UNAMID, and could also be provided forwounded civilians and combatants in the future. However,given logistical constraints, it would be unrealistic forthe mission to be able to do so for all woundedcombatants and civilians.


To ask Her Majesty’s Government what informationthey have about reports concerning the spread ofyellow fever in Darfur; what is their assessment ofthe risk this poses to human life; and what resourcesare available to combat it. [HL3483]

Baroness Northover: We are deeply concerned aboutthe outbreak of yellow fever in Darfur. The latestreport from the World Health Organisation suggeststhat 497 people have been infected, with 124 deaths.Sudan has been allocated 2.4 million vaccines fromthe International Co-ordinating Group on Vaccine

and the vaccination campaign started on 20 November2012. The UK has contributed to the vaccinationcampaign through its support to the Central EmergencyResponse Fund. We will continue to monitor thesituation closely.

SyriaQuestion

Asked by Baroness UddinTo ask Her Majesty’s Government what steps

they are taking to ensure women who have been rapedin Syria and other zones of conflict have access toall necessary advice, counselling and medical assistance,including termination, if it is their choice. [HL3581]

Baroness Northover: In the past year the UK hassignificantly stepped-up efforts to tackle the problemof violence against women and girls, and we now have20 country programmes in place that directly tacklethe problem. These interventions will help 10 millionwomen access justice by 2015. For Syrian refugees inJordan, UK funding is providing clinical care andcounselling for 12,000 people who have survived sexualassault and trauma, including women, men and children.1,800 particularly vulnerable Syrian women, perceivedto be at risk of coerced marriage, will also receivefinancial support to help mitigate the potential risk ofthis exploitation.

In addition, the Foreign Secretary’s preventing sexualviolence initiative aims to replace the culture of impunitywith one of deterrence by increasing the number ofperpetrators brought to justice both internationallyand nationally.

Thames Tideway TunnelQuestion

Asked by Lord BerkeleyTo ask Her Majesty’s Government how much

has been spent each year since 2005 by (1) theDepartment for the Environment, Food and RuralAffairs, (2) OFWAT, and (3) the Consumer Councilfor Water, on (a) the Thames Tideway Tunnel, and(b) alternatives to the Thames Tideway Tunnel.

[HL3475]

TheParliamentaryUnder-Secretaryof State,DepartmentforEnvironment,FoodandRuralAffairs (LordDeMauley):Thames Water Utilities Ltd is the sewerage undertakerin London and responsible for ensuring a solution toongoing sewage discharges into the Thames. It is expectedto make an application to the Planning Inspectoratefor a development consent order for the Thames tidewaytunnel in early 2013. The environmental statementwhich forms part of its application will need to outlinethe main alternatives considered by Thames Water.

We are unable to provide cost figures split along thelines requested. Resources have been allocated to workingwith Thames Water in finding a solution to sewagedischarges into the Thames rather than split intoenabling a tunnel solution and into alternatives.

For Defra, the annual staff costs allocated to preventingsewage pollution into the Thames in 2012-13 are estimatedat approximately £360,000. The costs in 2011-12 weresimilar; in previous years they were significantly less.


With regard to other costs since 2005, none wereallocated from 2005 to 2009. From 2009 onwards,estimated approximate figures are as follows:

2009-10 Waste Water National Policy Statement - £44,0002010-11 Waste Water National Policy Statement - £94,0002011-12 Waste Water National Policy Statement - £13,000

Project Financing Advisers - £150,000

Legal Advisers - £200,000

2012-present: Project Financing Advisers - £239,000Legal Advisers - £246,000

Project Insurance Advisers - (figures not yetavailable)

For Ofwat, it estimates its costs allocated to preventingsewage pollution into the Thames as approximately:

2005-06 Consultancy costs - £34,0002006-07 Consultancy costs - £33,0002007-08 Consultancy costs - £177,0002008-09 Staff costs, expenses and consultancy costs - £148,0002009-10 Staff costs, expenses and consultancy costs - £152,0002010-11 Staff costs, expenses and consultancy costs - £206,0002011-12 Staff costs, expenses and consultancy costs - £731,000Apr 2012-Sep 2012

Staff costs, expenses and consultancy costs - £584,000

Ofwat is unable to provide estimated staff costs andexpenses from 2005-08 as they were not identifiedseparately during that period.

The Consumer Council for Water is unable to provideaccurate staff and expenses costs related to its involvementin the Thames tideway tunnel discussions; it has notincurred any consultancy costs relating to the Thamestideway tunnel.

The Consumer Council for Water estimates its costsallocated to helping water companies ensure the successfuldelivery of a sustainable wastewater service with minimalsewer flooding throughout England and Wales asapproximately:

2010-11 £491,0002011-12 £438,0002012-13 £271,500

Asked by Lord Berkeley

To ask Her Majesty’s Government what are theircurrent estimates in respect of the Thames TidewayTunnel of (1) its capital cost, (2) the cost of finance,(3) the operation and maintenance costs for thefirst 10 years of operation, and (4) any additionalor contingency costs. [HL3476]

Lord De Mauley: The Written Ministerial Statementin November 2011 gave a cost estimate for the Thamestideway tunnel of £4.1 billion, based on 2011 pricesand excluding financing costs. This included a significant£0.9 billion contingency element for risk allowance

and optimism bias. The Statement also said that theestimated average maximum annual sewerage bill impactwas £70 to £80 at 2011 prices, and this included anestimate of the cost of finance.

Thames Water, as part of normal project development,has since revised the estimated project costs. Theselatest estimates suggest that the average peak annualbill impact of £70 to £80 in 2011 prices has notchanged from November 2011. This range continuesto reflect the impact that financing costs will have onbills and the difficulty in estimating these for a projectof this nature and duration. Relatively small changesin the cost of capital for the project could have asignificant impact on bills.

The latest cost estimate produced by ThamesWater in August 2012 showed the project cost hasslightly increased, but remains between £4.1 billionand £4.2 billion, again at 2011 prices and excludingfinancing costs. The makeup of this cost figure includingthe contingency element is commercially sensitive asnegotiations on the financial and delivery structure forthe tunnel are still ongoing.

The approach used by Thames Water to developthese cost estimates has been reviewed by independentadvisers on behalf of Ofwat and confirmed to be inaccordance with best industry practice.

The current working assumption is that the Thamestideway tunnel will be delivered by an independentlyregulated infrastructure provider and the capital costand the cost of finance for this will be competitivelytendered.

Thames Water estimates the operating cost of thetunnel (Lee and Thames Tunnels combined) will varywith actual rainfall in any particular year. A typicaldesign year would mean that the operating costs fordirect staff and power to operate the pump stationwould be £11 million pa (2011 price base). This estimateexcludes the operating costs of treating the material atthe sewage treatment works, the management, financingand funding of the tunnel and long-term replacementof assets. Every 10 years there would be a majorinspection period for the tunnel, and this is estimatedto cost about £20 million. It is not expected to haveany significant maintenance or repair capital costsduring the first 10 years.

Asked by Lord Berkeley

To ask Her Majesty’s Government what limit totaxpayer liability is established by the Water Industry(Financial Assistance) Act 2012 in respect of theThames Tideway Tunnel before, during and afterits construction. [HL3477]

Lord De Mauley: The Water Industry (FinancialAssistance) Act 2012 does not set any taxpayer liabilitylimit in respect of Government contingent financialsupport for exceptionally large or complex water orsewerage construction or improvement works. Withrespect to the Thames tideway tunnel, the Governmenthave stated that they are willing in principle to providesuch support for exceptional project risks, and areworking closely with Ofwat and Thames Water Utilities


Ltd to ensure that the likelihood and impact of theserisks are minimised and taxpayers’ interests are protectedthroughout.

Town and Village GreensQuestion

Asked by Lord GreavesTo ask Her Majesty’s Government how many

applications there have been for the registration oftown and village greens in each year since thecoming into force of the Commons Act 2006; andhow many (1) were successful, (2) failed, and (3) arestill pending. [HL3456]

TheParliamentaryUnder-Secretaryof State,DepartmentforEnvironment,FoodandRuralAffairs (LordDeMauley):Section 15 of the Commons Act 2006, under whichnew town or village greens are registered, was broughtinto force on 6 April 2007 by virtue of the CommonsAct2006(CommencementNo.2) (TransitionalProvisionsand Savings) (England) Order 2007.

The data given below include only applicationsmade under Section 15(1) and not any applicationsmade by the owner of the land under Section 15(8).

The data are estimates based on actual figuresprovided by commons registration authorities duringbiennial surveys undertaken by Defra in the years2007, 2009 and 2011. The data themselves had to beextrapolated due to the fact that no survey received a100% return rate. The last survey was conducted inSeptember 2011 so full-year data are not available for2011. In the case of 2007, it is only possible to give fullyear data, rather than from April when Section 15 wasbrought into force.

Applications submitted under the predecessorlegislation (Commons Registration Act 1965) havebeen factored into the data presented below.

Applications 2007 2008 2009 2010 2011

No. submitted 143 196 194 134 137No. successful 18 26 25 38 27No. failed 35 52 79 45 57No. still pending 90 118 90 51 53

UgandaQuestion

Asked by Lord Lester of Herne HillTo ask Her Majesty’s Government whether the

Anti-Homosexuality Bill introduced in the UgandanParliament is being taken into account in theirreview of aid granted to Uganda. [HL3675]

Baroness Northover: Her Majesty’s Governmentare committed to ensuring that lesbian, gay, bisexual,and transgender people around the world are free tolive their lives in a safe and just environment. Weare therefore concerned about the proposed Anti-Homosexuality Bill being considered by the UgandanParliament. We have raised our concerns regularly atthe most senior levels of the Ugandan Government.

The current decision to freeze aid to the UgandanGovernment was over concerns about allegations ofcorruption in the Office of the Prime Minister. However,

aid to the Government of Uganda has always beenpredicated on fundamental commitments and agreedprinciples which include poverty reduction, respect forhuman rights, improved public financial management,and promoting good governance. Where we think thatsome of these principles are not being met, we wouldconsider the best way to respond, ensuring there is nodisproportionate effect on the poorest people.

World Trade Organisation: CustomsTariffsQuestion

Asked by Lord Pearson of Rannoch

To ask Her Majesty’s Government, further tothe Written Answer by Lord Gardiner of Kimbleon 7 November (WA 218), whether United Kingdomand German bound custom tariff rates are the ratesactually charged. [HL3758]

The Minister of State, Department for Business,Innovation and Skills & Foreign and CommonwealthOffice (Lord Green of Hurstpierpoint): Bound tariffsare not necessarily the rate that a WTO memberapplies to other WTO members’ products. Membershave the flexibility to increase or decrease their tariffs(on a non-discriminatory basis) so long as they do notraise them above their bound levels. In current usage,most favoured nation (MFN) tariffs are the maximumcountries promise to impose on imports from othermembers of the WTO, unless the country is part of apreferential trade agreement.

The common customs tariff (CCT) applies to theimport of goods across the external borders of the EUand is common to all EU members including the UKand Germany, but the rates of duty differ betweentrade partners depending on whether the EU has apreferential trade agreement with that country. Hencein many cases the tariffs actually charged by both theUK and Germany are lower than the bound tariff.

ZimbabweQuestion

Asked by Lord Avebury

To ask Her Majesty’s Government what assessmentthey have made of the report by Partnerships AfricaCanada, Reap What You Sow: Greed and Corruptionin Zimbabwe’s Marange Diamond Fields; and whatrole they propose the international community shouldplay in enabling Zimbabwe to recover stolen diamonds.

[HL3509]

TheSeniorMinisterof State,DepartmentforCommunitiesand Local Government & Foreign and CommonwealthOffice(BaronessWarsi):Wewelcometherecommendationsmade in the Partnership Africa Canada report, whichraises important questions and issues around the potentialmisuse of diamond revenues in Zimbabwe. The misuseof Zimbabwe’smineralwealthnotonlydeprives thepeopleof Zimbabwe of the benefits that they should receivefrom their natural resource but is likely to damage the


prospects of free and fair elections. The Zimbabwebudget statement released on 15 November reportedthat from estimated diamond exports of US$563 million,US$43 million in diamond dividend revenue has beenremitted to Zimbabwe’s Treasury this year.

The statements made at this month’s Victoria Fallsdiamond conference in Zimbabwe underscore the lackof international unity on questions of transparency inZimbabwe’s diamond sector. Although the KimberleyProcess (KP) has helped improve internal controlsover diamonds and shone a spotlight on production,export and revenue data, the KP’s narrow remit and

reliance on unanimity for decision-making make furtherprogress difficult. The UK is therefore focusing itsefforts on supporting solutions from within Zimbabwe.Although it is clear that more needs to be done, wewelcome the efforts of the Government of Zimbabwein developing the Diamond Act, which includes legislationaimed to regulate the industry more effectively. TheUK will continue to work with international organisations,such as the World Bank and International MonetaryFund, to achieve transparency of diamond revenueflows and to do what we can to support the transparencyagenda within Zimbabwe and elsewhere.


Monday 3 December 2012

ALPHABETICAL INDEX TOWRITTEN STATEMENTS

Col. No.Cybercrime ........................................................................ 41

ECOFIN ........................................................................... 48

Employee Ownership......................................................... 49

Col. No.EU: Single Market............................................................. 49

Taxation: Avoidance .......................................................... 49


ALPHABETICAL INDEX TO WRITTEN ANSWERSCol. No.

Bees ................................................................................... 97

Benefits.............................................................................. 99

Burma.............................................................................. 100

Climate Change ............................................................... 100

Columbia......................................................................... 101

Employment .................................................................... 101

EU: Turkey ...................................................................... 102

Gaza ................................................................................ 102

Gibraltar.......................................................................... 104

Government Departments: Recordsand Security................................................................. 105

Housing ........................................................................... 105

India ................................................................................ 106

Iraq: Chilcot Inquiry........................................................ 106

Col. No.Israel and Palestine: West Bank ....................................... 107

Justice: Compensation ..................................................... 107

Libya ............................................................................... 108

Pakistan........................................................................... 109

South Sudan .................................................................... 109

Sport: Disabled People..................................................... 110

Sudan............................................................................... 110

Syria ................................................................................ 112

Thames Tideway Tunnel .................................................. 112

Town and Village Greens ................................................. 115

Uganda............................................................................ 115

World Trade Organisation: Customs Tariffs..................... 116

Zimbabwe ........................................................................ 116

NUMERICAL INDEX TO WRITTEN ANSWERSCol. No.

[HL3436] ......................................................................... 107

[HL3456] ......................................................................... 115

[HL3463] ......................................................................... 107

[HL3467] ......................................................................... 107

[HL3474] ......................................................................... 104

[HL3475] ......................................................................... 112

[HL3476] ......................................................................... 113

[HL3477] ......................................................................... 114

[HL3480] ......................................................................... 110

[HL3481] ......................................................................... 111

Col. No.[HL3482] ......................................................................... 111

[HL3483] ......................................................................... 111

[HL3490] ......................................................................... 102

[HL3501] ......................................................................... 102

[HL3502] ......................................................................... 103

[HL3504] ........................................................................... 99

[HL3505] ........................................................................... 99

[HL3506] ......................................................................... 105

[HL3509] ......................................................................... 116

[HL3516] ......................................................................... 105

Col. No.[HL3523] ......................................................................... 108

[HL3525] ......................................................................... 106

[HL3541] ......................................................................... 101

[HL3575] ......................................................................... 100

[HL3576] ......................................................................... 100

[HL3581] ......................................................................... 112

[HL3594] ......................................................................... 103

[HL3595] ......................................................................... 103

[HL3601] ......................................................................... 109

[HL3632] ......................................................................... 109

[HL3633] ......................................................................... 109

Col. No.[HL3634] ......................................................................... 109

[HL3636] ........................................................................... 97

[HL3643] ........................................................................... 97

[HL3644] ........................................................................... 98

[HL3645] ........................................................................... 98

[HL3646] ........................................................................... 98

[HL3672] ......................................................................... 106

[HL3675] ......................................................................... 115

[HL3706] ......................................................................... 100

[HL3707] ......................................................................... 110

[HL3729] ......................................................................... 101

[HL3758] ......................................................................... 116

Volume 741 MondayNo. 77 3 December 2012

CONTENTS


QuestionsIran ................................................................................................................................................................................... 431European Council: December Meeting ......................................................................................................................... 434British Transport Police ................................................................................................................................................. 435Immigration: Home Office Meetings ............................................................................................................................ 437

Medical Innovation Bill [HL].............................................................................................................................................. 440Mental Health (Discrimination) (No. 2) BillPrisons (Property) BillMarine Navigation (No. 2) BillPresumption of Death BillMobile Homes Bill

First Readings.................................................................................................................................................................. 441

Six Statutory InstrumentsMotions to Approve......................................................................................................................................................... 441

Canterbury City Council Bill .............................................................................................................................................. 442Leeds City Council BillNottingham City Council BillReading Borough Council Bill

Third Readings ................................................................................................................................................................ 454

Draft Cumbria (Electoral Changes) Order 2012Motion of Regret............................................................................................................................................................. 455

Civil Legal Aid (Merits Criteria) Regulations 2012 ......................................................................................................... 464Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Amendment of Schedule 1) Order 2012

Motions to Approve......................................................................................................................................................... 489

Palestine: United Nations General Assembly ResolutionQuestion for Short Debate ............................................................................................................................................. 494

Legal Profession: RegulationQuestion for Short Debate ............................................................................................................................................. 513

Grand Committee

Enterprise and Regulatory Reform BillCommittee (1st Day) .............................................................................................................................................. GC 125

Written Statements......................................................................................................................................................... WS 41

Written Answers.............................................................................................................................................................. WA 97

HOUSE OF LORDS - Parliament Publications

Documents

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