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Grand Committee

Volume 693: debated on Tuesday 3 July 2007

Grand Committee

Tuesday, 3 July 2007.

The Committee met at half-past three.

[The Deputy Chairman of Committees (Viscount Ullswater) in the Chair.]

Before the Minister moves that the first order be considered, I remind noble Lords that in the case of each order the Motion before the Committee will be that the Committee consider the order in question. The Motion to approve the order will be moved in the Chamber in the usual way. If there is a Division in the House, the Committee will adjourn for 12 minutes rather than 10 because the House has now given itself 11 minutes to get into the Lobbies.

Working Time (Amendment) Regulations 2007

rose to move, That the Grand Committee do report to the House that it has considered the Working Time (Amendment) Regulations 2007.

The noble Lord said: Over the past decade the Government have put in place a framework of employment rights that provides decent minimum standards in the workplace while ensuring labour market flexibility and competitiveness. In 1998, we introduced a statutory entitlement to four weeks’ paid holiday for the first time, yet we are aware that some employers count time off for bank and public holidays against that four-week entitlement. We believe that that is unfair, and in our 2005 election manifesto we proposed to address this anomaly by increasing the current four-week entitlement to 5.6 weeks—from 20 days to 28 days—for those working full time and pro rata for part-time staff.

These proposals will be good news for the 6 million workers who will benefit from increased holiday as a result, particularly the low-paid, women and part-time workers who currently receive the least holiday. The benefits of holidays are clear: time away from the workplace reduces stress, increases quality of life and supports family life. However, we recognise that proposals that benefit so many will impose additional costs on businesses that currently give the bare minimum holiday entitlement. We have proposed a number of measures to help employers adjust their practices to comply with these regulations. First, we propose that the increase will be introduced in two phases with a holiday entitlement rising to 24 days this October and to 28 days from April 2009. We had intended to introduce all the additional holiday by October 2008, but on further consideration of the costs, particularly for the health and social care sector, we have delayed it until April 2009.

We are aware that some employers, particularly in the social care sector, face challenges in recruiting and training staff and are required by statute to maintain certain staffing levels. The increase in holiday entitlement may place particular strain on employers and staff in providing cover for the additional holiday, and we therefore propose a transitional period until April 2009 during which time payment in lieu of the additional holiday will be permitted. From April 2009, workers must be able to take their holiday as holiday, as our intention is to enable people to have more time away from the workplace rather than to receive additional payment instead.

Most employers already give their staff 28 or more days’ holiday a year. During the extensive consultation process on these changes, such employers expressed concern that they would face uncertainty and administrative costs as a result of these regulations, even though they may already comply. We are clear that we want to support such good employers while protecting vulnerable workers. We have therefore proposed an exclusion to these regulations. Where employers already provide staff with 28 days holiday, pro rata for part-timers, they will be excluded from the regulations. This incentive for early compliance will remove an uncertainty or administrative burden from good employers resulting from this regulation, while ensuring that vulnerable workers get the benefit of the increased entitlement.

In developing these proposals, we have consulted widely with employers and workers. These measures, along with the detailed guidance we will be providing for employers and workers shortly, balance the demands of workers for a better quality of life with the needs of business for a productive and motivated workforce. The proposals have been welcomed by the TUC and employer organisations such as the CBI, the Institute of Directors, the British Chambers of Commerce and the Engineering Employers’ Federation. A modern economy can thrive only by adopting employment practices that recognise the central contribution made by individual workers in the business’s success and rewarding their efforts in such a way that demonstrates that they are valued and respected.

These proposals deliver further fairness at work while advancing our economic competitiveness. I commend the regulations to the Committee.

Moved, That the Grand Committee do report to the House that it has considered the Working Time (Amendment) Regulations 2007. 20th report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

We generally welcome the regulations, as we have heard that they amend the Working Time Regulations 1998 to introduce a statutory entitlement to eight days’ additional paid annual leave, in addition to the four weeks’ annual leave entitlement already provided by the regulations, subject to a maximum statutory entitlement of 28 days. As my honourable friend in another place has already said, striking the right balance between family and working life is vital to the interests of the employer and the employee. In families where, often, partners are both working, holiday time is essential for people not only to recharge their batteries, but to have quality time with their children. For employers, staff are often the most important asset. Therefore, ensuring that staff are properly rested makes good business sense. We have seen in the regulatory impact assessment that stress is one of the critical drivers of sickness-related leave in this country. I suspect that we could debate the cause and effect between this measure and reducing such leave, but anything that helps to reduce sickness-related leave and boost productivity has to be welcome.

Working hours are generally a matter to be agreed between employers and employees. Britain must retain its opt-out from the working time directive. To put it on the record, employers across the UK should see and take advantage of the benefits of offering flexible employment. Government should not be regulating to require flexibility but, rather, deregulating to permit it.

Like the noble Baroness, I welcome the regulations. As somebody who has sat through the debates on working time and related matters since I first took this opposition job in 1997, I must comment on the remarkable change in the atmosphere of these debates. It is to the credit of the Government that they have changed the culture, with an acceptance by all three political parties that these changes and the protections given to workers are essential.

Reading the Committee deliberations in another place—which, as we all know, tends to be much more confrontational than this House—I thought that the way that all three political parties, particularly the Conservative Party, have now completely changed their attitude to these issues was quite remarkable. That is welcome for the good of the country, and the Government need to be congratulated on sticking to their guns in this area.

The regulations, which provide for four weeks holiday, amend the 1998 regulations. When they were brought in, no one assumed that employers would take the view that bank holidays should be included in the holiday entitlement, particularly for low-paid workers. I have seen an estimate that roughly 6 million workers—particularly the lower paid—suffer having bank holidays deducted from their statutory requirement for holiday. For that reason alone the regulations are welcome. By comparison with most of our competitors, we do not have as many bank holidays: we have eight days, whereas many of our competitor countries have 14 or 15. Indeed, the United States of America will have a major holiday tomorrow. So that provision is welcome.

I also welcome the fact that it will be made more difficult for employers to force employees to take payment in lieu of holiday, which is another reform in the regulations on which the Government should be congratulated. I very much support the regulations.

I am most grateful to the noble Baroness, Lady Wilcox, and the noble Lord, Lord Razzall, for their support and enthusiasm for the regulations.

On Question, Motion agreed to.

Companies (Political Expenditure Exemption) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Companies (Political Expenditure Exemption) Order 2007.

The noble Lord said: As part of the implementation of the Companies Act 2006 the Government have laid the draft Companies (Political Expenditure Exemption) Order to replace the existing order, SI 2001/445. This order is drafted in simpler language to correspond with the simpler format and drafting of the 2006 Act. It is being made under Section 377 of the Companies Act 2006, and its content was debated in a previous form in this House in 2001 in a very short debate. I am hoping that we will be able to follow the same form today.

I make it absolutely clear that this is not an order relating to party funding or party governance. It relates to corporate governance and how companies manage their affairs between the shareholders and the directors. Under Section 366 of the Companies Act 2006, companies must seek prior authorisation from their shareholders for political expenditure. This draft order exempts companies such as newspapers and other companies whose ordinary business includes the preparation, publication or dissemination of news material from having to seek authorisation. The only substantive change from the existing order is to extend the exemption to independent election candidates. Political expenditure under the 2006 Act is defined as any expenditure incurred on any publicity material or activities that may be intended to affect public support. This now includes public support for independent election candidates as well as political parties and political organisations. The exemption applies only to political expenditure. Companies that fall under this exemption will remain subject to the full requirements of the Act in respect of political donations.

The Companies Act 2006 has simplified and modernised company law. It has substantially rewritten company law to make it easier to understand and more flexible, especially for small businesses. This exemption order supports the objective of the Act, which is to pursue the principles of better regulation. It would be impractical to expect companies involved in journalism and news to pass resolutions to publish editorials or comment of a political nature. This draft order maintains a framework of company law that is proportionate and does not impose unnecessary burdens on business. As was also highlighted several times in the debates held on the existing order in 2001, the draft order supports the important principle of press freedom enjoyed in British public life. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Companies (Political Expenditure Exemption) Order 2007. 20th report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

I got quite excited about this order. I thought that I was going to get up and save the unions, as it were, but then I discovered that it did not apply to them at all. So I can only agree that this is an administrative measure, designed to replace the Companies (EU Political Expenditure) Exemption Order 2001 with one relating to the Companies Act. As such, we have no substantive points to make and I am happy to sit down.

Having heard my intervention on a question from the noble Baroness in the Chamber on the previous occasion, the Minister might not have expected me to have another swipe at those who will benefit from this change. If we were being awkward, we might well ask why we should not make it more difficult for quoted newspaper groups to influence voters in a referendum on European matters, which would of course be the effect of the order not being passed. As I understand it, were there to be a referendum on the treaty, which it does not look as though there will be, then the quoted newspaper groups—I think that there are probably two whose editorials on the referenda we could write—would have constraints imposed on them under the Companies Act 2006. Having said that, that is probably not the way to constrain what I like to refer to as the foreign-controlled press, but I should be interested to know the genesis of this order. Who has complained? Who has said that there is a problem? Reading the previous legislation, one would assume that it was covered anyway. Therefore, is this a case of people gearing themselves up for a campaign on issues where we would probably disagree with them, and have the Government been lobbied to bring in this order to that effect?

I am advised that the order is very similar to the one passed in 2001. We brought it forward again due to changes in the Act. I absolutely take on board the point made by the noble Lord, Lord Razzall. When I was being briefed, I thought about the role of book publishers in this regard, because they publish political books. Would it be sensible to go to the shareholders every time you published Peter Mandelson on the Blair revolution? The answer is no. For me, the bottom line is freedom of the press. Going back to the earlier question in the Chamber, one may not like what the papers say but it is essential that they have the right to say it.

The noble Lord has not specifically answered my question, so perhaps I may rephrase it. Is this simply regarded by his officials as a tidying-up exercise which should have happened earlier or have organisations been lobbying on this point?

I gather that there has been no lobbying and that this is a tidying-up exercise.

On Question, Motion agreed to.

Regulatory Reform (Game) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Regulatory Reform (Game) Order 2007.

The noble Lord said: This draft order will deregulate archaic legislation that dates back to the 19th century legislation. In fact, today I am introducing the policy that was announced by Michael Howard in 1994; it has taken that long to get this through. After that, the Better Regulation Task Force established by the noble Lord, Lord Haskins, and the Cabinet Office’s Better Regulation Team have considered this an area long overdue for reform.

I understand this draft order is not controversial and has been warmly welcomed by relevant industry bodies that represent game dealers and retailers, and also by those who shoot game. Indeed, last July at the president’s lunch at the Game Fair, I announced that we were going to do this, and I shall go back later this month and say that I have delivered in one year something that took 17 years to get through.

Full and proper consultation on this draft order took place in 2006, and respondents overwhelmingly supported the three proposals for change to game licensing. The draft order applies to England and Wales only. In broad terms, it will reduce bureaucracy for those shooting or dealing in game and will prevent unnecessary restriction of their otherwise lawful activities. It will also save central government resources, which are currently being put into the administration of a licensing system which is not serving any useful purpose whatever.

The three key changes that the draft order will introduce are as follows: it will remove the requirement to hold a game licence in order to take or kill game; remove the requirement to hold a local authority licence and an excise licence, commonly known as “dealing licences”, in order to deal in game; and remove the restrictions on dealing in game birds and venison during the close season, permitting game to be sold by everyone all year round, providing that the game was lawfully killed.

The draft order will also ensure that necessary protections are retained. For example, it will make it a criminal offence to sell game birds which you know or have reason to believe have been unlawfully killed or taken. The new offence is necessary to maintain the protection afforded to game birds during the close season while allowing the sale of game lawfully taken during the open season to be sold all year round. That was brought about by refrigeration—we are just catching up. Noble Lords should be reassured that protections for wildlife during close seasons are not linked to the requirement for a game licence and these protections will be retained. Provisions relating to poaching game and shooting it outside the relevant open season will also be retained.

These new regulations will make the selling and dealing of game less bureaucratic and will benefit consumers, retailers and game shoots. Game shooting interests will also gain as there will no longer be a licence required to kill or take game. The original intention of the licence to kill or take game was probably to limit hunting to those who were able to pay a significant amount for an annual game licence—and in those days it was a significant annual amount, which is no longer the case. Game shooting is now enjoyed by people from a cross-section of society. Some 480,000 people shoot game, which is an incredible number, creating some 70,000 full-time jobs and bringing to the economy some £1.6 billion. Two million hectares of land are preserved for game, so it is a big business in that sense, but it is also very costly in terms of regulating licences. Some local authorities do not charge in terms of dealers, while others charge a large amount. The game licence itself costs between £2 and £6. If that had been raised in line with inflation from when it was introduced, the cost would be £1,600, which shows how out of date it is.

For the avoidance of doubt, the Crown post offices, which issue the main licence, will not really lose out, as they do not make any profit or get income from the licences. We pay them some £300,000. In fact, abolishing this will probably save the post offices money rather than make them lose out. The rural or sub-postmasters are not involved in this process anyway, so there will be no effect there. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Regulatory Reform (Game) Order 2007. 11th report from the Regulatory Reform Committee.—(Lord Rooker.)

We came to this business a little quicker than I thought that we would, and I apologise to the Minister for not being here for his opening words. We support this game order which, as he said, catches up with the commitment that was made. I have one or two questions on it, but in the first place I shall make one or two general points.

Refrigeration has made a difference. It will mean that game will be able to be sold commercially, which we welcome. Hitherto it has been restricted to a certain season. The Minister also said that 480,000 people are employed in game and that it is a very important part of the rural community.

I recognise the role which the various shooting organisations play in the conservation of wildlife. It seems strange that we always talk about killing animals, when those organisations help to conserve and protect other species of wildlife. We put on record all too infrequently our thanks to all those who are involved. If my noble friend Lord Peel were not occupied with his duties as Lord Chamberlain, he would certainly have participated in this debate, because he has reflected over many years the enormous contribution that gamekeepers in particular have made on moorland—the Yorkshire Moors, for example—and in many other places.

I think that all Members of the Committee will welcome the removal of burdens and red tape. Why does the order refer only to England and Wales? It is perhaps because Scotland is devolved, but it will surely raise issues in cross-Border territories. If one is domiciled in England, the English law will apply, but it might be that one shoots in Scotland.

I understand the reason for retaining the provisions for those likely to be involved in poaching; that is, unlawfully taking game when they are not entitled so to do.

It may be that Sundays are already covered in the Act and I have missed it, but does the order cover six days or seven? While certain members of the community would welcome it covering seven days a week, there may be others who consider Sundays to be precious.

In recognising the contribution that those involved in the shooting of game have made to the broader conservation of wildlife, I thank the Minister for introducing the order.

We on these Benches also support the deregulation introduced by the order. It will be sad to go into a shop selling game and not see the provisions of the 1831 Act prominently displayed on the wall, but that is part of the deregulation and follows on from what the Minister said in the House the other day about removing regulations.

Regulation 5 discusses the sale of game birds. Will the burden of proof be on those who transport game birds to say where they obtained the birds, because that might be problematic? Perhaps the onus will be on the police to prove where the birds originated, because, in many cases, there will not be a bill of sale on such birds.

I, too, warmly welcome and support the regulation. I thank the Minister for the speed with which he replied to my Question for Written Answer and for his subsequent short correspondence with me.

I think that I am right in saying, if your Lordships will excuse the most appalling pun, that I started this hare running some 14 and a half years ago, on 10 November 1992, when I berated my noble friend Lord Ferrers, then my late and much missed friend Lord Mackay of Ardbrechnish, and finally Lord Annaly. On 21 July 1994, I finally extracted from Lord Annaly the following statement:

“My right honourable friend has decided that the licensing requirements for those who stake or kill game, contained in the Game Act 1831 and the Game Licences Act 1860, should be abolished”.

There was one very important sentence after that which I will come to in a minute.

I was told, back in the early 1990s, that game licences for those who shoot game—I am concentrating entirely on that—were only just positive in net terms. Some 98 per cent of the cost of a licence was spent on getting the revenue in. I disputed that but, be that as it may, 12p out of £6 did not seem an awfully good return on the money.

There is a point that I think is very important, which my noble friend Lady Byford raised, but in a slightly different context. The final sentence of the quote from Hansard read:

“Such abolition will also apply in Scotland”.—[Official Report, 21/7/94; col. WA 45-46.]

I fully understand why it no longer applies in Scotland, because this is a devolved matter. However, there is a very real problem—at least, I think there is, and I hope that the Minister can put me straight on this. Let me use myself as an example and suppose that I was asked to shoot in Scotland on a Saturday but was unable to leave your Lordships' House, or wherever else I happened to be, until the Friday afternoon. As the law in Scotland stands, I would require a game licence, but I cannot get one in England and by the time I get to Scotland, the post office is closed. At that stage, I am about to shoot illegally in Scotland. I imagine—again, the Minister may put me straight on this—that it is not permitted for my host to buy a game licence for me since this is a personal licence with my name on it. I simply do not understand how one could get out of this jam other than Her Majesty's Government persuading the Scottish Parliament as strongly as possible that it should follow the example of this quite excellent order.

I hope I can answer the noble Lord’s final point by saying that during the course of this year, of which half is left, the Scottish Executive will be reviewing the situation regarding game licences in Scotland. I hope that they will arrive at a sensible conclusion, as I am sure that they will seek to do, as we do not want any cross-border issues like this. I suspect that the position is exactly the same in that it is not cost-effective to issue game licences. The legislation would be the original legislation. The money would be chickenfeed—it is an excessive piece of bureaucracy and an archaic piece of law.

The consultation for the order included the question of Sundays, which proved incredibly controversial. This is not to say that it was good or bad, but it was so controversial that it would not be suitable for a regulatory reform order. The reason the House has approved the regulatory reform order process for changing primary legislation is because, generally speaking, it would not be done on a controversial issue, for which primary legislation would be required. In the consultation, support for two of the three issues to get on with it was over 90 per cent, while support for the other one was in the 70s.

The noble Baroness referred to poaching. That part of the law is not being changed; taking game illegally is still illegal. I hope that Scotland will review matters. On the sale of game birds, the burden of proof will be on the prosecuting authority. I understand from my background notes that the policing of the legislation will be done by the police. The prosecuting authority, whether it is the local authority or other such body, will need to prove whether the birds were taken illegally. That is in response to the point of the noble Lord, Lord Redesdale.

I hope that we can reach a satisfactory outcome regarding the Scottish situation. A similar range of legislation applies there, and a review will be under way during the course of this year. I think I have answered all the questions, but if not, I will try again.

No, it is not possible to shoot on a Sunday, although there are some quirks in relation to this. During my year at the Northern Ireland Office, some of the situations there were explained to me. It is quite surprising what you can and cannot do on a Sunday. Some things can be shot but I do not remember the classifications and I am not going to guess them. As I said, the issue was raised in the consultation and there was feedback, both for and against, but it was too controversial for an order of this nature. Therefore, if there were a procedure on this, it would probably have to be done by primary legislation.

For the record, I noted in the statement made by Defra on 18 May that not only were Sundays not included in the draft order but nor indeed was Christmas Day. Is that still the case?

I would imagine that it is. This order covers three areas, which I delineated at the beginning, where there is a massive consensus for change and where a regulatory reform order would be the way to get it through in view of the lack of parliamentary time. There was a time when newspapers were not published on Christmas Day, but I think that that has long since gone, so things are changing. However, we have not legislated for any change in respect of Christmas Day or Sundays. The only changes that we are legislating for are the three set out in the order.

On Question, Motion agreed to.

Regulatory Reform (Financial Services and Markets Act 2000) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Regulatory Reform (Financial Services and Markets Act 2000) Order 2007.

The noble Lord said: The Government believe that proportionate and risk-based regulation is key to encouraging an innovative and flourishing financial services sector in the UK. The role of the Financial Services Authority is important in this regard. The Government recognise that the FSA, and business, would benefit from the reduction or removal of certain burdens to support such a regulatory approach. As a result, we propose a number of amendments to the Financial Services and Markets Act 2000 that will also enable the FSA to operate more efficiently.

The Treasury consulted extensively on the proposals—twice, in fact. Indeed, some of the proposals originate from a stakeholder consultation into the effectiveness of the Financial Services and Markets Act 2000 two years after its enactment. Those consulted on the draft order included key stakeholders within the FSA’s jurisdiction, as well as consumer bodies and trade associations. The first consultation exercises consulted on a broader range of proposals than contained in this order. Three measures proved somewhat controversial and were not pursued as a result of concerns expressed by stakeholders. That aside, there was broad support for the proposals put forward in the second consultation.

There are a number of measures in the order but I shall try to run through them as briefly as possible. Article 3 would make it easier for partnerships to continue trading and remain authorised by the FSA following a change in membership. Such an amendment would benefit small businesses in particular.

Article 4 would remove the requirement on the FSA to consult EEA regulators in certain, limited circumstances. The current arrangement over-implements various EC directives, and the proposed amendment would remove this element of gold-plating.

The amendments outlined in Articles 5 to 8 would simplify a number of procedural requirements that the FSA is obliged to fulfil, even when an issuer himself seeks to discontinue or suspend the listing of a security. This includes the FSA giving reasons for its decision, and the right of the issuer to make representations and to refer the matter to the tribunal. Clearly, these procedures are entirely appropriate when the discontinuance or suspension has been initiated by the FSA and the issuer is resisting such action. However, when the discontinuance or suspension is initiated at the request of the issuer, these procedural requirements appear to serve no useful purpose.

The reforms impose some new procedural burdens on the FSA in order to protect the rights and freedoms of the issuer in cases where the FSA decides not to grant a request to de-list or suspend the listing. These include a right for the issuer to apply to the Financial Services and Markets Tribunal if the FSA rejects its application. The additional burdens are judged by the Government to be proportionate and fairly balanced, and I emphasise that when the order was considered by the Committee in the other place, due agreement was given to this point.

Article 9 would simplify the procedures that the FSA has to undergo when cancelling a sponsor’s permission. This will take effect only in cases when the cancellation is at the request of the sponsor. The amendment will deny access to the tribunal to those who make an application to cancel their permission to act as a sponsor. However, I emphasise that the cancellation will be by consent. As such, the Government do not consider that anyone will be prevented from exercising any rights or freedoms that he could reasonably expect to exercise.

At present, the FSA is able only to waive or modify a certain number of its rules for people and firms it authorises. The amendments contained in Articles 10 to 12 would enable the FSA to waive or modify its rules for unauthorised persons as well if, for example, it believes the rules concerned are unduly burdensome. This amendment requires the FSA to satisfy itself on a number of issues before using this power.

The final two amendments relate to the provision of FSA guidance. Article 13 would reduce some of the requirements placed on the FSA when consulting on its own guidance. Article 14 would enable the board to delegate the task of issuing guidance to a committee or sub-committee of the board.

The Government believe that these measures, taken together, will enable the FSA to take a better targeted, more streamlined and risk-based approach to its work. Firms will benefit indirectly from this more flexible approach and directly through the changes in the scope of FSA waivers and modifications.

The Delegated Powers and Regulatory Reform Committee has considered the proposals and regards them as making proper use of the powers under the Regulatory Reform Act 2001. I thank the members of the committee for their opinion and for their work in scrutinising the draft order. The committee in the other place also considered that the proposals were within the vires of the 2001 Act and has given its assent to the order. As the order was unanimously approved in the other place, I have hopes in commending it to the Committee today. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Regulatory Reform (Financial Services and Markets Act 2000) Order 2007. 11th report from the Regulatory Reform Committee.—(Lord Davies of Oldham.)

I thank the Minister for introducing the order. As he said, it was considered by the Delegated Powers and Regulatory Reform Committee in another place and by the same committee in your Lordships' House and, as he implied, it passed with flying colours. It might seem that there is therefore little to add, but I never like to pass up an opportunity to talk about deregulation with the Minister.

The order contains a number of eliminations or reductions in regulatory burdens. As the Minister knows, my party believes in reducing regulatory burdens and we do not object to the order—indeed, we support it. However, it is worth pointing out that only two of the eight measures in the order actually reduce regulatory burdens on businesses; most of the rest relieve regulatory burdens on the FSA. I am not saying that that is a bad thing but it is not what my party yearns for when we talk about reducing regulatory burdens. Reducing the burden on bureaucrats is fine but it does not have a real impact on what we should be trying to do—reducing the impact of regulatory burdens on businesses.

I have a couple of points of detail for the Minister. I was surprised that during the consultation there was no pushback against the proposal to amend Section 157, which would reduce the requirements on the FSA to consult on guidance. I have always seen consultation as a fundamental part of good regulation. It is part of the better-regulation guidelines. Having removed the requirement on the FSA, there is the possibility that some guidance will be issued without full consultation. Are the Government satisfied that the FSA has processes in place to ensure that it consults when appropriate, and do they have processes in place to keep an eye on what the FSA will be doing with its new freedom to avoid consultation?

The other surprising aspect of the lack of pushback from the stakeholders, whom I freely admit were consulted, was the issue of guidance being delegated to committees. That is proposed in the amendment to paragraph 5 of Schedule 1. I am sure that much guidance is routine and therefore capable of being delegated. However, the Minister has already referred to the possibility of gold-plating, an issue we often discuss when considering regulatory burdens. People do not usually set out to gold-plate; it is something that enthusiasts tend to do. Having appointed what will doubtless be enthusiasts and anoraks to the committees and sub-committees that will approve the guidance, how will the Government, with the FSA, ensure that those well-meaning individuals do not end up creating new gold-plating after taking the opportunity of this regulatory reform order to reduce some from the past?

Finally, how many pages of the legendary five-foot rule book are being eliminated by the order? I suspect that it will make no dent in the rule book. When does the Minister expect the FSA to deliver a significant reduction in its rule book? We know that the FSA has for some time been talking a good story on reducing the size of the rule book and moving to principles-based regulation but it is my understanding that the regulation rule book would, if printed out, still come to nearly my height.

I thank the Minister for his detailed explanation of the order and congratulate him on still being in his post. I think that this is the first time that the three of us have had the delight of debating since the new Prime Minister came into position and the reshuffle took place. We are delighted that the noble Lord remains in the Treasury brief.

This is by any standards a fairly minor measure; its individual components are acceptable to us and we support it. My question follows on from the noble Baroness’s last comments. Can we envisage further measures to reduce regulatory requirements in the financial services sector or are those who have been toiling in the vineyard to produce this measure hanging up their boots for another season, so that we should not expect anything else? The noble Lord said that a number of further proposals originally contained in the measure have been dropped, two of which relate to consultation. Have they been dropped for good or is there an intention to bring them back? The fact that the controversial matters related to consultation underlines the difficulty of deregulation. The easiest thing to suggest stopping is consultation. It is very easy to say, “Oh, let’s not bother consulting on all that again”. Of all the regulatory burdens, the burden placed on companies to be consulted is probably the one that they worry about least. So my question is narrow: will the three elements of the original proposals which have been dropped come back or have they been dropped for good? Subject to that, we support the regulations.

I am grateful to Members of the Committee for their contributions. I did not doubt that the noble Baroness, Lady Noakes, would take the full opportunity that this modest measure offers to talk further about reducing the burdens of regulation. I thank the noble Lord, Lord Newby, for his kind words. It is an absolute delight for us to be engaged in our usual places with regard to this order and, I imagine, on more substantial matters in the months to come. As the Committee will recognise, I canvassed vigorously for our relationship to remain as it has been over the past year or 18 months. I shall be working hard at the next election to make sure that our arrangements remain exactly the same.

The noble Baroness asked about one or two issues. The FSA is still obliged to consult, but, attached to that, a cost-benefit analysis on the matter is removed from the consultation, which makes the issue that much more intensive. We are seeking to reduce the levels of consultation. I bear in mind what the noble Lord, Lord Newby, said on consultation. Of course, the Government will keep under review the working of the FSA with regard to consultation. The noble Lord said that businesses worry least about that element of regulation. I am not sure that that is altogether true. We have all heard complaints from time to time about the excessive amount of material that descends on companies to which they are expected to make some response. But I hear what he says and I assure him that we dropped the proposals because it was clear at that time that what was being identified did not meet the response of the stakeholders. That is why we have taken that position. The noble Lord will recognise that this measure is a product of the very exemplar that he is enjoining me and the Government to follow with regard to necessary consultation.

The noble Baroness was perhaps a little less generous than is her wont on occasions. She is right that the main proposals reduce the procedural obligations on the FSA. I think that, wearing another hat and on other occasions, she is often quite enthusiastic that the problems of bureaucracy should be reduced. Therefore, she should welcome this measure, which seeks to streamline the work of the FSA and make it more the owners and stakeholders with whom it has relationships.

Some of the proposals will benefit firms directly and indirectly. They will remove administrative inconvenience and the time taken to apply for reauthorisation if a partnership or unincorporated association is dissolved. They will also benefit from the FSA being able to produce guidance in a somewhat more flexible manner. I recognise what the noble Lord, Lord Newby, is hinting at, but the trouble with flexibility is that it may not meet everyone’s requirements. It is helpful that we seek to build on good practice and see the FSA relating to its stakeholders effectively. The proof of this pudding will be in the eating.

There are also cost savings. The Government anticipate that the total administrative saving for firms is likely to be between £7.5 million and £9.3 million. The total administrative saving for the FSA, which the noble Lord contended would be the chief beneficiary from these proposals, is perhaps less: we can see savings of between £50,000 and £115,000 for the FSA. So there are direct benefits for firms and the FSA on which we can put figures.

The noble Baroness always questions me about reductions in the rule book and in the weight of legislation. I am never able to respond to her as accurately as I would like because they are very difficult questions, such as how many pages we have effectively reduced the book by. We are making a dent in the rule book with this issue. We are concerned to reduce the rule book. The work we are doing to reduce the book with regard to money laundering is evidence of the Government’s intention. However, the noble Baroness makes an entirely proper point, and I always sound a little less forthright than I would wish because I am never able to answer her. One day I will be able to count not the pages but perhaps the lines that we have withdrawn on some very small measure—I imagine it will be a microscopic measure, if I am ever given that opportunity. I look forward to that day hugely.

On Question, Motion agreed to.

Official Secrets Act 1989 (Prescription) (Amendment) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Official Secrets Act 1989 (Prescription) (Amendment) Order 2007.

The noble Lord said: This order is made under the Official Secrets Act 1989. Under that Act, it is an offence for a Crown servant or government contractor to make a damaging disclosure of any information within particular categories which is or has been in his possession by virtue of his position, unless he has lawful authority to do so. People who are not Crown servants can be treated as such for the purposes of the Act by being designated in an order. The order before us does that for the members and employees of two separate organisations: the Nuclear Decommissioning Authority and the Independent Police Complaints Commission. I will deal with each of them in turn.

First, I shall deal with the Nuclear Decommissioning Authority. One of the categories of information protected by the Official Secrets Act is that relating to defence and security, including information about nuclear technology and nuclear materials. The boards and employees of existing companies with access to such information—British Nuclear Fuels and the UK Atomic Energy Authority—are already designated under the Act.

The Nuclear Decommissioning Authority is an executive non-departmental public body set up on 1 April 2005. It is responsible for the decommissioning and clean-up of the UK’s civil nuclear legacy and has responsibility for nuclear sites previously operated by British Nuclear Fuels and the UK Atomic Energy Authority. It owns the plants and facilities of British Nuclear Fuels and manages clean-up operations at the UK Atomic Energy Authority’s sites.

British Nuclear Fuels and the UK Atomic Energy Authority have been restructured so that they now operate their facilities, both for clean-up and continuing commercial operations, under contract to the Nuclear Decommissioning Authority, rather than as principals. Employees of the Nuclear Decommissioning Authority therefore have access to the same information as those of British Nuclear Fuels and the UK Atomic Energy Authority. So it follows that members and employees of the Nuclear Decommissioning Authority and employees and board members of any future subsidiary should also be treated as Crown servants for the purposes of the Act. The draft order will achieve this by designating them as such. This is a necessary extension of existing designations, which will ensure the continued protection of information relating to defence and security.

Additionally, the order will designate members and employees of the Independent Police Complaints Commission as Crown servants for the purposes of the Official Secrets Act. The nature of the commission’s work is such that its members and employees may have access to one or more categories of information protected by the Act, in particular information which, if disclosed, is likely to result in crime or impede the investigation or prosecution of crime. The IPCC has responsibility for, and is guardian of, the police complaints system in England and Wales. All instances of deaths or serious injury following police contact must be reported to the IPCC. It has the power to investigate independently, using its own trained investigators, or manage or supervise investigations by the police into complaints, conduct and death or serious injury recorded under the Police Reform Act 2002. When investigations have been completed, the IPCC will decide whether a file should be submitted to the Director of Public Prosecutions for a decision about prosecuting serving police officers. The IPCC also has the power to recommend or direct that disciplinary action is taken against police officers when there is a case to answer.

In discharging these responsibilities, the IPCC commissioners and employees become the holders of confidential and sensitive information that must be used appropriately, particularly where criminal action may potentially be taken. Leaks of such information could prejudice criminal proceedings, either against the officer concerned or against others, and could involve the disclosure of information about police techniques which could prejudice future police operations. While there is a legitimate public interest in the accountability of police forces and their officers for their actions, the interests of justice cannot be served if such information is used inappropriately. In order to conduct effective investigations, the IPCC needs to maintain the trust and confidence of the public and the police service. Witnesses to serious incidents, whether from within the police service or the public, may be reluctant to provide evidence if they do not have the confidence that such information will be appropriately protected. Bringing the IPCC commissioners and staff under the Official Secrets Act 1989 will provide reassurance that there is a strong deterrent to unauthorised disclosure of information given in confidence to the IPCC. It is therefore appropriate and necessary to put the IPCC under the same duty of confidentiality as applies to Crown servants under the Official Secrets Act 1989. The draft order will achieve this by designating members and employees of the IPCC as Crown servants. Crucially, the IPCC has requested this change.

Additional categories of “Crown servant” were last designated in 2003, when subsidiaries of Urenco, the uranium enrichment company, were added to the list. The noble Baroness, Lady Anelay, agreed at that time that references within the Official Secrets Act had to be kept up to date. The order will do that, taking into account the responsibilities which the Nuclear Decommissioning Authority has taken on and ensuring the effectiveness of the restructured police complaints procedure under the IPCC. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Official Secrets Act 1989 (Prescription) (Amendment) Order 2007. 19th report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

I thank the Minister for explaining the order. Perhaps I may say how pleased I and my colleagues are to see him still with his shoulder to the wheel.

We understand and agree that both the Nuclear Decommissioning Authority and the Independent Police Complaints Commission regularly handle information, sensitive in its different ways, public disclosure of which would bear serious risks. The Minister will appreciate, though, that while we support the general thrust of the order, we are concerned to avoid an unnecessarily secretive approach. We ought to guard against a situation in which a blanket approach is taken towards a manageable risk. The order leaves open to doubt the exact nature of the information which is not to be disclosed. Will the Minister say precisely what information may not be disclosed?

Paragraph 4.3 of the Explanatory Memorandum, to which the Minister referred, states in relation to the NDA:

“One of the categories of protected information is information relating to defence and security”.

That is one of the categories. So what are the others? To what sort of defence information does it refer? I can see that there are security implications in respect of some information of which the NDA will come into possession, but of what information relating to defence that is not also information relating to security could it possibly come into possession? If that has not been fully explained already, I would be grateful for the Minister’s explanation.

Paragraph 7.1 refers to disclosure of “certain types of information”. Will the Minister explain exactly what that information is? Specifically, what rules will be applied in determining whether disclosure is permissible?

Paragraph 7.6 refers to the risk that information gathered during the course of an investigation could impede a prosecution if disclosed without authority. We understand this. Equally, details of unfounded allegations against any person, such as a police officer, should not be allowed to be made public.

Paragraph 7.7 states that any unauthorised disclosure could lead to prosecutions having to be abandoned. Did a particular case or cases cause the Government to decide that this order was necessary? It seems rather surprising that people in the position of members of the IPCC would even contemplate making information of this nature public and risking a case. Equally, it seems surprising that the perceived risk of leakage of sensitive information was not contemplated at the time of establishment of the IPCC. Will the Minister explain why this was?

I add my congratulations to those already offered to the Minister. I am pleased to see him in his place, and I am very pleased to see that he is still dealing with Welsh affairs, which I know from my previous incarnation he handled sensitively and with great talent.

I hope your Lordships, particularly my fellow countrymen who are eagerly awaiting the final matter today, will forgive me if I take some time on this order, because official secrets is a sensitive area, and it is necessary to fire something of a shot across the bows of the new Ministry of Justice.

All Governments love secrecy. I remind your Lordships that it was the Liberal Government of Mr Asquith who introduced the Official Secrets Act 1911, but they included in it a public interest defence; that is, it would be a defence to a prosecution that a disclosure had been made in the public interest. However, in 1989, largely due to the Clive Ponting case, who your Lordships will recall was a civil servant who had leaked details of the course of the “Belgrano” at the time of the Falklands war and revealed that it was heading out of the exclusion zone and not into it as had previously been said, the Official Secrets Act was amended and the public interest offence was removed. One thing introduced at that time, among others, was the removal of a defence for newspapers. Under Section 5 of the 1989 Act, it was made a specific offence for newspapers or journalists to publish secret information that had been leaked to them by a Crown servant in contravention of Section 3 of the Act. Therefore, under pressure, it was a Conservative Government who tightened things up.

Recently, following the Shayler decision, to which I shall refer later, the Intelligence and Security Committee revealed in its report for 2005-06 that the Home Office had bid for a legislative slot to amend the 1989 Act so as to remove the common law defence of duress of circumstances in order to address unauthorised disclosure by members or former members of the intelligence and security agencies. Indeed, the Government have said that they intend to remove the defence of duress of circumstances in order to clamp down on the increase in unauthorised disclosures by members and former members of the agencies and to increase the jail sentence. Mr Blunkett, the then Home Secretary, said that he wanted to place a gag on blabbers. That is perhaps an easier way of understanding the Government’s intention.

I turn to the matters with which we are concerned here. The Nuclear Decommissioning Authority is, it says, an organisation responsible for managing the clean-up of Britain’s civil nuclear legacy. It is a complex task, costing many billions of pounds and involving a wide range of expertise, and it will last for well over 100 years. What sort of secrets is it seeking to maintain? There are areas—for example, leaks from nuclear installations—where one can envisage that there would be a considerable public interest in disclosure. There has already been substantial publicity in Scotland about leaks from the Dounreay installation. Another important area for consideration is the transport of nuclear materials around the country by train. There have been accidents and concern has been expressed in many quarters. Therefore, it is not likely that there will be agreement over imposing what is essentially a criminal gag on everyone working in that industry or that particular organisation. We do not oppose the order but we want to call attention to the fact that there are instances where the public interest may well be in the disclosure of things that are going on within that industry which the industry might well wish to conceal. As I said, we do not oppose the order but we draw attention to its implications.

The reference in the order to the Independent Police Complaints Commission results from the leaking of information concerning the death of the Brazilian, Jean Charles de Menezes. Your Lordships will recall that the initial explanation for the shooting of that very unfortunate man was that he had leapt over a barrier, run down the stairs and shown signs of being a considerable danger when he was shot. It came to the attention of an employee of the Independent Police Complaints Commission, which looked into that shooting, that that was a false picture and that the statements that had been obtained by the police were to the effect that the Brazilian electrician was already being restrained by armed officers when he was shot seven times in the head, that he had not run away or vaulted over the barrier and that he was not acting in any suspicious way. It was as a result of that that the Leicestershire Constabulary was asked to conduct an inquiry into what had happened. The woman in question was arrested in connection with the unauthorised disclosure of IPCC documents and the person to whom she disclosed them, an ITV news editor, was arrested and charged with theft. Then, as happened on a number of previous occasions, the prosecution was dropped.

Your Lordships will recall the case of Miss Gun, which was dropped three days before the trial was due to take place in the Old Bailey. We had a considerable exchange with the former Attorney-General, the noble and learned Lord, Lord Goldsmith, over that. That lady, seeing it as her public duty to ensure that the truth be told, disclosed the matter, and all sorts of things fell upon her head. She was, of course, dismissed from her job. That is, I suppose, how a responsible employer should behave and how the two employers with which we are concerned in this order could behave, without the necessity for bringing criminal charges under the Official Secrets Act.

One should understand the background to these orders. On the one hand, with the Nuclear Decommissioning Authority, there are dangers that will exist over a long period of time and the possibility of things going wrong being concealed; on the other hand, with the IPCC, a specific case went all the way to court before it was thought that it should not proceed any further.

A review of security within the IPCC was carried out by Mr Bill Taylor. His fifth recommendation was that a specific arrestable offence be created for the unauthorised release of information by a member of IPCC staff in relation to the IPCC role. That was the solution that the review into the security of that organisation put forward. In fact, the outcome was that after consideration,

“the IPCC decided to pursue an alternative strategy involving an amendment to the Official Secrets Act. The Home Office has been asked to include the change at an appropriate opportunity”.

This is that opportunity, and that is what is being done today. It is acceptable only on the basis that the defence of necessity, which was outlined by the Court of Appeal in the Shayler case, be maintained. If the Ministry of Justice, the Home Office or whoever is responsible for this comes forward with proposals to remove that defence of necessity, just as the Conservative Government removed the defence of necessity before, I give notice that we on our Benches will strongly oppose any such attempt. I apologise for detaining your Lordships for rather longer than might have seemed necessary, but we are dealing with an important topic.

I thank the noble Lords, Lord De Mauley and Lord Thomas of Gresford, for their kind words and for congratulating me rather than commiserating with me on standing here today. The speech made by the noble Lord, Lord Thomas of Gresford, was not too long; it was extremely interesting and provided a context that should always be there when discussing matters such as this. I shall attempt to answer some of the questions that he asked, but I am grateful to him for saying that today he will not oppose this order, although he will be watching very carefully in future to ensure that what he hopes will not happen does not in fact happen. The points that he made were very well made.

The noble Lord, Lord De Mauley, asked what information would not be disclosed. On the nuclear side, it is commercially sensitive information about stocks of used uranium and plutonium. On the IPCC side, the Official Secrets Act makes it an offence to make an unauthorised disclosure of information in various general categories, which are information that damages security and intelligence, defence or international relations or information that impedes the prevention or detection of a crime. These are generalised categories that apply to disclosures that have damaging consequences and are unauthorised. However, this is not a blanket ban on disclosure as decisions on what to disclose can be challenged in court, which is an important protection.

The noble Lord, Lord Thomas of Gresford, asked why an extension was being made to the IPCC now. In the Stockwell investigation, there was an unauthorised leak of information from the IPCC, which led to a review of security that caused the IPCC to request the change. It was not originally included because the previous body, the Police Complaints Authority, had a specific duty in the Police Act. It was decided to make the complaints system more open and therefore not to include its effects. The leak of information from the Stockwell inquiry caused this request for a change. It was not considered appropriate to leak a specific offence, as with the previous authority. That is not absolutely clear, and I should like to write to the noble Lord with a fuller answer on that.

The question of the public interest defence, which the noble Lord, Lord Thomas, raised and discussed, was debated by Parliament at some length during the passage of the Bill in 1989. A public interest defence would allow a damaging disclosure to take place and then, when the damage was past recall, there would be an argument about whether the disclosure was justified. Members or former members of the security services cannot be expected to make a fully informed decision of the damage that an unauthorised disclosure may do. There is no need for a public interest defence, as a Crown servant can seek authorisation from his or her organisation for any proposed disclosure. Members of the security and intelligence service have access to the independent staff counsellor, who can report on any matter to the relevant Secretary of State or directly to the Prime Minister and can therefore deal with any allegations of impropriety within the services.

For members of the security services, the OSA imposes a blanket ban but, for the reasons above, a public interest defence is not appropriate for them. For those governed by this order, disclosure is an offence only if it is damaging in some way and it is not in the public interest to disclose information that damages defence, international relations or impedes the investigation or prosecution of a crime. If a whistle-blower still has concerns, he can ask for authorisation to disclose and challenge any refusal in court.

The noble Lord, Lord Thomas, also asked what secrets are to be maintained. The NDA is committed to openness and transparency in its activities and is not seeking to hide matters, but there are security matters in protecting sites from terrorists.

Finally, I have a fairly long brief on extending the Official Secrets Act to the IPCC, headed “additional briefing”. It is three pages long and I shall not read it out, but the noble Lord, Lord Thomas, may be interested to read it so I shall pass it to him and send a copy to the noble Lord, Lord De Mauley.

On Question, Motion agreed to.

National Assembly for Wales (Legislative Competence) (Amendment of Schedule 7 to the Government of Wales Act 2006) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the National Assembly for Wales (Legislative Competence) (Amendment of Schedule 7 to the Government of Wales Act 2006) Order 2007.

The noble Lord said: During the passage of the Government of Wales Bill, the Government gave an undertaking to Parliament to ensure that Schedule 7 is complete and accurate, which is reported at col. 193 of the Official Report of the House of Commons for 18 July 2006. In the process of drafting this order, the Wales Office facilitated discussions between other UK government departments and the Welsh Assembly Government to confirm the content of Schedule 7, and this draft amending order is the product of those discussions.

The amendments brought forward by this draft order seek to define the boundaries of the devolution settlement and not to extend it. The Government of Wales Act 2006 received Royal Assent on 25 July 2006, and since then this Government, together with the Welsh Assembly Government, have worked on a series of orders designed to bring the Act into force. The Government, noble Lords will be delighted to hear, are nearly at the end of this process.

The Act provides the new Assembly with the power to pass legislation known as Assembly measures in relation to matters authorised by Parliament on a case-by-case basis. However, the Act also provides for the situation in which, subject to endorsement by a referendum, the Assembly would acquire primary legislative powers. Under Part 4 of the Act, the Assembly would be able to pass Acts of the Assembly in relation to the full range of devolved subjects without further recourse to Parliament. Those subjects are listed in Schedule 7.

This order fulfils that commitment. It amends Schedule 7 to the Government of Wales Act 2006, Section 108, which will define the primary legislative competence of the National Assembly for Wales in the event of a successful referendum. By virtue of Section 109(4), the first Order in Council under Section 109 must be approved by a resolution of both Houses of Parliament, whereas subsequent orders must also be approved by the Assembly. This is the first order to be made under Section 109, so the approval of the Assembly is not required. The reason for this difference in procedure is that the first order amending Schedule 7 is intended to ensure that Schedule 7 is a complete and accurate description of the Assembly’s current devolved responsibilities. It is not intended to give effect to any substantive change in policy.

In contrast, the purpose of subsequent orders is to provide a mechanism whereby Schedule 7 can be updated if any changes to the boundaries of the devolution settlement are agreed in future by Parliament. Future amendments to Schedule 7 will therefore properly require Assembly assent. The purpose of Schedule 7 is to define the Assembly’s competence to pass legislation—Acts of the Assembly—in the event of a “yes” vote in a future referendum. The Government have no current plans to hold such a referendum, which could be triggered only with the approval of both Houses of Parliament and a two-thirds majority of the Assembly.

Schedule 7 lists the subjects which would be within the primary legislative competence of the Assembly, based on the current executive functions of the Welsh Ministers. If a subject is not listed, it will not be within the Assembly’s primary legislative competence, but the schedule also contains general restrictions and exceptions from those restrictions. In particular, the Assembly will not be able to legislate so as to modify any Minister of the Crown’s function without the consent of the Secretary of State. This means that, where there are isolated Minister of the Crown’s functions within subjects which are generally devolved, the protection of those functions need not be expressed by a specific reservation.

I do not wish to detain noble Lords any further by going through and explaining all the modifications individually. The Explanatory Memorandum explains what each of the modifications does. I commend the draft order to the Committee, and beg to move the Motion standing in my name on the Order Paper.

Moved, That the Grand Committee do report to the House that it has considered the National Assembly for Wales (Legislative Competence) (Amendment of Schedule 7 to the Government of Wales Act 2006) Order 2007. 19th Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

I am grateful to the Minister for his exposition of the statutory instrument and for setting it in the context of the Government of Wales Act 2006. The contents of the SI, a refinement of the terms of Part 1 of Schedule 7, were promised, as the Minister said, by the Secretary of State on 18 July last year, during the passage of the Act. Schedule 7 becomes operative only in the event that a referendum is held in accordance with Part 4 of the Act and the National Assembly is empowered to make laws, as Section 107 has it,

“to be known as Acts of the National Assembly for Wales or Deddfau Cynulliad Cenedlaethol Cymru (referred to in this Act as ‘Acts of the Assembly’)”.

The SI amplifies the areas where the Assembly may not legislate. It points out the forbidden apples in this Garden of Eden, even those hidden by the leaves. The first question that occurs to the casual observer of this charming corner of the political scene is why the hurry to get parliamentary approval? Are we not very far—years away—from a referendum? I remind the Committee that that can result only from an order laid by the Secretary of State after such consultation as he considers appropriate and approved by two-thirds of the membership of the Assembly and by both Houses of this Parliament.

I supposed until last week that the possibility of a rainbow coalition of Plaid Cymru, the Conservatives and the Liberal Democrats governing in place of the minority Labour Government who now control the Assembly had suddenly brought nearer the possibility of a referendum and concentrated the minds of the United Kingdom Government on the need to safeguard what are commonly called reserved areas against infringement by poacher legislators. Well, how wrong I was. It was not the possibility of a rainbow coalition that had brought the referendum nearer, but the agreement between Labour and Plaid Cymru that Plaid Cymru would support a minority Labour government on condition that Labour would give a joint commitment,

“to use the Government of Wales Act 2006 provisions to the full under Part III and to proceed to a successful outcome of a referendum for full lawmaking powers under Part IV as soon as practicable, at or before the end of the Assembly term”,

as the press account of the coalition document reports. So there we have it: the price exacted by Plaid Cymru for its support is clearly a referendum on full legislative powers. I cannot but wonder what the Secretary of State, Mr Peter Hain, thinks of that agreement. After all, he has spoken about his doubts about, and almost antipathy to, such a referendum. Of course, he has a powerful say in whether the referendum goes ahead.

However, the story continues. Both political parties, the Welsh Labour Party and Plaid Cymru, have to approve the coalition document over the coming weekend. We shall therefore watch that space carefully.

All the articles in the SI deal with what are described as “exceptions” to the areas where the Assembly may legislate. Articles 7 and 8 do not, but they, too, trim and curtail the permitted legislative area: Article 7 defines housing finance more narrowly and Article 8, under the heading “Public administration” defines inquiries more narrowly. I have no criticism of the tighter definitions inserted by the SI; indeed, I welcome them. The SI makes it clear time and again that the Assembly’s legislative power is confined to the areas where it has functional duties and responsibilities and that it is excluded from areas that are the prime responsibility of other departments of state.

Nevertheless, the public would be surprised at some of the subjects that are excluded from the Assembly’s legislative remit, particularly nuclear energy and nuclear installations, of which Wales has substantial experience through the nuclear power stations at Trawsfynydd and Wylfa. The latter is a candidate for an extended life and possible renewal. Local people and their representatives will wish to have their say, and there will be a great deal of discontent if the matter is completely out of their hands. This is a fresh addition to the exceptions listed under “Economic development” and will undoubtedly be controversial in Wales. Arguably, some aspects of nuclear developments are covered by subject 6, the environment, in Part 1 of the schedule, which covers environmental protection, pollution, nuisances and hazardous substances. The Assembly has legislative competence in those areas. There are obviously nuclear aspects to those matters. What happens in the event of a conflict of views on whether it is permissible for the Assembly to legislate? I presume that it becomes a matter for the Counsel General or the Supreme Court.

It is also surprising to note that the registration of local bus services and traffic regulation conditions related to those services are beyond the legislative reach of the Assembly, as is transport security generally, as opposed to rail transport. The Assembly Government surely decides matters relating to bus service subsidies and, with its responsibility for the building and maintenance of roads in Wales, must have concern for security on those matters. I would be grateful if the Minister could enlighten us further on these points.

I am not surprised by the exclusion of occupational and personal pensions, social security payments and various benefits from the scope of Assembly legislation. These matters require parity of treatment and a uniform UK approach. The rewriting of the section on water and flood defence is a welcome improvement and clarification.

There are no fewer than seven references to fish—fish products, fish feedstuffs or fish health—in this SI. All are intended to ensure verbal consistency with various other references in legislation which clearly distinguish between fish and other animals. It is a pity that the original draftsman was not familiar with the late Bing Crosby’s rendering of “Swinging on a Star”, which clearly defines a fish:

“A fish is an animal that swims in a brook,

He can’t write his name or read a book”.

However, I have no objection to the amendments, or to the SI as a whole.

It is interesting that this is the only occasion when the schedule can be amended by order by this Parliament on its own. If the schedule is to be changed again by order, it must be done, as the Minister explained, by resolution of the National Assembly, as laid down in Section 109. We are grateful to the Minister for his comments on this unique aspect of the SI, and trust that the Government have included all the necessary amendments to the schedule.

This may well be my last speech as a Conservative Front-Bencher since I have asked to be retired from that position and my request has been granted. However, I have also agreed to carry on until my successor is appointed, and I do not know when that will be. I have enjoyed my decade on the Front Bench, and I thank colleagues of all parties for their kindness, which has helped to make these 10 years so eximious a part of my life. I particularly thank the Minister on this occasion. We have always had a very amiable, amicable working relationship. As far as I am concerned, he certainly well deserved to survive into the new Government.

I am pleased to see the Minister still in his place. As the noble Lord, Lord Roberts, said, he has served the requirements of Wales extremely well, particularly in a legislative sense. I am particularly sad to think that we are to lose the expertise of the noble Lord, Lord Roberts of Conwy, who has made a massive contribution to Wales and to legislative matters affecting it, not least those surrounding the Welsh Language Act. That was quite a long time ago now, and an epoch-making piece of legislation. In his typically lyrical way, he has made most of the speech that I was about to make. I do not think that it is my duty to repeat the points in my contribution for my party, so, by way of illustration, I shall build on some of the points that the Minister and the noble Lord, Lord Roberts, made.

The Minister said that the order makes amendments to Schedule 7 to the Government of Wales Act and sets out the subjects in relation to which the National Assembly for Wales would be able to legislate if it were given the power to pass Acts of the Assembly. As the noble Lord, Lord Roberts, said, that is subject to a referendum under Part 4 of the Government of Wales Act 2006, and he is right to refer to the agreement that the Labour Party in the Assembly and Plaid Cymru appear to be coming to about the importance of a referendum. That is particularly topical in relation to this order.

Some aspects of the order have already been referred to, but I shall bring out some points that have not already been covered in detail. I agree with Article 3, which looks at the health of fish, fish products and fish feedstuffs. There is a lot of disease around in fish, particularly in freshwater fish, and it is important that we have secure and detailed legislation to protect them from some of the diseases that are rife in other countries.

I understand why there is an exception for pensions. However, nuclear energy and nuclear installations are of particular interest. I feel very strongly that, in the longer term, the Assembly should have the ability to legislate on energy. When one looks at the massive opportunities in Wales for alternative energy production, whether tidal, wind or solar, even with the kind of weather that we have had recently, there is massive capacity to produce a surplus of renewable energy, yet it appears from the order that the Assembly will not be able to legislate on energy. I find that extraordinary. However, the sensibility is in nuclear energy. It is highly controversial. My interpretation of the order is that, if the Assembly were to declare itself a nuclear-free zone—and one can envisage that in certain circumstances—it could not do that so far as concerns energy production from nuclear sources. That limits the competence of the Assembly to legislate. I am not surprised that the order has been produced at this point in the legislative cycle and that the Assembly cannot approve it, because it can be approved only here in both Houses of Parliament.

There are other matters of particular interest. The noble Lord, Lord Roberts, mentioned most of them, and I shall not repeat what he said. I agree with a great deal of his analysis but Article 8 of the order, for example, states:

“Under the heading Public administration, after ‘Inquiries’ insert ‘in respect of matters in relation to which the Welsh Ministers, the First Minister or the Counsel General exercise functions”.

In respect of inquiries, the gas pipeline which goes across Wales from Milford Haven to Gloucester carries gas which gets the energy gap down with imported gas. It is not possible to have a public inquiry. Most of us have seen that pipeline and its devastating effect on the environment in parts of rural Wales, but the Assembly will not be able to have an inquiry. It will be a continuous situation. Not only that but, so far as I can see, we cannot have an inquiry into nuclear waste disposal. Perhaps the Minister will correct me on that, but that could be a very live and controversial topic in the future. There are a number of issues of that kind.

Finally, Article 11 states:

“Under the heading Town and country planning, for the words after ‘Water supply’ substitute”,

a number of things. It continues:

“Appointment and regulation of any water undertaker whose area is not wholly or mainly in Wales”.

That means that the Assembly will not be able to legislate, for example, for anything within the Severn Trent Water area, which affects large tracts of mid-Wales where the reservoirs collect water for the second, I believe, most profitable water company in the United Kingdom. There are other issues as well concerning the lease of the Elan Valley water resources to that company.

There are quite controversial matters in the order. We are not here to oppose them, but I hope that the points that I make expose some of them. I do not expect the Minister to be able to answer all my points but these issues need to be exposed. When the Assembly looks at these matters, it will see that this order will have restricted its room for manoeuvre, albeit after a referendum, and restrict when the Assembly may get legislative competence to do so.

We are in the Moses Room and heavenly thunder fills this biblical room. The Minister gave a felicitous introduction and I, too, congratulate him on his reappointment. I am very glad to follow the informed comments of my noble friend Lord Livsey of Talgarth and to see in his place the noble Lord, Lord Roberts of Conwy, who I calculate has spoken on Welsh affairs for more than a generation. He and I entered the mother of Parliaments together. He always put the interests of Wales first and today he was on his best and well known biblical form when he alluded to the apples hidden by the leaves, followed by a crooning reference to Bing Crosby. That was 5,000 years beautifully encapsulated. I remember his serious contributions to the establishment of the Welsh Language Act and of Channel 4, which was quite an important development in the history of Wales.

The relevance and topicality of this statutory instrument could not be greater because the Welsh general election was in the first week of May. Even now, the First Minister, Rhodri Morgan, is still negotiating with other political parties for an agreement that would safeguard the existence of his Cabinet and its measures and proposals. So the words “legislative competence” are the very issue for the Wales Assembly. The words “law-making powers” and “referendum” are at the heart of the political drama being played out at Cardiff Bay more or less at this very moment.

Noble Lords have referred to the referendum. When it comes, as it surely will, it will be won, whether for good or bad—of that I am certain.

I acknowledge the success of the Welsh Assembly, which is not yet 10 years old. The miracle was how powers were transferred from Westminster to Cardiff Bay and how legislative competence was planned for, and how the changes were administratively seamless, without any major dysfunctions. On establishment, the public services continued miraculously as before and were delivered, literally overnight, most efficiently by the new Assembly. It said a lot for the Whitehall mandarinate and even more for the old Welsh Office Civil Service, which served my noble friend Lord Rowlands and myself in the Wilson and Callaghan Administrations in the 1970s and late 1960s.

The statutory instrument is an indirect compliment to the Welsh Assembly Government, their First Minister and their Cabinet—a compliment that they truly deserve. It is an important proposal, concerning the future governance of Wales. Can my noble friend the Minister state that it has been prepared carefully in conjunction with the Prime Minister’s Statement in another place today? Does the Prime Minister’s Statement in any way enhance or diminish the impact of this statutory instrument on the governance of Wales? Has my noble friend the Minister, in the process of reading himself in, had access to, seen, looked at or truly contemplated that before introducing this statutory instrument? I hope that he has—surely he has—for the relevance of the SI is then much greater.

Very briefly, Article 4 proposes pension matters under the heading,

“Economic development—(a) after the eighth exception”.

That enables me to ask, as the Liberal Democrats asked, what connection if any is there with the recent merging of the Welsh Development Agency into the machinery of the Welsh Assembly Government? Were the pensions of the excellent WDA employees safeguarded? Does the proposed amendment in any way safeguard or enhance the position of those excellent employees? The agency was a great success and delivered the goods on inward investment, expansion and rejuvenation across Wales, and for regeneration. It enabled Wales to cope with the loss of her manufacturing industries, specifically in the late 1970s and early 1980s. What assurances can the Minister give on that?

Similarly, I want to refer to nuclear energy. At Article 4(c), after the 15th exception, a reference is proposed to nuclear energy and nuclear installations. This leads me to pose a question which has already been put from a different angle. What effect does this have on the future of the Trawsfynydd plant, which is now dormant and unused? Also, what is the future of the Anglesey plant at Wylfa? It currently has massive economic and employment implications for the whole island and the sub-region. Can the Minister throw any light on plans to build a new plant at Wylfa?

My last point of detail concerns Article 11, referring to the heading “Water and flood defence”. Can the Minister list the water undertakings that are, as it were, half in and half out, as was referred to in relation to Severn Trent? I think that the Committee would be pleased to have a response on those matters.

The Minister will be relieved to know that I do not propose to ask him further questions, but I cannot allow this opportunity to pass without paying my own personal tribute to the noble Lord, Lord Roberts of Conwy.

For seven or eight of the 10 years that he was the spokesman on Welsh affairs for the Conservative Party, I fulfilled the same role for the Liberal Democrats. Throughout that whole period, we worked together very closely and very rarely disagreed. Having regard to the way in which the Conservative Party opposed a referendum for a Welsh Assembly, I was particularly impressed by the way in which the noble Lord steered his party along lines which I am sure he deeply supported in the direction of a positive and constructive attitude towards setting up a Welsh Assembly and its Government. He referred to a rainbow alliance. Unfortunately, at the moment the sun is not shining on a part of our rainbow and therefore it is not complete, but with regard to the rainbow that existed between the noble Lord and me over the years, I can say only that, at one end of it, there was certainly a pot of gold.

First, I, too, congratulate my noble friend on his return to office. Last year, I immensely admired the way in which he piloted the Government of Wales Bill through this House, and he has always been open and approachable towards Back-Benchers.

Secondly, in one sense, I was saddened to hear the noble Lord, Lord Roberts, say that he is to leave the Front Bench. His parliamentary life and mine have almost paralleled each other, and we both go back a very long way. I give him one word of comfort, although I do not think that he needs it. There is life on the Back Benches. Indeed, I have found it rather enjoyable in some respects and I am sure that he will enjoy it too.

I want to ask one or two brief questions about the order. In the Explanatory Memorandum, which has been laid before Parliament alongside the order, we are helpfully taken through the legislative background and told the distinction between orders under Schedule 5 and those under Schedule 7 to the Government of Wales Act. Naturally, we have not yet had any orders under Schedule 5 because the powers have only just been brought into being. However, that means that the Assembly has not been gaining legislative competences. I draw the Committee’s attention to the fact that two Bills which have been before this House—the Further Education and Training Bill and the Local Government and Public Involvement in Health Bill—carry various clauses with a substantial transfer of legislative competences which I should have thought in future should be brought before us in the form of orders.

I raise this with my noble friend because I wish to register concern. As we laid down very clearly how orders of this kind—either under Schedule 5 or, now, Schedule 7 of the Government of Wales Act—were going to be the subject of considerable pre-legislative scrutiny, neither of those sections have been subject to that scrutiny. Although we are told that we can amend them in this House and the other place, that is not a substitute for the proper kind of pre-legislative scrutiny that we established was going to be the norm for future Orders in Council. In future, if legislative competence is brought forward in the form of clauses in Bills, they should be subject to the same kind of pre-legislative scrutiny as we expect of orders.

Briefly, on this schedule, my noble friend mentioned that the Welsh Assembly Government had been consulted. Was the National Assembly consulted? Did this order at least go before one of its appropriate committees for clearance and approval? Perhaps I am now a natural Back-Bencher, but I see it not through the eyes of a government these days, but the eyes of a parliament or assembly. Has the Assembly had the opportunity to comment or make observations on this order?

Finally, I turn to the fact that, oddly, all those who have spoken have fastened on to one aspect—I shall go a slightly different way: the maintenance of the exception of any formal legislative competence in the area of energy. I think that the noble Lord, Lord Livsey, said energy; I am not sure that it is energy, but it is certainly electricity and nuclear installations. You cannot possibly have a different health and safety regime on nuclear in England from Wales or anywhere else. That has to be a UK responsibility, but it is now totally accepted that the Assembly will have legislative competence over electricity. The way in which electricity is going to be commissioned and developed is changing dramatically and rapidly. There are very small schemes, combined heat and power schemes, the wind farm issues and all the rest of it. I cannot see that somewhere, somehow, that total exception is going to hold. I ask my noble friend whether we are right in saying that the Assembly Government do not have any formal legislative competence at all, even around the fringes of electricity generation.

How does that lack of competence compare with the planning powers it has in certain respects? As the noble Lord, Lord Livsey, pointed out, the strategic decision to commission a power station is often involved in planning. He made a reference to the LNG pipeline. I do not share his view. I live near where that pipeline is going, and can see what he called “devastation”. I have North Sea gas in my house. A generation ago, people on the northern coasts of the country suffered whatever they had to suffer for the generation of, and advantages we have from, supplies. We cannot be so curmudgeonly on these issues as that. I suggest to my noble friend that the issue of electricity generation and the legislative competence that the Assembly does not have but may need at some time in the future is one that we will return to.

I pay tribute to my friend, the noble Lord, Lord Roberts. When I started in this job about three or four years ago, he was incredibly kind to me, supportive and generous with his time. It was not until I read his excellent autobiography that I realised that I was dealing with somebody who had been the longest serving Minister in a government department—the Welsh Office—since the beginning of the 19th century, and who knew more about Wales than I would ever hope to. He has been very kind to me over the years I have been doing this job. It is a strange thing to say, given that he comes from a different political party, but he has almost been like a mentor figure. I am really grateful to you, Wyn, and wish you every possible happiness and success on the Back Benches. Thank you very much.

An enormous number of questions have been asked in what has been a long and fascinating debate, and I shall try to answer as many of them as I can. If I miss out some of them, we will of course write to noble Lords.

The noble Lord, Lord Roberts of Conwy, requested clarification on a number of points. He asked why the order is before Parliament now and read some slightly unworthy motivations into the timing which are simply not based on fact. As I indicated earlier, the Government gave a commitment to Parliament to ensure that Schedule 7 is complete and accurate. As I am sure noble Lords are aware, since the Government of Wales Act received Royal Assent, the Government have undertaken a substantial programme of secondary legislation, comprising 11 orders, properly to settle matters of technical detail which flowed from the Act. This order is part of that process.

This programme has included, for example, the staff transfer order, the property rights and liabilities order and the transitional provisions (finance) order.

I am sorry to interrupt the Minister, but there is a Division in the Chamber, which takes precedence. I shall return in 10 minutes.

[The Sitting was suspended for a Division in the House from 5.41 to 5.51 pm.]

I shall go back a bit to get the context. I am sure that noble Lords are aware that, since the Government of Wales Act 2006 received Royal Assent last year, the Government have been undertaking a substantial programme of secondary legislation comprising 11 orders properly to settle matters of technical detail that flow from the Act. This order is simply one part of that wider programme, and the process of clarifying and defining the exact boundaries of Schedule 7 to match the existing executive functions of the Welsh Ministers has involved detailed discussions between UK government departments and the Welsh Assembly Government. This has been undertaken over the past seven months and is not something that could properly be accomplished in a very short timescale or as an expedient reaction to circumstances.

The noble Lord referred to Articles 7 and 8. I welcome the fact that he has no criticism of the tighter definitions that they represent, and can confirm again that one purpose is to ensure that the Assembly’s legislative competence is intended to fit within the boundaries of the devolution settlement rather than extending into areas which remain the responsibility of the UK Government. Having acknowledged that situation, and confirming that he has no criticism of it, I do not follow the noble Lord when he suggests that the public would be surprised that nuclear energy and installations are excluded. They have always been a matter for the UK Government, in Wales as in England. This order simply seeks to make that clear. It does not mean that local people and their representatives cannot have their say. The UK Government’s current consultation on nuclear offers the opportunity for the public and representative groups to set out their views. The Government are committed to a diverse energy mix to ensure that we keep the lights on.

I shall take this opportunity to explain to the noble Lord that registration for local bus services has been excepted from the Assembly’s legislative competence because there is a unified system of traffic commissioners across Great Britain. Although traffic commissioners are appointed by the Secretary of State for Transport, they have a quasi-judicial role so, as a result, operate largely independent of government. The role of the traffic commissioners is also not related to the power of Welsh Ministers to give subsidies to bus services. Their role is to ensure that bus operators operate their routes in accordance with the details of their services which they have registered. As a result, it is appropriate for this to be excepted, and the Assembly agrees to that.

I can also assure the Committee that, although transport emergency planning remains the responsibility of the UK Government, for Wales as for England, the UK Government work closely with the Welsh Assembly Government to ensure that UK civil protection policy and planning is tailored to Welsh needs in Wales. I am pleased that the noble Lord agrees with the clarification on the exclusion of occupational and personal pensions—a matter raised by a number of noble Lords—social security payments and various benefits from the scope of Assembly legislation. The noble Lord is correct in observing that the revised wording in Article 11 on water and flood defence more accurately reflects the current division of responsibilities between the UK Government and the Welsh Assembly Government, and removes any ambiguities present in the previous Schedule 7.

I welcome the acute observation of the noble Lord, Lord Roberts—taken up by the noble Lord, Lord Livsey—that there are no fewer than seven references to fish. In legislation, the term “animal” sometimes includes fish and sometimes it does not. These amendments seek to put beyond doubt the fact that fish will be within the Assembly’s legislative competence. I therefore assure the noble Lord that this order has widespread support from the UK Government and the Welsh Assembly, and welcome the fact that neither he nor any other noble Lord has a fundamental objection to the order as a whole.

I shall pick up on a few of the other questions. As I have said, we will write if we fail to answer a question. The noble Lord, Lord Livsey, asked about nuclear energy and installations, and whether Wales should have the ability to legislate. The Assembly will not be able to legislate on renewable energy—that is, the LNG pipeline—which I think I dealt with in my speech. The noble Lord also said that there was no ability to have a public inquiry in relation to the LNG pipeline or nuclear waste disposal. The Assembly can hold inquiries only into areas where the Welsh Ministers have executive functions, so it is right that the Assembly cannot hold inquiries that stray beyond this boundary. Currently, Welsh Ministers have power only under the Inquiries Act 2005 to hold inquiries into devolved matters.

The noble Lord, Lord Livsey, and my noble friend Lord Jones also asked about English and Welsh water company areas. Certain water issues are devolved on a water company basis rather than on an all-Wales basis. Therefore, although some Welsh residents are served by companies regulated by the Secretary of State, the converse is also true. Some English residents are served by Welsh companies. I shall write to Members of the Committee with a list of those companies, which I do not have with me. The amendment relating to nuclear power has no relevance to the plans for the Wylfa power station, a matter which was raised by the noble Lord, Lord Jones.

My noble friend Lord Rowlands asked whether the Assembly was consulted on this order with regard to the Explanatory Memorandum and the two clauses in two Bills conferring matters of legislative competence on the Assembly. Clauses in the Bill are subject to normal parliamentary scrutiny, debated in Committee in the House of Commons and on the Floor of the House of Lords. I have dealt with the fact that the Assembly does not have to approve this order. Negotiations have been conducted between the UK Government and the Welsh Assembly Government to arrive at the provisions. My noble friend Lord Rowlands also asked why the Assembly does not have competence over electricity matters. This reflects the current devolution settlement. The Welsh Ministers have no executive functions in this area.

The noble Lord, Lord Jones, asked whether pensions of WDA employees were safeguarded. They are not affected by this order. WDA employees are employed by the Assembly Government and are thus civil servants. The noble Lord also asked whether the SI had been prepared carefully in conjunction with the Prime Minister’s Statement today. It was prepared and laid before the Statement was made; it is the result of seven months’ work by officials, the Welsh Assembly Government and the UK Government. I was here in this Room when the Prime Minister made his Statement in the other place and it was repeated here, and I am looking forward to reading it. But the SI has certainly not been made in conjunction with that Statement.

I am grateful for the great interest in this order. We have had a long discussion. If I have failed to answer any questions, I shall write to noble Lords. I take the opportunity to say goodbye to the noble Lord, Lord Roberts of Conwy, as a spokesperson, though not as a friend and Back-Bencher.

On Question, Motion agreed to.

The Committee adjourned at 6.01 pm.