House of Lords
Monday, 31 March 2008.
The House met at half-past two: the LORD SPEAKER on the Woolsack.
Prayers—Read by the Lord Bishop of Carlisle.
My Lords, taking into account the measures being introduced to manage demand for prison places as recommended in the report by my noble friend Lord Carter of Coles, we expect the prison population to exceed 85,000 in the second quarter of 2009.
My Lords, I thank the Minister for that reply. Is he aware that tomorrow marks the start of the new shorter prison day? To save £60 million, prisoners will be in their cells most of the time between noon on Friday and Monday morning, with no educational or rehabilitative activities. Is he also aware that the chairman of the Prison Governors Association has said that, with these changes, the average time spent out of cell each week for each prisoner is at its lowest for nearly 40 years? In the light of this reduction and the expected further cuts in expenditure next year, how many hours of rehabilitative activity per week will prisoners have in 2009 when the prison population reaches 85,000?
My Lords, the Prison Service has had to meet spending targets. Reducing the core day in the way in which the noble Baroness rightly said will be done will help the Prison Service to live within its budget. The aim is also to ensure that activities and programmes that reduce reoffending are protected. Of course we will want to ensure that over the years ahead we invest properly in reoffending and rehabilitation programmes. That is all part of the policy that the Government are taking forward.
My Lords, last Friday the Government released two terrorist prisoners early; no doubt they chose Friday because the House was not sitting. What commitment can the Government give that they will not grant any more terrorists automatic release half way through their sentences?
My Lords, as the noble Lord will know, the number of terrorism-related cases that are likely to fall within the ECL criteria is very small. In the light of those cases, the Justice Secretary has decided to change the criteria for the ECL scheme so that any prisoner convicted under terrorism legislation would not be eligible in the future.
My Lords, will my noble friend confirm that, when the prison population reaches 85,000, the rate of imprisonment per 100,000 in Britain will be 154? The comparable rate in France is 91. Do we not have something to learn from the French? What about the entente amicale?
My Lords, we are always prepared to learn from our neighbours, as we are from other countries. Countries such as the US have much higher prison population rates. One reason why we have seen an increase in our prison population is that more offences are brought to justice. At the same time, we are seeing a reduction in crime in this country. Those are the outcomes that the public want.
My Lords, does the noble Lord agree with Her Majesty’s Chief Inspector of Prisons that a major cause of the present overcrowding of prisons is the indeterminate sentence for the protection of the public, which this Government invented in 2003? Is he aware that the number of those serving such sentences will soon be over 5,000, is estimated to be increasing at the rate of 1,800 a year and is further estimated according to the Home Office to reach the staggering figure of 12,500 in 2011? Is he satisfied that he is doing enough to meet that serious situation?
My Lords, we have to remember that the provisions were brought in to secure public protection. However, the noble and learned Lord is right to point to some of the issues that have arisen. He will know that in the Criminal Justice and Immigration Bill, which is before your Lordships at the moment, there are provisions to make modifications to that scheme. Those modifications will secure public protection but release some of the pressure on the prison population.
My Lords, the noble Lord will have seen the article in the Observer yesterday stating that the population of women prisoners has doubled between 1997 and 2006, with 90 per cent convicted for non-violent offences. All he has done is set up yet another review, an interdepartmental one on this occasion. Can he see why reformers such as the Howard League for Penal Reform call that response,
“reacting with yet more procrastination, delay and cowardice”?
Can he give the House hope that there will be some action on these matters instead?
My Lords, I do not share that analysis. The review by my noble friend Lady Corston was excellent. The noble Baroness, Lady Falkner, will know that we have accepted virtually all my noble friend’s recommendations and that we have set up a working mechanism to look at the development of small units. Of course we regard custody for women as a last resort. We are committed to seeing improvements. I am confident that the work being taken forward by my honourable friend Maria Eagle is the way to ensure the kind of changes that I am sure the noble Baroness, Lady Falkner, like me, wishes to see.
My Lords, does the noble Lord not think that 85,000 people being virtually out of work is rather a large number? Why cannot the work that they are given be productive? Why cannot the profit thereof go to the people whose lives have been injured by the prisoners? In Changi jail, for example, the prisoners make marvellous garden furniture and the profits go to the families of those who have suffered through the misdoings of their relations. One always knew what was going on in Bedford jail if the gnomes had bad-tempered faces, because that meant that the prison was in a bad temper that day.
My Lords, I certainly agree that reparation and restorative justice offer great hope for the future. I should say to the noble Baroness that Prison Industries employs about 10,000 prisoners a day, which provides some 12 million hours of activity per year. I very much understand and endorse the value of work for prisoners. Great progress is being made; more needs to be undertaken. As for the method of paying prisoners, we do not agree with the argument that is always being put forward that they should be employed on minimum rates, because the Prison Industries cannot be regarded as employers in the normal sense.
My Lords, we are into the ninth minute. Noble Lords need to be aware that that means that we have done eight and are on nine. I am afraid that we are out of time on that Question.
My Lords, we are the world’s sixth largest manufacturer. Manufacturing accounts for 13 per cent of national wealth, 50 per cent of exports and 75 per cent of business research and development. Recent assessments from the CBI and the Engineering Employers’ Federation show a positive outlook for the sector in the face of very challenging global economic conditions. The Government continue to support the sector through a range of measures including the Manufacturing Advisory Service, sector skills councils and the National Skills Academy, R&D tax credits and the science and technology programmes.
My Lords, I thank the Minister for her reply. I have no doubt that she is aware that one of our big manufacturing industries is about to be sold to an Indian company. Has protection been placed on the employees of the two companies involved? Given the problems that we face with our balance of payments, internationally we must go further to see how much exporting we can do to help the balance of payments.
My Lords, the Tata Group has not significantly changed any of the employees’ terms and conditions and, indeed, has approved the current management’s business plan and product plans. We are, of course, incredibly proud of the fact that we are the number one European choice of location for manufacturing inward investment. The noble Lord is quite right to point to export potential, particularly as emerging markets will add a billion new customers in the coming years. We are very well placed to do this because we have increased the productivity of manufacturing by 50 per cent since 1997 and manufacturing exports have risen by about 36 per cent in volume. So we are very well placed in relation to the important point made by the noble Lord.
My Lords, when looking at and assessing the state of British industry, will my noble friend take into account the figures of the SBAC, the Society of British Aerospace Companies, which show a 20 per cent increase in productivity and growth this year, due to the Government’s initiatives on skills and investment in those companies—British Aerospace, Rolls-Royce and others?
My Lords, I very much agree with my noble friend, but I should also point out that the recent contract placed for Airbus aircraft will provide a significant boost for British manufacturing and that it is, in fact, the biggest ever American contract to be placed in Europe.
My Lords, I join the House in commiserating with the noble Baroness for being described on the annunciator as Lord Digby-Jones when she rose to speak. That has now been corrected. I assume that the noble Lord is stuck in Terminal 5, like many others.
Bearing in mind the current exchange rate and the fact that manufacturing represents such an insignificant proportion of our industry, does the noble Baroness not agree, although possibly not many of your Lordships will agree, that now might be the time to look again at membership of the eurozone?
My Lords, it would not be fruitful to talk about entry into the eurozone. However, I should like to point out that it is not valid to say that manufacturing is just an insignificant part of this economy. It is the largest provider of productivity increases, with 75 per cent of the R&D gain. We have the best pharmaceuticals, aerospace and electronics industries and are now manufacturing twice as many cars as we were 25 years ago. Therefore, if I may say so, rumours of the death of manufacturing are somewhat premature.
My Lords, does my noble friend agree that the previous question is a classic example of how we undersell ourselves with regard to manufacturing? That is the case not just with aviation but also with car manufacturing, where we are ahead of most of Europe, and sub-sea platforms in the North Sea, where we are world leaders, having led previously on oil rigs. Eighteen per cent of our GDP relates to manufacturing and it is the highest paid sector in British industry. If my noble friend agrees with me, would it not be a good idea to start getting this message out so that we do not get other questions suggesting that we are underperforming when in fact we are doing exceptionally well?
My Lords, we all know that the cost to business of extra regulations introduced by the Government over the past 10 years is £65 billion and rising. Will the Minister, who brings to the House a fresh eye and a powerful intellect, tell me what is the effect of these regulations on UK manufacturing?
My Lords, we have discussed regulation at length and I look forward to the noble Baroness’s support tonight during our debates on the Regulatory Enforcement and Sanctions Bill in the interests of improving regulation for manufacturing. We believe that manufacturing has increased productivity by 50 per cent but I fail to see how it would be able to do that in the face of an overwhelming burden of regulation from this Government. Of course, this Government have produced a manufacturing strategy, which a previous Government might have done more to do. If they had, we might not have inherited a manufacturing industry that needed revival.
My Lords, will my noble friend note that, following the sale of Rolls-Royce and Bentley Motors to BMW and Volkswagen in the former county of Cheshire, they have gone from strength to strength? Indeed, Bentley Motors has a productivity rate of 3,000 per cent.
asked Her Majesty’s Government:
What is their assessment of the prospects for a meaningful dialogue between the Government and the Opposition in Burma over constitutional reform; and what they are doing to increase humanitarian aid to that country.
My Lords, the regime appears intent on resisting the UN Security Council’s call for a meaningful dialogue with the Opposition. It maintains that position, despite the fact that only an inclusive political process stands any chance of bringing stability and national reconciliation to Burma. UK humanitarian aid to Burma will increase from £9 million in 2007-08 to £18 million a year by 2010-11. The United Kingdom is one of the country’s biggest donors. In addition, the EU programme for Burma in 2007 was €19 million.
My Lords, I thank the Minister for that reply, depressing though it is. It illustrates well why we should not allow events in Tibet to distract us from the plight of the long-suffering people of Burma. Does it not serve to show that the Burmese regime’s dialogue with the UN Secretary-General’s special representative is little more than a sham designed to gain time while the regime rams through its own constitution? What is the international community going to do about that? On the question of humanitarian aid, the Answer was certainly more encouraging. We have imposed targeted sanctions but do we not need more, together with more targeted humanitarian aid designed to reach those who need it most?
My Lords, we believe that the United Nations should continue to play a leading role in resolving this crisis. We welcome the personal engagement of the Secretary-General. He has the support of the entire Security Council and the wider international community in taking forward his good offices mission. I agree with the noble Lord this far: we are very disappointed by the outcome of the latest visit of the UN special envoy, Mr Gambari. No progress appears to have been made by the regime in meeting the reasonable expectations of the Security Council.
My Lords, does the Minister recall that on 10 March the European Union announced its new upgraded sanctions on the Burma regime? What is his opinion of those? Is there not a danger that they will hit mostly smaller enterprises which have nothing to do with the unpleasant regime in Burma and leave untouched the generals who are awash with petrodollars and who are developing trade, through their businesses, with China and Thailand? What is his opinion of that?
My Lords, we do not agree with what the noble Lord suggests. We believe that EU sanctions send an important and clear message of our determination to seek change in Burma and the new sanctions are specifically designed to target senior members of the regime and their business associates. There have been constant regime calls for them to be lifted and some anecdotal evidence of their impact: for example, Air Bagan, the airline closely linked to the regime, has had to suspend operations. I emphasise that they are just one part of a broader strategy towards Burma. Another part is to increase humanitarian aid, not through the regime, but through the United Nations and NGOs.
My Lords, China is obviously the key influence on the Burma regime and now it must surely be on the defensive, not only because of the events in Tibet and in Darfur, but also because of the Olympics. Is not now the appropriate time for the European Union to press China to intervene more positively in respect of Burma?
My Lords, we encourage and we expect China to use its great influence positively and constructively to urge reconciliation and genuine reform in Burma. My noble friend knows, of course, that China supported the UN Secretary-General’s good offices mission and signed up to the clear demands for progress in the very significant 11 October Security Council presidential statement. We look to China to maintain the pressure for change and my right honourable friends the Prime Minister and the Foreign Secretary raised Burma with the Chinese leadership during their visits in February.
My Lords, in the circumstances, what will the Government do to follow up the recommendation of Sergio Pinheiro, the UN special envoy, that the Human Rights Council should find a means of following up its recommendations? In particular, will the United Kingdom at least draft a resolution for presentation to the Security Council, considering that presidential statements have previously been ignored? On the humanitarian front, will the Government take steps to increase the supply of cross-border aid to affect the tens of thousands of people who are displaced by military action by the regime in the border regions?
My Lords, on the UN and the Security Council resolution, we are in discussion with our partners about options for that. Whether we take it forward will depend on how much progress the Secretary-General and his envoy, Mr Gambari, are able to make towards establishing a reconciliation dialogue. It is very important that we understand that the regime has not really moved at all.
My Lords, having returned last night from the region, may I ask the Minister whether he is aware that the plight of the ethnic national groups, such as the Karen, the Karenni, the Shan, the Rohingya and the Kachin peoples, continues to deteriorate as the SPDC military offensives continue against innocent civilians? More than 60,000 Karen have been displaced since 2006 and more than 80,000 Karenni are living in hiding in the jungle. The Minister has said that DfID has been increasing its aid, but last year there was a commitment to cross-border aid and we have been told that so far none of that has materialised. Why has there been such a delay and can the position of cross-border aid, which is needed by those people in order to survive, be addressed urgently?
My Lords, we certainly appreciate the huge difficulties of the ethnic minority population in Burma. We are of course talking with Burma’s neighbours, where the refugee problem is great indeed. The noble Baroness should be pleased, though, that we are going to double our humanitarian aid in the next few years. As regards what the noble Baroness says is a lack of progress over the past year or so, I will write to her.
My Lords, the UK provides support for TB control through its funding to the Global Fund to Fight AIDS, Tuberculosis and Malaria; through bilateral country programmes; through organisations such as the World Health Organisation; and through new research evidence and drugs. The Prime Minister, then Chancellor, launched the Global Plan to Stop TB with former President Obasanjo, of Nigeria, and Bill Gates, co-chair of the Gates Foundation, in 2006.
My Lords, I thank the noble Baroness for that reply. I had TB at the age of 15. With the spread of large-scale TB and HIV co-infection, and, now, drug-resistant TB nearer to home, do we test immigrants when they come from the worst-affected countries? Perhaps we cannot catch up with them when they disappear into the system; I gather a lot of immigrants disappear and we do not know where they are.
My Lords, it is interesting that the noble Baroness said that she had had TB. A third of the world’s population has the TB bacteria. The total number of cases of TB in the UK in 2006 was 8,479; that is the latest figure we have. Of that, 72 per cent of new TB cases were non-UK born. However, the vast majority of these cases only develop active disease after they have been in the UK for at least two years, and often much longer than that.
The noble Baroness asked about screening. Of course, we have a long-standing policy, as the noble Baroness will know. Anyone who appears unwell, mentions health problems or medical treatment and is seeking entry for more than six months will be screened. As the noble Baroness will know, there is a list of high-prevalence countries for which there is screening.
My Lords, the recruitment of health professionals is of great concern in this House and elsewhere. What, if anything, are the Government doing to discourage—as I believe they should—recruitment of such professionals from developing countries where their skills are critically required?
My Lords, my noble friend is right. We have a code of practice that embodies ethical principles for international recruitment of health workers, and an agreed list of developing countries that should not be targeted for their health workers. The UK has systematic policies to prevent the targeting of developing countries.
My Lords, what is being done to ensure that the British medical profession is adequately trained in the diagnosis of tuberculosis? I ask because a neighbour of mine, who died a very short time ago, had been treated in hospital and by her GP for some time, and was found when she died to have had advanced but undiagnosed tuberculosis.
My Lords, my briefing mainly deals with the problem of diagnostics on the global scene. However, I agree with the noble Lord that there is a real problem of diagnosis whether we are talking about the UK or internationally. There is a need for rapid tests that correctly identify people with the disease. If we are talking globally, those tests must be easy to use at a local level. I will write to the noble Lord on what the UK is specifically doing internally to ensure that combating TB is strengthened. I know that the National Health Service is looking carefully at strengthening its TB policy.
My Lords, given that most cases of TB are being diagnosed through sputum microscopy, a technique that is more than 100 years old, what role is being played by Her Majesty's Government, the universities and the pharmaceutical industry to help develop more rapid and effective diagnostic tools including those that will diagnose drug-resistant TB and people with the TB/HIV co-infection?
My Lords, the UK is doing a great deal to try not to be complacent about the problems that the twin epidemics—the twin scourges—of TB and HIV, to which the right reverend Prelate referred, present. We are supporting a number of programmes on AIDS/TB co-infection through the Global Fund to Fight AIDS, Tuberculosis and Malaria and UNITAID, a new drugs-purchase facility of which the right reverend Prelate will be aware. DfID is currently working to update its strategy on tackling HIV and AIDS. HIV/TB co-infection is included in that strategy, which has had wide consultation. There is a problem about diagnostics, as I said earlier: they are out of date, and we have to put more focus on, and funding into, updating them.
My Lords, the screening process is that under the Immigration Act 1971, immigration officers at ports of entry have powers to refer passengers subject to immigration control for medical examination on arrival. They look at the person’s health. People claiming asylum at ports are routinely referred to the port medical inspector, and at Heathrow and Gatwick airports X-ray equipment is available.
My Lords, what is being done to co-ordinate the battle against HIV and TB? How are the Government facing the need? The World Health Organisation suggests that we might be short of 4 million health workers. What are we doing to encourage the training of more health workers?
My Lords, we launched the international health partnership directly to address the problem of the shortage of international health workers. If we look at the example of Malawi, we see that, as a result of our work with the partnership, in the first six months of the programme more than 500 new health workers were trained. The shortage is a continual problem, but we are focused on it and are determined to overcome it. On the twin epidemics of TB and HIV, we are supporting many programmes on AIDS, TB and TB/HIV co-infection through the Global Fund to Fight AIDS, Tuberculosis and Malaria and UNITAID, as well as efforts to tackle AIDS and TB in specific countries, such as China, India and South Africa.
Sex Discrimination Act 1975 (Amendment) Regulations 2008
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Sex Discrimination Act 1975 (Amendment) Regulations 2008 laid before the House on 6 March be approved. 13th Report from the Joint Committee on Statutory Instruments, Considered in Grand Committee on 25 March.—(Baroness Andrews.)
On Question, Motion agreed to.
Legislative Reform (Health and Safety Executive) Order 2008
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Legislative Reform (Health and Safety Executive) Order 2008 laid before the House on 18 February be approved. 6th Report from the Regulatory Reform Committee, Considered in Grand Committee on 25 March.—(Lord McKenzie of Luton.)
On Question, Motion agreed to.
Official Statistics Order 2008
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Official Statistics Order 2008 laid before the House on 26 February be approved. 12th Report from the Joint Committee on Statutory Instruments, Considered in Grand Committee on 25 March.—(Lord Davies of Oldham.)
On Question, Motion agreed to.
Town and Country Planning (Fees for Applications and Deemed Applications) (Amendment) (England) Regulations 2008
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Town and Country Planning (Fees for Applications and Deemed Applications) (Amendment) (England) Regulations 2008 laid before the House on 27 February be approved. 12th Report from the Joint Committee on Statutory Instruments, Considered in Grand Committee on 25 March.—(Lord Bassam of Brighton.)
On Question, Motion agreed to.
House Committee: Fourth Report
rose to move, That the fourth report from the Select Committee (HL Paper 78) be agreed to.
The report can be found at http://www.publications. parliament.uk/pa/ld200708/ldselect/ldhouse/78/78.pdf
The noble Lord said: My Lords, I will first introduce the committee's report and then deal with the issue raised by the amendment in the name of the noble Lord, Lord Trefgarne, at the appropriate point.
The report makes a recommendation for the restructuring of the senior management in the House of Lords, following the retirement of the current holder of the post of the Gentleman Usher of the Black Rod, Sir Michael Willcocks, in May 2009. The Clerk of the Parliaments has reviewed the responsibilities of Black Rod's post and found that a very significant increase in Black Rod's responsibilities has taken place in recent years, due largely to heightened security needs, the acquisition of additional buildings on the parliamentary estate and the increasingly demanding works programme.
The management of the works and estates has become a major and vital responsibility, which requires its own professional expertise. In response to this, the House Committee has recommended that the senior management team should be strengthened with a new post of Director of Facilities, reporting directly to the Clerk of the Parliaments. The new director would have responsibility for works, accommodation, facilities and certain services. The post-holder would be responsible for the largest single element of the House of Lords budget. It is therefore appropriate that the new post-holder be a member of the Management Board.
I will enlarge on that point in the light of the amendment tabled by the noble Lord, Lord Trefgarne. It is important not to underestimate the significance of the role which the new Director of Facilities will perform. The committee takes the view that there is now a real need for the House to acquire the type of professional expertise proposed here. Works and estates have taken on tremendous importance in recent years, especially due to the pressure on accommodation. I need not tell your Lordships that the House is much busier than it once was. Average daily attendance has shot up; overall activity levels are at an unprecedented high; and with that the demand for office space and meeting rooms has risen dramatically.
The House administration has responded to those challenges by investing in the Millbank island site. Plans are well developed to refurbish 1 Millbank to become the location of choice for Back-Bench Members. The Millbank island site is a tremendous undertaking with many far-reaching effects on the arrangements for the accommodation of Members and staff. The scope of that project alone justifies the recruitment of a Director of Facilities.
However, there are other long-term projects for this estate. The House is about to begin substantial work on the mechanical and electrical services of the palace and major repairs to its roofs. I do not anticipate that the new post-holder will be underemployed once the Millbank site is operational. The Director of Facilities will also undertake supervisory responsibility for the Refreshment Department. At present, that responsibility rests with the Director of Human Resources, to whom the Head of Catering Services reports. The new Director of Facilities will not have day-to-day operational responsibility for the catering facilities; that duty will remain with the Head of Catering Services.
The portfolio of the Director of Facilities will be of such significance to the House and to the public purse that it is imperative that the post-holder reports directly to the Clerk of the Parliaments. The individual appointed to the post is also likely to be of a grade that will make it necessary for him or her to report to the Clerk of the Parliaments. The Clerk of the Parliaments, who as head of the administration is responsible for determining the membership of the Management Board, has advised that the significance of the new role will be so great as to require the new director to be a member of the Management Board.
I turn to the other side of the coin and explain how the new arrangements will affect the holder of the post of Black Rod. The appointment of a Director of Facilities will enable the holder of the post of Black Rod to focus on the more traditional aspects of the role as Gentleman Usher, Secretary to the Lord Great Chamberlain and Serjeant at Arms. Those roles carry responsibility for such vital duties as security, order in the House, the Doorkeepers, ceremonial duties and events, public access and the Sovereign’s residual estate at Westminster. We will therefore look to the new post-holder to have all the experience and expertise that have traditionally been required of that post. Black Rod would continue to report directly to the Clerk of the Parliaments and would be a member of the Management Board.
Black Rod’s role would continue to be largely similar to that of many of the previous holders of the post of Black Rod. Works and estates is a relatively recent addition to the portfolio of Black Rod’s responsibilities, which arose in 1991 when both Houses took over responsibility for works and estates following the Ibbs review. We are in large measure reverting to a previous pattern. Buckingham Palace has been consulted on the proposed changes and is content. I can therefore assure the House that there is no diminution of the importance of Black Rod’s traditional role.
It is a recognised imperative that Black Rod and the Director of Facilities would work closely together and be easily and readily accessible and responsive to Members. The House Committee has emphasised the importance of the continued provision of efficient services to Members under the new arrangements. Indeed, I emphasise that Members’ needs are at the forefront of the proposals for restructure. A working group of officials has been established to consider the detailed arrangements of the division of responsibilities, and the House Committee will consider its recommendations in due course.
I pay tribute to the work of our current Black Rod, Sir Michael Willcocks, and am pleased to say that his appointment will be extended for a further year to May 2009 so that he can assist in the introduction of this important change. The House is invited to agree the recommendations set out in paragraph 6 of the report. I beg to move.
Moved, That the fourth report from the Select Committee (HL Paper 78) be agreed to.—(The Chairman of Committees.)
rose to move, as an amendment to the Motion, at end to insert
“save for the words
“the Management Board member” in paragraph 3,
“Both post-holders would be members of the Management Board.” in paragraph 4, and
“the Management Board member” in paragraph 6(a),
and with the addition of the words “The post-holder would not be a member of the Management Board.” at the end of paragraph 6(a).”
The noble Lord said: My Lords, I am grateful to the noble Lord, Lord Brabazon, for inviting us to agree to the House Committee report, but I am afraid that I have to disagree with much of what he said. I hold no brief for the present Black Rod; he is a distinguished former officer. As it happens, I knew his predecessor rather better, having served with him in the Ministry of Defence. The plain fact is that we have benefited over the years from a succession of very distinguished former officers who became Black Rod, and I pay tribute to all of them in their time.
The position of Black Rod, held as it is by a former senior military officer, reflects the competence of such people to hold that position. Our Armed Forces are a huge business by any standards. They have all the problems and all the activities that we have in this palace, so it is completely appropriate that a former military officer should hold the position of Black Rod, as he will have held similar responsibilities during his career. They all come to us with a distinguished background and great competence, so the idea that a senior officer cannot carry out these duties is absurd.
I have no difficulty in providing Black Rod, whoever he may be, with the additional expertise and advice that may be required for the extensive building programme and related matters in this palace. What I object to, and what I believe is wrong, is that the new man—if it is a man; it might be lady, who knows? I see the noble Baroness, Lady Ashton of Upholland, looking at me disapprovingly. The new person, whoever they may be, will no doubt provide admirable new advice and support to Black Rod in the role that he fulfils. But he does not need to be set in authority over Black Rod on these matters as is proposed. Although it is proposed that he will sit alongside Black Rod on the management committee, in these matters he will be supreme and Black Rod will have no role to play in them. I do not approve of that.
I have heard of a number of assurances that Black Rod will always be a military man. I am not sure who gave those assurances, but I doubt whether they were given on any authority. When the time comes, Black Rod is chosen by the House. Non-military people have been considered in years past, and may well be in the future. I do not agree with that; a military man is the sort of chap—the sort of person—that we need.
My Lords, perhaps there is a very senior lady officer somewhere in the Armed Forces ready to take over this post. Maybe she will be outside the Armed Forces, but I think I would have some difficulty with that, as I explained. For example, in years past very senior police officers have been considered for the post, which is as it should be. Some very senior police ladies may like to be considered for the post, and I would have no difficulty with that. However, I rather think that the military ethos is the best.
The noble Lord, Lord Brabazon, said that the Queen has been consulted, and I was very glad to hear it. She presides over the appointment of Black Rod and approves his appointment once it is decided on by the senior representatives in your Lordships’ House. The Queen acts wholly on ministerial advice on these matters but she does need to be consulted. Perhaps I may ask in parenthesis when she was consulted. I believe that the question was raised only at the end of last week. I would not be surprised if the Queen was consulted only this morning—but consulted she has been, and I am very glad to hear it.
I should like to ask the noble Lord, Lord Brabazon, a question on a more important matter regarding employment protection legislation. Regardless of whether the noble Lord likes it, and however justified or unjustified it may be, about 50 per cent of Black Rod’s present duties are being removed. In the real world, under the present employment protection legislation, that would represent constructive dismissal. I know that from my own experience. Has the noble Lord considered that implication, and what would be his response?
I turn to what I regard as a rather sensitive aspect of this matter, so I shall do so with the utmost care—the position of the noble Baroness the Lord Speaker. She is the chairman of the House Committee. That was decided by your Lordships, and I accept it. Since becoming Lord Speaker, she has discharged her duties—if I may say so—with charm and with sensitivity. I thank her for that. However, part of her appointment is that she does not become involved in controversial matters. She is chairman of the House Committee and, whether she likes it or not, she is now involved in a controversial matter. Because she does not speak in your Lordships’ House, the report was introduced by the noble Lord, Lord Brabazon, in his capacity as Lord Chairman, but he is not chairman of the House Committee. I think that the noble Baroness the Lord Speaker finds herself in a slightly awkward position as a result.
My noble friend Lord Strathclyde is a distinguished member of the House Committee, but I do not know how he came to agree these proposals. There can be only two possible explanations. The first is that he was swayed by the arguments. But the deficiencies in the arguments that I have taken the liberty of deploying to your Lordships lead me to a more charitable explanation of my noble friend’s position—that he nodded off during consideration of the matter, and when he woke up it had all been decided and it was all too late. I would say only this to him. I am sure that he will be the Leader of your Lordships' House in a couple of years’ time. If he nods off then, the noble Lords opposite—who will by then be on these Benches—will have a field day on government legislation.
We are, I fear, at the top of a slippery slope. At the bottom of that slope lies Group 4 security, Pret a Manger catering and some foreign company looking after the building services of the House. We run the risk of becoming the T5 of Westminster. I beg to move.
Moved, as an amendment to the Motion, at end to insert
“save for the words
“the Management Board member” in paragraph 3,
“Both post-holders would be members of the Management Board.” in paragraph 4, and
“the Management Board member” in paragraph 6(a),
and with the addition of the words “The post-holder would not be a member of the Management Board.” at the end of paragraph 6(a).”—(Lord Trefgarne.)
My Lords, I did not intend to join this short debate quite so early, but I have been drawn to my feet by my noble friend Lord Trefgarne. He may not be right in saying that I am a distinguished ornament on the House Committee, but it is a job that I take most seriously, so there is no nodding off in the House Committee. However, on behalf of the whole House, perhaps I may wish my noble friend a happy birthday today.
I agree with my noble friend on one very important point: it is unthinkable that this House would agree to do anything that would belittle the great office of Black Rod. As noble Lords know, Black Rod was a creation of King Edward III, and for more than 650 years successive holders of the office have served their sovereign, this House and, indeed, the Order of the Garter with unfailing loyalty. Sometimes this has brought them up against the political arm, and on occasions those were the most powerful in the land. They have even had to arrest Members of your Lordships’ House from time to time, but that is not something that has been held against successive Black Rods by this House.
When you hear the guides talking to visitors in Central Lobby, they never fail to describe the ceremony of Black Rod striking the doors of the other place at the State Opening of Parliament because it always has resonance. People of all ages respond to the ceremony and its deep symbolism, not only of the long battle for English liberties and parliamentary government, but also of something greater than all of us in either House—and that is the authority of the Crown.
There has been a great deal of talk about searching for Britishness. It did not need President Sarkozy to tell us last week, although he did so both admirably and eloquently. Britishness is here in the bones of our Parliament, in our ways and in our traditions, and Black Rod is very firmly part of it. Many noble Lords feel that keenly. Lately we have too often carelessly scorned our traditions; I refer in particular to the dumping of great offices of state such as that of Lord Chancellor. It is high time to stop tearing up our roots and start nurturing them, so I am sure that I speak for the vast majority of this House when I say that we want no change to the nature of the office of Black Rod. But that is not what is proposed in this House Committee report; it is the nature of our House that has changed. The demands made by newer Members in particular for new office space—
My Lords, will my noble friend give way on this point? Many of us think that Black Rod himself is better placed than anyone else to know whether another officer is necessary. Would it not be helpful if we knew the views of Black Rod? I have not heard them yet, and it seems to me quite extraordinary that they are not set out in this paper.
My Lords, the Chairman of Committees will answer the specific point about the views of Black Rod. My understanding is that Black Rod is entirely happy with what has been proposed, but if I am wrong, the Chairman of Committees will of course point that out.
My noble friend has raised another question: is Black Rod the right person to decide who should get offices? No, he is not. That should be up to the Convenor and the Chief Whips of the respective party groups. We are talking about the management of projects for the provision of new accommodation. A massive project is being undertaken in the multi-million pound development proposed for Millbank. This issue, and that of Black Rod, were not passed on the nod but discussed and deliberated at length in the House Committee. I believe it was right for the Clerk of the Parliaments to recommend and for the House Committee to agree that this specialist task of managing the huge building works to meet our accommodation requirements requires special skills and full-time attention. And with so much attention being given to the expenditure involved, it is essential that this House shows in this project that it can use public money prudently.
Apart from the Clerks, Black Rod is the most significant interface between Members of this House and the Administration. His presence just next to the Chamber and the position of his office on the Principal Floor reflect the important part he plays in the role of this House, and will continue to play in the future.
The Clerk of the Parliaments has been in office for only four months. It is clear already that he has inherited a number of difficulties, along with great new responsibilities. If he believes that this major project requires a new officer, and that that officer should be on the Management Board and report directly to him as Accounting Office for our House, we should surely back the judgment of the Clerk of the Parliaments. Given the nature and cost of the procurement project ahead, the Clerk of the Parliaments is right in the action that he has suggested. So I hope that my noble friend, having underlined the strong feelings that we all have about the ancient traditions of this House and the office of Black Rod in particular, will not press his amendment and that the House can accept the House Committee report.
My Lords, I was eager to get in before the noble Lord, Lord Strathclyde, so that I could defend his reputation against the scandalous slur that one of the most alert members of the House Committee should ever nod off, even when I am speaking.
I consider the House Committee to be among the most onerous and responsible of the committees on which I sit. It is the committee where the buck stops. My experience of recent time, particularly in terms of major construction projects, is that I have been asked to catch the stopping buck without the full information that I feel is necessary for the proper management of those projects. This is not some last-minute scheme cooked up on the back of an envelope. It evolved after the most considered discussions in the House Committee of how we now deal with two separate functions of the ancient responsibilities of Black Rod.
I say to the noble Lord, Lord Trefgarne, this is the first case of unfair dismissal that I have heard of which involves a year’s extension of the contract of the person concerned, but perhaps he is more expert on employment law than I am. This is not a diminution the role of Black Rod but a recognition that the House now has multi-million pound projects to manage. Frankly, if I am going to sit on the House Committee and take the ultimate responsibilities on your Lordships’ behalf, I want the person managing such projects before me with the final responsibility for the advice that he has given me. I hope that we do not get diverted.
One of the problems of managing this estate, which is costing the taxpayer millions of pounds, is the push-me-pull-you structure which leaves committees at that end making decisions without proper consultation with committees at this end. There is a far greater case for having many more joint services between the two ends of this building and much more joint management, rather than accommodation and other issues being squirreled away at one end and information kept from the other, all at the cost of the taxpayer.
The quick trip of the noble Lord, Lord Trefgarne, from the 19th century, where he usually sits, into the early 20th century was of interest. However, the next Black Rod could well be a woman and the Director of Facilities could be a woman because, I say to the noble Lord, Lord Trefgarne, that is what happens in the 21st century. If this House has any sense it will follow the advice of the House Committee and give us a management structure fit for the 21st century.
My Lords, perhaps I may ask the noble Lord for clarification. Where does it say in the report that the new Director of Facilities will liaise with the other part of the Palace? If the report stated that a certain person would be in charge of the facilities and the grand projects of the whole Palace, that would make much more sense. It does not say that anywhere. And why is the Refreshment Department tagged on to such an important role?
My Lords, I assure the noble Baroness that we are but at the foothills of giving this Parliament the structure required for the 21st century. Of course the new director will not have responsibility for the whole of the Parliament; those battles are still to be fought with some of the most conservative elements in the Palace—which are through those doors—but I can assure her that this proposal will give the House someone who can do a proper job on projects which will cost the taxpayer millions of pounds, for which we must have a proper line of management responsibility through to the House Committee.
My Lords, much of what I wanted to say has been said by the previous two speakers, with whom I agree. I support incremental reform of the House of Lords, and here we have a small but, to my mind, vital change to ensure that the House is professionally equipped to undertake major building programmes in the 21st century and to be accountable to the House for the expenditure of many millions of pounds. As a Member of the House Committee I have fully endorsed the restructuring of senior management.
I offer profound thanks to Black Rod and others who have had to grapple with the complex business of managing building projects, including, as your Lordships will know, the now-completed visitor reception centre, the proposed work on the Millbank island site and the onerous commitments to modernise mechanical and electrical equipment—in some cases, for the first time in 80 years. I do not underestimate the time, skill and heavy responsibilities that that work has entailed on the part of Black Rod and his office in the past few years. It is a testament to the Clerk of the Parliaments’ reform approach that he has initiated the senior level restructuring, and I offer him and his offices my full support, now and in the future.
My Lords, I find myself rather pulled about in his debate. One does not like to hear the House arguing against itself. All we have heard so far are the arguments from Members of the House Committee—apart from my noble friend Lord Trefgarne—who of course support the House Committee’s recommendations. I greatly admire the Clerk of the Parliaments, who is doing the most superb job of work, and one hesitates even to consider taking an opposite view from his.
I understand the necessity of having an important person to take charge of the Parliamentary Estate in the House of Lords and that he should be called a Director of Facilities, but I do not see why he cannot be responsible to Black Rod. Black Rod has always looked after these affairs as well as the security, the attendants and the doorkeepers. I do not see why it is not possible to have a person who is a highly-paid official and an expert who is responsible to Black Rod, so that there is continuity. I would have thought that was a reasonable thing to do. It worries me that we are proposing to employ this new gentleman at £100,000 a year—a great deal of money and a good deal more than Black Rod gets—who will do only half the work that Black Rod does. He will get twice the emoluments but apparently do half the work. That is in rather a vulgar sphere, but at least it is pertinent.
I regard my noble friend Lord Strathclyde as totally correct: we ought not to diminish by one iota the standards, and the standing, of Black Rod. He epitomises this House in many ways, and people look up to him both within the House and without. My fear is that, if we put this man up next door to Black Rod on the management committee, he will assume similar proportions, although not the same ones. What will happen on state occasions? The new Director of Facilities will be responsible for the attendants, the housekeepers and all that. On state occasions, all such people are responsible to Black Rod, so there will be upheaval as they change loyalties. I repeat that I would not be disappointed at having a new Director of Facilities, but he ought to be available through Black Rod, not counter to him.
My Lords, I hope the House will recognise that the noble Lord, Lord McNally, made two points of some importance. The first is small: he echoed the noble Lord, Lord Trefgarne, in saying that there is at least an arguable case on the question of employment protection for Black Rod and his office. The noble Lord shakes his head: an arguable case is not a crushing case, so that is a small point.
The second point is much more important. If the House, as I hope it will, supports the report from the committee—and I have seen many committees dealing with these matters over many decades now—I hope that we will support it in the spirit given to us by the noble Lord, Lord McNally. We are in the foothills of a new venture in control of the Palace of Westminster. On this matter, we should not be bound by any conservative views of the other place, including the future of your Lordships’ House itself.
My Lords, I was not a member of the House Committee when this matter was discussed and the fourth report published, so I do not speak as a member of that committee. I was not there. I did not nod off or forget. However, I was a member of the House Committee for many years and I am conscious from the discussions that took place then how much the workload in relation to accommodation and works has increased, and—this is an important point—how much it is likely to increase. There seems to be an assumption that the workload is static. I do not believe that: the workload will continue to increase primarily because of the follow-up to the acquisition of the Millbank island site, the decanting of some Members and the preparation of offices in the new building. In addition, the major works that have been mentioned involving electrical supplies to the House and on the roof will be long-term operations, so we should assume that the work will increase.
For all those reasons, I understand why the House Committee recommended that senior management should be reinforced by May next year by a new Director of Facilities, thus reducing the burden on Black Rod or his successor. I agree with the committee’s recommendation on the basis of my knowledge from the past and of the structure that has been proposed.
My Lords, I look at this from the attitude of being a Conservative. As noble Lords may know, there are several of us still at large—perhaps as many as 10 or 20. We meet at safe houses in the countryside, well away from Notting Hill and other such suburbs. I shudder at all this talk of enormous expenditure on new facilities. I notice that the noble Lord, Lord McNally, was almost sneering in what he said about my noble friend Lord Trefgarne being rooted in the 19th century and not up to speed in the 21st. I invite him to consider whether Parliament was more effective at holding the Executive to account in the 19th century than it has been in the 21st.
When I stand and look across Bridge Street at Portcullis House, I frequently wonder how, before we had computers, telephones, radios and all those things to make life easier for management, this Parliament managed the British Empire without that building and its facilities. How on earth did we do it without them all? I suspect that the more facilities and offices we have, the more millions of pounds we spend and the more experts we bring in, the less Members of Parliament of both Houses actually do in controlling the Executive. They all seem to be too busy consulting their researchers, their focus groups or someone or other to have any time to spare to participate in the job of Parliament. I suspect that we may see a similar process in the report—that we will all get pushed a little farther away and have much more professional management. We could probably find a very good manager from Northern Rock or somewhere who would come in. I understand there are a lot of people spare in the City these days who two or three years ago we would have all said were wonderful. We could get one of them to come to do this job, which is clearly beyond the scope of a mere retired Army officer.
I have very grave reservations about all this. If Parliament really wants to become more effective and to make progress at doing its basic job, instead of rushing into the 21st century we would do very well on many occasions to return to the 19th, perhaps even better to the 18th.
My Lords, like the noble Lord, Lord Williamson, during my period on the House Committee I was very well aware that the burden on Black Rod is indeed very heavy, and is getting heavier all the time. As noble Lords will recall, first there was the rebuilding of the kitchens on top of all his ordinary duties. Then there was the visitor centre and now there is the Millbank contract. I have no doubt that a new high-level post is needed for someone with experience of managing large-scale building contracts.
I do not feel very strongly one way or the other about the amendment of the noble Lord, Lord Trefgarne, on whether the person should be a member of the management team, but on the whole I would back the judgment of the House Committee on that. However, the point on which I feel very strongly is the name. Surely we can do better than Director of Facilities. To me, it suggests an advertisement for a cheap hotel or boarding house with all mod cons and the usual facilities. Can we not find something a little more dignified for this House? I suggest that if any of your Lordships are in favour of the word “facilities”, they go straight away and look at a scathing article on the subject of facilities in Fowler’s Modern English Usage, and then they will never support that name again.
I have to suggest an alternative. If we must have a director of something—nowadays everybody seems to need to be a director—I suggest instead Director of Establishments. That is a nice, old-fashioned word, but I am bound to say that I would go back even further in history and choose a name like Receiver-General. That is a name by which the exactly equivalent job in Westminster Abbey is held. What about Receiver-General? What about Estates Bursar—another good, old-fashioned term? Estates is what he will be dealing with and we all know what bursars are. Above all, I suggest the word “Commissary”, which is perhaps not familiar to all your Lordships. That is a perfect word to describe it. It means an officer put in charge of something. Therefore, it has a certain mystery about it, whereas, I am bound to say, Director of Facilities has none. If I were applying for this job, I would be much more attracted to it if I were called the Commissary of the House of Lords than I would if I were called the Director of Facilities.
My Lords, I hope that the noble Lord the Lord Chairman of Committees will not be misled by the tone of some of the speeches into being unaware of the real feeling of disquiet among many of your Lordships about what has taken place. Decisions have been taken on matters that deeply concern the House as a whole without the House as a whole being given the slightest idea even that discussions were taking place until the crucial decision had already been taken by the House Committee. I ask the Lord Chairman—perhaps the Leader of the House would listen to this, too—if he could give two undertakings. First, that no such decisions that affect all your Lordships so deeply should be discussed and decided behind closed doors in the future. Secondly, that when any further or consequential adjustments between the holder of the old post and the holder of the new post are discussed, the dignity of the office of Gentleman Usher of the Black Rod will not be diminished and will be paramount, and that our respect and affection for the present holder of that office should be demonstrated beyond doubt.
My Lords, we have been told that the new Director of Facilities will receive a salary of £100,000 a year. We have not been told what his office staff and his office facilities will cost. What will be the total cost of this whole operation? I would also very much like to be told how much it would cost to give Black Rod, within his office, the necessary expert assistance to do the job, instead of creating a whole new office.
My Lords, I just have one question. In view of the fact that the House is to be reformed in due course and is likely to be half the size, what will happen to all this new island estate, which is costing millions, at the end of the day? Perhaps the Leader of the House might be able to answer that.
My Lords, may I make a comment? I support the recommendation that is before us today. I declare an interest in my former capacity as chairman of the House of Commons Catering Committee. We made some very tentative steps forward when I was chairman. I have heard some rather adverse comments about the other place today. I emphasise that, as well as any new structure that is put in place, it is important for noble Lords to engage freely and frankly with their colleagues in the other place.
The noble Lord, Lord Colwyn—who was the chairman of the House of Lords Refreshment Committee when I was in the House of Commons—and I worked very closely on the first stages of bringing together certain aspects of catering between the two Houses, although not as strongly as I would have wished. We developed the first policies on procurement, joint purchasing and several other areas that were very beneficial to both Houses. There is a long way to go, but I believe that both Houses can work together in a spirit of co-operation.
I listened to the noble Lord, Lord Tebbit, when he talked about Portcullis House. It is important to us too that there is the Jubilee Café. In all the history that the noble Lord, Lord Tebbit, spoke about, in this 19th-century building we never had a facility—I use that word advisedly—for constituents and visitors, often coming from far-flung parts of the country, to have a cup of tea. There were no facilities. When the noble Lord criticises Portcullis House, I hope that he will remember that we have for the first time a facility where constituents can come collectively and sit down and have refreshments at the end of a tour of their Palace, which they pay for. They have a right to expect that kind of facility—
My Lords, I do not want to prolong the debate, but the noble Lord should know that this building is not about running a cafeteria for visitors. The building is not supposed to be a tourist attraction. It is supposed to be a working building to control the Executive. The less work it has as more and more of the executive functions are transferred to Brussels, the more it seems to want to become something of a visitor attraction. That is all it will be before very much longer, the way we are going on.
My Lords, we need to begin to wind the debate up. I speak as a member of the House Committee, and as a representative of your Lordships' House on it. I want to make three or four key comments from my perspective, and obviously the Chairman of Committees will sum up and respond to the important comments made.
I pay tribute to the noble Baroness the Lord Speaker for the way in which she chairs the House Committee. The noble Lord, Lord Trefgarne, is right that it is important that someone representative of your Lordships' House is able to play the appropriate role, and she does that extremely well. Chairing us—the group of House Committee members—is not a task I would relish in my life, but it is done with great professionalism and due regard to your Lordships and your needs above any one of us.
I pay tribute to Black Rod. I have had the privilege of discussing the issue on my own, one on one, three times with him to make sure that he was in agreement with me that the move was important to make. Unless something has changed, I can confirm that Black Rod feels strongly that it is important; he did so on each occasion. That was not because I or anybody else had questioned capabilities. It was because, when we realised that we would lose Black Rod before too long to retirement, it was important for the committee to look at what the future needed. I joined the House Committee after discussions had begun, despite what the Mail on Sunday says. I listened with great care and considered some of the options that noble Lords have put forward about where the level of person ought to be, what requirements your Lordships would have in the future, whether simply extending the professionals within Black Rod’s office would suffice, and so on. It became clear to me, for some of the reasons already outlined by other noble Lords, that the most suitable way of dealing with the matter was to find somebody of a high level and quality—a person of great calibre—who could take our estate and facilities on to the next phase.
Although noble Lords feel passionately that perhaps we spend too much time worrying about technology and so on, I should say what the footfall is like in my office day to day from Members of your Lordships’ House who do not have a desk where they can sit properly, who are worried that they do not have a computer that works properly, who complain about some aspects of whether facilities are available to them as often as they might be, who have concerns—dare I say?—about the refreshments provided in the House, and so on. Rarely a day goes by when I do not hear something, and some noble Lords are more vocal than others on these subjects. No doubt there is great concern to make sure that we move forward into the future, as well as keeping the quality we have now.
The pressure of work on Black Rod is obvious to me. I find it practically impossible to get into his diary because of the number of meetings that he has. He always makes time for me with great grace, but it is a genuine issue that we have been fortunate and may not be so fortunate in the skill mix again. The role of the House Committee on noble Lords’ behalf is to look at the future and determine what is needed, without diminution of the person, the role and the importance of what has gone before. It has to say that what is to come requires something additional, new and different, and that is what we did.
The report comes to noble Lords with the best endeavours of the people who on your behalf are trying to provide you with the best possible quality of service. It does not take a single thing away from the Black Rod we have today, nor the Black Rod we shall have in future. It recognises that if we are to provide the services that we think you and I deserve for the future, to have the quality of controls over the expenditure that we need, and to have the ability to work—as my noble friend Lord Bilston said—more closely with another place to develop the facilities of the future, whether separately or jointly, we need this person in post.
My Lords, I will attempt to cover some of the points that have been made. If I miss any, I have no doubt that noble Lords will let me know at a later stage.
The noble Lord, Lord Trefgarne, started the debate by moving his amendment. I felt that the noble Lord seemed to misunderstand in one respect—I thought that he referred to the Director of Facilities being in authority over Black Rod; that is not the case. Both people will be responsible to the Clerk of the Parliaments; both will be members of the Management Board. The jobs will be separate. The noble Lord also asked me when the Palace was consulted. All that I can say is that it was consulted some time ago; I do not want to go into the details, but it was certainly not today or yesterday. It was before that. The noble Lord also raised the issue of the possibility of constructive dismissal; but, as the noble Lord, Lord McNally, said, no one is actually being dismissed in any case, because the present Black Rod has been given an extension to his contract until May of next year, and these changes will apply to the person who takes over as Black Rod at that time.
I say to all noble Lords—I am very grateful, by the way, to other members of the House Committee who supported the report—that I am not surprised at that support. The noble Earl, Lord Ferrers, seemed somehow surprised that members of the House Committee should actually get up to speak in support of the report. That is what a unanimous committee does. I say to the noble Lord, Lord Denham, who complained that this whole thing was apparently done in smoke-filled rooms behind closed doors, “not at all”.
My Lords, perhaps they would not be smoke-filled rooms these days, but he said that it was done behind closed doors. That is what the House Committee is for. That is what your Lordships at the beginning of the Session appointed the House Committee to do—to discuss important matters such as this, to come up with proposals and bring them to the House in the form of a report, which is what we are debating. The House can decide whether or not to agree to the report, whether to accept the amendment in the name of the noble Lord, Lord Trefgarne, or whatever. That is the way in which the whole thing is set up. So I really cannot recommend another way to do it.
Other points were made. I am grateful to the noble Lord, Lord Strathclyde, and I can assure the noble Lord, Lord Trefgarne, and other noble Lords that the noble Lord, Lord Strathclyde, did not nod off during any of the debates on this matter. As I have said, this report was a collective decision of the House Committee, but, as the noble Lord, Lord Strathclyde, has said, this is being done in no way to belittle the great office of Black Rod, which will continue in the traditional role. For example, the State Opening ceremony, when he goes down to the House of Commons, will remain exactly the same. The new Director of Facilities will have nothing to do with that at all. I must take into account, of course, the remarks of the noble and learned Lord, Lord Lloyd of Berwick, whose support I was grateful for. I can assure the noble and learned Lord that we in the House Committee will bear in mind his dislike of the title Director of Facilities. We will consider the possibility of using title Receiver-General or Estates Bursar, but I cannot make any firm commitment to agreeing to a change.
A number of other points were made. The noble Lord, Lord Waddington, asked whether Black Rod was happy with the proposals. I cannot, of course, speak for Black Rod from the Dispatch Box. All that I can say is that he was with the discussions on this matter all the time, and he is and will be a member of the working group that is looking into the future. So he is on board with the proposals; as to whether or not Black Rod is happy with them—the noble Lord will have to ask him himself.
My Lords, that is not quite the question that I asked. I suggested that Black Rod is better placed than anyone to know whether the present work burden is too heavy and whether another person is required. Surely he must have expressed a view on that, and personally I would accept his view rather than that of anyone else. He must know whether he can do the job.
My Lords, as I said before, we are not talking about the present Black Rod; we are talking about the future—next year, when the present Black Rod retires. That is as far as I can go on that.
Various noble Lords queried the cost. As I said in my opening remarks, £100,000 is an indicative cost of the new post. We will obviously have to take advice on the appropriate grading of the post and the background to it, and there will obviously be one-off expenditure on recruitment, although it is highly unlikely that a vast new army of staff will be involved.
The noble Lord, Lord Tebbit, referred to years gone by and said how, in his view, Parliament was much more effective 200 years ago than it is now. That is a matter of opinion but it does not have very much to do with whether we have a new Director of Facilities. I do not know how things were all those years ago but, in the present day, this person will be responsible for a budget of upwards of £35 million a year. How that compares with what it was when this place was built, I do not know, but we are now talking about a very much larger estate.
My Lords, the noble Viscount, Lord Montgomery, also raised that point. I was going to say to him but I shall say to the noble Lord, Lord Tebbit, as well that I do not know what the size of the House will be in future. I only know that if the size of the House is reduced to 400 people who are elected or partially elected, they will all have researchers, secretaries and goodness knows how many other people. The noble Lord, Lord Tebbit, holds his head in gloom at that prospect but I am pretty certain that that is what will happen. There will probably be a demand for more space rather than less. However, I am getting slightly away from the point. I think that I have probably answered most of the questions raised, so I invite the noble Lord, Lord Trefgarne—
My Lords, will the noble Lord give an assurance on a fairly technical matter? Black Rod will continue to be responsible for security. The security of this House depends in large measure—or, at least, in large part—on the building and the work of the Parliamentary Work Services Directorate, which will be the responsibility of the new appointee. Can he assure us that, while Black Rod is here in his extended year, he will be consulted and that a protocol will be in place to ensure that the person in charge of the works department is kept abreast of, and takes into account, the security requirements before recommendations go to the House Committee?
My Lords, I can give an assurance that, as now, works that are required for reasons of security—for example, putting the Corus barriers outside—will in future obviously be a responsibility of the Director of Facilities. The demand will be led by the people in charge of security, of which Black Rod and the Security Committee will form part. Before I conclude and invite the noble Lord, Lord Trefgarne, to withdraw his amendment, I should say to noble Lords that, as a member of the House Committee, I shall break the habit of a lifetime: if the noble Lord calls a Division on this amendment, I shall vote for the report as it is.
My Lords, I am obliged to the noble Baroness. I have two things to say. First, I am not opposed to the appointment of a Director of Facilities or whatever he may be called. I am opposed to the fact that he should not report to Black Rod, who I believe should have overall responsibility for these matters. Secondly, I believe that the deliberations of the House Committee on this important matter should not have been in secret, as they were. Other Members of your Lordships’ House were not permitted to attend—only the members of the committee. For this important matter, I believe my noble friend Lord Denham is entirely right that that was quite wrong. The Chairman of Committees should be ashamed of that.
On Question, Motion agreed to.
Climate Change Bill [HL]
Read a third time.
Clause 2 [The target for 2050]:
1: Clause 2, page 2, line 3, leave out from “to” to end of line 4 and insert “prepare such proposals and policies (including the setting of five year budgets) as the Secretary of State reasonably considers will—
(a) ensure that the net UK carbon account for the year 2050 is at least 60% lower than the 1990 baseline, and(b) enable the carbon budgets that have been set under this Act to be met”
The noble Lord said: My Lords, Amendments Nos. 2 and 3 are grouped with this amendment. All three amendments have the same objective. When I read the draft Bill for the first time last summer—it seems almost a lifetime ago—my immediate reaction was that Clause 1 as it then was imposed a meaningless duty that was almost certainly unenforceable and that if we had any respect for the legislative process something better had to be put in its place. It seemed to me self-evidently absurd that any Secretary of State could be held responsible for the delivery of a target 20, 30 or 40 years into the future, particularly when its successful delivery would depend not just on the actions of government but also on the reactions of a host of individuals and organisations, not to speak of events beyond the control of government.
The view that the clause would be unenforceable in the courts was widely held by those far better qualified than I am, and the joint pre-legislative scrutiny committee, of which I was a member, shared my scepticism. As the noble Lord, Lord Puttnam, its chairman, told the House on Report, the committee probably spent more time discussing this issue than any other. He was charitable about my responsibility for that fact.
During that same debate at Report, the noble and learned Lord, Lord Lloyd of Berwick, gave to the argument an authority that I cannot match when he observed that,
“it is meaningless to impose a duty on the Secretary of State that cannot be enforced … It could not be said that the Secretary of State who happens to be in office in 2050 was in breach of the duty imposed by Clause 1 until the very last moment of 2050, by which time it would be far too late for anybody to do anything about it. In the mean time, there is nothing that anybody can do—and certainly nothing on which the courts could possibly adjudicate. That applies to all Secretaries of State between now and then. So Clause 1 is what Roman law—it is a very long time since I studied Roman law—called lex imperfecta. It has no force and it has no place in this Bill”.—[Official Report, 25/2/08; cols. 463-4.]
I pursued the issue in the debate on the Queen’s Speech, at Second Reading and in Committee, when I tabled an amendment that was admirably argued by my noble friend Lord Caithness during my absence abroad on the business of a Lords committee. By then, the Government had begun to give ground. In response to my Second Reading speech, the noble Lord, Lord Rooker, observed:
“It is not just about the punishment in the event of failure; it is about trying to change institutional behaviour”.—[Official Report, 27/11/07; col. 1209.]
In Committee, he added to a similar comment about institutional behaviour the words:
“We were trying to find a way to achieve behavioural change in Whitehall ... That is the central objective”.—[Official Report, 11/12/07; col. 163.]
Later in the proceedings, the noble Lord told the Committee that the clause was drafted so as to send a signal to the Civil Service. It has always seemed to me wildly improbable that civil servants, if they even remember the wording of Clause 1, would say to themselves, “Gosh, I may be held responsible in 30 or 40 years’ time if the target is not delivered”. It is surely much more likely that they will say, “There is not a cat’s chance in hell that I or my Minister, if we are still alive, will be blamed”. In any case, the courts are never going to get involved in making judgments about those extremely complex issues, which may well be totally outside the control of any particular Secretary of State.
On that occasion in Committee, the amendment was not pressed and we decided to have another go at Report. I seem to be fated. Once again, I was out of the country on day one of the debate and, once again, my noble friend Lord Caithness powerfully moved an amendment in which we attempted to overcome all the objections that Ministers had raised on the previous occasion. If we had succeeded, the original Clause 1 would have been replaced with the following clause:
“It is the duty of the Secretary of State to promote policies and to take measures, including the setting of targets and five year budgets, best calculated to ensure that the net UK carbon account for the year 2050 is at least 60 per cent lower than the 1990 baseline”.
The words “promote policies” were taken from the National Health Service Act 1946 and “best calculated to” from the Coal Industry Nationalisation Act 1946, precedents that I thought might appeal even to Ministers in a new Labour Government.
Among those who supported the amendment were the noble Lord, Lord Turnbull—I am very glad to see him in his place—who said that he found the logic of the amendment compelling, the noble and learned Lord, Lord Lloyd of Berwick, for the reasons that I have already cited, and the noble Lord, Lord Puttnam, who chaired the Joint Committee with such distinction.
Rather unexpectedly, the amendment was grouped with government Amendment No. 50, which introduced into the Bill for the first time what is now Clause 13. Although the noble Lord, Lord Rooker, stood alone among those who spoke in defending Clause 1—the score was one against nine—my noble friend Lord Caithness felt that we should carefully consider the effect of new Clause 13, which moves things a little further in the right direction, and come back at the next stage. Because an amendment about the principal aim of the Bill was carried, the original Clause 1 has now become Clause 2.
I am extremely grateful for the help that I have received since the conclusion of Report from the noble Lord, Lord Turnbull—the former Cabinet Secretary and head of the Home Civil Service—the noble and learned Lord, Lord Lloyd of Berwick, and the noble Lord, Lord Puttnam, in arriving at an elegant solution that would strengthen the Bill and bring together in one place and very early on the most crucial duties of the Secretary of State. We have combined the provisions of Clause 13 on the preparation of proposals and policies to enable carbon budgets to be met with the requirement of Clause 2 to ensure that the 2050 target is met. If my amendments were accepted, the crucial part of Clause 2 would read that it is the duty of the Secretary of State to,
“prepare such proposals and policies (including the setting of five year budgets) as the Secretary of State reasonably considers will—
(a) ensure that the net UK carbon account for the year 2050 is at least 60% lower than the 1990 baseline, and
(b) enable the carbon budgets that have been set under this Act to be met”.
The clause would then continue with existing subsection (2), which defines the 1990 baseline, and with the remaining components of Clause 13, which cover sustainable development and the role of our national authorities.
One noble Lord has told me that he has a doubt about the amendment, as the clause would still provide that the account for 2050 was at least 60 per cent lower than the 1990 baseline. He would like it to be higher. If, however, I had been minded to attempt to merge yet another amendment into the clause, I am certain that I would be out of order at Third Reading because it would reopen an issue that had already been voted on and decided at an earlier stage.
The word “reasonably” has been included in the amendment at the suggestion of the noble and learned Lord, Lord Lloyd of Berwick, who like me had initially been tempted to stick to the words “best calculated”, which were used in my amendment on Report. We judged it wiser to stick to the basic formula that the Government had used and therefore approved in Clause 13.
The noble Lord, Lord Turnbull, pressed the case for the amendment in a very helpful letter that he sent to the Minister and copied to those who took part in the debate on Report, in which he argued that,
“it relates to what civil servants actually do, ie give policy advice, develop trading frameworks, advise on tax rates, and draw up and enforce regulations etc. These responsibilities will be reflected in departmental objectives and can be cascaded down into individual job descriptions in a way a national CO2 target cannot”.
In other words, as he argued on Report, instead of trying to pin everything on the nation reaching its target in 2050, the amendment would create a duty to deliver everything that makes the objective possible.
While a civil servant or a Minister is never likely to be held responsible for the non-achievement of the 2050 target, one can envisage Parliament and even the courts holding them responsible for the production of policies that are clearly in conflict with that objective. I offer a perhaps exaggerated example. Let us assume that, a short time ahead, we are faced with an energy supply crisis. Gas has been cut off by Russia to Europe and the nuclear programme is running years behind schedule. The Minister announces that we are to build a large number of coal-fired power stations without the necessary cleaning equipment and that we are to import large quantities of heavily polluted coal from some other part of the world because that is where the supplies are economic and available. There can be no question but that Parliament and, I suspect, the courts would argue that that could not be held to be in line with the objectives that our clause sets the Secretary of State.
Perhaps even more important is the requirement to prepare policies that reasonably can be judged to achieve the interim targets and budgets. During our debates, there has been widespread agreement that the 2050 target will be achieved only if prompt and effective action is taken to achieve the 2020 target and the interim budgets along the way. My amendments would not only ensure that civil servants and Ministers had to prepare policies likely to achieve what we all want—the 2050 target—but guarantee continuous, political pressure if the five-year targets were missed or looked like being missed.
The existing clause is little more than a spoof. The Government are pretending to the world that we are the first country to impose a statutory, legally enforceable duty to achieve such a major environmental target, but it will not take long for the rest of the world to realise that the Bill does nothing of the kind. Thanks to the combined efforts of noble Lords sitting in different parts of this House, the Government have been given the opportunity to give much greater strength and clarity to the Bill. I hope that the Minister will accept that opportunity. If he does not, I shall seek the support of the House to achieve this important improvement. I beg to move.
My Lords, I support my noble friend, having put my name to a variation of this amendment for the third time. As my noble friend has said, we worked on this at Second Reading, in Committee and on Report. Although, I feel that we could have won a Division had I tested the opinion of the House on Report, it would have been wrong to do so in view of government Amendment No. 50, which I needed to consider. The Government’s only argument, which the noble Lord, Lord Rooker, has used on every occasion, is that this amendment would weaken the Bill. I dispute that. This amendment strengthens the Bill. It makes it a realistic proposition rather than a fanciful idea, which the original Clause 1 did by imposing a duty on the Secretary of State that could not be upheld in the courts.
As has been said, we discussed this in the Joint Committee at great length. Without doubt, this is one of the key amendments now left to be agreed by the House in order to put this Bill into the right shape to send to another place. If we do not alter it in this way, there is little chance that the other place will have even the opportunity to consider such an important matter. For that reason, and everything I have said at previous stages, I support my noble friend Lord Crickhowell.
My Lords, when an amendment to Clause 1 was debated on Report, the Minister was rather dismissive of it. He argued that it would weaken the Bill. We now have a new amendment, tabled by the noble Lord, Lord Crickhowell, and the noble Earl, Lord Caithness. I shall make another attempt to persuade the Minister of its merits. First, the amendment has the merit of elegance and clarity in its drafting. In relation to the targets, it brings together in one place at the beginning of the Bill the things that the Secretary of State has a duty to do from the original Clause 1 and the things that the Secretary of State must do under new Clauses 13 and 14. That will make the Bill’s purpose much clearer and the way it operates more logical.
Secondly, the Minister argued on Report that the amendment would weaken the Bill. It could be said that the Government draft is stronger because it relates the duty directly to the final objective set for 2050, but in my view this is illusory. The link with the 2050 target is an indirect one, depending not only on what the Secretary of State does, but also on how society responds. As a result many legal experts, some of them in this House, have cast doubt on whether the Secretary of State could successfully be challenged in law. The amendment is superior, in the view of many, because it relates the duty to those things a Secretary of State actually does—developing policies and implementing them—and not to something that a Secretary of State does not actually do, which is emit CO2. The test then becomes one of whether the actions or omissions of the Secretary of State are reasonable in relation to the objective. That looks to me like a proposition that a court could handle.
The Minister also argued that one of the purposes of the Bill is to require departments and their civil servants to look continuously at whether their actions could be challenged in law, thereby evoking the famous JOYS booklet, The Judge Over Your Shoulder, first published in 1987 and now in its fourth edition. Again, this would be more effective if it related to what civil servants actually do in terms of giving policy advice, enforcing regulations and so forth, as the noble Lord, Lord Crickhowell, explained. The purpose must be connected to the objectives of the department and those of individual civil servants.
Thirdly, the new Clause 2 brings greater and more continuous pressure of enforcement. At present there are to be two channels, the first of which is political accountability. If any of the targets for the five-year carbon accounts are missed or look like being missed, the Government must report to Parliament on why and what they are going to do about them. The second channel is the threat of legal challenge for failure to meet the duty to deliver the objective for 2050. But this really begins to bite only when 2050 comes into sight and it becomes undeniable that the target will be missed. The advantage of the amendment is that the duty will apply to the quinquennial targets as well as to that for 2050, so bringing the political and legal enforcement processes into line.
The defect in the Bill which this amendment addresses has not just come to light. It was identified last year by the Joint Committee on which many of your Lordships served, and while the introduction by the Government of what are now Clauses 13 and 14 go some way to rectifying the fault, in my view they do not go far enough. Therefore I hope very much that the Government will complete the process by agreeing to adopt this amendment and refining it if necessary during the Bill’s passage through the Commons.
My Lords, I congratulate the noble Lord, Lord Crickhowell, on his tenacity in pursuing this important issue. Certainly one of the big messages from the Government has been that this Bill leads globally in the fight against climate change because there are statutory targets, yet there are two fundamental problems with the claim, one of which this amendment would begin to put right. The statutory targets do not apply strongly enough to the five-year budgets that frame the short-term areas of action and count rather more than the target for 2050. We also have a statutory obligation on Ministers which concerns the 2050 target, but in the Bill is set at 60 per cent. We are therefore in the strange position of having the Prime Minister expecting the climate change committee to come back with a reduction of around 80 per cent, but the target set out in primary legislation remaining at 60 per cent. The legal obligation in 2050 remains at 60 per cent rather than 80 per cent. The amendment goes a long way towards solving the interim issue.
We on these Benches have a particular problem because we believe that it is absolutely wrong for the incorrect target to be on the face of the Bill that passes from this House. This matter was voted on and the opinion of these Benches was rejected. I do not agree with that but I accept the will of the House. We will fight for our target in the other place when the Bill goes there.
Again I congratulate the noble Lord on this approach. The amendment would strengthen the Bill considerably. As the House has already expressed its will on the 60/80 argument, we on these Benches support this strengthening of government accountability.
My Lords, I, too, support the amendment. In a sense, I have been involved in shuttle diplomacy on this subject for 10 months now, and two things have happened during that time. First, my journey has taken me from thinking that the noble Lord, Lord Crickhowell, was on to something to becoming convinced that he is more than on to something and is absolutely correct. Secondly, during those 10 months I had an opportunity to talk to a great number of people with a great deal more expertise in this area than I will ever have, and 100 per cent of them have, in one form or another, confirmed that the amendment is correct.
On the other hand, all I have heard from the Government is something I can only sum up as “not invented here”. I have not heard a single cogent argument offered in support of the position the Government are currently taking. Therefore, I unequivocally support the amendment.
My Lords, I congratulate my noble friend Lord Crickhowell most warmly on the assiduousness with which he has pursued this issue over, I dare say, the 10 months to which the noble Lord, Lord Puttnam, referred a moment ago, but certainly through all the proceedings in the House.
I am not a veteran of the pre-legislative scrutiny but, as I said on Report, I was the only parliamentarian from this Parliament who sat through the entire CPA conference on global warming which took place in the last week of November last year. In the context of the claim which the Government properly and reasonably make that we are setting an example and are the first Government to legislate—an issue to which my noble friend Lord Crickhowell referred—exactly that claim was made by the government spokesman early in the conference. Its global universality is one of the virtues of the Commonwealth and, after he had left, some of us smiled as a series of Ministers from what I will call the smaller island territories said that the situation was so threatening and so imminent for them that they had already carried through such legislation as was required, and at least 10 had full-scale plans at a much higher state of advancement than anything we can claim. It is therefore important that the example the Government set out to give should be as good as possible. If my noble friend’s amendment improves it still further, that is all to the good.
I do not propose—I said I would not do it on Report and I shall not do it now—to go through the British Library experience to which I alluded in Committee. However, it still remains with me. The test of any Secretary of State during the 20 years that the British Library was being constructed was that he or she would be held responsible for the exact state of the business. However, in view of the fact that the Government’s insistence on the wording which is currently in the Bill prior to my noble friend’s amendment has so concentrated Whitehall’s mind, I will say—I did not say this in Committee—that when the construction had been going on for 15 years and book cases were being installed in the cellar of the British Library, the book cases developed a habit of ejecting the books and putting them on the floor, which in the concept of a flagship library is not a wholly satisfactory development. I was sent into battle armed with a happy Q & A: Question: “Secretary of State, why is it that the shelves are throwing the books on the floor?” Answer: “Shelves, being inanimate objects, cannot throw anything”.
Anything that can be done to reinforce the Government’s position is good. I am a warm supporter of my noble friend’s amendment.
My Lords, I support the amendment. As the noble Lord, Lord Crickhowell, will know, he and I voted together in this direction during the Joint Committee pre-scrutiny process.
I speak on this issue for the opposite reason from the noble Lord, Lord Teverson. The Bill enables the Secretary of State to amend the 60 per cent target to 80 per cent. It is a red herring to suggest that the target in the Bill is only 60 per cent. My concern would increase even more if the figure were set at 80 per cent; if the Secretary of State had a duty, as under the current Bill, to ensure that that target were met, I would be deeply concerned. The Government would find it difficult, if the climate change committee recommended 80 per cent, not to be seen to be setting challenging targets. It would be almost a game of chicken. If the Government say they have a duty to meet a target, they have to be pretty sure they can meet it; otherwise it is a pointless duty to set.
The target can be amended. If a duty were placed on the Secretary of State to ensure that a figure was met, he or she simply could not guarantee to meet it. The other reasons that the noble Lord, Lord Turnbull, gave on the process issues are equally strong and are another reason to accept the amendment. As in the Joint Committee, I find that on this occasion I agree with the amendment of the noble Lord, Lord Crickhowell.
My Lords, as has been made clear, the basic intentions and the philosophy behind the amendments have already been debated in your Lordships’ House. However, along with other noble Lords, I thank my noble friend Lord Crickhowell for his persistence in tabling these amendments. In addition, the amendments in their present incarnation, as my noble friend has said, are an improvement based on the debates we have had, and he has indicated the joint effort that lies behind them. I am pleased to see this set of amendments tabled at this stage. We have heard from across the House noble Lords’ support for them.
As has been said, the amendments seek to address some problems with the Bill’s most important duty: that of the Secretary of State to ensure emission reductions. We want to stress as ardently as possible that our intention is to strengthen that duty, not to weaken it. Despite first appearances, the amendments strengthen the Bill. The Minister claimed that the Bill, which places a duty on the Secretary of State to ensure that emissions are reduced by 2050, is the stronger. However, the Government still have not adequately responded to the argument that the link between the Secretary of State and the final objective for 2050 is an indirect one.
Yes, the Secretary of State should be at the helm of policy, the responsibility of reducing emissions should be driven across all departments and it is of vital importance that the targets are reached. Those issues are not under dispute. What is being debated is the best way of ensuring that those things happen. Yet the first duty placed on the Secretary of State has little to do with the way that they happen—it is merely to guarantee results. I understand that the Bill then breaks down the individual duties of the Secretary of State and outlines, to a degree, the path to be taken, with the aim of achieving the 2050 target.
What, then, does a duty to ensure outcomes add to the Bill? Does it imply that after the Secretary of State has prepared proposals and policies to meet 2050 targets and has failed, he is further empowered to do anything necessary to meet that target? Or is it the intention to bring the Secretary of State to court in 2049, after four decades of Secretaries of State who have tried to reduce emissions, because the numbers are not adding up? Surely the point of this duty is to ensure that the effect of the Bill is felt across all departments. Having a duty that is tethered to a target 40 years away will make it more difficult to hold any Secretary of State to account. He could always claim that he is on track to reduce the emissions by 2050, though he knows that he might not even be around to see that date.
The amendments tidy up the language of duties and obligate the Secretary of State to do his job in a way that will ensure results. It places a duty on the Secretary of State to do what Secretaries of State do: to make proposals and to implement policy. It would strengthen the duty placed on him because he would have to justify how each policy fitted into the overall framework of reducing emissions. If that is what is going to happen in practice as the Bill stands, why are the Government reluctant to accept it and put it in the Bill? Why are they willing to risk setting the threshold for compliance too high, thereby negating it? Do they think that the Secretary of State will do anything other than make proposals and policies under the Bill as it stands? Is this not the way in which he will go about ensuring a reduction?
Essentially, we support the amendment because it scores a direct hit on something with which any legislator should be uncomfortable; namely, legislating for the result and not the process.
My Lords, I hesitate to rise because I am eight-to-one down. I thought that I might be nine-to-one down by way of repetition. Although I fear that my answers will be very much the same as previously, I take on board the points that the noble Lord, Lord Crickhowell, made and I agree with many of his sentiments.
I shall go through a little of the chronology of this part of the Bill, with which the amendments deal in isolation. It is as though nothing else is in the Bill. We have just heard that no legal requirement is placed on the Secretary of State other than the 2050 target but that is not true. The 2020 target is a legal duty; it is set out in Clause 5. All I ask is that noble Lords look at the facts of the Bill as it stands, rather than what it might have been or some of the early rhetoric of our debates. There is even a duty to publish a compliance action plan if one of the five-yearly budgets is missed. The idea that we have legislated for 2050 and ignored everything else is just not true. It is there in the Bill. If we are getting such inaccuracies the fourth time we debate the Bill following Second Reading, all I can say is that I am at a disadvantage.
I have responded to the letter of the noble Lord, Lord Turnbull, but fully accept that one cannot always be sure where the post goes. A load of letters went into the internal system earlier today. However, part of my speech is based on the letter, and the letter is based on the speech. In other words, the message is exactly the same.
The noble Lords’ amendment addresses the strength and enforceability of the Secretary of State’s existing duty in what is now Clause 2 and used to be Clause 1, and the need for that duty to place the Government under continuous pressure. In some ways we welcome that, as I hope I have made clear throughout the Bill’s passage. We welcome scrutiny in both Houses and from outside bodies. We want to be as transparent and accountable as possible.
Clause 2 provides the Bill’s overarching purpose and requires a specific outcome, and that should be maintained in the Bill. If we removed that duty it would place the focus on the process rather than on a clear outcome. The amendment’s effect would be that the Government could fail to meet the 2050 target but still comply with their duty so long as they had developed what they thought at the time were the right policies. Without the clause, the Government would still be held to account on whether they had taken forward the right processes, but there would be no legally binding long-term target which placed pressure on the Secretary of State to achieve the final outcome as opposed to just going through the process. One has to separate those two functions. We genuinely believe that doing it that way would dilute the Bill rather than strengthen it.
On the other hand, as I hope I made clear in several of our debates, I agree with the noble Lord, Lord Crickhowell, about the importance of placing continuous pressure on Governments. Although we are debating amendments to this clause, it is worth putting the issue in the context of what happens in other parts of the Bill, including Clause 13. Clause 2 is only part of the picture outlined in Part 1. I have just referred to Clause 5, which places a duty on the Secretary of State to meet the 2050 target. It requires the Secretary of State to set the carbon budgets and,
“to ensure that the net UK carbon account for a budgetary period does not exceed the carbon budget”.
Under Clause 18, the Secretary of State must publish a compliance plan if the budget is missed. Clause 9 requires that budgets be set with a view to meeting the 2050 target as well as the 2020 target and any post-2050 target. Clause 5—which I will come back to—also requires the Secretary of State to ensure that carbon budgets are met. The Bill therefore provides an ongoing duty on the Secretary of State to reduce the net UK carbon account. My point is that those are all in addition to Clause 2. Clause 13, which the Government added to the Bill after debate and scrutiny in this House, places a duty on the Secretary of State to,
“prepare such proposals and policies as the Secretary of State considers will enable the carbon budgets … to be met … The proposals and policies must be prepared with a view to meeting”,
the 2050 target.
The Bill’s existing structure already provides a series of complementary duties. There is a clear outcome-focused duty to meet the 2050 target complemented by duties to make emission reductions on an ongoing five-yearly basis, and there are ongoing duties to develop policies. Taken together, that is a strong package of duties which focuses on the process while maintaining the outcome in the Bill. The amendment would remove elements of the existing structure in Clause 2 and the outcome-focused duty that the clause currently provides. It does not add to the existing requirements. We do not see how that could be a desirable outcome in either legal or policy terms.
The noble Lord, Lord Teverson, originally made the point about the duty covering the 2050 target and not the intervening budgets, but it is not correct. The intervening budgets are just the same, as I set out on Clause 5. The noble Lord, Lord Crickhowell, said that the Secretary of State had no ability to influence the UK net carbon account, but we do not think that that is correct. The Secretary of State does not have direct control over emissions levels, in the sense that he does not have his finger on the switch, but he can employ many methods to reduce the UK's emissions through regulation, incentives, encouragement and persuasion. The Bill also allows the purchase of credits from overseas, a subject we have debated and will return to, including government purchases if necessary and for those to be counted towards meeting our targets. So in a sense the Government do have an ability directly to influence the UK's net carbon account—which is made up of both emissions and the credits purchased overseas.
As I said, the ratio among noble Lords who have spoken is about eight to one, but that does not mean that I stand alone. It does not mean that I am wrong or necessarily that I have got it right. However, I will not do as the noble Lord, Lord Brooke, suggested. I will not make extravagant claims that I cannot back up when questioned. I have not done that on this Bill. On the first occasion when these claims were adduced, perhaps on Second Reading, I pointed out that Australia had legislated on some aspects of this matter. I am therefore not saying that we are the only ones doing this, that we are the world leader and No. 1 and that no one else has ever done anything remotely like this. I am talking about what is in the Bill, not what people think should be in it or thought was in it.
With our changes, Part 1 taken as a whole—I am not looking just at the narrow aspect of Clause 2, or Clause 1 as it was originally—constitutes a package that meets the objective that everyone is concerned about while not diluting it. We strongly believe that to approve these amendments would dilute the package in Part 1, as I have sought to explain. I therefore hope that, contrary to what he said, the noble Lord, Lord Crickhowell, will not press the amendment.
My Lords, one of the great advantages I have in responding to the Minister at this stage is that he has said absolutely nothing that he has not said in all the earlier debates. In almost every case those points have been addressed this afternoon by me or by the noble Lord, Lord Turnbull. It is always rather bad luck on a Minister to be given all these helpful papers from his civil servants before the debate as he feels that he has to do justice to them. However, we are so fond of the Minister partly because of these wonderful revelatory moments when he gives away just a little of his own thinking. He did it this afternoon when he said, “I agree with the sentiments of much of it”. That gave us a clue about what had been going on in those conclaves with his colleagues at the other end of the House.
I must challenge two of his observations. He said that I had removed the focus from the 2050 objective. That is a curious remark when the very opening sentence of my amendment sets the Secretary of State to,
“prepare such proposals and policies … as the Secretary of State reasonably considers will—ensure”.
If that does not direct the Secretary of State to focus on something, I do not know what does.
The Minister also asserted that I had claimed that the Secretary of State had no power to influence. However, the whole of my argument was that, by the preparation of policies, the five-year budget process and so on, he does have the ability to influence. What he does not have is the ability to ensure.
The Minister kept calling in aid Clause 5, which apparently is going to bail him out of the mess that his department has put him in. However, Clause 5 states:
“It is the duty of the Secretary of State … to ensure”.
We are back to that word “ensure”, which is exactly the word we are criticising in what is now Clause 2.
We have gone over this many times. All I would like to do at this stage, before the crucial final words I should utter, is to thank all those who have supported my amendments at this and earlier stages, particularly those who helped to draft this amendment and who supported it today. As this is the last occasion on which I will speak on the Bill in this House until it is sent back to us from another place, as I suppose it will be, I thank the Ministers for the courteous way in which they dealt with all the points we made. As I say, I also thank the Minister for those wonderful revelatory moments with which he has endeared himself to the House. If only his colleagues at the other end of the House really understood how this House works and how to influence it, they would not get into the mess in which they have got themselves on this occasion. I ask the House to vote for the amendment. I wish to test the opinion of the House.
[Amendment No. 2 not moved.]
Clause 13 [Duty to prepare proposals and policies for meeting carbon budgets]:
[Amendment No. 3 not moved.]
Clause 24 [Base years for targeted greenhouse gases other than CO2]:
4: Clause 24, page 13, line 1, after first “the” insert “amount of”
The noble Lord said: My Lords, in moving the amendment, I shall speak also to Amendments Nos. 5 and 10. These are minor technical changes to the Bill. Amendments Nos. 4 and 5 are intended to provide greater consistency in the use of the terms “emissions” and “amount of emissions” in Clause 24(2). Similar wording is included elsewhere, for example in Clause 15 and earlier in Clause 24.
Amendment No. 5 also makes clear that if we are to treat emissions of a greenhouse gas for a particular year as if they were emissions of that gas for 1990, then that applies to the Climate Change Act as a whole, not just for that clause.
Amendment No. 10 includes reference in paragraph 25 of Schedule 1 to the Committee on Climate Change’s review of the 2050 target required under Clause 33. This amendment is simply to make sure that the list of the committee’s functions in Clause 33 is comprehensive, so that if any information is needed on any of the committee’s activities, it can be obtained. A similar amendment has already been made to the second subsections of Clauses 40 and 41, regarding powers to give guidance and directions respectively. I beg to move.
On Question, amendment agreed to.
5: Clause 24, page 13, line 2, leave out “taken into account as if they were” and insert “treated for the purposes of this Act as the amount of”
On Question, amendment agreed to.
Clause 25 [UK domestic effort]:
6: Clause 25, page 13, line 23, at end insert—
“(3) Nothing in subsections (1) or (2) shall prejudice the Secretary of State’s ability to secure further emissions reductions beyond the minimum level of compliance with section 5(1).”
The noble Lord said: My Lords, the amendment has been tabled in the interests of further clarification on an issue that, although it has been debated in depth, demands further scrutiny. The issue is of such importance that addressing it again at Third Reading is as important as debating it for the first time. I will be brief, but I want to explain what the amendment does and our intentions in tabling it.
It offers further clarity to a provision that is already in the clause—we understand that—which is that the duty to secure a 70 per cent reduction in domestic emissions exists only in so far as the budget is concerned. There is nothing to stop a Government buying more and more credits after that to secure further reductions. This amendment was motivated by the evidence that the noble Lord, Lord Turner, gave to the Environment, Food and Rural Affairs Committee last week. We appreciate that it does not entirely address the noble Lord’s concern.
However, we bring this issue before the House again today because of some of the concerns that he did express—namely, that there is a chance that the current 70/30 split might result in the Government having to set less ambitious targets. That would be a sad repercussion for a well intentioned amendment. We want to make sure that this does not result in fewer emissions reductions and we hope that there would be some way of making the amendment workable, while maintaining the integrity of its intention.
Let us make no mistake: your Lordships have spoken. This House resoundingly affirmed its commitment to a 70 per cent domestic reduction; but, as we noted in our speech to that amendment, we would be willing to consider other ways of going about this, should it not be workable. The important point was to get a firm commitment, beyond a few general ministerial comments, that domestic reduction was of primary importance. It might be that economic circumstances and the sheer time it takes to fit new technologies into existing frameworks conspire to mean that in one budget a 69 per cent domestic reduction may be better than a reduction of 70 per cent if the total reduction can be higher by virtue of the ratio being different. I simply do not know. What I do know is that the most important part of our fight against climate change must occur within these shores, and your Lordships have voted to recognise that fact.
The Government seemed to think that there were problems with the structure of the amendment and that somehow it was unworkable. It was with disappointment, then, that I saw that they had not tried to address this issue themselves. Can the Minister give any details about conversations that he has had with the Treasury regarding overseas caps? Will he give the House an assurance that he is working to find a way to cap overseas credits that reflects the will and opinion of this House, or is he simply content to let this stand in the Bill in its current form? Essentially, we hope that with this amendment the Government will be able to give us assurances about their plans regarding overseas caps now that the Bill has been amended. I beg to move.
My Lords, with respect to the noble Lord, Lord Taylor—I know the work that he has done on this—I still do not really understand why the amendment is necessary. Clause 25(1) refers to a figure of at least 70 per cent. Throughout our discussions on this subject, we have stated that this relates purely to the targets and does not affect any trading systems; nor does it affect the Government’s ability to purchase external credits under the clean development mechanism, the Kyoto mechanisms or the ETS, although the latter is primarily a commercial scheme. If they wish to do so, that is completely within their powers. The clause simply uses the words “at least” with an accounting target in the UK carbon account. It does not need to reflect any other actions by government or commercial companies. Therefore, from these Benches we would find it strange if the amendment were needed. The fact that Clause 25 is clear and simple is what commends it most. Having said that, I agree with the clarification, although I do not think it is necessary to put it in the Bill.
My Lords, I fear that I shall disappoint the noble Lord, Lord Taylor, on the specific questions that he asked. We had good debates on this issue in Committee and on Report, but your Lordships’ House spoke clearly on the question. We now have Clause 25 in the Bill and we think it is right to leave it to the other place to consider it.
Amendment No. 6 has come late in the day and there has been no time to consider it across government. Unlike in the other place, starred amendments in this place are debated the day after they are tabled. In the other place, this amendment would not even have been selected because it was tabled only on Friday for a debate on Monday. Therefore, I have been party to no discussions about the amendment. The discussions about how the Government will deal with the Bill in the other place have only just started and my colleagues there said to me, “We want to wait until you’ve finished with it because we don’t know what else will happen”. As noble Lords saw from the earlier debate, we came close to making another major change to the Bill. Therefore, positions have not been set and lines in the sand have not been drawn. Basically, as will be seen, we have confined the Government’s amendments at Third Reading to ones that conform to the rules of your Lordships’ House—that is, they are just tidying-up amendments. We would not have brought back a large, substantive amendment on this issue even if we had a fixed position on it, because that would have been outside the rules.
Our initial analysis of the amendment is that it adds very little, if anything, to the framework of the Bill. Nothing in the Bill, including in Clause 25, prevents overachievement of the budget set out in Clause 5. That is what I said earlier and it is what the noble Lord, Lord Teverson, said.
The key question for any Government in setting a budget under Clause 5 will be the costs and the benefits of any of the given budget levels. Any restriction on the use of overseas credits would be a relevant factor in that calculation, but this relates to the setting of budgets rather than meeting them or even going beyond them, if it is desired. This does not change our view that the issue should be considered in the other place and, therefore, I am in no position to bring a considered view on this to the House this afternoon.
My Lords, obviously I am disappointed that the Minister is not able to respond as he would wish. If the amendment had been laid before, it may have been possible for the Government to consider it. None the less, I hope that the Minister will accept that in tabling this amendment we were seeking to be helpful and to clarify the position of what we think is an extremely important clause.
Clause 25 places on the Secretary of State a particular responsibility to ensure that domestic reductions are at 70 per cent. We accept that that may well be a burdensome responsibility, but it is one that we believe is part and parcel of making a success of this Bill. Although I am disappointed that we are not able to put this amendment into the Bill for clarification of the text, I am grateful at least for the chance to discuss it. I hope that the Minister will be able to advocate the sentiments behind my amendment when he has discussions on the Bill as it moves to the other place. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 38 [General ancillary powers]:
7: Clause 38, page 20, line 16, leave out paragraph (a)
The noble Lord said: My Lords, I shall speak also to government Amendment No. 8. This relates to the Committee on Climate Change and its powers and functions, which we discussed earlier. It will provide the Government with independent expert advice and keep track of our progress towards meeting our targets. We consider that the Bill as it stands provides a strong institutional structure for the committee. On Report, we made a number of enhancements to further strengthen the transparency and accountability of the Bill’s framework to ensure greater clarity about the expected progress over the whole of the budget period. We also discussed amendments tabled by the noble Lord, Lord Dearing, and these government amendments respond to the points made during that debate.
I realised that during the course of that debate, I had the noble Lord, Lord Dearing, with me through most of my speech. It was only in the last few minutes that I lost him and, privately afterwards, I informed him that in the last few minutes I had stuck to the brief. The noble Lord made some valuable points and I hope, in what I am about to say, that it will be appreciated that we have listened and had discussions about this.
In introducing his amendment on Report, the noble Lord, Lord Dearing, said that,
“it is in the interests of the Government and us all that the Government should have, through the committee, the information and analysis required to formulate good policy”.—[Official Report, 11/3/08; col. 1494.]
The Government agree with that sentiment, and these amendments are intended to make it crystal clear that the Committee on Climate Change may do anything that appears to it necessary or appropriate in relation to any of its functions. That includes gathering information and carrying out research and analysis, and commissioning others to carry out such activities. Importantly, this also includes publishing the results of all such activities, if the committee so desires, so that information can be made public and openly debated. For instance, in providing its advice on budgets and targets, the committee will need to carry out an in-depth analysis of the potential for reducing emissions across the economy and rationally present the costs, benefits and other impacts of doing so. It is also now required to advise on the sectors in which there are particular opportunities to reduce emissions and to publish the reasons for its advice.
We expect that the committee will publish its workings in some detail, so that its advice is seen as being as credible as possible. For comparison—although this is not a target—the first report by the Low Pay Commission ran to almost 300 pages, so we will not be short of analysis. That is not a target but we would expect the committee to publish its workings in some detail. We want its advice to be credible in the view of the public. The decision on what level of analysis to carry out and to publish, in support of its advice, is for the Committee on Climate Change to take and nothing in the Bill restricts that.
The committee’s analysis will also inform its annual report to Parliament which will be an essential part of holding the Government and the country to account for progress. Clause 35 requires that the committee’s annual report must refer to progress made so far towards meeting the targets and budgets; refer to progress that remains to be made; say whether, in the committee’s view, the targets and budgets are likely to be met. So if the Committee on Climate Change considers that further progress is required to meet the United Kingdom's carbon budgets, there is nothing in the Bill which would prevent it from using its annual report to point out exactly where in the economy it believes there is the greatest potential to reduce emissions, and so enable the United Kingdom to get back on track.
As I have consistently argued, it is the job of the Government to draw policy conclusions from the committee’s analysis, whether that is analysis in support of the committee’s advice on budgets or contained in the committee’s annual report to Parliament. So, for instance, we could imagine a scenario where the committee's analysis demonstrates that there is a cost-effective potential to reduce emissions, say, from domestic heating, or from increasing the energy efficiency of existing homes. But it would be for the Government to decide how to tap into that potential—whether to regulate, to tax, to incentivise, or to encourage, and when to do so. That will ensure that the Government retain political accountability for their decisions.
I hope that is clear. When these amendments are placed in the Bill, it will be seen that a committee of the calibre of the Committee on Climate Change will have a much freer hand—not carte blanche—than might have been thought before this debate started. I beg to move.
My Lords, I rise briefly so that the annunciator does not have to be changed, as it has had me moving the amendment for the past couple of minutes. I support the amendments in this group. On Report, I called the amendment tabled by the noble Lord, Lord Dearing, which had a similar intention, the Frankenstein amendment and this seems to be Frankenstein night, missing perhaps that extra final charge from the electrical condenser, but, none of the less, bringing new life to the committee. We welcome these amendments. Empowering the committee to conduct and commission its own research is an important concession from the Government. It is a credit to noble Lords in the previous debate and a credit to the Government that they have taken note of that debate.
The Committee on Climate Change needs to be armed with the potential to find out the information necessary to combat climate change without a direct order to do so from the Secretary of State. It is highly likely that the committee will notice areas that need further examination and that need to be brought to the Government’s attention. Thus, it is welcome that the committee will now be empowered to do so. I hope it puts these new powers to good use. It is pleasing to see the Government finally taking on board a Conservative position: that this committee needs to have a power that comes from its scientific authority.
My Lords, as one who put his name to the original amendment of the noble Lord, Lord Dearing, I very much welcome the strong terms in which the Minister spoke to the amendments and described the ability of the climate change committee to take forward its own agenda in this area. Finally, I congratulate the noble Lord, Lord Dearing, on having pursued this strongly. He has achieved a good result.
My Lords, Machiavelli, Frankenstein and the opposition Front Benches have done a great job. I am grateful to the Minister for what he has said, particularly on Clause 35. This pilgrim is now released from Doubting Castle.
On Question, amendment agreed to.
8: Clause 38, page 20, line 21, at end insert—
“( ) In exercising its functions, the Committee may—
( ) gather information and carry out research and analysis,( ) commission others to carry out such activities, and( ) publish the results of such activities carried out by the Committee or others.”
On Question, amendment agreed to.
9: Before Clause 80, insert the following new Clause—
“Guidance on reporting
(1) The Secretary of State may issue, or cause to be issued by an authorised body, guidance regarding the information concerning a company’s greenhouse gas emissions which should be publicly disclosed by such a company as part of its annual reporting.
(2) The guidance may relate to the appropriate content and form of such disclosures or any matter necessary to promote the provision of transparent and comparable data regarding the greenhouse gas emissions of companies.
(3) The guidance issued under this section may distinguish between different categories of company according to criteria to be determined by the Secretary of State, such as turnover or market share or number of employees or any other criteria he or she deems relevant, and may contain different standards for each category of company in respect of the content and form of the disclosures or other matters referred to in subsection (2) above.
(4) Any company which is required to produce a business review under the Companies Act 2006 (c. 46) must report on greenhouse gas emissions having regard to any guidance given under this section, and the Secretary of State may provide that compliance with any such guidance will be presumed to constitute compliance with section 417 of that Act (contents of directors’ report: business review) in respect of reporting on such emissions.
(5) The power to give guidance under this section includes the power to vary or revoke it.”
The noble Baroness said: My Lords, I am grateful to the House for allowing this issue to be raised again. The substance of the amendment was put both in Committee and on Report, and I fully realise that the,
“practice of the House is normally to resolve major points of difference by the end of report stage”.
However, this had not happened because of the timing of the amendments at both stages. Amendments on this area were put close to 11 pm on the last day in Committee, and close to 10 pm of the last day on Report. The noble Lord, Lord Rooker, noted on Report that discussion in Committee had been “incredibly truncated”. Discussion on Report was somewhat more substantial but, again, truncated by the late hour. This was certainly not something on which the opinion of the House could possibly be tested at that hour with the pressure of time. I am grateful to the Minister and the House for allowing this issue to be properly examined now and I am grateful for the support of the noble Lords, Lord Dubs and Lord Whitty, and the right reverend Prelate the Bishop of Liverpool, even if several of them cannot be here; the annunciator being stuck on Amendment No. 6 is probably not helping.
The more I look at this issue, the more I see it as a litmus test of the Government’s seriousness. They are to be congratulated on bringing forward the Bill; now it must make a difference. In some ways, the amendment, limited though it is, reflects debate on many of the keys areas of the Bill. I shall explain what it is about, and why I think as I do.
A couple of years ago, we passed the Companies Act, bringing company law from the 19th and 20th centuries into the 21st. As it passed through this House, we insisted that, at the very least, quoted companies over a certain size should have a duty to report on various things, one of which needed to be their impact on the environment. Clause 417 of the Companies Act 2006 requires directors of quoted companies to include information on the impact of the company's business on the environment in their business review. A company director must also,
“have regard ... to … the impact of the company's operations on ... the environment”.
Amendment No. 9 states that those companies which are required to report on their environmental impact should include in that report information on their greenhouse gas emissions. Simple and non-controversial enough, you would have thought, and something which might be considered to be implicit in any environmental impact report. But we know it is not. Many companies do, or plan to do, this, but others do not. We seek to bring them up to the same standard. For companies which do not have this responsibility, we have a provision for the Secretary of State to guide on it. That is what this amendment is about. It is about being specific about something which is already supposed to be happening.
So why do I think this is a litmus test? I am spokesperson for the Liberal Democrats not on the environment but on international development. I bring forward the amendment because I recognise the impact that climate change will have, first and foremost, on developing countries. The Bill is being overseen by Defra, and led for us by our environment team. A cross-team, cross-party approach is surely what this issue requires. The Minister could not have been more refreshing, as we have heard, in his approach to the Bill. His heart is clearly in it. But remember those discussions earlier in the Bill about whether it should really be the Prime Minister who oversees this, because it must be implemented across government and across all departments? Of course, the Companies Act belongs to the new DBERR department, or what the noble Lord, Lord Rooker, prefers to call the DTI.
That is why the Government's reaction to our amendment is a litmus test. Will what Defra says must be done be seen through by DBERR? What does DBERR make of this Bill? Or is the problem the Treasury, given the problems of OFR and the business review of the Companies Bill? I have looked very hard at what Defra and DBERR say on this area and what the Minister said last time. There is more than a cigarette paper that could be slid in here, and that is what worries me. If, at this incredibly early stage, DBERR is apparently unwilling to countenance a spelling out of what in all honesty—and straightforwardly—ought to be included by quoted companies when they report on their impact on the environment, what possible hope have we for taking forward even more difficult decisions? The amendment does not force change on companies, though of course we hope that transparency, openness and simply working things through would indeed have that effect. It simply asks for a report.
I shall remind your Lordships. The Minister said that,
“these are incredibly important issues … the Government are very keen to promote transparency of carbon reporting by companies”.—[Official Report, 18/3/08; col. 245.]
He told us that he had his own Private Member's Bill in another place at another time which actually promoted company reporting of this kind. He did not prevail under the then Tory Government. He is a “goodie”, he says, and I think we would all agree. So it seems that he accepts the case, and has long done so. I note from Defra's website that, in January 2006, it issued a set of environmental reporting guidelines,
“to help companies to identify and address their most significant environmental impacts”.
“Companies that measure, manage and communicate their environmental performance are inherently well placed. They understand how to:
improve their processes,
reduce their costs,
comply with regulatory requirements and stakeholder expectations,
and take advantages of new market opportunities.
Failure to plan for a future in which environmental factors are likely to be increasingly significant may risk the long-term future of a business.
Good environmental performance makes good business sense. Environmental risks and uncertainties impact to some extent on all companies, and affect investment decisions, consumer behavior and Government policy”.
It goes on to note responsibilities under the Companies Act. All of that would seem to indicate that the Minister should long since have agreed to this amendment. So what has happened?
Well, this is where the litmus test comes in, and whether, indeed, the Prime Minister should have overall control here. I turn to the DBERR website. Issued in July 2007, there is a paper entitled Duties of Company Directors. Margaret Hodge, the Minister, says in the introduction:
“Pursuing the interests of shareholders and embracing wider responsibilities are complementary purposes, not contradictory ones.
I strongly believe that businesses perform better, and are more sustainable in the long term, when they have regard to a wider group of issues in pursuing success”.
In this she includes,
“their impact on communities and the environment. They do so at least partly because it makes good business sense”.
So far so good. But is there anything at all in the body of this paper on directors' duties about the environment? Not a thing.
So I undertook a pretty thorough search, as if I were a company director—which, of course, it would be nice to be—of DBERR's website to find out all my responsibilities. There is all sorts of information and all sorts of helpful distillations of the new law. Is there anything on my responsibilities to the environment? Hunt as might, I could not find it. It may well be there, but if so it is pretty effectively buried. That makes me think that DBERR seems not to be engaged in this Bill or if it is, it is saying, “Hands Off, Delay. Don’t do this now. Wait until X or Y”. I notice the Minister nodding. I should like him to tell me, hand on heart, that it is otherwise. I certainly hope he can, but I can think of no reason, other than that, for why the Government have not simply welcomed this amendment and said, “Yes, this fleshes out what we intended. We can say that in the next round of reporting, the relevant companies ought to include their carbon emissions, and most of them will have done that anyway”.
Last time, the Minister said that many companies are already doing this, and that is indeed the case. However, we know that it is patchy and not comparable. We need to level the playing field. We need to bring the tardier companies up to the level of the leaders. We have realised, not least via the Stern review, that action needs to be more urgent and sustained than we realised even as the Companies Act was passed. To delay for assessment, as the Government seem to suggest, for two, four or six years simply does not reflect the urgency of this problem. I am sure that Defra is only too well aware of that and I hope that, at the eleventh hour, the Minister will allow this change to the Bill. He and his colleagues at the other end of the building might already be becoming aware that there is a campaign building on this. Would it not be easier to be able to reply to all the postcards saying that they have listened, they agree anyway and this significant marker, this litmus test of how the UK will take this forward, has already been agreed to? I beg to move.
My Lords, I strongly support this amendment. I am not sure whether the noble Baroness mentioned this, but in Committee I moved this amendment. It was rather later than my bedtime and that of most noble Lords, so it is reasonable that we come back to this issue. I do not want to say very much because I agree with pretty much everything that the noble Baroness said.
The fact of the matter is that the targets in the Bill are not going to be delivered by legislation, by Governments, by and large, or, essentially, by individuals acting on their own through their own ethical considerations. They are going to be delivered by the main economic movers; namely, private companies acting to meet those targets within the framework that the legislation and the Government set. For those companies to change the way in which they behave in relation to carbon and carbon equivalents, they need to ensure that they have proper, verifiable measures of what the carbon and carbon equivalent is and that they are built into their central motivation for their management, their staff and their researchers so that the success of the company relates to a large degree to the way in which it minimises its carbon and carbon equivalent emissions. For that to happen, we need a proper system of accounting, supported by guidance and the accounting profession to ensure not simply that carbon is effectively traded on a verifiable and equitable basis but also to change the way in which companies behave, research is rewarded and managers receive promotion to highlight the company’s image and its public relations. Without that dramatic behavioural change in private enterprise, we will not achieve the targets set in the Bill.
It will also have a knock-on effect, and I declare my interest as chair of the National Consumer Council. Unless those consumers who are driven by ethical and environmental considerations can see that a company is making serious efforts to drive down its carbon emissions, doing so better than competitor companies, making its contribution and changing the way it does business, there will not be a demand effect on companies to redouble their efforts so that the full leverage of competition begins to operate in a way that means that these carbon targets are most likely to be met. This amendment is therefore absolutely necessary.
As the noble Baroness said, this amendment does not prescribe exactly what the Government should do but inserts an enabling clause to deliver legislation that is already on the statute book. However, it is an essential lever that we believe ought to be in the Bill. If he is not prepared to accept the amendment today, I hope that the Minister will take it back to his colleagues and will come back during the passage of the Bill with something that does deliver the whole of Whitehall because—if I can be indiscreet for a moment as I no longer hold the office that the Minister holds—there are recalcitrant elements in Whitehall and the noble Baroness pretty accurately identified them. However, with the overall political commitment to the Bill that has been set by the Prime Minister and the Government, that opposition within Whitehall has to be overcome, and this is one way of overcoming it with the support of British industry.
My Lords, I very strongly support the amendment. I remember sharing a platform in a very supplementary capacity with the previous Prime Minister when he launched the project Accounting for Sustainability. It is a research project that is currently under way under the leadership of KPMG that intends to do exactly what the noble Lord, Lord Whitty, said, which is to put into the DNA of companies the consideration of something that, because our existing accountancy rules are retrospective and look at historical costs, has not, until comparatively recently, been part of the picture of practical management. This amendment is entirely consonant with the way in which the general picture is developing. As has already been stated, it is permissive and shows direction of travel rather than being mandatory, so it does not tie the Government’s hands in an inappropriately specific way.
My right reverend Brother the Bishop of Liverpool is a signatory to the amendment. He is characteristically abroad on his environmental crusade, but I want to sign up to this as well, particularly as I chair the Church of England’s Shrinking the Footprint campaign, which affects 18,000 of our churches and many other buildings. I know perfectly well that such measures as are described here are complex, but it is entirely possible to get compliance and make progress, even with an amazingly devolved and undisciplined organisation such as ours. This is an essential indication of whether the Bill will take advantage of an evolution in the general climate, particularly the climate that relates to how we account for our enterprises.
My Lords, I support this amendment. I shall add an additional reason. I would not have spoken had any other noble Lord mentioned it, but it is important. The Government have tripped over themselves, sometimes to the point of going to far, to be business friendly, but I get around and talk to businesses and the businesses I talk to tend to be those that are the most responsible and the most eager to be seen to be part of the UK community. They always say the same thing to me: “For God’s sake, why do the Government not legislate and create an even playing field between we who wish to be responsible and those many other businesses that choose not to be?”. If that is not the best possible reason for pushing this amendment through, I can think of no better. It is to ensure that the actions taken by the best companies are matched by those that are at present wishing to evade and avoid them.
My Lords, I am pleased that we have had the opportunity of debating this subject at a reasonable hour, which has meant that the issue has been well aired. I shall speak to a particular aspect of the amendment, which is reporting on emissions. In the light of the National Audit Office report, that is a pressing issue. The NAO review of measuring and reporting greenhouse gas emissions pointed out that one of the potential pitfalls of the implementation of the Bill is how we will know what we are emitting. In its current form the Bill marries the measurement of reporting mechanisms to international reporting practice. That is right and proper and we see nothing wrong with that. It is indeed important to accord with international standards in the face of an international problem.
However, the amount of carbon being emitted might not correspond to those figures. According to the NAO report, the environmental accounts compiled for the Office for National Statistics show much higher emissions than those being reported to the United Nations Framework Convention on Climate Change.
One reason for that is that the ONS emission figures include international aviation and shipping, which we are pleased will now be included in the Bill on the decision of your Lordships' House. However, that is not the only reason that the ONS statistics are higher. There are many different ways of calculating greenhouse gas emissions. What efforts are currently being made to standardise the method? To what degree can the Minister guarantee the accuracy of the figures?
If we are calculating our emissions according to international standards, but have further information that we are emitting in ways that are not required to be reported to the UNFCCC, what do the Government plan to do to address that discrepancy? Can the Minister give undertakings that the budgets will be set to take account of the fact that there are emissions that are not being included? Will the Government agree to alter their percentages in the light of the fact that there might be more emissions that need to be reduced—such that a 100 per cent reduction would really get rid of all gases?
I was dismayed to see the context of the NAO report. It implies that the Government have not been effective at all in reducing emissions, although they had led us to believe that they had been. What mechanisms will be put in place to ensure that ministerial reporting on emissions takes into account the entire spectrum of our emissions? Does the Minister not think that it is vital to be open and accurate in reporting emissions data?
The NAO report notes that new reporting budget mechanisms in the Climate Change Bill might,
“complicate the reporting framework further”.
What is being done to ensure that that does not happen? Is there any way to ensure that that is not the case? Will the National Audit Office review the new framework?
Finally, and importantly, will the Minister confirm that he has held consultations following the report to avoid the traps that it outlines? In order to implement a proper system as proposed under the amendment, we need to have a proper measurement system.
My Lords, I very much support the amendment and was delighted to put my name to it. I am aware that my noble friend has a very difficult case to answer—probably as difficult a case as any Minister has had to answer on any issue for a long, long time. Does he agree that if such reporting takes place, it would have a salutary effect on the way that companies behave? Is there any other way in which the same end could be achieved, other than that suggested in the amendment? If there is, we would all be happy to hear whether the Government will propose it. I believe that there is no better way to achieve this end; I cannot think of any other way to approach it. I therefore very much hope that the Minister will be sympathetic to the arguments put forward.
As my noble friend Lord Whitty said, if this were on the statute book and given effect, the culture of companies would inevitably change. In tackling climate change, we are seeking to alter the culture of individuals and of businesses and companies. This is one obvious way to make enormous progress on that. Of course it is a competitive world. This is a case where competition can only be a good thing. I would like to see reporting on Tesco, on Sainsbury, on Asda. Then we would begin to see what is actually happening. If we had reporting on the different airlines, would that not be interesting and salutary? It might influence our behaviour as between Tesco and Sainsbury and between airlines—I had better not say British Airways these days. That would enable us as consumers to make informed choices. If any of us were shareholders—I am not, except through an ISA, a PEP—we could exert pressure on companies.
If companies had that pressure brought on them, I believe that they would respond, because that is the nature of the marketplace and of competition. While that information does not exist, companies are under no pressure. Even well meaning people within companies—trade unions, sympathetic directors and sympathetic workers—are in difficulty because they do not have the ammunition with which to make the argument. Goodness me, if I were working for a company and could see that down the road they had a much better record, I would want to know why they were doing it and we were not and what we could do to change our behaviour.
I find the argument absolutely compelling. I look forward to my noble friend’s positive response.
My Lords, I also support the amendment. It is true that there have been moral homilies to companies to report and, under the Companies Act, some requirement to report for some time, but work done jointly between the Environment Agency and some City institutions shows that reporting is very inconsistent, very difficult to track between companies and very difficult to track over time.
Recent research during the past three years has shown that you sometimes need to be a bit of a detective to find company reporting on environmental parameters generally and on climate change and carbon emissions in particular. Some of them tuck it away in corporate social responsibility reports separate from their annual reports and read, one assumes, only by sad human beings such as me and, perhaps the Minister. Others cite it in their annual reports but in ways that vary from year to year, so that one cannot even track the progress of the same company on a consistent basis year on year.
The Companies Act talked about the responsibility being laid on companies for reporting according to their degree of risk and the assessment that the company would make about what were the significant risks. During the passage of the Bill, we have heard just how significant climate change is as a risk not only to companies but to us as a country, to our economy, to social considerations and, indeed, to the whole globe.
It is instructive that most of the work that the Environment Agency has done on company reporting has been done jointly with the insurance industry and with the investment management community within the City, which is very interested in being able to track what it now realises is a key risk that will influence how it feels about insuring companies and advising on investment in companies. There is a big community out there, all coming at this from different angles, which would like consistent, comparable, clear reporting. It would be useful if that helped us to avoid too many fights in future about the basis on which we are going to keep the books on carbon emissions.
This is a bit of a diversion, but I cannot resist it. I was tickled by the search of the noble Baroness, Lady Northover, of the BERR website. If we are into BERR-bashing, I must confess that when BERR recently published its statement of purpose and objectives, I put a quick word search into it looking for the word “environment”. It came up three times and I thought, “Yippee! This is really good: BERR saying ‘environment’ three times”. Alas, on each of the three occasions, it was talking about the business environment and there was no other mention of environmental issues. Of course, I could not possibly comment in terms of the amendment on whether that is a reason.
This is a very apt amendment because it is proportionate. It makes the point that the requirements to report must not be too onerous; they must reflect the size and impact of the business. It is not a one-size-fits-all amendment; it is therefore worthy of support.
My Lords, I support my noble friend. We have just debated an amendment that deals with the 60 per cent reduction in carbon dioxide that we are considering. We should not forget that this is a 60 per cent reduction in carbon dioxide not from electricity or big business but throughout the country. We have a slight problem in that there is no way of measuring that, as many noble Lords have pointed out.
On Virgin Radio this morning, there was an advert from the Carbon Trust saying something like, “If you’re a business, we’d like to help you to reduce the amount of carbon dioxide you produce”. Perhaps that is the wrong way around. Business should have a moral obligation to do so if we are to push this forward. We risk producing a piece of legislation that does nothing more than be a piece of legislation, because there are other pieces of legislation. Local government has an obligation to try to reduce domestic carbon dioxide emissions by 30 per cent but no means by which to do so.
The first thing we must do is find out who the polluters are. The amendment would help to do that. I am not sure that business would see it as a bad thing. I was at a dinner with a lot of CSR representatives from companies. I think they would see it as a good thing. This is true especially of some of the big companies such as BT and Ikea, which have a good message to send. BT has just advertised that it has reduced its carbon dioxide emissions by 60 per cent. That is a good message which they should put to their consumers.
However, there is a problem here. DBERR—or is it BERR? I never know; it has changed its name three times. I still prefer DBRRE, or Debris, but that is just a personal thing. It rolls off the tongue better and does what it says on the tin—and Defra measure carbon differently. How is business meant to measure carbon? Is it meant to follow BERR’s measurement of carbon or Defra’s? That is just a brief point, but it is no bad thing because the real point of the amendment is to make directors of companies think about their carbon footprint.
I am a director of the Institute of Advanced Motorists, the commercial arm of which has been pushing fleet training. We used to sell that very successfully on the basis that the more white van drivers you train, the fewer accidents they have. The training also pays for itself very quickly because fewer accidents mean a smaller insurance premium. We now have a much more persuasive argument for companies. People who have been trained in advanced driving, which is actually safe and sensible driving such as not putting your foot to the floor when you are coming up to a red light, produce 10 per cent fewer emissions from the tailpipe. This is a very effective argument, which companies have been taking on board in the past two years. The saving in carbon dioxide, as well as the saving in fuel, is now resonating with fleet managers, whom we never thought we would get through to on the environmental aspect.
This is a good news issue, but one that must be thought about. We must appeal to company directors not only on main issues such as electricity but on every aspect from transport and procurement through to office management. This is an excellent amendment. If the Government do not accept it, little success will be built into the Bill in the next few years.
My Lords, I have just counted up the votes. I think it is eight or nine to one: or perhaps nine to zero, to be honest. As my noble friend Lord Whitty said—I realise that the Annunciator was not quite right when we came to the debate—the noble Baroness, Lady Northover, referred to moving the amendment and to the unsatisfactory nature of the way our first two debates were held at almost 11 o’clock on the first night. The general consensus was that it was not known that we had to stop at a certain time. I think it was a Wednesday evening, and the House does not sit after 11 pm on a Wednesday because of the early start on Thursday. The debate on Report, too, was held late in the day. This debate has not suffered the fate of the daylight hours debate, which started late on both nights and has not come back today. I take what the noble Baroness said about bringing this back at Third Reading, but it is not for me to pronounce on the rules of this place. It is on the Order Paper and therefore up for debate. It gives me an opportunity to set out the Government’s position.
First, as I have said before, we are not starting with a blank sheet. Many United Kingdom companies, such as the 1,000 companies in the EU Emissions Trading Scheme, are already required to disclose their emissions.
My Lords, I thank the Minister. He said this on Report. Clearly companies have to report because the Government run the system that measures the EU Emissions Trading Scheme, but that does not have to appear anywhere in any public company report, so it in no way meets the requirements of the Bill.
My Lords, I have only just got going. I know that I have said that before. I am simply setting out the facts—and being very careful with my use of words—that those companies are required to disclose at present.
Secondly, there are non-financial issues, which are relevant to the development of performance in a business. Environmental matters can be included, as noble Lords have already said. The good companies will include them, and for lots of reasons. At the end of the day, being good companies, they see that the bottom line improves as well as the customer base. The Companies Act business review requirements require that, and we expect that many companies will report on climate change issues in their business reviews. We will start to get a picture of that in the next few years, which will feed into the proposals.
On the standards for reporting, I understand that debates, in which I was not involved, during the passage of the Companies Act 2006 concluded that, rather than mandatory standards for narrative reporting, we could encourage minimum compliance with guidance and a voluntary approach. That would ensure that directors gave proper consideration to reporting. A lot of work is being done to support voluntary reporting. I must point out again that UK companies are already global leaders—I may fall foul of this; I am not claiming that they are the best—in voluntary environmental reporting.
The noble Lord, Lord Taylor, asked about the National Audit Office report. As that report says, UK greenhouse gas reporting follows international reporting requirements and, as I think I said during the passage of this Bill, we follow the best practice guidelines and have been favourably reviewed by international experts from the United Nations climate change convention and the Kyoto Protocol. If that is not enough, Clause 29, which came across our radar earlier, requires that UK emissions,
“must be determined consistently with international carbon reporting practice”.
There are some issues relating to what Defra is doing. We are supporting the secretariat to the Climate Disclosure Standards Board, which was launched at the World Economic Forum in January 2007. David Miliband attended as the then Defra Secretary of State. The objective of the board member organisations is to align their core requests for information from companies to ensure that they report climate change-related information in a standardised format that facilitates easier comparative analysis by investors, managers and the public.
I know that some people take the old-fashioned view that company reports are simply for the shareholders and that everyone else should mind their own business, but we have gone way beyond that. I am in a position where I can break the habit of a lifetime. We have just had a Division, which the Government won by two votes—I am incredibly grateful to the two Members—on an issue that would have been major. I am using my experience from this place and from the other place. I have to say that the postcards can be a real bore, especially when they come in separate letters from Members of Parliament and require individual replies, to which they are entitled. It is a brave Minister who spends large sums which have not been agreed with colleagues, but that is not an issue with these amendments. As I and others have already said, when the Bill goes to the other place, the Government’s collective view and individual views will determine how the Bill finally ends up and the lines that are taken. There are no lines in the sand in that respect. Every amendment that this place sends to the other place will be considered and either rejected or modified, as happens when the Government think again. Therefore, taking this completely sensible and cost-effective approach, I am going to suggest that the House accept the amendment.
My Lords, I am not sure what I am supposed to do now. I thank the Minister very much. When he said that it was eight or nine to one, it may have reflected how he really felt on this. I very much appreciate the participation of Members on all sides of the House, but especially the Minister’s agreement to the amendment.
On Question, amendment agreed to.
Schedule 1 [The Committee on Climate Change]:
10: Schedule 1, page 48, line 21, at end insert—
“( ) section 33 (advice on level of 2050 target),”
On Question, amendment agreed to.
Schedule 2 [Trading schemes]:
11: Schedule 2, page 55, line 24, at end insert—
“(c) may identify the activities by reference to the objectives to be achieved by them”
The noble Duke said: My Lords, I shall speak also to Amendments Nos. 12 to 14 in this group. Having read carefully the Minister’s reply to my amendments on the final day of Report stage, I am left with the impression that those who were advising him were unable to shake off their predilection for the top-down approach where the Government define the area of the economy to which each scheme applies. As such, several of the answers appeared to be a bit wide of the mark.
As we have just heard, we are back to the question that runs through all our minds. Just how urgent is the saving of carbon emissions to our future? Opinions vary from those who propose the Gaia theory, where the problem is so serious that it is too late for us to do anything about it, to those who think that the current ideas are all far too theoretical and are influenced by forces so far beyond our control that what we are doing is a waste of time. My impression is that the Government find themselves in a dilemma because they would like to appear to be green by taking action but realise that an over-reaction might put the British economy at a disadvantage. So their enthusiasm has to be tempered.
As the Minister pointed out during the previous discussion on this subject, the nearest approach that the Government have made to what my amendments seek to achieve was the first UK Emissions Trading Scheme. It was certainly admirable in its way and it exceeded its targets by some considerable amount, but again it was taken up by only 32 fairly large businesses. As the Minister will be aware this scheme has now closed for new entrants and continues only for those for whom it has a little longer to run.
Part 2 of Schedule 2 would allow the Government to bring forward a similar scheme, but that is unlikely as they will be concentrating on their auctioning of allowances, in a scheme such as the carbon reduction commitment, to targeted industries rather than seeking to provide another £215 million or whatever to subsidise a new scheme. If we are anxious to pursue every meaningful opportunity to save carbon emissions and take account of the urgency that most of us feel, I am left rather quizzical about the Government’s rejection of the mechanisms required to participate in the whole project-based mechanisms offered under joint implementation.
At Report stage I asked the Minister if he could explain the Government’s reasoning. If the Minister is unable to do that now, I would be most grateful to receive an explanation in writing. This group of amendments would allow the climate change committee or the Government to consider an opt-in scheme for project-based enterprises within the UK. It would dovetail in with the tradable allowance concept in much the same way as the project-based schemes that are approved under joint implementation can dovetail in with the national allowances and credits generated under CDM for those who are meeting their Kyoto targets. Amendment No. 11 proposes that meaningful enterprises from any sector of the economy can put forward schemes that provide the necessary savings defined by the objectives to be achieved. At the earlier stage, the Minister expressed some concern that my amendments would leave out the obligation for a consultation process as required by Clause 40.
In a project-based mechanism, the Government will not be laying down enterprises to which they want a scheme to apply, so the need for that obligation would be at the most formal, or even unnecessary. There would be plenty of opportunity for the Government to determine whether applicants are aware of the requirements placed on them once the application has been received.
In response to my amendment regarding carbon credits at that earlier stage, the Minister said that paragraph 17 would provide for the issue of credits. But my understanding is that the Government’s approach to the issuing of credits is that it will be totally their decision. My Amendment No. 12 highlights the possibility that projects first proposed and then approved can generate a right to certificates which would be issued as part of a UK trading scheme. Amendment No. 12 recognises the fact that the definition of credits is contained only in Part 1 of Schedule 2, as it is important that this ability is seen to apply equally to schemes encouraging activities.
One of the objections the Minister was trying to flag up about those earlier amendments was that the existing paragraphs in the Bill,
“will enable suitable safeguards to be put in place to ensure that participants and activities are controlled appropriately”.—[Official Report, 18/3/08; col. 158.]
But this is a hint of all the uncertainties that the top-down approach contains—such as what should be the level of allowances foreseen for each enterprise? What level of reductions in emissions can be envisaged without making areas of British industry uncompetitive in the global economy? I understand that the renewables obligation is taken to be adding about 15 per cent to our energy prices. At what level should the price of the allowances issued be set before the market has stabilised?
Does the Minister accept that the project-based approach contains its own regulator? If the price of carbon in the main scheme of allowances starts to become too dear, more enterprises will be attracted into the scheme and will help to contain the price. But if the price of carbon begins to be too cheap, no proposals will come forward to aggravate the position and so will considerably reduce an existing area of uncertainty. In the present proposals, anything of this nature could require government intervention. Amendments Nos. 13 and 14 would give the limited element of official control to the scheme that would be necessary. I beg to move.
My Lords, we discussed similar amendments on Report, and I thank the noble Duke for bringing these back. However, rather like the earlier group of amendments moved by the noble Lord, Lord Taylor, I do not have much more to add before the Bill goes to the other place. As I have made as clear as I can, and if we understand the intention of these amendments correctly, nothing in the Bill would exclude what the noble Duke seeks to provide for.
The Bill provides a framework approach. There is nothing in Schedule 2 to prevent the development of a trading scheme allowing people to opt in or to do anything that this group of amendments seeks to ensure. Obviously, decisions on issues such as this would need to be taken in the context of individual schemes if and when they are established under the Bill.
As I noted on Report, the Government set up the voluntary UK Emissions Trading Scheme, which ran for four years from 2002. That was a bottom-up scheme of the kind mentioned by the noble Duke. It involved large and small organisations such as Ford, Tesco, the Natural History Museum and, indeed, Kirklees Council. The scheme delivered carbon savings well in excess of those anticipated, and was a valuable learning experience. The example demonstrates that we are willing to look at the issues raised by the noble Duke. As I said, however, we are in no position at this stage in the Bill’s progress to come back with a demonstrable government acceptance. No doubt these issues will be discussed in the other place.
I apologise because I have repeated what I said on the previous occasion. I cannot take the matter any further at this point in the Bill.
My Lords, it is interesting to note that the Minister has indeed come back with the same arguments he made at the earlier stage. I think it is quite likely that the Government could decide that they will bring in a scheme of this nature, but it is very much a government decision in the first instance. I am seeking to ensure that the possibility exists in the Bill. However, in the light of what the Minister said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 12 to 14 not moved.]
An amendment (privilege) made.
My Lords, I hope that it is proper at this stage for me to thank the Minister for the way in which he has conducted the passage of the Bill through this House. It has been a challenging Bill and many of us have learnt a lot about things of which we knew relatively little when we embarked on the process, but it has been conducted by the Minister in a most agreeable and pleasant fashion, and it must be to his liking that he has been able to accept amendments made at Third Reading in the way that he has today.
I also appreciate the support given by the Bill team to making this a sounder piece of legislation than it was when it started. The Minister said that he knew it would leave this place in a very different form from that in which it arrived. I hope that it has been improved and that the work of your Lordships will be considered in another place. I thank noble Lords for all their contributions, and here I refer to the cadre of skill that has come from the Joint Committee of both Houses chaired by the noble Lord, Lord Puttnam. I hope that noble Lords have strengthened the Bill and thus ensured that its implementation is that much more likely to be successful.
My Lords, I should like to add to those words. I have not taken a Bill through the House from these Benches before but I have found this a positive process. Much of that is down to the Ministers involved, particularly the noble Lord, Lord Rooker. The Bill team has also been particularly helpful; they have been involved in many useful discussions and supplied amazingly comprehensive briefing papers. I tried to fire off a few myself but the salvos came back very quickly. I still think that mine were right and theirs were wrong, but there we are.
I, too, would like to thank the noble Lord, Lord Puttnam. I had the privilege of serving on the Joint Committee which scrutinised the draft Bill. I felt that it was a good exercise and the Government should be congratulated on it. That pre-legislative scrutiny has helped the passage of the Bill.
As we all know, this is a framework Bill. It is now down to all of us—whether in opposition or in government, as citizens, and now businesses as well—to get on and implement its provisions in order to save the planet, or whatever the cliché is. But the work is still to be done.
My Lords, I have no desire to delay the House and I know better than most how the credit roll at the end of a movie can be exasperating, so I shall keep my contribution as short as possible. I want to say on behalf of the members of the Joint Committee how involved and engaged we were in the process, and we are hugely appreciative of the Minister for the way in which he has treated our recommendations. Interestingly, around 70 per cent of our recommendations have been accepted and incorporated in the Bill that will now go to the other end of the corridor. That is not a bad day’s work.
I think we would all agree that the Climate Change Bill cannot succeed in a purely party political environment. We are in this together and we will succeed or fail together. As the Bill passes to the other place, and in every sense I wish it godspeed, I want to point out to the Government that the atmosphere out there in the world at large regarding these matters has changed in the 10 months since we started our consideration of the Bill. Just recently, articles by John Vidal, Andrew Rawnsley, Martin Kettle and Ian Sample have all essentially made the same point—that there is a developing informed scepticism about the commitment of this House and the Government in general to the intentions that lie behind the Bill.
Like many noble Lords, I thoroughly enjoyed President Sarkozy’s extravagant flattery last week, but there is another voice out there. Some of your Lordships may have read an article recently published in the Guardian by the dean of the Lee Kuan Yew School of Public Policy in Singapore, Professor Kishore Mahbubani. I am grateful to him for allowing me to précis his words:
“While the West conducts a self-congratulatory conversation, the rest of the world sees an emperor with no moral clothing”.
Professor Mahbubani describes three crucial flaws in the following terms:
“The first is its [the West’s] inability to practise what it preaches. The second flaw is its refusal to recognise its track record of double standards … whenever a western country has to choose between promoting its values or defending its interests, interests always trump values. The third flaw in western discourse is that when presented with a choice between ‘doing good’ and ‘feeling good’, the West almost always chooses the latter—because it costs less”.
The Bill is a fantastic opportunity for this country to prove that it will not remain guilty of those flaws, and in that sense I commend it and wish it well.
My Lords, I am most grateful for the kind remarks that have been made. The Bill was new ground for many of us. I fully expected to follow its passage through the other place while doing the farming job so that I would be up to speed by the time it finally arrived here. I was as surprised as anyone else to be told last November that it would start in your Lordships’ House because I have only taken one other major Bill through this House first, the Police Reform Bill when I was at the Home Office.
The Bill has not been party politically contentious, and that is an important aspect of it. As my noble friend has just said, while it has been considered for around four months in this House, it also underwent the scrutiny of the Joint Committee. I know it will be a surprise to the other place where, like the Human Fertilisation and Embryology Bill, it will be treated as though it has never been debated. Nevertheless, I think that we are sending it across in better shape, and I thank everyone for their help and co-operation. I thank in particular my two colleagues on the Front Bench for dipping in and out and for keeping me in order so that I have said the right thing at the right time on most occasions. I certainly thank the team in the Box and those who are not present today. I have not always followed the notes I have been given, but they were helpful in putting what I wanted to say into context.
Sometimes you have to take the will of the House. The only way you can get that is to stand at the Dispatch Box and listen. Indeed, I have to say to the noble Lord, Lord Taylor, that I did not have any choice. When we won by two votes I was not prepared to risk defeat on the amendment—it could easily have gone the other way—and soured the day’s work. I decided while listening to the debate that it would be a good idea, with all the caveats I put on to it, that we should accept the amendment.
The House is grateful to the Joint Committee for its work because it will be shown to have been a real credit to the activities of committees of both Houses when the Bill is considered in the other place. We have had the odd late night on the Bill, which meant that staff were dislocated, and I am grateful for their efforts. I have had very good back-up. I have the best private office in Defra and in Whitehall, and I am extremely grateful for all the help I have had during the passage of the Bill.
On Question, Bill passed, and sent to the Commons.
Channel Tunnel Rail Link (Supplementary Provisions) Bill
1: Before Clause 1, insert the following new Clause—
“Regulation of the rail link
(1) From the day twelve months after this Act comes into force—
(a) any railway undertaking operating on the rail link will be subject to regulation under the Railways Act 1993 (c. 43), the Transport Act 2000 (c. 38), the Railways Act 2005 (c. 14) and the Railways Infrastructure (Access and Management) Regulations 2005 (S.I. 2005/3049), and(b) any reference to a “rail link facility” in those Regulations shall cease to apply.(2) In subsection (1) “rail link” has the same meaning as in the 1996 Act.”
The noble Lord said: My Lords, it was nice to listen to the finale of the Climate Change Bill and to hear the congratulations which followed it and the unanimity described. In this case, the Minister faces opposition from all sides of the House.
In Grand Committee, the main point the Minister made concerned getting the best deal for the taxpayer. I have reread that debate and the only plausible argument—it is not a sound argument—put forward by the Minister concerned the independence of regulation. In the debate following the report of the European Committee, his noble friend Lord Jones of Birmingham said:
“On regulation of the railway sector, I entirely agree that the focus should be on free, undistorted, liberalised and competitive markets. In the same way that the Government have influenced the energy sector with a view to opening it up, so we will continue, I assure the House, to work with the European Commission in pushing for a better regulated and more competitive railway sector. The Government would like to see greater regulatory co-operation across the European Union. The key is co-operation; the key is independence of regulators”.—[Official Report, 14/3/08; col. 1705.]
On the day of that debate we saw the noble Baroness, Lady Vadera, in her office. She reiterated the Government’s commitment to independent regulation. She banged the table and said, “That is what we believe in”. In the Regulatory Enforcement and Sanctions Bill, the next Bill to come before the House, the noble Baroness, Lady Vadera, has tabled an amendment to Clause 71. Amendment No. 102 provides for the independence of the economic regulators of the Gas and Electricity Markets Authority, the Office of Fair Trading and the Office of Rail Regulation. In all, five bodies have been excepted from the general regime laid down in the Regulatory Enforcement and Sanctions Bill which applies to other regulators.
These regulators have been excepted because each of them was set up by statute and their duties are clearly defined in statute. These duties include granting access rights and reviewing the efficiency with which the infrastructure operator conducts its business. If the regulators feel that an infrastructure operator is charging too much or is being inefficient, they say so. It is not a question of saying so when it suits the department, which we all know can be a changing feast; the department may or may not make up its mind, this year, next year or sometime never. The rail regulator has to produce a quinquennial review to a very strict timetable.
The Minister’s arguments have turned on two things. On the question of the independence of the regulator, the Government are speaking with two distinct voices. It is incompatible that you should argue in this Bill for the department to carry out the regulation and argue for the independence of regulators in another Bill. In Grand Committee, I repeated that I had been told by a significant and serious potential purchaser that it would rather have the competent, consistent regulation of the Office of Rail Regulation than the kind of regulation that would undoubtedly be operated by the department as part of the political process, which could change, not change or not be issued. Anyone who invests wants certainty and the potential purchaser would choose to be regulated by the Office of Rail Regulation, which it has become used to and which operates with other rail regulators in Europe. The noble Lord, Lord Berkeley, may have something further to say on this.
I am sure the noble Lord would never accuse me of being a half-hearted friend of the railways. I am absolutely consistent in my support of the railways. I have received in the past few weeks—they passed through his hands—some terrible, evasive answers which have not given information, given misleading information or given information that does not answer the question. We want satisfaction on this issue. When the Minister responds, I hope he will either give us satisfaction or say that he will take the matter away, talk to other Ministers and come back with a formula that satisfies us. This is a serious issue and I am not playing around. I beg to move.
My Lords, I support the amendment, to which I have attached my name. I shall not repeat what has been said, but it is important to note that the Bill as it stands will increase the regulatory remit of the DfT. However, with the DfT also being the vendor of both the infrastructure and the UK arm of Eurostar, it could result in a number of potentially damaging consequences, including higher access charges, lower levels of utilisation and conflicts of interest, as well as all the other consequences mentioned by the noble Lord, Lord Bradshaw.
It is essential that we avoid these pitfalls and I hope the Minister will be able to give us some reassurance on this. The ORR should be the economic regulator of the CTRL. Independent regulation is essential for consistent and robust governance and we should promote it in the House. We all echo the points made by the noble Lord, Lord Jones, who advocated that governance should depend upon strong and independent national regulatory authorities. He also said that he was taking a particular interest in this legislation. I repeat what the noble Lord, Lord Bradshaw, said: we need more satisfaction on this issue before we complete the process of legislation and I hope the Minister will be able to help us today. I support the amendment.
My Lords, I, too, support the amendment, which is designed to create the same regulatory framework for the CTRL as happens on the rest of the network. As my noble friend says, if the text is inadequate perhaps he could suggest some improvements, but that is the intention.
As both noble Lords who have already spoken have said, the idea is to enable the independent regulator to fulfil duties not just to set the original charges in accordance with the regulations, which is very important, but also to be able to manage—actually, “manage” is probably the wrong word—or to oversee the operation of the infrastructure manager and, if necessary, require it to introduce efficiencies.
To return to the setting of charges, there is no doubt at the moment that the lack of charges is putting off other operators from using it. The noble Lord, Lord Bradshaw, mentioned a potential investor. I happen to have met today another equally credible investor who could buy the infrastructure manager. I got exactly the same answer to my question as the noble Lord did. It is not a question of whether the regulator would provide a better deal than the Department for Transport would. For the past 10 to 15 years the regulator’s office has established a precedent, a method of operation and a credibility that make it probably one of the best regulators in this country and certainly the best in Europe—although the latter is maybe not saying a great deal. I shall come on to that.
These companies are saying they want certainty. It is the risk of changes of mind by the Department for Transport, or changes of policy, that they cannot price. These investors start off, not with the politics of the House of Lords or the House of Commons, but with a spreadsheet, and they do not like uncertainty. Even though they may be told by the Department for Transport, “We’ll make sure the charges are really high so you’ll get lots of lovely revenue and therefore you can pay us more”, they will not believe it. They will probably realise that, as with the Channel Tunnel, high charges do not necessarily mean extra revenue.
Here we have two investors, whom we happen to have met, who are saying that they would much rather have the thing regulated by the Office of Rail Regulation alongside the rest of the railway. Then we would probably pay more than if it were not, which to some extent puts paid to my noble friend’s argument that the Government want to do it this way because they will get more revenue. If he has evidence from other investors—if I and the noble Lord, Lord Bradshaw, have got it wrong—we would like to hear about it. At the moment, that is my view from the point of view of the investors.
Then there is the question of those who will run trains on the line. We shall come to this again when we discuss the second amendment in the name of the noble Lord, Lord Hanningfield. One of the operators I have spoken to who wants to do this said, “Since we don’t know what the charges are going to be yet, or the regulatory framework, we are not investing in the equipment that needs installing in the locomotives to enable them to work with the signalling on this line”. They have delayed investment.
As I mentioned briefly in Committee, there is still no approved network statement nor any charges, nearly two years after the first bit of the line opened. If this had been regulated by the ORR from the start, the infrastructure manager would, quite rightly, have received a hefty fine. If you do not know how much you are going to pay, you are not really going to bother to decide whether you are going to run trains on the line. You do not know whether you can do it without making a loss. This is another example of the lack of stringent regulation that we find because the ORR is not doing it.
I return to the costs. One usually finds a relationship between the costs of maintaining a piece of railway and the charges. The regulator, as we all know, is doing an enormously complicated assessment of how much money Network Rail needs to maintain its network. It is likely to say, “You already reduced your costs by 31 per cent last time and this time we will probably want somewhere between 20 per cent and 30 per cent”. It is easy to say that the Channel Tunnel Rail Link is a new line and it will be very efficient, but it is actually being operated by Network Rail at the moment under a kind of subcontract from the present owners. I suspect that if the Office of Rail Regulation got its teeth into this, it would find ways of saving money even now and might well say to the operators, “You can save 20 per cent in the next five years”. Again, the lower the costs, the lower the charges and the more traffic that will use the line. It is really quite simple.
I look upon the noble Lord, Lord Jones, as a kind of ambassador for many good things that we do in this country. He made a speech during a debate on 14 March, when we were focusing on energy and transport issues. While he is going around the world, he clearly believes that the kind of private sector arrangements we have here for the network industries and the regulation that goes alongside them are something that we are proud of. Personally, I am proud of what is happening on the railways now; it is rather good. The noble Lord said in the rest of the paragraph, which the noble Lord, Lord Bradshaw, did not quote, that:
“A flexible … framework will require greater regulatory co-ordination and consistency, coupled with a robust process for reaching agreement on cross-border issues”,—[Official Report, 14/3/08; col. 1705.]
and all that. He is really saying that we want to sell this to the rest of Europe. We cannot do that unless our own house is in order. I have been talking to people in the Commission about this today. They said, “Well, Tony, it’s all very fine you saying what a great regulatory framework you’ve got, but if your Department for Transport decides it wants to regulate something because it’s easier and it thinks it’ll make a bit more money, how are you going to sell this to the rest of Europe?” That is what our railway business wants from this country—many companies are starting to operate on the Continent—but we have to have a sound home base.
For me, this is quite simple. I hope my noble friend can answer this question: what is making the Government continue down this path when two major investors and one major operator say that they would pay more money if the Government went down the road of making this railway regulated in the same way as the rest of the network? I look forward to hearing what he has to say.
My Lords, I support the amendment. It is important that the Channel Tunnel Rail Link, or High Speed 1, should be incorporated wholly into the public railway network in a uniform fashion because I hope that one day we will have a high-speed network, and I do not want the precedent to occur whereby the high-speed lines are for some reason governed differently.
My Lords, I am grateful to all noble Lords who have made a contribution to this debate, which I fully acknowledge is an important one. It has been the main thrust of concern and discussion on the Bill as it has gone through its various stages, so it was no great surprise to me when the noble Lords, Lord Bradshaw and Berkeley, later joined by the noble Lord, Lord Hanningfield, put this amendment down for further discussion today. They have been commendably clear in terms of what they are after, and I congratulate them on that. It is very welcome that we can clear the air on this. I hope that noble Lords will bear with me; I have a lengthy series of points to make, but I ask them to follow through the argument. I shall also try to answer some of the points that have arisen during the course of their contributions.
As explained, the amendment would subject High Speed 1 to the same regulatory scrutiny by the Office of Rail Regulation as the national rail network. I disagree with the suggestion of the noble Earl, Lord Mar and Kellie, that a separate system of regulation somehow separates the line in discussion from the rest of the network. That point is not entirely relevant to the debate. We have had much discussion on this, but I am happy to expand on the points and provide some of the assurances that noble Lords seek.
Noble Lords are concerned that the new railway falls outside the scope of regulatory arrangements which cover the national network. I clarify that the Bill makes only minor changes to the existing situation. It does not exempt High Speed 1 from regulation. High Speed 1 has never fallen within the regulatory regime in the Railways Act 1993 as a result of provisions within the CTRL Act 1996. This Bill is more of the same, with some minor differences.
In Committee, we discussed the dining habits and the dining partners of the noble Lord, Lord Bradshaw. We have been joined today by the dining partners of the noble Lord, Lord Berkeley.
My Lords, I apologise; that is what I thought I heard. The noble Lords have regaled us with their reflections on conversations that they have had, perhaps at lunch, perhaps on other occasions. When they got stuck into the hors d’oeuvre, and before the noble Lord, Lord Bradshaw, got round to sipping his nicely chilled Chablis, there was clearly a meaningful conversation to be had with a potential purchaser of High Speed 1, who indicated that it would be happier with regulation by the Office of Rail Regulation rather than with regulation by the Secretary of State. I hope that fair consideration was given to the issue in those congenial discussions, because it is clear that it requires some thinking through.
The noble Lord asked me to explain why the Government want to retain a regulatory role that has worked well. The answer is that we believe that keeping the current structure will secure a higher sale price by enhancing the commercial stability of High Speed 1. We did not come to this decision lightly, and we will consider which parts of the Secretary of State’s current and future duties can be undertaken by the Office of Rail Regulation as soon as the sale of High Speed 1 is under way next year. Coming to a definitive view on what those duties might be, and finalising the detail of the contract between the Secretary of State and the owner of High Speed 1, will be an important element of our thinking. I share the view of both noble Lords, who have made big contributions to this debate, that once the detail of that contract is agreed, and where functions of a regulatory nature continue to exist, the Office of Rail Regulation would be the obvious and competent candidate to undertake them.
The noble Lord, Lord Berkeley, raised the operation of the CTRL. There is a contract between LCR and Network Rail for the operation of High Speed 1 which lasts until 2086. The Department for Transport is in discussions with Network Rail. We will try to find a way to amend the current relationship so as to introduce more effective incentives to reduce costs. However, there is no possibility of it being transferred to the Office of Rail Regulation; it seems to us that the current arrangement works sensibly.
I return specifically to access charges. The noble Lord, Lord Hanningfield, mentioned them as did the noble Lords, Lords Berkeley and Bradshaw. The enterprise value of High Speed 1 is determined largely by the amount of income that the company will receive in future. The income stream is generated by the access charges paid by train operators. It makes commercial sense to assume that the more secure the income stream, the less risk that bidders and their lenders will associate with HS1’s business. For that reason, investors will see attraction in having a firm contract with the Secretary of State which defines precisely the parameters for them to set access charges in the long term. The Secretary of State will set the charging framework within that contract, because the level and structure of charges will directly affect the value that taxpayers receive in a sale. Our only concern is to protect value by providing potential bidders with certainty. Bidders will know that the maximum price that they will be permitted to charge train operators will not be reset at regular intervals, neither by the Secretary of State nor by the Office of Rail Regulation.
The rest of the rail network is subject to economic regulation by the Office of Rail Regulation, which allows it to review prices charged at regular intervals and to increase or reduce them if appropriate. That is necessary for Network Rail’s network given the historical uncertainty about the company’s cost base. In the case of Network Rail, it will provide comfort to investors in the same way as in the water industry, for example, where privately owned utilities also have complex, historical asset bases.
However, we do not see High Speed 1 in the same light. Furthermore, developments in EC legislation since the Railways Act 1993 and the Channel Tunnel Rail Link Act 1996 mean that charges for HS1 are subject to independent regulatory control by the ORR through the appeal mechanism in the Railways Infrastructure (Access and Management) Regulations 2005. Given these factors, subjecting HS1 to additional regulatory scrutiny through periodic reviews of access charges would introduce an unnecessary burden as well as unnecessary uncertainty for the business. The noble Lord, Lord Bradshaw, spoke about the necessity for certainty—I completely agree with him. Additional scrutiny would damage value, rather than enhance it. LCR, the present owner of the business, shares this view, and we are confident that investors will be comfortable with it, too. The relationship of HS1’s future owner with the Secretary of State will be similar to that between the Secretary of State and many other owners of public infrastructure, most obviously those operating under long-term concessions or PFI or PPP contracts. That is a well understood relationship, and investors’ cost of capital for those projects has decreased significantly as the market has matured.
In the context of the future restructuring of LCR, the Government have considered carefully whether there are good reasons to augment the EC model of regulation for HS1. The department took professional advice on the options available and discussed the plans with the Office of Rail Regulation. It concluded that there was no overriding reason to do so. The department has not received feedback from any of the parties to which it has spoken that would suggest concern in the industry about the regulatory arrangements for HS1.
The Government have no desire to undertake the functions of an independent regulator in relation to HS1. In the context of the restructuring, we will consider which powers can be transferred to the Office of Rail Regulation, given its expertise and available resources. For example, the duty to ensure that the charges set by HS1 comply with the 2005 regulations could usefully be managed by the ORR in the future, once a long-term charging regime has been put in place.
Until the sale process begins, the Government—as well as potential purchasers—can only speculate on whether the market as a whole will see more value in either a railway subject to periodic charging reviews by the ORR or one for which there is a charging framework established in a long-term contract with the Government. The key choice is the type of regulation, not a choice between having the Secretary of State or the ORR acting as the regulator. The case is not clear cut, and the course that we have chosen to follow is the one that we think will deliver the greatest possible return. In our opinion, any arguments against it are not sufficiently compelling to merit changing the existing regulatory arrangements.
My Lords, my noble friend said that the key to all this will be the long-term charging regime once it is in place. Is he aware that that is exactly what happened with the Channel Tunnel? A 50-year long charging regime was put in place when it was set up and financed 20 years ago. Because of changes to things outside, liberalisation and so forth, that more than anything else is now responsible for there being so little passenger and freight traffic through the tunnel. I suggest that that is not a good precedent.
My Lords, I made that point earlier—I certainly made it in earlier debates. We continue to want to increase freight through the tunnel, particularly with pathways for freight. We know that we have to work with our partners to achieve that. I do not think that that is necessarily a killer argument.
To be clear, HS1 access charges will be regulated. The charging framework is likely to set a maximum cap on the investment recovery element of the HS1 access charges. The prices offered by HS1 must comply with that framework, and with the specific requirements in the 2005 regulations. These are intended to ensure that charges are fair, non-discriminatory and, subject to certain provisos, cost-reflective. Operators who are not happy with the access charges for HS1 or the terms and conditions on which access is offered can appeal directly to the Office of Rail Regulation which will review whether those requirements have been met. If not, it is able to direct the infrastructure operator to remedy the situation.
Our current thinking—on which we sought views from industry late last year—is that the maximum access charge for passenger charges will be just over £2,000 per train on top of operating costs. We expect freight charges to be lower than that and understand that HS1 will produce proposed access charges for freight services. Details of the proposals that we put to industry at the end of 2007 are publicly available and I will ensure that copies of them are placed in the Libraries of both Houses. We are considering the responses that we received and expect to consult industry in the next few months on a revised proposal.
I know that the noble Lord, Lord Berkeley, had a particular concern about one of the features of the proposals previously put to the industry—that charges levied on particular operators might be allowed to rise and fall proportionately depending on total usage of the line. A number of the parties who responded to the consultation provided strong arguments against that proposal, with which both we and LCR have some sympathy. Although we are yet to develop all of the detail of the revised proposal, we and LCR both expect to move away from that feature of the previous consultation. Although the work is ongoing, I hope that that will provide noble Lords with suitable comfort that the arguments have at least been listened to.
In Committee, I was also asked how the Government would ensure that the HS1 concessionaire would be incentivised to reduce costs without the involvement of the Office of Rail Regulation. We have identified that that element needs further attention as part of the restructuring arrangements. As a result, we are working on a number of proposals to ensure that the new owner of HS1 has the appropriate levers and incentives to reduce costs while operating and maintaining the railway to an acceptable standard. We are discussing that with Network Rail which, as noble Lords will be aware, has a long-term contract to operate and maintain HS1.
For the sake of completeness, I should also mention the other areas of HS1's business which were excluded by the 1996 Act from some aspects of ORR regulation. In contrast to Network Rail, the operator of HS1 does not require a licence and its access contracts are not subject to prior approval by the ORR. In addition to the regulatory controls under the 2005 regulations, LCR has given certain covenants to the Secretary of State in relation to the operation of the railway in the development agreement that was signed between the then Government and LCR in February 1996. That contract will continue beyond the sale of HS1. Within the context of the restructuring, we will consider whether any new rights or obligations need to be put in place to ensure the appropriate level of regulatory scrutiny.
Although the development agreement does not duplicate the conditions of Network Rail's licence, it has some similarities, including covenants in relation to maintenance, insurance and environmental issues, restrictions on cross subsidies and a non-compete obligation in relation to the provision of passenger or freight services on HS1. The agreement prescribes standard terms and conditions with which HS1 access agreements must comply. It also reserves to the Secretary of State rights to prescribe the terms of access agreements with domestic franchisees requiring access to the line. There is no equivalent of the good stewardship condition which exists in Network Rail's licence, but we will consider whether that should be included when the development agreement is revised post restructuring. In addition—to build on the point I made in my Written Answer to the Question asked by the noble Lord, Lord Berkeley, in February—a Network Statement covering both parts of the rail link is publicly available already.
I hope that that lengthy explanation satisfies the concerns raised in Grand Committee which prompted this amendment and I hope that the assurances that I have given will enable it to be withdrawn. However, before I sit down, I want to touch on a final point in connection with the amendment which relates to the questions asked by the noble Lord, Lord Berkeley, in Grand Committee about whether the current regulatory position is consistent with EU legislation. That point was also touched on by my noble friend Lord Jones in his general comment on the value of independent regulation.
Our understanding of this legislation is that it imposes independence requirements on the regulatory body responsible for handling appeals in relation to access and charging disputes. It also ensures that the access charges set by the infrastructure manager comply with EC requirements. The setting of the charging framework for HS1 is not a function of the regulatory body and therefore, as regards that role, the independence obligations under relevant EU legislation are not engaged. On the other hand, they do apply in relation to the Secretary of State's supervisory functions in relation to access charges for HS1 under the 2005 regulations, where she is acting as a regulatory body within the meaning of Directive 2001/14. I sought at the outset to give comfort that the transfer of these functions to the ORR will be given serious consideration once the charging framework has been determined. I hope that that also gives comfort as regards the compliance of the regulatory arrangements for HS1 with EU requirements.
Before the restructuring can be finalised, we expect to submit a state aid notification to the EU Commission, to ensure that any aid that is restructured or left in place has the Commission's blessing. We expect that the Commission will want to examine the charging arrangements for HS1 as part of its review of that notification. That will be a final check on whether the line that we have taken meets EU legislative requirements. I make no apology for going on at some length because I think it has been valuable. I wanted to set out for the record very clearly how we see this relationship working. We have given the amendment serious consideration. I have worked through the major issues.
One final issue that is of concern to the noble Lord, Lord Berkeley, is that HS1 will set prohibitively high access charges for freight. That is obviously a concern, but HS1 has commissioned Intermodality to undertake a specific study to help identify commercially sustainable charges for freight service on the line to help identify what access charges might be affordable for freight services on HS1. Intermodality is analysing the freight market, particular segments within it and international comparators for pricing. We and HS1 expect the report to be completed by May. It will then feed into the subsequent consultation on access charges later this year. We recognise the importance of this issue. For that reason, we strongly support that study.
As I say, I do not apologise for the detail of my response, which I hope has been helpful to noble Lords. I am sorry that I have spoken for so long but I hope that the amendment can now be withdrawn.
My Lords, I thank the Minister for that reply but I am sorry to say that it does not satisfy me. He more or less put down my noble friend as regards the extension to the high-speed line elsewhere. I do not know whether I misunderstood but I took that to mean that it would be regulated separately from the rest of the network, which was the point he was making. However, it is quite wrong to have two railway lines regulated under different regimes which are interconnected with each other.
I do not think that the Minister has really grasped the point that this railway will operate in a competitive environment. In the end, the customer will decide what he will pay. The department can set whatever charges it wishes but if they are too high people will not come and people have got to make an effort to come. It is not as if there are lots of people out there who will swarm to the railway. There are people out there who are very sceptical about railways and need to be persuaded to use the service. Independent regulation will give confidence to investors in the new infrastructure, train operators and, more importantly, train operators’ customers that they are not dealing with the whimsical regulation that the Minister described, which is leading to the almost paralytic control now being exercised over rolling stock, and which has most train operators and rolling stock companies wringing their hands in despair.
I am dissatisfied. The Minister needs to discuss the matter with the noble Lord, Lord Jones of Birmingham, because we are getting inconsistent messages.
My Lords, I do not think that what my noble friend Lord Jones said is inconsistent at all. He was talking about the system of regulation in general. I explained in detail that this was a separate issue. The noble Lord will need to study what I said very carefully. I have read the relevant paragraph in the speech of my noble friend Lord Jones and nothing in it sets us at odds with him at all. He is absolutely right to make the case for independent regulation. It is a very different relationship.
My Lords, independent regulation means regulation based on assessment and study of the costs associated with the assets. The Minister referred to the water industry and the water regulator. However, there were horror stories about the amount of capital taken out of the water industry, which was privatised almost debt-free and now has mountains of debt because it was not properly regulated. As the noble Lord, Lord Berkeley, said, we have here a regulator who can and will set charges. I have no confidence in a charging regime that is cooked up between Network Rail and officials in the department. It has to be tested in the market independently.
I will read what the Minister said but I plead with him to discuss this within government because I believe that the whole speech he read out is totally inconsistent with what we have been told elsewhere. I have no doubt that we will return to the matter at Third Reading and we shall require change. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 [Powers of Secretary of State]:
2: Clause 1, page 1, line 5, at end insert—
“( ) For the avoidance of doubt, in subsection (1) “railway services” refer only to those services that both originate and terminate in the United Kingdom, excepting any historical support provided to international service operators.”
The noble Lord said: My Lords, we are rather repeating ourselves but I have chosen to table this amendment once again to further the discussion that we had in Committee.
I hope noble Lords will forgive me for introducing an aside here. I visited Colbayns school in Clacton on Friday, where the Minister was a pupil. It is a very successful comprehensive which has recently developed an extremely interesting skills department. I urge the Minister to pay the school another visit. I wanted to record the name of the school in Hansard as it is such a good one.
To return to the amendment, views on this one, short clause are manifold. It appears that in Committee there was some confusion, mainly due to some of the comments that the Minister had made at Second Reading. The Minister sought to reassure us and maintained that the clause did not need to be amended. Having read Hansard and upon reflection, I still feel that this clause could be tightened to satisfy the views of several noble Lords.
I understand that it is the given intention of the Government to reduce long-term public support for international services. However, our view remains that Clause 1 does not reflect this intention. Of course, it is important to prevent funding of services on the Continent, which would be neither acceptable nor desirable. In addition, much of our discussion last time focused on the need to create an environment to facilitate competition with international services on High Speed 1. A lot of what we discussed on the previous amendment was related to this. Any support provided to Eurostar in the form of access charge loans, rolling stock leases and the like surely has the potential to undermine this competitive environment. Presumably, this is one of the reasons why the Government intend to reduce public support in the long term.
The intention not to subsidise is all well and good, but can this not appear in the Bill for the avoidance of doubt? I foresee a situation where Eurostar, whoever it then belongs to, is treated more favourably in financial terms, which certainly would not be in the interest of open access competition. Even if this is not the intention, this clause would surely provide comfort to any operator thinking of starting a competing international service. Indeed, it must be said that Clause 1 in general is framed in such a way as to alleviate concerns of potential bidders, so the addition of this amendment would surely relieve potential operators.
I still maintain that the reasoning the Minister followed at Second Reading was a departure from that followed in another place and indeed from the stance adopted in Committee, where it was said:
“Clause 1 gives the Secretary of State the same commercial flexibility to support HS1 as she has for the national rail network, including flexibility to subsidise international operators in the same way as we currently support domestic franchise operators”.—[Official Report, 19/2/08; col. GC 146.]
Will the Minister confirm exactly what is meant by this?
The Minister argued last time that this amendment is unnecessary due to the 2005 Act's application to Great Britain only. However, the provision of historic support would imply that funding in other ways is possible. I argue that for the avoidance of doubt this amendment should appear in the Bill. Clause 1 is all about clarifying what already exists in legislation, and this wording follows in that vein.
Finally, the Minister argued last time that this amendment would not be acceptable as it would prevent the alteration of historical funding structures already in place for Eurostar during the restructuring period. Accepting the amendment would prevent, for example, the rationalisation of the rolling stock leases and so prevent the achievement of a higher sale price. Is this the intention of the Government? If they do not like the wording of this amendment yet know that they require sufficient flexibility in the short term for restructuring, can they come back with a form of wording that is more acceptable? I beg to move.
My Lords, this is a very interesting amendment. I go even further than the noble Lord, Lord Hanningfield, in suggesting that the whole question of historical support should be resolved at a very early date. My noble friend said in Committee that all passenger operators—rather than freight operators—should be treated equally in terms of access rights and access charges on the CTRL. There is absolutely no reason why the Government should not sell Eurostar UK without any conditions, subsidies or anything else to the highest bidder on the basis of the charges.
On the previous amendment, my noble friend said that the charges for passenger trains, and I assume it is all passenger trains, would be £2,000 per train as a contribution to the financing costs of the CTRL, plus the operating costs. Several issues come out of that. First, if the Government start subsidising international services, it is inevitably a can of worms because you do not know what is happening on the other side of the Channel. SNCF or Deutsche Bahn might want to come in as competition, as we have discussed. You do not know what subsidy they are getting for which services, so it is a seriously slippery slope to start to subsidise any international services, including Eurostar. It should not be subsidised in the way that might be inferred from the last two lines of the amendment. I will leave that to the noble Lord, Lord Hanningfield.
However, there is an even bigger problem here, because the charges that appear to have been considered for using the CTRL are based on what they think they can get away with with Eurostar, which includes a £20 charge per passenger for using the Channel Tunnel, regardless of how many people go. I have been talking to some people who have an interest in local authorities in Kent, and they are still very upset that only one or two Eurostar trains a day are stopping at Ashford. We talked about the fact that it is a high-speed line and any train should be able to go on it, so a service such as Manchester-Birmingham-London-Stratford-Ebbsfleet- Ashford-Calais-Lille, for example, could be run by a competing train operator. The answer was, “Who is going to fork out £2,000 a train for going up 60 miles of track?”. That is a very high figure for a service to start. There will be the same problems as there are with the Channel Tunnel. I said on the previous amendment that the charges will be so high that no one will use it. The figure of £2,000 is arbitrary. I do not know whether any discussions have taken place with German or French railways or anyone else. Eurostar has little choice but to accept it, because it is owned by LCR, which is guaranteed by government; so it is hardly a discussion between equals.
There is one last problem that I would like to ask my noble friend about. On the rest of the network, train operators pay so much to use a station. If a train stops at a station, they pay so much to Network Rail for the services that may be provided, such as the platform being in good order. The international stations used by Eurostar are quite expensive and they are quite expensive to operate, because you have all the special facilities such as customs and immigration and the segregation that goes with that. Is the idea that there will be a separate charge made to Eurostar and anyone else who wishes to operate international services for calling at stations? At the moment, Eurostar probably either owns or operates the stations, but how will this work with open access? This is all a barrier to other operators coming in and providing competing services. This is the only opportunity that we have to talk about these things before it is all signed and sealed in the contract, and we suddenly find that we end up with another contractual disaster, which we have talked about already with the Channel Tunnel and other things. I would be grateful to my noble friend for some responses. There is merit in such an amendment, and maybe the noble Lord, Lord Hanningfield, will consider bringing it back on Third Reading.
My Lords, I am grateful to the noble Lord, Lord Hanningfield, for reminding me about my old school. It was not called Colbayns in those days; it was Clacton Secondary Modern School for Boys, and it became a comprehensive some time shortly after. I visited the school some years ago, and I was most impressed by the headmaster—I think it is Mr Pavitt—who has done a brilliant job of turning the school around. Since my words at the Dispatch Box are recorded, I offer to pay another visit, and perhaps Mr Pavitt will invite me again. I greatly enjoyed it the last time I went.
I thank the noble Lord for tabling this amendment and allowing me another opportunity to outline the Government’s position. Under the present legislation, the Secretary of State can support services in the United Kingdom. In the context of international passenger services, that has translated into supporting Eurostar UK Ltd, the part of the Eurostar joint venture that is responsible for paying the UK-side access charges. The Secretary of State has not stood behind the French and Belgian parts of the joint venture in that way; they rely on the French and Belgian state railways for any support they receive.
My Lords, the support that we have provided has been to Eurostar UK Ltd. That is the nature of our support. It is for the French and Belgian parts of the joint venture to provide support to their element of the part of the railway that they run.
The amendment would restrict the Government’s ability to provide any support for international services, other than that historically provided to Eurostar. As I have said before, the Government’s intention is substantially to reduce the public support for international services, mainly by putting in place a commercially sustainable, long-term access charging regime. In Committee, noble Lords were concerned that the Government’s position had changed since Second Reading. I assure them that this is not the case; our position on providing funding to Eurostar has remained unaltered since the Bill was introduced in another place.
At Second Reading, I said that Clause 1 gives the Secretary of State commercial,
“flexibility to subsidise international operators in the same way as we currently support domestic franchise operators”.—[Official Report, 19/2/08; col. 146.]
My point was that the provision of some continuing support to Eurostar and other international service operators may be desirable, not that Eurostar’s position is or will be akin to that of a domestic franchisee.
For clarity, Eurostar does not provide its services under a franchise agreement with the Secretary of State, and there is no intention that it should do so in the future. While it currently has the benefit of reserved capacity on HS1 until 2052 on a take-or-pay basis, it is proposed that this will be renegotiated as part of the restructuring, so that its position as regards access to HS1 will be the same as any other open access operator. The historical funding structures that are in place include the access charge loan, guarantees of Eurostar’s rolling stock lease payments, hedging obligations and its ability to pay HS1 access charges. Removal of this support now would damage Eurostar’s ability to compete as a sustainable, stand-alone entity. To damage that could be commercial suicide.
We also wish to retain the power to reorganise or amend these existing support packages to achieve best value for taxpayers through the restructuring. The amendment would prevent us achieving that, which is why it cannot be supported. I add for certainty that the Government do not intend to put Eurostar in such a position that it has an unfair advantage over prospective competitors; in any event, state aid rules prevent them doing so.
Finally, although we have no intention of doing so now, we do not believe that a future Secretary of State should be left without the power to provide any new support for international services in future, should they choose to do so. No decisions have been made on the future of Eurostar, and Clause 1 seeks to provide the Government with as much flexibility as possible in their pursuit of the most economically advantageous return for taxpayers. For those reasons, I urge the noble Lord, Lord Hanningfield, to withdraw his amendment.
My Lords, two or three questions were asked, and if the noble Lord, Lord Berkeley, will let me I will reply to those; I suspect that his interruption might have been on them. He asked about the prices charged for stations. There is to be no charge, to incentivise operators to stop at stations. He suggested that access charges could become unaffordable. The Government intend to cap access charges at a level affordable to new entrants into the market. The analysis behind the level of access charge is based on the principle of affordability. The noble Lord also raised an issue about the Channel Tunnel and charges. We are setting charges now, with the benefit of more understanding of the market for international services than was available 20 years ago when Eurotunnel first raised debt. Eurotunnel now has the benefit of a 50 year-plus contract, giving guaranteed usage levels and charges for freight and passenger services. There is no equivalent long-term contract benefiting High Speed 1. I hope that I have covered his points.
My Lords, I am grateful to my noble friend for clarifying those issues. It might help if he were prepared to write to those who have taken part in the debate, to separate the possible government support that Eurostar gets from using the Channel Tunnel, because of the fixed costs that he mentioned—they are different on the French side—from the costs associated with using the Channel Tunnel Rail Link. I was getting a bit confused, so I am sure that it would be better if he wrote to us.
My Lords, the noble Lord is right to say that these things are complex. I will set out them out in correspondence for the benefit of all noble Lords who have taken part in the discussion. I think that I have answered the main point; obviously we wait to hear what the noble Lord, Lord Hanningfield, has to say.
My Lords, I thank the Minister for his answer. The exchange between him and the noble Lord, Lord Berkeley, hit the nail on the head. I have never said that I wanted to stop the historical funding. One recognises that there has to be historical funding during the restructuring, et cetera; I want to be absolutely clear on that. I may have tabled an amendment that would stop it, but that is why I ended my comments by asking the Government to help on the amendment, because I still feel that there is no real clarity about what will happen in future. That is what all this discussion is about. All our discussions slightly go round in circles. It is a bit like the first amendment in a way. We are basically behind the Bill, but the two discussions that we have had today are mainly through lack of clarity and understanding where the Government will go after the historical funding and restructuring.
We are giving the Government an opportunity to think and to clarify these things a bit more for us before Third Reading. I hope that the noble Lord, Lord Bassam, can take up the suggestion of the noble Lord, Lord Berkeley, and write to us to try to clarify the issues. I repeat that I do not want to stop historical funding; I just want to know where we are going afterwards. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Regulatory Enforcement and Sanctions Bill [HL]
53: Clause 38, page 16, line 38, leave out from “amount” to end of line 39
The noble Baroness said: My Lords, Amendment No. 53 would remove a regulator’s ability to calculate fixed monetary penalties by reference to “prescribed” criteria, and is similar to Amendment No. 112 moved by the noble Lord, Lord De Mauley, in Grand Committee. The reference to prescribed criteria caused some confusion when the issue was debated in Committee, and on reflection we accept that the provision could overcomplicate the sanction and are happy to remove it.
The amendment would mean that fixed monetary penalties would simply be of a prescribed amount or amounts, set out in the order made under Part 3. That process will be transparent, as the level of penalty will be specified in both the order and the penalty guidance that the regulator will be required to publish under Clause 62. That will still allow fixed monetary penalties to be set at different levels if appropriate. For example, a sole trader may be given a £50 penalty, whereas a company might receive a £100 penalty, or the penalty for carrying out an activity without a licence may be £50 for one week or £100 for two weeks. I beg to move.
My Lords, I am grateful to the Minister for her brief explanation of government Amendment No. 53, with which are linked seven other government amendments. I am still fairly new to this House, as is she. I had expected that, rather than come back to them, the procedure would be that she would speak to all the government amendments. Perhaps there could be a little clarification from the noble Lord, Lord Bach.
My Lords, I shall do my best to explain. The noble Baroness has done what is quite normal on a grouping of this kind, with a government amendment at the start but an opposition amendment from another noble Lord as part of the group. The Minister will move the first amendment and then the other noble Lord can move his amendment. The Minister will then come back to debate the noble Lord’s amendment and speak to her other government amendments at that time. I hope that that is satisfactory.
My Lords, I am most grateful for the clarification; I can certainly live with that.
My amendment deals with the question of the maximum penalty. What is suggested is the maximum available in the magistrates’ court. The noble Baroness will clarify it for me; I apologise, as I forget at the moment, but I think that the maximum in the magistrates’ court is £5,000, but it could be £3,500. Oh! It seems that £5,000 is correct; I am most grateful. I suggest that the figure should be half the maximum. The amendment gives me an opportunity to raise the important question of how many different levels of fixed penalty the Government have in mind. When I asked this earlier on Report and in Grand Committee, the Government said that they had not thought it through yet but that there might be two—one for a rich business and one for an individual. I said, “Supposing it’s a rich individual and a small business”, and the Government said that they had not thought that through, which they plainly have not.
The noble Baroness has given us two extremely modest penalties, which in one way is encouraging. However, if the Government have in mind penalties of £50 or £100—£50 a week can be a darn sight more frightening if you have been trading without a licence without realising it for six months—that needs some explanation. Why do they need £5,000 as a maximum for fixed penalties? We are pretty used to quite small fixed penalties in this country; we have learnt to live with them in straightforward cases such as parking. The Government keep saying, “This is not tick-box”. So the Government have abolished criteria because they could not think what the criteria ought to be. They were asked about them and it was plain that they had not thought of any sensible criteria. I could have thought of some criteria, but, anyway, they decided to throw up their hands and surrender on that one. Now they are congratulating themselves on removing it; but that leaves the practical question just as much in evidence, because the Government have proposed a range of £5,000 and we do not have a clue as to how they think the statutory instruments, when they eventually come through, will be worded and what they will provide.
However, I am probably being totally unjust and I look forward to hearing what the noble Baroness says to elucidate this point. I shall sit down now, because I believe that I shall be able to speak to, or at least comment on, some government amendments later.
My Lords, I would never accuse the noble and learned Lord of being unjust, but perhaps I may clarify the matter. We understand the concerns that have been raised, and we have, of course, already taken steps to limit fixed monetary penalties. In Committee, we moved an amendment to cap the level of fixed monetary penalties, so that they cannot exceed the maximum fine available in the magistrates’ courts, as the noble and learned Lord said. We have also proposed simplifying the process for fixed monetary penalties, which will now simply be set at a prescribed amount or amounts.
The effect of Amendment No. 54 would be to cap fixed monetary penalties in most instances at a maximum of £2,500, as there are some exceptions to the £5,000 limit in magistrates’ courts. Setting a cap at this level would be an entirely arbitrary limit on the penalty, and I am not sure why the noble and learned Lord has proposed a cap at half the magistrates’ courts maximum, not a quarter or three-quarters. Also, this would unnecessarily limit the flexibility and effectiveness of the new powers.
My Lords, the limit that would be set by Amendment No. 54 appears to be regardless of sector. For example, some offences within the scope of Part 3 relate to failure to hold a permit. In the environmental field, this fee could be as high as £3,000. Some offences of this kind might in future be dealt with by means of a civil sanction. However, the noble and learned Lord’s amendment would preclude the use of a fixed monetary penalty altogether, as the Minister would be unable to prescribe a fixed monetary penalty at a level that reflected the benefit that a business might accrue in not obtaining a permit.
We have also tried to design the measures in Part 3 so that there are no perverse incentives for regulators to pursue a particular course of action. Restricting the level of fixed monetary penalties could upset that balance. It could, for example, encourage the regulator to pursue criminal prosecutions instead of imposing a civil sanction, given that the fine in the courts could be double the level of the fixed monetary penalty.
I understand the concerns of the noble and learned Lord regarding proportionality. I should stress that the Bill simply sets a maximum level for fixed monetary penalties. It will be the order made under Part 3 that sets the actual levels of fixed monetary penalties for a particular offence and clearly this will not be set at the maximum level in every case. At this point, we should not arbitrarily restrict the ability of Ministers to set fixed monetary penalties at an appropriate level so as to provide an effective deterrent.
The noble and learned Lord asked about the various levels at which fixed monetary penalties could be set. As the noble and learned Lord knows, the Bill is enabling legislation and applies to a wide range of regulators and regulatory offences in a wide range of circumstances for a wide range of sectors. As I mentioned earlier, in the environmental field, the fixed monetary penalty may have to be as high as £3,000 to reflect the benefit gained by not obtaining a permit. We would expect most fixed monetary penalties to be much lower. It should be noted that the Minister must set out in the order the penalty amount for each offence and must consult before making that order. It will, of course, be subject to the affirmative resolution procedure and, no doubt, the noble and learned Lord will have views to express at that time. Parliament will, therefore, have the ultimate say on whether the penalties for a particular regime are set at the right level. It is not accurate to suggest that they will be set arbitrarily at varying and different types of levels. The fixed monetary penalties will have to be appropriate and will be debated and set in order, with the relevant sectors and businesses in mind.
My Lords, I thank the noble Baroness and the noble Lord, Lord Bach, for seeking to achieve a consensus on fixed monetary penalties, which we discussed at some length in Grand Committee and which are the subjects of Amendments Nos. 56, 57 and 58. It will be my purpose formally to move Amendment No. 56, to support the government Amendment No. 57, and not to move Amendment No. 58. The effects of those amendments are that people will now have a right to make representations before a fixed penalty is imposed, and that will now be in the Bill. It will require the regulators to serve a notice of intent before imposing a fixed monetary penalty and to allow the implicated party to make written representations and objections to the regulator. Government Amendment No. 57 meets all the concerns that were expressed by your Lordships’ Select Committee on the Constitution. I am extremely grateful for that.
My Lords, I welcome the Government’s support for Amendment No. 56. I also welcome government Amendment No. 53, although my noble and learned friend Lord Lyell’s important question seemed to lead to an answer from the Minister that revealed that there would be multiple maxima for the fixed penalty, dependent upon the sector. That seems to raise more questions than it answers.
I welcome also government Amendment No. 57, which seems to achieve a similar outcome to what we were driving at in the amendment of my noble friend Lord Goodlad and other amendments that we tabled in Committee. In our view, when a regulator decides to impose a penalty, the defendant should have an opportunity to make representations as an innocent party. The penalty should not already have been imposed.
My Lords, I thank in particular the noble Lord, Lord Goodlad, for raising this important issue and for his amendments that have improved the Bill. We understand the concerns that the noble Lord and others have expressed about the fairness of the procedure for imposing fixed monetary penalties. We are happy to accept Amendment No. 56.
I wish to talk further on Amendment No. 57. The amendment and Amendment No. 58 would add a notice-of-intent stage to the procedure for imposing fixed monetary penalties and would allow a person an opportunity to make representations before the final penalty can be imposed. We believe that this addresses the concerns about procedural fairness that the noble Lord and others have raised.
Amendment No. 57 is, however, slightly different from Amendment No. 58. In particular, Amendment No. 57 would allow a business to discharge its liability after the notice of intent has been served by paying a discharge payment of a prescribed amount straight away, without the need for going through the procedural stages of representations and final notice. Where a business admits liability, we believe that it should be allowed to discharge its liability as soon as possible, without the need to go through the whole process.
If a person chooses not to pay the discharge payment because he challenges the proposed imposition of the penalty, he will go on to make representations and objections against the sanction to the regulator. Obviously, if the regulator still thinks that person is liable to a fixed monetary penalty, it will impose it by way of a final notice. The person can appeal against the fixed monetary penalty by going to a tribunal and arguing that the decision was based on an error of fact, was wrong in law or was unreasonable. I would stress that this procedure is fully compliant with our obligations under Article 6 of the European Convention on Human Rights.
The discharge payment will be set out in the order and could be the same amount as the penalty or set at a lower rate to reflect the procedural savings of an early admission of liability. Similarly, a person may not have to pay the full penalty when a fixed monetary penalty is imposed by final notice, as the regulator could offer an early payment discount under the power in Clause 51(1)(a). Both provisions could encourage early compliance.
The level of discharge payment or any early payment discount will be set out in the order made under Part 3 and subject to the affirmative resolution procedure.
The other main distinction between our amendments and those in the name of the noble Lord, Lord Goodlad, relates to time limits. A person in receipt of a notice of intent to impose a fixed monetary penalty will have 28 days to make representations and objections to the sanction or pay a discharge payment. Amendment No. 57 sets out this time limit and therefore addresses the concerns expressed in Grand Committee on 30 January by the noble Lord, Lord Cope, during debate of his Amendment No. 125, which at the time we agreed to consider further.
Finally, I should like to speak to Amendments Nos. 61, 70, 83, 92, 93 and 95. These are simply consequential amendments that flow from the changes in Amendments Nos. 56 and 57. Amendments Nos. 92 and 93 clarify the suspension provisions in Clause 66, taking account of the fact that both fixed monetary penalties and discretionary requirements will now be subject to a notice of intent.
I hope that what I have said has reassured the noble and learned Lord about Amendment No. 54 and that he now feels able not to press it.
My Lords, all amendments can be spoken to in the order in which they come in the Marshalled List. The fact that they happen to be grouped together is entirely for the convenience of the House, but all amendments can be spoken to one at a time in the order in which they appear on the Marshalled List.
On Question, amendment agreed to.
[Amendment No. 54 not moved.]