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Lords Chamber

Volume 704: debated on Friday 10 October 2008

House of Lords

Friday, 10 October 2008.

The House met at ten o'clock: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Liverpool.

Health and Safety (Offences) Bill

Read a third time.

My Lords, I beg to move that this Bill do now pass. I am aware that this stage of the proceedings is normally perfunctory, or at least very brief. It will be pretty brief today, but given that there are one or two other people who want to speak, I hope that the House will allow the Bill to be slightly differently treated this time. It is three months since we last debated it and, quite properly, one or two issues have been raised, particularly by the noble Lords, Lord Bradshaw and Lord Taylor of Holbeach, that need a response on the record from the Government. These days I cannot do that, and the job falls to my very good friend, the noble Lord, Lord McKenzie, who will provide the necessary explanations and reassurances in a few minutes.

As this is the last chance I will have to say anything on the Bill, let me give special thanks to the noble Lords, Lord Bradshaw and Lord Taylor of Holbeach, on the Opposition Front Benches. It has been very pleasing that the basic consensus that existed when the original Health and Safety at Work etc. Act 1974 was passed—I have read those debates and there was an agreement across the parties but not on the details—has also applied during the passage of this small but important Bill.

I thank my very good friend, the right honourable Keith Hill, who was lucky in the ballot in the Commons, which is more than most of us achieve, and selected this important topic. He has followed our proceedings and advised me throughout. I also thank my noble friend Lord McKenzie. This is a wonderful system—I have the glory of introducing the Second Reading and he has the job of answering the difficult questions, which is an arrangement I would like to see applied more frequently. It also falls to me to thank the hard-working Bill team, officials in the Department for Work and Pensions.

It has been my pleasure to be involved in this Bill. It has kept me busy and out of mischief, and I have pleasure in formally moving that it do now pass.

Moved, That the Bill do now pass.—(Lord Grocott).

My Lords, this is not a time for long speeches except perhaps from the Minister. It is indeed a pleasure for us on these Benches to welcome the Bill at Third Reading. At Second Reading, I expressed, as the noble Lord, Lord Grocott, said, some aspects of concern with the Bill, reflecting the anxieties of a number of organisations about its implications. We talked in particular of the provisions for imprisonment and the reverse burden of proof. I am pleased that the Minister has been able to fulfil his commitment at the time and am grateful for his courtesy in advising me of the reassurances he proposes to give today. It has meant that we have been able to maintain, as the noble Lord, Lord Grocott, has said, the cross-party support that health and safety legislation has always enjoyed in the past.

This will be a very satisfying day for Mr Keith Hill, who nurtured this Bill, and for my friend Mr Andrew Selous, who gave it his support on behalf of the Opposition in another place. I am sure that the noble Lord, Lord Grocott, will be very pleased that he is seeing this Private Member’s Bill safely through to enactment. I congratulate him, and wish the Bill well.

My Lords, I do not want to prolong this but simply want to thank the Minister for all the co-operation we have had. I add my congratulations to the noble Lord, Lord Grocott, and to Mr Keith Hill in another place. He and I are very old colleagues.

My Lords, the Government wholeheartedly support this important Private Member’s Bill, and I thank my noble friend Lord Grocott for his work in taking this measure forward in the House and for consulting noble Lords on their concerns. This he has done with commendable skill, building on the excellent work of the right honourable Member for Streatham, Keith Hill, who successfully piloted the Bill through the other place.

As my noble friend has said, an important aspect of the Bill has been the strong cross-party consensus on its principles, both here and in the other place. This consensus is to be welcomed, especially on health and safety matters. I thank the noble Lords, Lord Taylor of Holbeach and Lord Bradshaw, for their constructive engagement with these matters.

Some business organisations have expressed concern over the Bill’s provisions to make imprisonment of individuals an option for a wider range of breaches of health and safety legislation than at present. There is also concern over the European Convention on Human Rights and the reverse burden of proof. While I understand these concerns, I want to underline that the Bill does not add to or change existing health and safety requirements and duties on individuals and businesses. I can also confirm that the health and safety regulators are not changing their prosecution policy on individuals as a result of the Bill.

Under health and safety law since 1974, imprisonment has always been available in the lower courts for failure to comply with an improvement or prohibition notice or court remedy order and offshore offences and, in the higher courts only, for failure to comply with licensing requirements, explosives provisions or disclosure of information in breach of the Act. However, there is a history going back to the mid-1990s of judges expressing discontent in exceptional cases but being unable to impose jail sentences for especially blameworthy health and safety offences committed by individuals. Imprisonment is already widely available under regulatory legislation. These arrangements have worked well and without objection for many years. I have no reason to believe that imprisonment would be used more often for health and safety offences than for these other regulatory offences.

There are important safeguards in place, such as the strict guidelines laid down in the Code for Crown Prosecutors, the HSE enforcement policy statement and other documents. The HSE and other health and safety regulators expect that, in the public interest, a prosecution should be brought only where very serious circumstances applied, such as where death was a result of the breach of legislation, where there had been reckless disregard of health and safety requirements, where there had been repeated breaches which gave rise to significant risk, or where there had been persistent and significant poor compliance. Following these rigorous tests, there is the trial process and the right of individuals to have their cases heard before a jury.

In addition, the Sentencing Guidelines Council in England and Wales issues guidelines to encourage consistent and proportionate sentencing by the courts. The right honourable Keith Hill MP has approached the council on updating its guidelines, and it has indicated that it will review its programme in the event of the Bill becoming law. I am also concerned that the courts have up-to-date advice, and I can therefore tell the House today that I am writing to the council on behalf of the Government to ensure that, if the Bill is successful, this work is taken forward as a matter of urgency. Moreover, I shall stress the important point that imprisonment should be reserved for the most serious matters, and the expectation is that these matters will generally be concluded in the higher courts.

I turn briefly to the reverse burden of proof, which I dealt with in some detail at Second Reading. I shall remind the House of the key points.

The Bill’s proposed changes raise an important issue in relation to Article 6 of the European Convention on Human Rights, but only for individuals and not for companies or organisations. The main concern is in relation to Section 40 of the 1974 Act, which imposes a reverse burden of proof on defendants, but only where the duty giving rise to the offence for which they have been accused is subject to the statutory qualification,

“so far as is reasonably practicable”.

Section 40 of the 1974 Act was challenged in a prosecution conducted by the HSE in 2002 against a plant hire operator, David Janway Davies, for a breach of Section 3 of the Act. Janway Davies appealed against conviction on the ground that Section 40 was incompatible with Article 6.2 of the European Convention on Human Rights. The Court of Appeal ruled against Janway Davies, holding that the reverse legal burden of proof in Section 40 was compatible with the convention. The court’s approach was to examine whether a “fair balance” had been struck between the fundamental right of the individual and the general interests of the community, it being for the state to justify an inroad into the presumption of innocence,

“which should not be greater than is necessary, justified and proportionate”.

The Government’s view on the Bill’s proposed changes is that where the reverse burden of proof has an impact, there is first of all still an onus on the prosecution to show that there is a prima facie case, and the prosecutor may refer to the reasonably practicable steps that an individual could have taken—a process termed advance rebuttal. The facts relied on in support of a defence will in any event be within the knowledge of the defendant.

On the basis of this and other case law, the Government consider that the proposals in the Bill, including the widened scope for custodial sentences, are reasonable and proportionate, and that Section 40 continues to represent a fair balance between the rights of the individual to a fair trial and the protection of life and limb from dangerous work practices.

This Bill proposes a small but important change to the Health and Safety at Work etc. Act 1974 and the Health and Safety at Work (Northern Ireland) Order 1978. These pieces of legislation have been widely accepted as a huge step forward and a path-breaking measure, not just in the UK but also in many other countries.

I add my thanks to those already offered to the Bill team who supported the noble Lord, Lord Grocott, in this matter. Good employers and diligent managers and directors have nothing to fear from the Bill, indeed they have much to gain as it tackles the commercial advantage that unscrupulous businesses gain from non-compliance. The Government welcome the Bill and I therefore commend it to the House.

On Question, Bill passed.

EU and Russia (EUC Report)

rose to move, That this House takes note of the report of the European Union Committee on The European Union and Russia (14th Report, HL Paper 98).

The noble Lord said: My Lords, I thank my colleagues on Sub-Committee C of the European Union Committee, four of whom will speak later in this debate, our staff and our special advisor, Sir Roderick Braithwaite, for their considerable help in preparing this report.

I must confess that, during August, as events developed in Georgia, I began to worry about how far the report and today’s debate were being overtaken by events. It is clear that some things have changed—I have no doubt that reference to them will be made during our debate—but in rereading the report and the government response, which we received on 15 July, I believe that much is still relevant and that we have an important topic to consider today.

The Government response on 15 July was sent to us by the then Minister for Europe, now Secretary of State for Scotland, Mr Jim Murphy. I take this opportunity to thank him for his great help to Sub-Committee C of the European Union Committee, both when he came and gave evidence to us and in our correspondence. We wish him very well in his new responsibilities.

The report that we are considering today is based on an inquiry that the sub-committee carried out between last July and this May, including a most useful visit to Moscow in December, where we had a very full programme, for which we are very grateful to the assistance of our embassy in Moscow, and to Brussels, where we had useful discussions with the Council Secretariat, including Mr Solana and the Commission.

The events of this summer have raised questions about the nature of the long-term relationship between the European Union and Russia. I shall return to this at the end of my remarks, but I believe that a great deal of the analysis and conclusion of the report remains valid. The events of this summer do not change the facts of geography. As we say,

“Russia shares a border with the European Union, with which it is bound by numerous ties of practical interest”.

One of the most important of these is energy, where there is a mutual dependence. As the Government say in their response, some 25 per cent of the EU’s gas comes from Russia, while some 25 per cent of Russia’s GDP comes from oil and gas sales to the EU.

As we consider in the report, many Europeans fear that the European Union’s dependence on Russian supplies will leave it open to Russian political and economic blackmail, although we concluded:

“In the current situation it is uncertain whether Russian policy is the action of a country simply pursuing its economic and commercial interests in an old-fashioned and mercantilist way, or whether Russia intends to use its energy exports as a political weapon to impose its will on neighbours and partners”.

We advocated that,

“EU Member States should therefore take active and coherent measures, involving common funding where necessary, to diversify both sources of supply and transportation routes, including pipelines such as Nabucco, even where these are not obviously commercial”.

While the Government witnesses who appeared before us preferred this to be done by the private sector, we were pleased that, in the response of 15 July, the Government accepted that,

“until the single market is fully functioning, there may be a case for greater intervention in very exceptional cases, generally recognised to be those of particular importance to EU internal security of supply, and where genuine market failure can be identified”.

This would seem to mean that the case for Nabucco requires examination and, I hope, support.

A further serious problem of the European Union’s energy relations with Russia is with the long-term trends in Russian production of both gas and oil. This has not been helped by the difficult experiences of European and particularly British companies in attempting to develop Russian oil and gas fields. We will be interested to see the European Union’s second strategy energy review when it comes out this month, referred to in the government response. As the Government say, the European Union level of action,

“adds value externally through its combined weight and economic power”.

Unfortunately, in energy as in other things in their relations with Russia, the member states of the European Union do not always act on a unified basis.

In May, when we prepared our report, there had not been agreement among member states on the prospect for opening negotiations for a new agreement between the EU and Russia to replace the partnership and co-operation agreement of 1994, and whether such an agreement would be legally binding. We recommended that the negotiations should start in 2008 and were therefore pleased that, as the government response reported, the EU and Russia,

“launched negotiations on a new agreement at the EU-Russia Summit on 26-27 June. They also announced that their aim was to conclude a strategic agreement that will provide a comprehensive framework for EU-Russia relations for the foreseeable future”.

As the response says, it should provide for,

“a strengthened legal basis and legally binding commitments covering all main areas of the relationship”.

The Government added that,

“this is very good news, both for the EU and for the UK”,

and that it is,

“in both the EU’s and Russia’s to negotiate an ambitious, deep and wide-ranging agreement covering the full range of issues in the relationship. This will bring consistency and predictability to the relationship and benefit both the UK and Russia”.

Inevitably, the negotiations were suspended after the Russian invasion of Georgia at the emergency council held in Brussels on 1 September. The Written Statement from the Foreign Secretary issued to the House at the beginning of this week reports that they remain suspended. I hope that in his response the Minister will be able to say something about the prospects for their reopening. Many will have seen the assertion by President Sarkozy in Evian this week that the Russian withdrawal from buffer zones around South Ossetia and Abkhazia was,

“the full implementation of the accords of August 12th and September 8th”.

I am not sure that everyone else accepts that interpretation.

There is a visit by the French Foreign Minister, Mr Kouchner, to Georgia today. No doubt he will report to his colleagues in the General Affairs and External Relations Council when it meets in Brussels next Monday. On Wednesday next week there is also an important meeting in Geneva to take up some of the details of the arrangements. There is to be a EU-Russian summit in Nice on 14 November. We assume that that will go ahead, as there has been no suggestion in any of the documents that it would be cancelled. Would that be an occasion for reopening the negotiations? I hope that the Minister will be able to respond.

Our report recommended Russian membership of the World Trade Organisation, although, interestingly, we found that some Russian industrialists remained quite happy to remain outside. The Government in their July response agreed with us and said,

“Russia in the WTO could only strengthen the governance of world trade and add to global security”.

Since the events of August some in the United States have argued against Russian membership. Has this been discussed in the EU? I hope that the Minister will be able to say something about that. What is the view of the Government?

One of the more disturbing aspects of the definition of the five components of the foreign policy of Russia made by President Medvedev in his statement of 1 September was the right to defend Russian citizens wherever they lived. That has potentially a particular danger for our colleagues in the European Union living in Estonia and Latvia, as we reported in paragraph 296. We very much welcome the response of the Government on the need to speed up the naturalisation process of Russians living in Estonia and Latvia.

Chapter 6 of our report deals with international security and the common neighbourhood. Here, without foreseeing the Russian invasion of Georgia, we quote evidence from a former British ambassador, Sir Andrew Wood, who told us that,

“many Russians feel themselves to have been cheated by the West ... Moscow gave up its international power and got nothing in return. That argument feeds on a tradition of xenophobia mingled with self pity, now compensated for by the idea that ‘Russia is back’ … Putin is not the first to say that the weak are always beaten. The corollary is the conviction that Russia needs to show strength and surround herself with dependable, even controllable, allies”.

The then British ambassador, Sir Anthony Brenton, told us that the EU should remember that Russia went through a period which they regarded as a “national humiliation”. He argued that:

“one of their main aims ... is to recreate a strong stable, successful Russia … They are particularly concerned to maintain and to reinforce their influence in … their immediate neighbourhood in the near abroad, in places like Georgia, Ukraine and so on”.

These analyses of Russian attitudes do not in any way justify Russia's over-reaction to the Georgian actions in South Ossetia in August; they indicate the sensitivity of what we described in our report as the “common neighbourhood”—the countries formerly part of the Soviet Union and now described by Russia as its “near abroad” and now involved in the European Union's European Neighbourhood Policy. As the report says, and as the Government’s response agrees:

“We believe the EU should consult in depth with the Russians over all aspects of the European Neighbourhood Policy...but should not give”—

the Russians—

“a right of veto over EU policy”,

in these areas.

There are, however, other areas of international relations with identifiable common interests between Russia and the European Union. In the report we quote the example of Iran where the negotiations with Tehran,

“are perhaps the most striking example of the CFSP machinery at work with the Russians”.

It is interesting that last month at the UN in New York there was a successful meeting of the Middle East Quartet which agreed that there should be a follow-up to the Annapolis meeting in Moscow next year. On 22 September, the Russians voted to continue the mandate of ISAF in Afghanistan. These examples of co-operation lend weight to the argument put forward by Henry Kissinger and George Shultz in an article published earlier this week in the Washington Post,

“that the fundamental interests of the United States, Europe and Russia are more aligned today—or can be made so—even in the wake of the Georgian crisis, than at any point in recent history. We must not waste that opportunity”.

The final section of our report deals with managing the European Union's strategy towards Russia. Some would say that, in the light of Russia’s actions in Georgia, our position was too optimistic. The sub-committee has not had a chance to reconsider its conclusions but we did say that,

“EU-Russia relations are ... in a negative phase in a long process of transition”.

We also discussed the weakness of the EU positions over a range of subjects because of the reluctance of members to accept a common position towards Russia. As we said:

“The EU will always be more effective when it can agree a united approach in its dealings with Russia ...Too often, however, Member States act in a way which allows the Russians to drive wedges between them”.

We expressed the view that:

“The EU's attitudes and policies towards Russia have an uncoordinated character”.

We argued that:

“An updated approach should be drafted as a collaborative project between the Commission and the Council Secretariat”.

We were therefore very pleased to learn from the Government’s response that in March of this year, as we were preparing our report, the Foreign Secretary and Bernard Kouchner, the Foreign Minister of France, set down in a private joint letter to EU partners some thoughts on how the EU should engage with Russia.

As a result much work has gone forward, and we were told that a report will be prepared and put forward at the EU-Russian summit in November. What progress has been made about that? Will the document be made public in advance of the summit? Will it be subject to parliamentary scrutiny?

I end on a personal note, rather than with the view of my sub-committee. We concluded in May that:

“The European Union is not facing a new Cold War”.

I believe that that is still the case, but that the relationship between Russia and the European Union is multi-dimensional and that, for the present, while some dimensions allow for co-operation, others do not. We call in the report for,

“a hard-headed and unsentimental approach by the European Union”—

which—

“can help to ensure that the relationship is productive rather than the opposite”.

Events in Georgia have certainly made this no easier, and much will depend on the results of the discussions beginning in Geneva next week. I hope therefore that the negotiations on the new agreement will resume as soon as possible. I beg to move.

Moved, That this House takes note of the report of the European Union Committee on The European Union and Russia (14th Report, HL Paper 98).—(Lord Roper.)

My Lords, I declare my relevant energy and other interests, as stated in the Lords’ Register of Interests and recorded by the Advisory Committee on Business Appointments. I also declare an interest because I have a Russian wife, and as Vladimir Putin's biographer.

Incidentally, as Putin's biographer, I was never one of those who believed that the former president would quietly ride off into the sunset. Instead, what we now have is a political tandem, with Prime Minister Vladimir Putin firmly in the front seat and President Dmitry Medvedev holding up the rear.

Perhaps I may say at the outset how proud I am of the committee's work in producing the report before your Lordships' House, under the able chairmanship of the noble Lord, Lord Roper, from whom we have just heard. Our committee received excellent support from the Clerk and her staff, the committee specialist and our special adviser, Sir Roderick Braithwaite.

Since we wrote the report, the global credit crunch has gathered pace, and we have witnessed the brief Russian/Georgian war over South Ossetia and Abkhazia. Even so, I agree with the noble Lord, Lord Roper, that the findings and conclusions of our report remain sound and are a valuable addition to the debate about current and future relations between the EU and Russia. We wrote in the report that:

“The current difficulties in the relationship should not weaken the EU's determination to build a long-term partnership with Russia, based on dialogue, trust and common interests”.

We noted that the changes needed to transform Russia are likely to,

“take decades if not generations”.

We said the EU needed a,

“hard-headed and unsentimental approach”,

as the noble Lord, Lord Roper said, so the Russians see it in their own interests to work productively with the EU. The EU is Russia's major trading partner, the UK is its single biggest investor, and we share interests in the United Nations, the G8 and over major issues such as tackling terrorism, nuclear proliferation, the Middle East peace process, Afghanistan, and Iran's nuclear ambitions.

The EU accounts for 81 per cent of Russia's pipeline gas exports and 60 per cent of its oil exports. As supplier and consumer, we are locked in a close mutual embrace. As the noble Lord, Lord Roper, said, production shortfalls and the falling price of oil, now under 85 dollars a barrel—incidentally, at under 70 dollars a barrel the Russian federal budget will be in difficulty—present a major threat, as do the production shortfalls themselves, to Russia's ability to meet its international and domestic commitments.

As a former energy Minister, I have a particular interest in energy matters, and I believe that the noble Lord, Lord Crickhowell, will expand on this theme in his speech. Despite the Government's response to our report, I still believe that we were right in the committee in arguing that pressing Russia for ratification of the energy charter treaty is a waste of time. Far better to my mind would be to incorporate the principles of the ECT and the transit protocol in a new, legally binding, partnership and co-operation agreement. Most effective of all would be to develop a common EU energy policy, a liberalised competitive energy market and Europe-wide energy grids.

Since the conflict in Georgia, some have argued that Russia should be thrown out of the G8, its WTO membership should be blocked, and the EU should abandon negotiation of a new partnership and co-operation agreement between Brussels and Moscow. These were not the conclusions of our report, and I do not see a reason to change them. Engaging Russia is a far better policy than isolation or containment. It was appropriate for the EU to suspend talks on a new PCA until the Russians withdrew their armed forces from Georgia proper, but now they appear to have done so, negotiations should be resumed. I should be interested to hear the Minister’s view on that. Whether or not we like it, and many do not, South Ossetia and Abkhazia will not be returned to Georgian control sometime soon. I hope the EU can eventually broker a meaningful settlement of the dispute.

I will not speculate on who provoked whom, and whether they were backed or opposed by the state department or the Pentagon, but I will vouchsafe that miscalculations were made on all sides. The Georgians seemed to expect an easy victory; the Russians totally underestimated the economic cost of conflict in our interdependent world.

The result for Moscow was an outflow of $56 billion and the precipitation of the collapse of the Russian stock exchange, although other factors were at work here. Watching Russian TV on the family dacha outside St Petersburg as the crisis unfolded, it was revealing for me to see an oligarch on Russian television publicly begging the state president to provide liquidity to domestic industry as foreign capital took flight.

Georgia was Russia's Suez. The war cost Russia more than the lives of its servicemen and reputational damage abroad; it was starting to suck the economy dry. Moscow should rethink its strategy of international relations as a zero sum game, which to my mind is reminiscent of 1970s superpower politics. The world has since moved on.

For all the Russians’ talk of genocide in Georgia, the real ghost in the room was Kosovo. Moscow's argument was that if Kosovo could have its independence, why not South Ossetia and Abkhazia, and will the Crimea be far behind, with the growing dispute over the Russian lease of the Black Sea fleet base of Sevastopol? The Crimea is historically and ethnically part of Russia, and was gifted by the Ukrainian Soviet President Khrushchev to the Ukrainian SSR in the 1950s as a present. Of course, it did not matter in those days because it was the USSR which counted, not the supposedly autonomous Soviet socialist republics. Well, it certainly matters now.

In my view we are not witnessing a new cold war, as the noble Lord, Lord Roper, said, rather the evolution of a “Russia First” strategy, which re-emerged after the 1995 Duma elections and is characterised by a uniquely Russian approach to political and economic development which appropriates certain western skills and values while avoiding wholesale copying of western models of democracy and market economy. The result is a hybrid version of both and a re-assertion of Russian claims in perceived areas of historical and traditional interest, ranging from the Balkans to Russia's “near abroad”. What is new is not the strategy, but Russia's confidence—some would say arrogance—and new relative wealth to give it momentum and muscle. The EU has to come to terms with this new assertive Russia without losing its own policy coherence, and to my mind pragmatic engagement is the best approach.

My Lords, like the noble Lord, Lord Truscott, I pay tribute to our chairman, the noble Lord, Lord Roper, the staff of the committee and our special adviser, Sir Roderick Braithwaite, who together had the formidable task of consolidating the mass of complicated and detailed evidence that we received. The committee was also particularly grateful to Sir Anthony Brenton, our ambassador in Moscow, and his team for the programme that was arranged for members of the committee in Moscow in December 2007 when the embassy was not having an easy time, particularly in dealing with the threat to the activities of the British Council.

I believe that the report we are debating provides a valuable foundation for further consideration of the EU's relations with Russia. However, the fact that our visit to Moscow took place as long ago as December last year, and that since then we have witnessed violent interventions in Georgia, leaves one to conclude that this is unfinished business to which we will have to return. That is particularly true of one element in the story to which our report referred, but which, because our primary role as a committee is to deal with European affairs, is not as central as perhaps it needs to be in any future report. I refer to the role of NATO. In paragraph 174 we said that,

“the Russians feel betrayed by the West over its abandonment of the assurances they were given in early 1990 that NATO would not be enlarged”.

The announcement by the United States that a radar and anti-missile system was to be stationed close to their borders was seen by the Russians as the final straw. The intense dislike that Russia feels for NATO was made particularly clear in a speech delivered by President Medvedev at Evian in France two days ago, in which he said:

“But the real issue is that NATO is bringing its military infrastructure right up to our borders and is drawing new dividing lines in Europe, this time along our western and southern frontiers. No matter what we are told, it is only natural that we should see this as action directed against us. But the moment we try to point out that this is objectively contrary to Russia’s national security interests everyone starts getting nervous. How else are we to interpret this behaviour?”.

I feel bound to question whether expansion of NATO to Russia's borders, and the encouragement of Georgia to join, adds to the security of the countries which Russia identifies as its near abroad, or to the stability of the world. It is not clear to me what NATO would have done if Georgia had been a member of it when Russian forces advanced into South Ossetia and beyond.

Reference has already been made to the very important article by Henry Kissinger and George Shultz in Wednesday’s Washington Post. My attitude is well summed up by their comment:

“Those of us who question the urgency with which NATO membership was pursued for Georgia and Ukraine are not advocating a sphere of influence for Russia in Eastern Europe. We consider Ukraine an essential part of the European architecture, and we favor a rapid evolution toward E.U. membership. We do believe that the security of Ukraine and Georgia should be placed in a larger context than mechanically advancing an integrated NATO command to a few hundred miles from Moscow”.

Whatever the origins of the conflict, Russia's violation of Georgian sovereignty, its use of disproportionate force and its subsequent recognition of Abkhazia and South Ossetia was not acceptable conduct. But if you are powerless to send in forces, the right way to deal with such conduct is not by threats of military intervention but by making it very clear that Russia would pay a high political and economic price by pursuing a self-isolating course.

One of our witnesses told us that Russians consider that exercising their influence and control over the near abroad is as natural as the Monroe doctrine tradition is for the foreign policy of the United States. But the reality is that much of Russia’s near abroad is also Europe’s. As we concluded in paragraphs 204 and 205:

“It is therefore a particularly sensitive area and should be treated as such by both parties”.

I hope that we can take some encouragement from President Medvedev’s statement at Evian:

“I would like to emphasize that we are open to cooperation. And we intend to cooperate responsibly and pragmatically. The events of the last two months contain much tragedy but they are at the same time an example of pragmatic cooperation between Russia and the European Union. When Russia, Europe and the entire world found themselves confronted with crisis in the Caucasus, we managed to act in a proactive and coordinated manner with a sense of responsibility for our common European future”.

I hope that Russia’s future actions will reinforce and underline that statement made a couple of days ago.

Energy security, the other issue about which I wish to speak, connects directly with the recent events to which I have referred. We received particularly valuable evidence on energy issues from Professor Dieter Helm of Oxford University, and we devoted an important part of our report, chapter 5, to the subject. Europe’s dependence on energy supplies from Russia, primarily in the form of gas, is substantial, at perhaps 25 per cent overall, but dependence varies from 100 per cent in some countries to almost nil in the case of Britain. When the Government produced their generally favourable and positive response to our report, they were curiously complacent about Britain’s vulnerable position.

In paragraph 305, we said:

“The creation of genuinely competitive energy markets within Europe and the creation of Europe-wide energy grids should be a primary objective of EU policy. Even those countries (including the UK) that do not import significant quantities of Russian gas directly are vulnerable if supplies to their continental partners are interrupted; or if there is a prolonged period of cold weather. Exposure to a volatile spot market, without adequate storage facilities, and without long term contracts, mean that they could find themselves with soaring energy prices and gas supplies severely curtailed. Alternative supplies from Norway, even where they are available in sufficient quantity, will not be price competitive”.

Professor Helm warned us that even without dependency on Russian gas, the UK was “terribly exposed”. The Government’s response to that comment was that they did not accept that we were vulnerable, and they set out, in not very convincing terms, the arguments why they thought our present energy resources would meet every possible eventuality. However, the industry that has to deliver the gas took a rather different view, if a report in the business section of the Daily Telegraph of 11 September is correct. At an Ofgem conference in London, companies such as E.ON, RWE’s npower business, Centrica and others all pointed to our vulnerability, particularly with the threat of high prices and the likelihood that liquefied natural gas would go to other countries that are willing to pay for it. I quote:

“Chris Train, network operations director of the National Grid, said that although winters have been mild since 1987, severe weather would be ‘very challenging’ for the UK’s energy industry. ‘There should be sufficient generation to meet demand this winter,’ he said. ‘But that’s subject to credible risks and there has recently been a high level of coincidences’”.

Clearly, there are risks.

Since we took evidence on that point, as the noble Lord, Lord Roper, pointed out, the Government appear to have shifted position somewhat on the whole question of energy security. The recently departed Minister for Europe, Jim Murphy, to whom I also wish good fortune in his Scottish responsibilities, reporting to the committee on 12 September on events at the extraordinary European Council meeting, said:

“Russia’s actions in Georgia also illustrate the need for Europe to intensify efforts to ensure its long-term energy security. The European Council tasked the EU with examining initiatives to diversify energy supply, including increased support for infrastructure that diversifies energy sources, an increased commitment to renewable energy, measures to improve energy efficiency and measures to improve the internal market”.

That implies that the Government now accept the need for increased infrastructure projects, such as the Nabucco pipeline through Turkey. We suggested in paragraphs 302 and 303 of our report:

“Since a number of gas pipelines run through countries such as Ukraine whose bilateral relations with Russia can affect supplies to Western countries, the EU Member States should therefore take active and coherent measures, involving common funding where necessary, to diversify both sources of supply and transportation routes, including pipelines such as Nabucco, even where these are not obviously commercial (though recognising that Nabucco will not on its own solve the problems) … The market will sort out many problems for the supply of gas, as it did after the first two oil shocks. However, on its own the market will not rapidly produce the right results, and considerations of security of supply need to enter into the equation”.

I end with a few short, general comments. Some recent reports and comments in the press have talked of a return to Cold War conditions and have given the impression that Putin’s Russia was a great power with the ability to threaten the world and even to challenge NATO and the West. No doubt, that was a reaction that delighted Mr Putin and will have pleased many Russians. It is, I judge, hardly the reality. Like the school bully, Russia has certainly found it relatively easy to torment and throw to the floor its weak little neighbour; but that does not make it a power able to realistically threaten the larger powers in both the West and the east.

In recent years, Russia has taken advantage of its energy resources and the high price of oil, but it is finding it increasingly difficult to meet the energy needs of its own people, let alone those of its principal customers. It needs those customers, and the EU is the biggest. It needs the investment and skills that it lacks—although I suspect that the noble Lord, Lord Browne, who I am pleased to see in his place, would tell me that in recent times it has hardly gone out of its way to encourage investment by non-Russian companies. It has certainly made it pretty difficult for BP and its investment in Russia.

Russia has to reduce its overdependence on natural resources, and it may be hard hit by falling demand for those resources and the reduced price of oil and gas. It has a declining working population. Its armed forces have a great deal of outdated equipment, and defence expenditure as a share of national income and in relation to other powers is comparatively low. All that suggests that, if Russia continues to isolate itself from the wider world, it will be Russia that will be the poorer, not its neighbours.

Europe certainly needs to be firm and united in its reactions. The final conclusions of our report still seem valid:

“The sensible approach for the EU is to situate its relationship with Russia in a long-term perspective. The European Union is not facing a new Cold War but EU-Russia relations are perhaps in a negative phase in a long process of transition which could last for some time. Despite the difficulties, Russia cannot avoid dealing with the European Union on trade, on competition, on customs and frontier controls, and on a variety of other issues involving the European Union's common standards and regulatory procedures. Even when either side loses sight of it, they are bound by an inescapable common interest”.

I referred earlier to the important article by Henry Kissinger and George Shultz. They say:

“This drift toward confrontation must be ended. However appropriate as a temporary device for showing our concern, isolating Russia is not a sustainable long-range policy”.

They believe:

“The six points put forward by French President Nicolas Sarkozy provide a framework for a solution of the Georgian crisis formally accepted by all the parties: a genuinely independent Georgia, within its existing borders, while the status of South Ossetia and Abkhazia—disputed since the founding of Georgia—continues as the subject of negotiation within the security framework”.

I hope that they are right in their final conclusion, which has already been quoted by the noble Lord, Lord Roper, that,

“the fundamental interests of the United States, Europe and Russia are more aligned today—or can be made so—even in the wake of the Georgian crisis, than at any point in recent history. We must not waste that opportunity”.

That means a united effort by the European countries, not a fragmented effort, and a sense of increased realism from Russia.

My Lords, I was not a member of the House of Lords foreign affairs sub-committee, and I think that I am the first speaker today who was not a member, but I commended its report at the time as a sensible contribution to Europe-Russia relations, which mapped out the areas of possible co-operation between the EU and Russia. It highlighted challenging conflicts, which needed to be negotiated. I was particularly pleased that the noble Lord, Lord Roper, pointed out the crucial aspects of Russian psychology that influence the country’s behaviour. The feeling of resentment that it had lost out and that it is now in a position to get some of its own back has dominated its recent actions.

Since then, events have taken place. I shall not go into details on the TNK-BP dispute, which is the only aspect of the energy situation that I want to mention in my speech. Above all, there has been Georgia. I agree that EU-Russian relations are at a low ebb, but they are not at as low an ebb as UK-Russian relations. When the Georgian conflict broke out, President Sarkozy flew to Moscow and brokered the ceasefire and the agreement for the withdrawal of Russian troops. Our Foreign Secretary, David Miliband, flew to Kiev and gave an interesting lecture on the importance of international law, democratic governance, territorial integrity and so on. Britain did not have the EU presidency at the time, but can one imagine Gordon Brown flying to Moscow under those circumstances to broker a deal? One cannot, because Britain has absolutely no influence or leverage at all on Russia. That is what I meant when I said that our bilateral relationship with Russia is at a very low ebb; it is almost in deep freeze.

The Opposition have not made a sensible contribution to this. David Cameron gave another moral lecture. He said that Russia must be excluded from the G8 and proposed the crass notion that one should extend visa restrictions to a much wider range of Russian visitors to this country. He also said, “We must lead, not follow”. What world do these statesmen think that we are living in? Lead whom and with what? Should we lead 3 billion Chinese and Indians, who are, by the way, part of the wider world to which the noble Lord, Lord Crickhowell, referred? It is not just the European world. That wider world does not regard Russia as the main bully; it regards the United States as the main bully. We have much less influence in Europe than we think. Should we lead the United States? These words have little meaning and few things are more ignoble than impotence masquerading as strength.

I agree completely that there is a lot of unfinished business. I endorse what has been said about the undesirability of expanding NATO into the Ukraine and Georgia, for two reasons. First, it is bound to antagonise Russia and make much more difficult all the co-operation that we hope for and should get from Russia, with which we face many common challenges. When the first plan to expand NATO to the Baltic states was mooted, an expert wrote that it would create an irreconcilable, suspicious and hostile atmosphere between Russia and the West that would result in a return to the Cold War. That was a prescient observation. The expansion has made things much more difficult. A further expansion would further sour relations between Russia and the West.

Secondly, an expansion is undesirable because we would be undertaking military guarantees to two of the most unstable regions in the world, whose territorial integrity and limits are unsettled. NATO is a military alliance, not a nice NGO expanding its activities. If we let countries into NATO, we undertake to defend them militarily against aggression. That would be the commitment. The Ukraine and Georgia do not have a right to enter NATO. It was ridiculous for the Foreign Secretary to say, “Well, they asked to join. Of course we will let them in. After all, they are democracies”. By the way, that is not true. We should let countries into NATO only if it is in our interests and if the alliance is prepared to take seriously the military commitments that flow from Article 5.

Georgia is a country that lays claims to territory that has declared its independence, as recognised by Russia. Letting the Ukraine into NATO would risk splitting up that country. It is a mad policy to pursue and I hope that it is put in cold storage, which looks likely, because the Ukrainians have not voted on joining NATO and most of them are against it. The Georgians have voted for it. One must distinguish between Georgia and the Ukraine. It would be much more dangerous to let in the Ukraine, but both issues should be put into cold storage. We should think seriously about a new security structure, such as that mentioned by President Medvedev in Evian the other day. Such a structure exists only in shadowy outline. It takes the whole discussion beyond the expansion of NATO into a world in which we could start talking sensibly about the security requirements from the Atlantic to the Pacific.

We often tell the Russians that they should pay more attention to what others think about them and that they should try to imagine how their actions and behaviour strike other people. That is important. Misperception is at the root of many foreign policy disasters. We, too, should think a bit more about how our actions strike not just the Russians but the wider world. We talk about international law, but we are hardly impeccable supporters of it. People can talk about Kosovo and the invasion of Iraq. We talk about not deterring foreign investors. I agree. I read, I think only yesterday, that our Prime Minister said that bankers who have been responsible for excess lending should be punished. What does he mean by that? Should they be punished for legal activities? Does that encourage people to invest in Britain? President Putin attacked Mechel over criminal activities and suggested that it might be punished. We want to punish people who have engaged in activities that have never been suggested to be criminal.

It is the language. What about the charge that we often make that the Russians misuse their law for political purposes? That is perfectly true; they do. They use all kinds of legalities to get their political way. What about the freezing of the assets of the Landsbanki of Iceland under our anti-terrorist legislation? Is that not a good example of using a law for a purpose for which it was not intended? We do all these things ourselves. We do not do them as obviously as the Russians, but many of our actions are subject to the adverse interpretations that we give to the Russian actions.

We must be careful. A huge area of co-operation is available; we have not reached a dead end regarding Georgia and this may be the beginning of a new, more hopeful era. I wholeheartedly commend the report for mapping out those possibilities.

My Lords, I am a member of Sub-Committee C. I pay tribute to the noble Lord, Lord Roper, for his excellent synopsis and wise observations today and, together with the staff and our adviser, for steering the committee to consensual and realistic conclusions. The question is whether, following the events in Georgia in August—since when an amendment has been moved—we are now in a different age that justifies a supplementary report. Certainly, as has been said, in its immediate response to the invasion, the European Council decided to conduct a comprehensive review of EU-Russian relations, which will continue until the EU-Russia summit in Nice on 14 November, and has suspended negotiations on a new EU-Russia partnership and co-operation agreement.

There were of course already major changes in Russia’s attitude to the West, probably dating from 2002-03, when internal reforms in Russia were frozen and there was a tidal wave of new gas and oil money. As the noble Lord, Lord Skidelsky, said so well, relations with the United Kingdom had already been bad over the previous four years, with visits frozen—one thinks of TNK-BP and the British Council, which the Russians conceded had been singled out for political reasons.

Correspondingly, there had been a sea change in the West’s attitude to Russia. In the 1990s, we had attempted to recreate Russia in our own image and had welcomed it into organisations such as the Council of Europe as if the country were on the road to a western-style liberal democracy. We had ignored the long history of authoritarianism, of western rivalry with Russia at its borders from the great game of the 19th century to the near abroad of today, the Russian fears of encirclement and anger in Russia at the depredations of the oligarchs who had stolen so many of the state assets. Russia had of course been invaded by Napoleon and Hitler. We had underestimated Russia’s deep humiliation at its loss of world status and given insufficient weight to the warning of President Putin two years ago that Russia also had the right to be self-interested.

The truth is that Russia is not and never has been a western-style democracy. We should end the illusions of the 1990s and build a new relationship. We should recognise that sovereign democracy, as defined by the Russians, is a world away from democracy in the western style and closer to the authoritarianism of both the tsars and the Soviets. We should build a relationship with Russia based on a new realism, robustly defending our interests as Europeans but also building areas of co-operation where possible, with our eyes fixed on our medium-term and longer-term interests.

To what extent has the invasion of Georgia changed the analysis in our report of last May? What lessons should we draw? What action should we take? The starting point is of course that it is quite unacceptable to change the frontiers of Europe by force. There may have been a miscalculation by the President of Georgia but there was an immediate and disproportionate response by Russia. Russia has allowed the ethnic cleansing of South Ossetia and recognised the independence of the breakaway provinces—potentially, at least, in respect of South Ossetia, on the way to Russian annexation—wholly contrary to international law and recent UN Security Council resolutions, such as that in April, to which Russia was a party. Its attempts to draw parallels with Kosovo are little more than debating points. Nevertheless, my judgment is that the key conclusions of the report are probably still valid and our concerns justified.

Should a price be paid for the invasion? Certainly Georgia has paid a price—the probably permanent loss of territory, the deaths of its citizens, internally displaced persons and the damaged infrastructure. Russia, too, will and should pay a price. Today, the stock market has been closed—of course, there was a whole series of other reasons for that—and there have also been important private sanctions. In the six weeks after the invasion, foreign investors withdrew US$56.7 billion from Russia; they perceived that it was not a stable business environment.

Russia has isolated itself politically, being joined in its recognition of the breakaway provinces only by Nicaragua. The international community will have a new suspicion of Russian intentions and abandon much of the wishful thinking, which gave Russia the benefit of many doubts. There will be a lack of trust and good will. Increasingly the G7 will meet as the G7 and not the G8.

That said—this theme was taken up by a number of speakers—we must recognise that we have a mutuality of interest in a number of key areas, not just in the market for gas and oil. Last year, Russia provided 38 per cent of EU gas imports and 33 per cent of EU oil imports. We also have common interests in areas such as counterterrorism. Russia itself has been a major victim of terrorism in the Caucasus. It provides access for our military and aid effort in Afghanistan. We need its co-operation over non-proliferation policy, the trafficking of nuclear materials and the physical protection of nuclear sites in Russia, as well as, obviously, in other foreign policy areas, such as the Middle East peace process. Given the lack of airlift capacity in the western alliance, it is Russian helicopters that will transport aid and military personnel to Chad. So Russia is showing a serious interest in helping in crisis-management operations.

What should our response be? Obviously, we should seek the greatest possible measure of EU unity. We should prevent the bullying of EU states such as Estonia and Poland and the attempt by Russia to have solely bilateral deals on oil and gas supply. Unfortunately, the pass has already been sold by a number of EU countries in forming long-term energy contracts with Russia. We should have greater care in relation to energy security. It is interesting that the new Government in Germany are seeking a new energy stockpile. We should look at areas such as a European Union grid to prevent shortages in one country going across frontiers.

Clearly, as has been said, we should diversify sources of energy. There should be increased support for the Nabucco project. The brief interruption of the pipeline supply to the West may have meant that Nabucco is now on track for construction between 2010 and 2013. Perhaps my noble friend will indicate whether that is true and what priority status for Nabucco means in practice. We should deal with Gazprom in a more hard-nosed way, insisting on principles of reciprocity, transparency and unbundling, as has been said by a number of commentators, treating Gazprom no differently from Microsoft. There should also be equal investment rights and third-party access to pipelines. As Edward Lucas says in his book The New Cold War, we should avoid the Finlandisation, or what he rather unkindly called the “Schröderisation”, of western Europe.

We need to select areas where our interests clearly coincide, particularly as the weight of China, India and Brazil increases in the world. We need to respond to President Medvedev’s call for greater consultation. That is certainly not happening in a number of key and sensitive areas, which has given the Russians a greater argument. We need to work together in a series of non-controversial areas, including—pace the British Council—culture, and realise that not everything is political.

We are aware of the provocations, the needling by Russia in areas such as Zimbabwe and Venezuela. We ourselves should avoid provocations wherever we can, such as the US withdrawal from the ABM treaty. The Russians will criticise the missile defence proposals, but I understand that, privately, they accept the sites in Poland and the Czech Republic. More debatable is the decision taken by the NATO council in April to work towards bringing Georgia and the Ukraine into NATO. I understand the argument that the new democracies should be able to make their own judgments. Perhaps contrary to what the noble Lord, Lord Skidelsky, and others have said, the pass was already sold when the NATO council made its decision to move towards membership action plans in April. Any concession now would be construed as weakness. However, we appear to have ignored proper consultation with Russia and to have given insufficient weight to the traditional NATO concepts: would the accession of these new members add value to security and are we able to enforce an Article 5 guarantee in respect of those countries? We should not make promises on which we cannot deliver. Greater EU involvement, rather than NATO involvement, leading possibly to membership, is far more acceptable and much less threatening and provocative.

There are signs that, after the invasion of Georgia, Russia has recognised its isolation and the damage to its interests and is seeking to build a better relationship with the West. The speech by President Medvedev at Evian this week has already been cited. His proposal for a new European security treaty is not new, but it was warmly welcomed by President Sarkozy. I ask my noble friend whether Sarkozy was speaking on behalf of the presidency and how much consultation there was when he made that immediate response. In that speech, President Medvedev reiterated his concerns about a unipolar world—that is, US domination. Although his theme was broadly conciliatory, he called, first, for a world based on the rule of international law; secondly, he called for the abandonment of war as an instrument of policy; thirdly, he endorsed the central and co-ordinating role of the UN; and, fourthly, he called for respect for the sovereignty, territorial integrity and political independence of states, which sounded astonishingly hollow in light of the invasion of Georgia and Russia ignoring its formal international engagements.

As in relation to Georgia and others, Russia has ignored those international commitments that it made in 2000 at the OSCE to withdraw its troops from areas of the frozen conflicts. There may be some merit in the proposals, but surely one should respond to them with great caution. As a first step, the most appropriate response is to put Russia to the test by seeking confidence-building measures, such as movement on other frozen conflicts in its near abroad area, evidence that the president is serious in his call for greater transparency of companies and the removal of barriers to international trade.

Overall, we must recognise, as the noble Lord, Lord Skidelsky, said, that our ability to influence Russia is limited, that talk of Russia as a strategic partner is, at the very least, premature and that Russia is not as strong as we think it is. One thinks of demography, bureaucracy and so on. Also we are not as weak as we Europeans sometimes think we are. We need to respond to invasion in a way that is consistent with our principles and interests but still look for areas of co-operation with Russia on the basis of political realism and avoiding those illusions of the past.

When we look back over 15 to 20 years, we remember that the Berlin Wall, the Soviet Union and communism were still in place. I firmly believe that in, say, another 15 to 20 years—a similar timescale—commentators will note that there was much sound judgment and good analysis in the report.

My Lords, I too am privileged to be a member of Sub-Committee C. This is the second report which the committee has produced and it seems to have suffered from rather unfortunate timing. We produced a report on the Arab/Israeli issue, which was filled with recommendations about the Palestinian Authority negotiating with the Israelis. Then we had the outbreak of violence in Gaza and before we knew what was happening, there were two Palestinian authorities. At that stage, I recommended that we did not publish the report—at least we were in a position not to at that point—but I was seriously outvoted. Now we find that our report on Russia has been rather overtaken by events with the aggression of Russia against Georgia.

I believe that my chairman, the noble Lord, Lord Roper, is absolutely right to have this debate because it gives us an opportunity to discuss where things are going with Russia and with the EU. We have to study seriously the whole question of what happens to Russian minorities around Europe. I believe we should look into that.

The noble Lord, Lord Skidelsky, makes the point that we do not want to risk another war—of course, no one does—but I wonder what signal we would send to Russia if we said, “We’re giving up all ideas of any country like the Ukraine belonging to NATO”. Surely, that would send a signal to Russia: “Invade Ukraine as well and you can take over the third of the country which has a Russian population and we will not do anything about it”. I do not think it is quite as simple—the noble Lord, Lord Anderson, alluded to that as well—as just saying that we should recommend that none of those countries joins NATO. We may send a very unfortunate signal if we do that.

The noble Lord, Lord Skidelsky, was also very harsh about the Government, whom I do not often find myself defending, in terms of the freeze on relationships between Russia and the United Kingdom. I thought what started it was the poisoning of Litvinenko, the ex-KGB man, when someone put some nuclear material into his coffee and he died in agony a few days later. We asked for the person whom we considered to be guilty of that crime to be extradited from Russia. He was a crony of Putin. He still has not been extradited and it does not look as though he will be. A series of events then took place in Russia which was in retaliation for what I thought was our quite reasonable request. I do not think that we can be accused of instigating a freeze in relationships with Russia. I think it instigated it by murdering a man on British soil in the way that it did.

There were great protests from the West when the invasion of Georgia took place but, as has emerged in this debate, the real reason Russia decided to comply with the treaty and to withdraw was much more to do with the fact that enormous pressure was exerted in the financial world, long before the present financial crisis emerged. The stock market in Russia was collapsing and had to be suspended for a number of days. I suspect that the oligarch friends of Putin were saying, “Come on, we are worth a fraction of what we were a few weeks ago and something has to be done”. I believe that markets had a much stronger influence over what happened in Georgia than outside intervention from the EU or anybody else. The noble Lord, Lord Truscott, referred to the oligarchs getting extremely worried about their financial position.

The Russians used to take the view—I do not know if they still do—that they are blessed by having this strong man, Putin, at the helm of their country. I think they are cursed by him. He has enormous limitations. He is the KGB man that he was trained to be. He feels extremely comfortable basically fighting the Cold War. He knows all about the ruthless use of power and how to eradicate opponents, but he does not know a lot about how to rebuild his country, which is in desperate need of rebuilding. Breaking up the BT joint venture was a disastrous signal to send to the financial community because Russia needs all the help it can get from the West. Although it has enormous reserves of oil, gas and minerals, it has appalling problems with a massive lack of infrastructure and many industries that need to be not even modernised but probably started from scratch, and it needs skilled workers.

One of the witnesses quoted in our report said that the population of Russia is now 142 million and by 2050, it will be down to 110 million. That is a catastrophic drop in population. Putin has referred to it as one of the biggest problems facing his country. I had been sold the idea that it is to do with Russians having a low birth rate. They do not. The birth rate in Russia is similar to that in other European countries, but young males have an extremely high death rate as a result of alcohol, tobacco and accidents. The population drop will create a vacuum, and vacuums get filled, so Russia will have massive problems with Muslim and Chinese immigration in times to come.

Putin has played to the paranoia which has always been there among Russians. I have to ask whether the West has helped on this. The West has been to enormous lengths to make it clear that it sees no role for Russia in NATO or the EU. I put forward an amendment, which can be found on page 123 of our report. Noble Lords may wonder why it is my amendment because my name is not on it, but if I had been there, which I was not, I would have voted in favour of it, although the rest of the committee was against me. I am grateful that the chairman, the noble Lord, Lord Roper, put my amendment to the committee, even though I was not there. It was:

“Whilst we recognise that the Russian government has no current wish to join the EU and is unlikely to want to do so in the near future, we hope that, one day, Russia may consider applying. Russian membership of the EU would be of inestimable value to relations between Russia and Member States of the EU as well as of great benefit to the Russian people”.

I feel strongly that we should not play to the paranoia that Russians may have and should tell them that we consider Russia a European country. Many Russians feel very European. Our committee referred to the fact that in the east, many Russians are Asians, but we must bear in mind that Turkey considers itself to be an extremely suitable and likely candidate to join the EU, and I regard the Russians as more European than the Turks.

My Lords, I hope it is in order for me to intervene; I know that the noble Lord has not finished his speech. I was on the committee in the overlap, and I would have voted for the amendment tabled by the noble Lord, Lord Hamilton.

My Lords, that is some of the better news that I have heard for a long time. I am enormously grateful to the noble Lord, Lord Lea, for his intervention and am very glad I gave way. How sad that he left the committee before he could vote on my amendment.

An argument against Russia being in the EU is that it is too big. The land mass of Russia is enormous, but the economy is not that big, even despite the massive oil wealth, and with oil and gas prices coming down, that economy will shrink. I suspect that, in a few years, Turkey, whose population is growing at a massive rate, will probably overtake Russia, whose population is going down. We will not see the population of Russia as that overwhelming.

Nobody is pretending that Russia is a suitable candidate to be in the EU in the near future, but things change. If Yeltsin had survived, if he had not been a drunken, corrupt incompetent who did everything he could to make a complete mess of the Russian economy and if the ideal view of what Russia might have been when Yeltsin took over had happened and it now had a thriving democracy, Russia would be asking to become a member of the EU, and we would be entertaining that idea.

Russia needs a friendly gesture. At the moment, Russia constantly goes on about being surrounded, which actually means having neighbours that it does not control, but that is an absurd concept to go along with. Switzerland is surrounded by two international organisations of which it is not a member—NATO and the European Union—but I do not hear the Swiss complaining that they are surrounded. That is because the Swiss have nothing to fear from the countries around them, and it is irrational for the Russians to go down that road. Before I die, I sincerely hope to see Russia as a member of NATO and the European Union.

I shall finish on what has been happening to European unity. When it comes to dealings with Russia, the Germans have made up their mind that they have national interests that do not concur with those of other members of the EU. That is because they are tremendously dependent on supplies of Russian gas. Therefore, they want to have their own relationship, and have not condemned the Russians as heavily as other members. I wonder what the value of our report is when we are trying to appeal to European unity on relationships with Russia when there is none. Indeed, there is no European unity when it comes to bailing out banks. We are now seeing a fragmentation of the European Union, and it makes me wonder whether the integration policy can go on any further or whether it should be reversed. I think it should be. As time goes on, we might be better employed sitting on a committee to decide what the UK’s relationship with Russia should be and taking the same independent view that Germany is taking towards Russia.

As it is, we spend all our time bowing at the court of some concept of European unity, which, in many cases, when the chips are down and things really matter, is not there. It is not adhered to by even senior and founding members of the European Union, such as Germany. We should strike a more independent note, look after our interests and realise that there are many cases where the EU cannot satisfy them.

My Lords, I am tempted to follow the noble Lord, Lord Hamilton of Epsom, in his concluding remarks, but that would not be proper in this debate. Suffice it to say that I hold to the view that perhaps what we need to re-examine in building a strong Europe is a more confederal rather than federal approach.

We all owe a deep debt of gratitude to the noble Lord, Lord Roper, and his colleagues for a particularly interesting report. As I listened to him today, I recalled that it is just over 55 years since he and I first met in Yugoslavia and forged a lasting and eternal friendship. I remember him keenly going off on his own to distant and far-flung monasteries to get below some of the facade with which we might have been being presented. He has followed that keen interest in international and global affairs ever since. It is good to see him in the role that he enjoys today.

I believe that it is vital to understand and not just to react to Russia. We have a great deal of responsibility ourselves for how Russia has evolved since the demise of communism. We led Russia down the road of romantic ideological market capitalism without giving any serious thought to, or doing any serious work on, as we should have done, how you actually move from A to B—what fabric of society you must have if accountable capitalism within a democratic framework is to work.

The noble Lord, Lord Roper, was also right to dwell on the possibility of a sense of humiliation in Russia. I have always had anxieties about the comparison with Versailles after the First World War. There was a very high price to pay for Versailles. But we must understand a bit more than that; we must go back into the history of Russia. There has always been this dichotomy, this dilemma: what is the Russian identity? There was Peter the Great trying to follow and emulate what he saw as the great strengths of Europe—there is St Petersburg itself. In the 18th century, we saw an extraordinary period when the Russian elite spoke French, adopted French culture and it was totally unacceptable to participate in Russian society at their level without speaking in French.

After that infatuation with Europe and European culture, there was some sort of backlash in the 19th century, when members of the elite thought that that was not fulfilling. They had experienced the loyalty of the peasantry in conflict and wanted to get back to what they believed was the heart of Russia, the peasantry. They went off to join the peasantry, but, unfortunately, it was a rather disillusioning experience because the peasantry did not turn out to be what they had romantically thought they were. Then things in the elite moved back to a more European-oriented approach. That is reflected in culture, music, literature and art, in the interplay between European aspirations and the great mysterious realities of Russia, vast as it is.

In the story of Russia, as has been emphasised already in the debate, there is the ongoing reality—it was the reality in pre-revolutionary Russia and during the Communist decades, and has been since—of a tradition of a self-perpetuating authoritarian elite and a constant drive to be taken seriously as a world power. That elite and that continuity is demonstrated in what I have personally encountered as the very strong KGB-FSB school, which operates at almost every critical part of decision-making.

The interdependence of Russia and Europe is inescapable. It is there in economic and financial realities, in the realm of energy, in global warming, in vast wider issues such as Iran and in security and the threat of international terrorism. I have always held that Putin is absolutely right when he talks about Russia being in the front line of the interface with global militant extremism, but in Chechnya, Ingushetia and elsewhere, the paradox is that the brutality and cruelty of direct and, more sinisterly, indirect oppression has been totally counterproductive. It has strengthened the appeal of extremism to many people. We should not be misled by perceived relative order and security in Chechnya today. I am convinced that it is the order of tyranny and fear and I am fairly certain that many of the young are still being attracted by the militants. The issues are not resolved.

Chechnya is of far greater significance than just for Chechnya alone. If I have one criticism of the report it is that it did not give nearly enough prominence to the significance of Chechnya in the equation. Chechnya has become a rallying point. Russian policy, coupled with the disgraceful equivocation of Europe and the West has, as I said, strengthened the appeal of extremism to many exasperated and disempowered people. However, if we criticise we must look to our own credibility. Here I could not agree more strongly with what the noble Lord, Lord Skidelsky, said. The Kremlin's cry of double standards must be taken seriously.

We desperately need—and the current global financial crisis is a very good time to do it—to regenerate the post-Second World War practical idealism forged from the experience of devastating and bitter global conflict—the idealism of internationally agreed norms and standards for which we are all striving together. Those standards and norms are in the realm of eliminating indiscriminate use of force—and, for example, the use of torture—and embrace a fundamental commitment to the protection of human life, something that we need to remember as we go about our business in Afghanistan and Iraq. They are about human rights not just as a qualitative option but as an essential, central pillar of a stable, secure society. They are enshrined in an unyielding determination to uphold the international rule of law so badly undermined by the manner of our intervention in Iraq.

There has been reference to Georgia. We must be honest with ourselves. Are Russian charges about the role of the West totally without foundation? How far did we meddle in the election and try to control events? What were our motives for doing that? What was the significance of the energy card?

To pose those questions is in no way to condone the Russian action, but to recognise the grounds—however cynically exploited by them—of Russian concern. If we are endeavouring to look at events through Russian eyes, I am sure that the expansion of NATO up to the Russian borders can be seen by them as provocative—it is certainly exploited by them as being provocative, if not threatening. We need to realise that in our policy towards Ukraine that consideration must be in the forefront of our minds. A shared and, yes, muscular approach to securing our common interests is indispensable. The European Union has a vital role to play in this. Nevertheless, anxiety about Russia’s behaviour in Chechnya, Ingushetia and elsewhere, and about the aspirations of the Chechen and Ingushetian people, must in logic mean a similar anxiety about South Ossetia and Abkhazia and their people in their relationship with Georgia. Real and genuine self-determination and cultural identity must surely apply there as well.

If we are to build, as we must, a sense of common interests and common struggle with the Russians, as opposed to drifting back into confrontation, it will be soundly achieved only on a basis of honest, tough and uncompromising candour about our own analysis. This must apply to Chechnya and Ingushetia, as it must—the noble Lord, Lord Hamilton of Epsom, was absolutely right about this—to the total unacceptability of ruthless, barbaric and cruel murder in London and a trail of radioactivity across the capital.

The report refers to the OSCE and the Council of Europe. I have no doubt whatever that the Russians prefer the Council of Europe, but we must beware the danger of the Council of Europe becoming a Russian poodle. Russia is a grand payeur, and as such has influenced the institution quite considerably. It is worth remarking that, with the expansion of the Council of Europe, instead of a substantial and established political and value culture, the institution has moved much more into the realm of aspiration. However, we need to meet the anxieties of the Russians head on, for example by introducing into the Council of Europe the concept of the universal monitoring of all member states and not simply the rather arrogant monitoring of certain states that still include Russia.

One part of the Council of Europe deserves far more attention—the European Court of Human Rights. This has been an outstanding international institution, disastrously underfinanced. When one sees the scope of its responsibilities, it is extraordinary what it achieves with so little financial support. Let us remember that the Council of Europe Parliamentary Assembly elects the judges. There might be a moment of anxiety about that, but it has been fascinating historically to see how those judges grow into their international responsibility and how a culture and mores are established. It is very impressive.

If we recognise the significance of the European Court of Human Rights, let us be very cautious about moving into alternative institutions in the same area in the European Union. That could be a terrific own goal; it could aid and abet the concept that human rights are about European culture and European standards. The great thing about the European Court of Human Rights is that it extends beyond European Union boundaries to encompass Russia. That is a very strong position, so I am glad to end my remarks by paying the warmest possible tribute to the judges in the European Court of Human Rights and to all those who serve it so faithfully.

My Lords, in congratulating the noble Lord, Lord Roper, and the members of the European Union Committee on their excellent work in the production of this report, I feel bound to observe that this is a clear case of how events can move on so very quickly in the field of international relations.

When the committee’s report was published in May, no one could have predicted that events would change so rapidly. Even in the Recess, not many would have expected that the intervening months would bring such a dramatic change in the nature of relations with Russia. The changes that we witnessed over the summer have not only fundamentally altered the nature of relations with Moscow but put the strength of a European Union foreign policy most dramatically to the test, and Europe has been found wanting. Accordingly, this is a most timely debate, and the question of future interaction with Russia is vital to the security of the whole world.

I do not intend to focus my remarks totally on the recent, and ongoing, conflict in Georgia, but plainly it is relevant as the dispute has ramifications that affect our relationship. The intricacies of who is to blame for the conflict can be considered on a future occasion, but it is important to state that I am uneasy with Russia’s focus on becoming more assertive towards its neighbours—a policy that appears to have superseded the economic liberalisation that offered so much hope.

To underline my point, when Russia sent its troops into Georgia in August, we watched President Sarkozy, leading on behalf of the European Union, broker a deal designed to lead to peace. Sadly, the deal that was agreed left President Saakashvili of Georgia little or no room for manoeuvre and has legitimised the presence of Russian peacekeeping troops in the disputed area.

However, my short remarks about Georgia serve rather more as a lesson to those ambitious for a European Union foreign policy than as a lesson about the situation in that troubled region. The reality is that the European Union has proved most enthusiastic at generating words and lengthy statements, but the practical effects on the ground are most disappointing, and even negligible. From a European Union perspective, we need to maintain good relations with Russia; it is a large and very powerful country, and our dependence on it for energy is critical. If a common foreign policy is to work, providing a stable basis for a satisfactory relationship with Russia must be a key starting point. Yet despite the importance of Russia, I fear that we are not doing enough to understand the nature and importance of other countries, which could have serious consequences for all of Europe.

It is evident that there is a clear lack of consensus among European Union member states about how best to approach the Russian Government. We need to be more effective at engaging with the Administration in Moscow, and should not be afraid of asserting our differences. The approach that we have witnessed from President Medvedev and Prime Minister Putin does not accord with the experience of the wider European democratic structures. We need to be prepared to engage in the argument and to defend our principles. The European Union has proved far too timid in addressing this challenge.

I confess that I do not know a great deal about the practical interactions between President Medvedev and Prime Minister Putin. I observe, however, that it appears that President Medvedev’s power base is very much in accord with those of Prime Minister Putin, and it appears that his authority depends very much on the strength of his Prime Minister. In the final months of Mr Putin’s reign as President of Russia, it became clear that an increasingly hard line was developing in Russia’s foreign affairs. This is a country that is not afraid of isolation and confrontation. Some argue that Russia is hungry to rewrite the final chapter of the Cold War, which still has a strong resonance in that country.

I believe that the objective of the Russian Government is not confrontation but that they have no compunction in using the means to achieve their ends. Russia is keen to maintain strong and positive relations with countries that comprise the European Union, on both a bilateral and a European basis. We should not be afraid of asserting our beliefs in the rule of law, but in expressing those concerns we should be careful not to give added weight to the political power of hard-line nationalists within the Russian political class.

I reject the argument that in Russia we have witnessed the growth of a new authoritarian capitalism; rather, I believe that Russia lacks a clear ideological philosophy beyond populist nationalism. What has been most depressing in the engagement between the European Union and Russia, however, is the failure to establish and defend a consistent line. I am inclined to speculate about how the position would be affected by, say, a common energy policy. I am not in favour of an energy policy devised by officials in Brussels and presented as a fait accompli; however, should member states’ Governments speak with a clear and consistent voice on energy matters, we would probably see a very different relationship with Russia.

The absence of a common line can only weaken our position in dealing with Russia, and when that situation is matched by grand, verbose statements emanating from Brussels, our standing is diminished yet further. This is a problem for Europe that needs urgently to be addressed.

I wish now to reflect on the common challenges that we face alongside the Russians. Russia shares a border with China and Iran, and its relations with those countries are complex and most interesting. Russia appears to have witnessed the economic growth of China with some concern, and I am not convinced that the relationship with the regime in Iran is sustainable. Levels of trade with Russia and Iran are positive, but I detect elements of defensive strategy in the relationship there. We need to bear this in mind in dealing with Russia’s neighbours. Military action against Russia would move the Russians further towards the Iranian Government and create an alliance that would not serve our interests.

In conclusion, we need to find a formula that enables the European Union to speak with one voice and to pull together firmly, as that will be the most effective way to engage with Russia. We must be pragmatic and deal with the situation that we face collectively. Observers of foreign policy matters will not be impressed by the way the European Union has conducted its relationship with Russia. The report provides a constructive appraisal of the state of our collective relationship. Whether or not the European Union is capable of delivering what is needed remains to be seen.

My Lords, not being a member of the committee, I add my thanks for the enormous work it has done. I apologise for arriving a little late. I want to concentrate on Chapter 6 of the report, “The Common Neighbourhood and International Security Issues”, particularly the dangers of encouraging countries in Russia’s “near abroad”, such as Georgia and the Ukraine, both with significant Russian minorities, to hope to become NATO members.

As we all know, the Caucasus, like the Balkans, where the First World War broke out, is a cauldron of seething ethnic animosities. The committee is right to point out that the EU should listen more carefully to what the Russians have to say. It has never been properly explained how we can encourage NATO’s relentlessly eastward expansion without provoking a strong Russian reaction. Like the noble Lord, Lord Crickhowell, I note the comment at question 174 that the Russians feel betrayed by the West over its abandonment of the assurances it gave in the early 1990s that NATO would not be enlarged. Agreement in principle to site bases in the Czech Republic and Poland has been the last straw.

On the other hand, nothing excuses the recent Russian actions in Georgia and, in the same vein, the comments of the Russian President that:

“We are not afraid of anything, including the prospect of a new Cold War”.

He ignored today’s economic interdependence of Europe and Russia. How well thought out was our Foreign Secretary’s recent visit to the Ukraine? Bronwen Maddox, the chief foreign commentator in the Times, in a report on 28 August, enthuses about the visit and heaps praise on the Foreign Secretary—including on his haircut. She quotes him as saying:

“It is clear to me, standing here today, that this is a European country … once it fulfils the criteria, it should be accepted as a full member, and we should help you get there”—

that is to say, into the EU and NATO.

As regards whether there was due consideration, preparation and deep thinking before the visit, Ms Maddox lets the cat out of the bag, saying that the Foreign Secretary conceived the Ukrainian trip a week ago, according to aides, on his dash to Tbilisi. She praises his astute choice. I am not sure.

Sir Mark Lyall Grant, the political director of the FCO, points out that Russia distinguishes very clearly between the EU and NATO because the United States is in one but not the other. I find it curious that, not since Curzon was Foreign Secretary in 1919, has a British Foreign Secretary shown such an interest in the Caucasus. I am sure that the Foreign Secretary is extremely familiar with the charter of NATO, commended by Ernest Bevin to the House of Commons on 14 May 1949, and the North Atlantic Pact, which was debated a little earlier, on 18 March that year. I remind noble Lords of Article 5, referred to by the noble Lord, Lord Skidelsky. I have checked the words:

“The parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all”.

The use of armed force can follow—one for all and all for one.

It is therefore not only the interests of applicants that should be heard; those of existing NATO members should be considered very carefully. Do we all want to get entangled in supporting Georgian or Ukrainian ambitions? Encouraging democracy is one thing; entering into commitments is another, especially any military obligation which could not conceivably be fulfilled. In fairness to the Foreign Secretary, while voicing support he did not say that Britain would actually lobby for giving countries a membership action plan, referred to by my noble friend Lord Anderson—the start of the process—when NATO Ministers meet in December. So far as we are concerned, I give a little reassurance to my noble friend: the pass does not seem to have been sold because that assurance was not given.

We should be extremely careful—I hope that this will not be taken in the wrong way. Words to encourage democracy are one thing, but we must be careful not to posture on the world stage and not to take into full account what obligations mean. We have been in our lifetime through many of those instances when obligations are called upon to be paid. Most of us have lived through the experience of the Cold War. I was a mere youth when the NATO charter was agreed. In Germany, as a young soldier, I was occasionally asked to guard a train from Hanover to Berlin with the blinds down, going through another sector, and seeing the Berlin Wall. None of us want to go back to that. We must be extremely careful not to provoke that.

I know also of the continuing Russian fury regarding our intervention in Kosovo in the face of what, undoubtedly, was genocide on a huge scale. As Attorney-General, I had to approve, on a daily basis during the 68 days, each and every one of the air targets to ensure that they kept within our legal obligations. In April, when I spoke to some M embers of the Russian Duma they were not persuaded about the merit of our actions. There is a concern that to compare one with the other—what happened in Kosovo with the problem of the minorities in Georgia and Ukraine—is ridiculous.

I would therefore suggest to the Government and the Foreign Minister that they make full reappraisal of where the British interests, referred to by the noble Lord, Lord Hamilton, lie. We should be careful to consider that before the meeting of NATO Ministers in December. The Cabinet should be reminded of our obligations, our rights in NATO and where expansion could lead us. Having considered these, the Cabinet and the Foreign Secretary would be better armed to reach a consensus with countries that are geographically much nearer to the applicant countries. There could be a heavy price to pay for relentless expansion eastwards.

My Lords, I welcome this report. The EU Committee of the House of Lords has a well deserved reputation for well researched and well judged reports. I share the analysis that we are dealing with a country in a period of what I think that the noble Lord, Lord Truscott, called post-imperial angst. There is a real sense of grievance, a sense that it was humiliated in the 1990s, and now it is back and wishes to reassert itself. I think the noble Lord, Lord Truscott, also made the comparison with Suez: that Russia has reached the stage in post-imperial development where coming to terms with being less of a great power than it was is extraordinarily difficult. We have to remember that the British did not learn that after Suez. It was a great failure of post-Suez. I doubt whether Russia will learn that post-Georgia unless the oil and gas price sinks back down in dollars again, in which case it will have to.

With some of my contacts in Moscow, I have found that they talk about the Georgians in the same way I imagine that Members of this House talked about Irishmen in about 1850. There is a real sense of superiority about the peoples around them—that they are part of the world—and a clear ambivalence towards Europe. In the 1980s, when I was secretary of the British/Russian round table, we found ourselves with Russians who insisted that Russia was a European power and had to be accepted as such. I remember causing offence at a meeting in Moscow by suggesting that many of us regarded Russia as at least as European as Turkey. I was told by an outraged senior member of the Community Party that one could not say that because “Russia, after all, was a Christian country”. There are all sorts of ambivalences in that.

Now we find Russians saying that they are not to be judged by European rules—that they are a great power to be compared with the United States. The whole concept of sovereign democracy is that Russia, like America, is allowed to play by different rules from smaller countries such as Britain and France, which is part of the problem with which we have to deal.

I also share the view of the noble Lord, Lord Skidelsky, that part of our problem in dealing with Russia is the loss of the western moral authority that we have suffered in the past eight years and more. We have to recognise that some Russian actions now are deliberately saying, “We can behave like the United States. Okay, they are going to send a fleet into the Black Sea; we will send ships into the Caribbean. They are going to supply the Georgians; we will send aircraft to Venezuela”. There is an in-your-face assertion that, “If you want a sphere of influence, we will have one too. If you are going to influence us, we will do the same to you”.

The summer before last, my wife and I cruised into Sebastopol harbour and, I have to say that the fattest I have ever been was returning from a Black Sea cruise because they feed you so well. The Russian naval base in Sebastopol is a great deal smaller than Guantanamo Bay. It has the same post-imperial echoes as that large base on sovereign Cuban territory. The American approach to Georgia has been irresponsible and provocative, which I regret, but that is only part of the set of issues with which we need to be concerned. The pace of NATO enlargement clearly has been too fast. Some of us were never happy entirely about NATO enlargement disregarding Russian sensitivities. I attended the German Marshall Fund’s parallel conference in Bucharest to the NATO European Council. I was not sure which was worse, the aggressive expansionism of some Republican Americans or the arrogant nationalism of some of the Russians who were invited to answer them. The future of NATO is a very large question to which we in this House and elsewhere should return. If NATO is an anti-Russian alliance, there are large questions for us about how we see our future relationship with Europe. What are the objectives of NATO enlargement? Are we sure that we agree with the consensus in Washington about the purposes of NATO enlargement?

However, the most important question is: what is to be done? I strongly agree with the committee’s statement in paragraph 320:

“The EU will always be more effective when it can agree a united approach in its dealings with Russia”.

A common European policy towards Russia is clearly in the British interests. Sadly, we have seen a number of defections from solidarity. The most appalling was Mr Berlusconi’s action in inviting President Putin as his first foreign visitor when he again became Prime Minister. But we understand all the sensitivities and hang-ups which the Germans have, as well as their business interests, in their very special relationship with Russia.

We have been very lucky that we have found ourselves with France in the presidency when the crisis with Georgia came up. One can think of a number of other presidencies that would have handled this much less successfully. But the British Government have not contributed enough. British policy on the whole has been passive. We want a British Government who engage in the debate here and in other European countries about why we share common interests in a stronger policy towards Russia.

I also agree with paragraph 284, which states:

“The EU should resist any attempts to isolate Russia”.

We need to engage with the Russians as far as we can, but—the report does not spell this out quite as much—we need to speak plainly and bluntly about our interests and theirs.

Last February, I led a cross-party delegation from this House to Moscow. The memory I most enjoy is our discussion with the foreign affairs committee of the Duma in which the temperature and the noise level rose quite considerably as it told us what it most objected to about British policy and our welcome of particular Russians to whom it objected, and we told it what we thought about Russian neglect of the rule of law, murders of opponents, corruption in the armed forces, et cetera. One has to talk at that level, sadly, to make sure that one gets the Russians’ respect.

We need a more active policy towards the EU’s eastern neighbours. In his reply, can the Minister give us the view of Her Majesty’s Government on the new Polish/Swedish initiative for an eastern partnership? I see that the European Council has asked for a report from the Commission in December, targeted as we know particularly at the western former Soviet countries of Ukraine and Belarus—that is not easy, but I see that the Finnish Foreign Minister has just been to Minsk—Moldova and the southern Caucasus states. We need action on these frozen conflicts. We have neglected Transdniestra at least as much as we did Abkhazia and South Ossetia. One of the things we can learn from this is that we need to engage with Moldova and Transdniestra as actively as we can. We also need to engage with the Ngorno Karabakh problem, which is very similar to the Abkhazia and South Ossetia problem, particularly given that the relationship between Turkey and Armenia, which is part of the jigsaw here, is at last beginning to improve.

I hope that the Minister will also be able to tell us about what he expects to come out of the meeting in Geneva next Tuesday, 15 October, on how post-conflict Georgia should develop and what the role of the EU monitoring mission is going to be inside Abkhazia and South Ossetia. We cannot concede to the Russians that the EU monitoring mission, which I think includes a number of British officers, will not be allowed to operate inside Abkhazia and South Ossetia. As we know, there has been not just ethnic cleansing but looting in those countries. I was in both places four years ago and noted that there was clear indiscipline, with the local militias disorganised and even at that point conducting operations of ethnic cleansing. I recall vividly that I was there with Anna Politkovskaya, who was herself murdered not long afterwards, and that for her it was clear that what was happening in the south of the Caucasus and what was happening in the north was all part of the same problem—how the Russians mishandle the smaller nationalities to their south. The point was also made by the noble Lord, Lord Judd, in his speech.

Next, we have to negotiate on partnership, and we have to negotiate hard, and I hope that the Minister will reassure us on that. The rule of law is absolutely non-negotiable. However, the Russians do want to negotiate the rule of law. The rule of law that they think should apply here is not necessarily one that should apply there. In protecting the substantial Russian community we now have in the UK, this is a particular British interest. Yes, we may negotiate with the Russians on WTO membership, but we do not make any concessions on whether they are up to WTO standards. On the OECD, the Russians are a very long way from coming up to the standard to join. I was happy to see in the Government’s response to paragraph 294 with regard to the OECD the words:

“Accession candidates need to be aware that the political aspects of like-mindedness will also be raised”.

I hope that they will be raised very robustly when it comes down to it. Incidentally, the idea of Russian EU membership is absolutely off the table. On my last visit to Moscow, one of my oldest Russian acquaintances said, “We want to be offered EU membership so that we can turn it down”. There is a real sense of, “We demand to be treated as equals, but sod it, we are not going to behave as if we’re like that”. The idea that the Russian elite would ever accept the disciplines of EU membership is way beyond the pale. We need also to grapple with energy security, and I hope that the Minister will be able to say something about a positive British attitude to investing in Nabucco and making sure that external energy security as well as progress towards a more integrated EU energy market is on the table.

A common European Union policy on Russia ought to be the core of a common foreign policy. One of the real weaknesses of the whole process of a common foreign policy is that we have not made more progress towards this. It is clearly in Britain’s interest, and even some Conservatives recognise that that is the case. I argue that European interests and assumptions in its relations with Russia are closer than British attitudes and assumptions are to those of the United States. I know that the Governor of Alaska believes that if one sits in Alaska one sees relations with Russia much more clearly than those of us who are more distant, but I and members of this party think that it is very clearly in Britain’s interests that we should be working actively towards a more coherent European response of negotiating with the Russians and managing the relationship, but not allowing them to bully the West in the way they would like.

My Lords, the House is grateful to the noble Lord, Lord Roper, and his committee for its hard work in preparing this excellent report on the EU and Russia, and I apologise to the noble Lord for missing the first half minute of his speech. We have enjoyed some very well informed contributions. The noble Lord, Lord Truscott, spoke with great authority on energy issues and Russia, as one would expect given that his wife is Russian. The noble Lord, Lord Skidelsky, and the noble and learned Lord, Lord Morris, both believe strongly that Georgia and Ukraine should not join NATO. However, I agree with my noble friend Lord Hamilton that not now doing this would send the wrong message to Russia. There is a strong argument for offering them a pathway to joining NATO, despite Russian insistence that this would transgress a very thick red line. Moreover, I certainly agree with the noble Lord, Lord Wallace of Saltaire, on the issue of possible Russian EU membership.

When this report was written, EU-Russian relations, although already displaying signs of tension, were of a different temperature than they are today. As my noble friend Lord Sheikh said, events have moved very quickly. I believe that the disproportionate Russian response to Georgia must dramatically alter the EU’s view of its neighbour. Even in May, the committee observed:

“The European Union is not facing a new Cold War, but EU-Russia relations are perhaps in a negative phase in a long process of transition which could last for some time”.

This assessment has undoubtedly been corroborated by recent events, and indeed relations have deteriorated further. Although Prime Minister Putin has said that there is,

“no basis for a Cold War”,

much of Russia’s recent conduct undermines confidence in that statement. Russia’s genuinely felt resentment and anger over the Western response to the Georgian crisis stands to continue to dog relations despite the recent cooling of the rhetoric, and as several noble Lords have mentioned, NATO expansion remains a potential flashpoint.

Russia’s actions in Georgia have been rightly condemned as disproportionate. The scale of Russian militarisation on the Georgian border always belied Russia’s claim that it was only reacting to a Georgian attack, and mobile phone intercept evidence presented by Georgia now supports the assertion that, despite Georgia’s misjudgments, Russia was the aggressor. Russia believes that it has the right to assert itself in its “near abroad”. Indeed, the EU has acknowledged the sensitivity of the area in the European Neighbourhood Policy. However, as the report makes clear, this should never,

“give them a right of veto over EU policy”.

We should go further, as has my right honourable friend William Hague, and say to Georgia:

“That your right to live in peace and freedom was long-awaited and hard-won, that your democracy has every right ultimately to join the alliances of the world democracies, and that the bullying of you or your neighbours must never be allowed to pay”.

Violating a neighbour’s territorial integrity must not translate into increased influence.

Although they have now withdrawn, Russian forces stayed in Georgia for far too long. They dug in around strategic interests such as the port of Poti, hundreds of miles from the south Ossetians they claim they were there to protect. The return of Russian forces to pre-war lines, as outlined in the original agreement, has seemingly been forgotten with the announcement that Russia would keep 7,500 troops in South Ossetia and Abkhazia. Will the Minister confirm that negotiations on a new EU-Russian partnership agreement will not take place under such conditions?

Can the Minister also tell the House whether the 19 observers that Britain has contributed to the EU observer mission have seen any evidence of offences against the civilian population and whether Georgian refugees are being allowed to return to their homes in the region? We must not allow what would be, in all but name, ethnic cleansing.

The recognition of South Ossetian and Abkhazian independence is also unhelpful. There can be no comparison with Kosovo. It has taken eight years to strike the balance between the Kosovo Albanians’ insistence that nothing short of independence would be acceptable, and Serbia’s insistence that it would not yield sovereignty. The Ahtisaari plan is a product of the,

“political process … to determine Kosovo’s future status”,

that UN Resolution 1244 called for—a process, if not the result, that Russia supported. The EU must, above all, use the strength of united resolve to defend its interests and oppose aggression.

The EU certainly needs good relations with Russia. Last year the combined trade in goods between the EU and Russia was €232 billion, while the EU was by far the biggest investor in Russia, with €17 billion. The creation of a cyber-terrorism research centre in response to the attack on Estonia is one example where co-operation can help. Support for Ukraine from outside interference regarding its upcoming elections would also be welcome.

Russia will need major investment in the upstream and midstream gas and oil sector in the next two decades. In that context, the recent difficulties that TNK-BP’s joint venture underwent were not helpful to build investor confidence. But it is clear that Russia’s leaders remain in denial, at least publicly, of any connection between their own actions, whether over energy issues or, especially, Georgia, and the loss of investor confidence. So I ask the Minister whether, in Her Majesty’s Government’s discussions with their Russian counterparts, it has been made clear that such belligerence damages business confidence and makes investment less forthcoming.

Last year the EU imported almost €100 billion in oil and gas from Russia. As the committee warned in May, all countries are vulnerable, such is the magnitude of gas imported from just the one country. Russia could,

“use its energy exports as a political weapon to impose its will on neighbours and partners”,

much as it did to Ukraine in 2006. Do the Government accept the Conservatives’ long-held view that there is an urgent need for a review of our energy security?

The noble Lord, Lord Anderson, to whom I always listen closely when he speaks on international matters, was critical of EU countries which make their own energy agreements with Russia. My noble friend Lord Hamilton disagreed. There is an argument that we must be careful not to look at Russia only through the EU prism, thereby ignoring all the possibilities for protecting and furthering this country’s interests on a bilateral basis or in concert with other partners away from the collective EU system. It is clear that, on the energy front, our concerns are different from anything that might emerge from a common EU energy policy, which the report anyway concedes is virtually unachievable.

Although, as my noble friend Lord Crickhowell said, our energy position is exposed, we—unlike continental Europe—have the opportunity via Norway and our own North Sea, plus LNG imports, to depend less on Gazprom and the Russians generally. But I support the committee’s recommendations mentioned by my noble friend that EU member states should take active and coherent measures to diversify both sources of supply and transportation routes.

On the subject of trade, Russia dropped to 143rd out of 180 countries in Transparency International’s corruption perception index. What work is being done to minimise corruption in Russian business practices and its impact on British companies operating there?

We also need strong relations with Russia to deal with important foreign policy challenges. The Russian veto of the UN Security Council resolution on Zimbabwe was deeply disappointing We cannot afford similar divisions to debilitate negotiations with Iran on nuclear proliferation. What conversations have Her Majesty’s Government had with their Russian counterparts on this pressing issue?

Russia has nothing to fear from the EU or NATO and much to gain. We have an obligation to convince Russia that the US missile defence system to be based in Poland and the Czech Republic is not a threat, but rather to mitigate a threat from the Middle East. The Russian president’s response that Russia would upgrade all its weapons platforms including its nuclear deterrent by 2020 is unwelcome and suggests that we have not yet succeeded.

Despite our differences, we have held out the hand of friendship to Russia. We want to continue to do so, for we genuinely believe it to be to the benefit of all. But our relationship must be based on mutual respect, and I support the committee’s view that this should be combined with a hard-headed and unsentimental approach by the EU as well as by our own Government.

My Lords, I, too, congratulate the noble Lord, Lord Roper, and the European Union Committee on producing this detailed and thoughtful report, which makes an important contribution to our understanding of EU-Russia relations. My officials wanted me to congratulate the noble Lord, Lord Roper, on both the publication of this report—rather perversely in that case—and the scheduling of the debate. While we can certainly agree that the debate is well timed, it is a little harder to conclude that the report’s timing was perfect given what has happened since its publication. Having heard earlier from the noble Lord, Lord Hamilton, that this was the second time that this had happened to the committee, we can only fear what its next subject might be and devoutly hope that it is not the global economy.

Whatever the inevitable redundancy of some of the report given what has happened since, the basic analysis holds up extraordinarily well and the events of the summer do not shake its fundamental conclusions. Before we return to the circumstances of Georgia, it is worth reminding ourselves that the common challenges that the EU and Russia face—tackling climate change, the long-term security of our energy supplies and the broader issues, which have not been much mentioned today, of promoting peace in the Middle East and combating the threat of a nuclear Iran—are key issues on which we must be able to maintain a constructive and deep dialogue. That of course means that we have to have a Russian partner that is willing to play a responsible international role and to keep to the international commitments that it makes. Whatever other lessons we can learn from recent events, we need to continue to remind the Russian Government that international engagement comes with certain responsibilities and with rules of behaviour.

My noble friend Lord Truscott said that the economic costs of the conflict had no doubt been very much underestimated by the Russians, who I am sure had not foreseen the impact on stock prices. He suggested that this was their Suez, a point to which the noble Lord, Lord Wallace, returned. Well, perhaps—it was certainly their sub-prime. Suez has an association that we should perhaps question because our near east is very different from their near neighbourhood. It is worth observing that, for the Russians, real issues of their security and confidence in the motives of the West have been raised by NATO enlargement. Whatever the agreement that we will all find in needing to deal firmly with the Russians and remind them of Europe’s collective red lines, we also need to recognise, as many noble Lords have said today, just how provocative recent events have appeared in Russian eyes, beginning with the promise of enlargement and continuing through the events of August. In that regard, a proper part of any long-term response is to find ways to reassure Russia that we want a peaceful, constructive relationship and that, just as we expect Russia to live by the rules of a civilised international order, we remain equally devoted to that ourselves.

In dealing with Georgia, while I hear noble Lords who say that we must look at UK national interests as well, even if those might in some ways diverge from those of Europe as a whole—allowing that as a debating point for a moment—I do not think that it detracts from the fact that our power to influence Russia comes from our ability to forge a common European position. It is the voice of Europe that will stall Russia in its actions, not the voice, I believe, of the UK alone. Our effort to make sure that there is a common European position is enormously important to our handling of this crisis since it began.

Russia’s response to what happened in South Ossetia and Abkhazia was clearly utterly disproportionate. Whatever the rights and wrongs of how this began, Russia breached all the expectations and rules of the international community in the scale of their response and their slowness and reluctance to withdraw troops since. Even if, as many noble Lords have said, the Georgian actions were ill considered and provocative, that does not excuse the Russian response.

It is in that context that we have sought to work with the French presidency as well as our fellow members to forge a clear strategy. It began with the extraordinary European Council meeting on 1 September, which sent a clear message of support for Georgia and underlined the importance of Russia living up to all her international commitments and obligations, including honouring the commitments that it had made under the peace plan brokered by President Sarkozy. I join others in saying how fortunate we were that France has the presidency at this time, because there was an astonishingly swift and united response to the crisis. As I have observed, when EU member states speak with one voice, they achieve much more than is possible when they speak alone. It also highlights our ability to use a whole range of tools to ensure stability and security internationally. We have now established effective mechanisms that will provide independent monitoring of the situation on the ground. The EU civilian monitoring mission is there. Already more than 200 monitors have been patrolling the zones adjacent to South Ossetia and Abkhazia since 1 October.

As to the ultimate issue of complete access under the agreement with President Sarkozy, we need to hear the reports next week to the GAERC and the European Council before confirming that we believe that complete access has been secured. However, we can already say that not just the EU but the OSCE and the UN appear to be receiving the access broadly that they need to carry out their mandate.

The noble Lord, Lord Crickhowell, asked about President Medvedev’s statement two days ago in which he called for a new security approach embracing both sides in an agreement around security principles of mutual non-interference and guarantees of the independence of the countries of the wider Europe and Russian region. Similarly, we have heard other initiatives, such as the Swedish-Polish initiative. The response to all these is to say that we are seeking more information on both those initiatives. There will be extensive discussions of them in the coming weeks, but we should remain open to them regarding suggestions on NATO and weigh everything against our goal, which is to secure a set of borders that allows countries to enjoy full independence within them and reduces any prospect of action by neighbours against each other of the military kind that we saw in August. It is a little early to conclude the best way of bringing Russia back into such an arrangement, but we need to be open-minded to suggestions from all quarters.

We remain committed to the EU-led Geneva talks, which are, as was mentioned, due to start next week, on 15 October. It is extraordinarily important that Russia demonstrates real commitment to this process and to the unresolved questions, because, for all the progress that we have made on observers, there has not been progress on refugees and internally displaced persons, or on property rights of those who have been displaced by the conflict. There remain outstanding humanitarian issues and profound questions of human rights and their breach. Beyond providing that lasting security and stability, we need to redress the events of the past weeks and months and their real cost to individuals. We all know that, when people are displaced and their rights to their previous homes are left unresolved, that can be a source of tension and conflict that can run through generations and decades. We have seen it in too many other places, from Cyprus to the Middle East, to want to leave these issues unsolved, somehow setting firmly in concrete as time elapses. We need to solve them now.

On 1 September, the council unanimously decided to suspend negotiations on a successor to the EU-Russia partnership and co-operation agreement. That assurance, which the noble Lord, Lord Astor, sought, remains in place. While, as the report argues, a successor agreement is enormously important, negotiations on it will resume only when the issues of August have been satisfactorily resolved. It was also agreed that we would conduct a comprehensive review of EU-Russia relations and intensify efforts to ensure the EU’s long-term energy strategy. We remain committed to the PCA negotiations, but in good time, when the circumstances are right. The agreement to an audit of EU-Russia relations, which has already begun and will run up to the next EU-Russia summit in Nice in mid-November, will allow us to take a considered decision about the future of relations between Europe and Russia.

The committee can in one regard take some comfort from the events of the summer: if it had felt that there had been some complacency in the Government’s views on the energy question, nothing has concentrated minds more than the events of August. We certainly believe that a long-term energy strategy will require support for infrastructure that diversifies energy resources, renewables and energy efficiency, as well as measures to improve the internal market. The Prime Minister has made it clear that we would support Europe giving increased support for the development of the Nabucco pipeline as a critical part of such a strategy.

I make a broader point, which I know is slightly disputed in this House, about who depends on whom in terms of energy security. While the European Union is of course highly dependent, particularly in a cold winter, on Russian energy, the EU remains by far the largest market for Russian energy. Gas exports to the EU provide a significant proportion of Russia’s annual GDP. Russia needs the EU and, in particular, UK investment and technology to develop its natural resources. Without investment in new infrastructure that will link Russia to new markets, not only will we continue to be the natural trading partner as a region for Russian energy, but also Russia will remain as dependent on us as we are on it.

I apologise for not being able to respond to every issue raised today; I will return to some of them where appropriate in letters to noble Lords who raised them. Let me conclude. What ultimately is our best defence against a Russia that is in some ways resurgent and in some ways seems unwilling to accept all the rules of international behaviour and law? NATO remains a vital prop. However, as many noble Lords have observed, an equally important part of our strategy is the expansion of not just markets but the values that underpin those markets. The security of Georgia and Ukraine rests much more on drawing them into a strengthened and deeper democracy and drawing their economies into links with Europe, as they start to share the benefits of us as customers and trading partners. Russia’s long-term stability and value to us as a partner rests on its coming to terms with the need for the rule of law in its commercial dealings and its internal human rights arrangements, as well as how it deals with its neighbours. What is often called the “soft-power strategy” of expanding economic, cultural and political ties, not only with Russia’s neighbours but with Russia itself, must not be disrupted or thrown off course by recent events.

As many noble Lords have said, we must deal with Russia through engagement and by drawing it into the orbit of markets, values and mutual interests, because that is the long-term path to peace. Russia has seen the cost of defying that in what has happened to its markets. This may not seem the best week ever to make the case for how the expansion of markets can bring prosperity and peace, but we should not be shaken in understanding that the same circumstances that brought the end of the Cold War, the fall of the Berlin Wall and the expansion of those values of democracy and free markets remain our best weapon in dealing with Russia.

My Lords, I begin by thanking all those who have taken part in this debate, particularly the Minister. I agree with him that we have been fortunate in the timing of this debate, even if it has been slightly hijacked by the events that have occurred since the publication of the report. It has been a very useful debate; I am particularly grateful to my colleagues on the sub-committee—the noble Lords, Lord Truscott, Lord Crickhowell, Lord Anderson and Lord Hamilton of Epsom—who were able to develop and extend parts of the report. I am glad that we have had the time to consider parts of the report because, as the Minister said, the analysis is valuable.

I was particularly pleased that the noble Lord, Lord Hamilton, had the chance to make the case for his amendment. He enriches the diversity of the committee as he has enriched the diversity of this debate. We appreciated particularly the powerful speeches by the noble Lord, Lord Skidelsky, and the noble and learned Lord, Lord Morris of Aberavon, dealing with some of the wider aspects beyond the question of the European Union’s relations with Russia. Of course, our report was produced before the June decision of the NATO council, which is why the subject is touched on only tangentially in the report.

I very much appreciated the kind words of the noble Lord, Lord Judd, who was able not only to give us a historical perspective but, from his experience as the Council of Europe’s rapporteur on Chechnya, brought to our attention that important part of the matter.

The noble Lord, Lord Sheikh, raised serious problems that can be justly put to the European Union, but we should note that the European Union has had one important logistic success. We usually talk about how slow it is for the European Union to get operations into the field, so to get the 200 members of the European Union monitoring mission into the field quite so quickly, with such a diversity, is something of which it can be justifiably proud. As the noble Lord, Lord Sheikh, hinted, it is also important that we have a common analysis of Russia among the member states of the European Union if we are to get common reactions and actions from the member states. Therefore, the work to which the Minister referred is of great importance.

I was grateful for the support from the various Front Benches for the general thrust of the report. What my noble friend Lord Wallace said about our needing to look at the other frozen conflicts is particularly important and I hope that that is something that the EU with its special representatives in the south Caucasus and elsewhere will be able to take forward. The noble Lord, Lord Astor of Hever, as I might have expected, raised one or two issues about the future role of the European Union, but I was pleased that he recognised that there were a number of areas in which it can play a useful part.

To the Minister, I would only say that I had not really thought about the curse of Sub-Committee C. Whatever subject we choose for our report then experiences a deterioration in its situation. We must be more careful in future. The point that he made about Russian reactions is important: international relations are often more about perceptions of what is happening than about the reality. We refer in our report to how Russia has perceived some developments over the past 20 years.

The Minister replied slightly obliquely on the timing of the return to negotiations; he said that it would happen when circumstances are right and when we are satisfied with various developments. We will obviously watch this carefully. There may well be more than one view, both in the General Affairs and External Relations Council and perhaps at the European Council meeting next week. I totally share his conclusions on the importance of bringing Russia into the wider economic and political communities of which we are part. Developing a common European foreign policy with Russia is a great opportunity and a great challenge. It may not be something that we succeed in, but I am sure that Members of this House will watch what happens with great interest.

On Question, Motion agreed to.

Internet: Personal Security (S&T Report)

rose to move, That this House takes note of the reports of the Science and Technology Committee on Personal Internet Security (5th Report, Session 2006-07, HL Paper 165-1) and Personal Internet Security: Follow-up (4th Report, HL Paper 131).

The noble Lord said: My Lords, those of us who are regular computer users—I think that we are now a majority, even in this House—have for some years been watching with alarm the increase in the criminal use of the internet, and have been especially worried about the impact that this has had on non-expert users.

In 2006 that concern led the Science and Technology Select Committee to decide to conduct an inquiry into personal internet security. The report from the inquiry was published in August 2007. In October 2007, we received the Government’s response to our report, which we were disappointed to find was extraordinarily complacent. Few of our recommendations were accepted and, indeed, the Government did not even agree with us that abuse of the internet was a significant problem.

As the committee was not satisfied with this response, a follow-up inquiry was launched in February 2008. It was chaired by my noble friend Lord Sutherland. As part of this follow-up, the committee asked those who had given evidence in the original inquiry to comment on the Government’s response. After receiving these comments it took evidence from two Ministers involved in policy on internet security: Mr Vernon Coaker, then Parliamentary Under-Secretary of State for Crime Reduction in the Home Office—I would like to congratulate him on his recent promotion—and the noble Baroness, Lady Vadera, Parliamentary Under-Secretary of State for Business and Competitiveness at BERR.

We were gratified to learn from the Ministers that the Government’s view had changed and that they were now taking a more positive view on our recommendations. Mr Coaker acknowledged that the follow-up report had prompted them to rethink their response. He said that the report had helped to drive the agenda forward and that reconsideration of the evidence had reinforced progress.

However, it was clear from the input we received from the witnesses that there was still much to be done. In this connection we were pleased that Mr Coaker offered to keep the committee informed every two months. We were grateful that he held to this commitment and the committee was pleased to receive his reports in July and September. On behalf of the committee I would like to thank Mr Coaker and the noble Baroness, Lady Vadera, for working so constructively with the committee.

Before moving to the substance of my remarks, I would like to thank those who supported our inquiry. First, I acknowledge and thank Dr Richard Clayton, our specialist adviser, who is one of the world’s leading authorities in this field and who has the added talent that he can explain the complexities of the internet in terms that non-experts can understand. His advice and his contacts were invaluable to us.

I also thank Christopher Johnson, who was clerk to the original inquiry, and Christine Salmon, who was clerk to the follow-up inquiry, and the staff of the committee who expertly co-ordinated the taking of evidence and organised our visits, especially the very valuable visit we made to the USA, and who wrote the clear and concise drafts from which the final report has emerged. I also acknowledge the contribution of committee members who participated in these inquiries and who brought a broad range of expertise to bear on the issues, some of which were of a highly technical nature.

I do not intend to go through all our observations and recommendations—they are laid out clearly in the report—other than to say that we still support all of them. I will instead concentrate on those I consider most important and that remain outstanding. Last week the committee was pleased to learn that the Government were going ahead with our recommendation to establish a specialist e-crime police unit, although it is not clear how the £7 million that is to support this unit is to be spent. We would appreciate the Minister telling us more about that. I seek reassurance that the important expertise that this unit will provide will be available to police throughout the UK, and that something along the lines of the regional centres of expertise set up by the FBI in the USA will be replicated here.

Important issues remain unresolved, such as the responsibilities of the banks. It is anomalous that the banks in the UK are not obliged by law to refund those who have been defrauded by electronic means. The banks set up schemes to avoid fraud, but when these fail they determine whether you have been defrauded. It is true that in the majority of cases they refund the money of people who have been defrauded, but they do this only under the voluntary Banking Code. Why are they not obliged to do this by law? In effect, we are being asked to put the banks in the special category of trusted institutions. In today’s environment this is scarcely appropriate. I suggest that we should watch them closely and regulate their responsibility to pay up when their anti-fraud schemes fail. We should introduce legislation equivalent to the Bills of Exchange Act 1882, which specified that if a bank honoured a forged cheque, the bank, not the customer upon whose account the cheque had been drawn, was liable.

The Government tell us that when we are defrauded we should report not to the police but to the banks. This is aimed, apparently, at reducing police bureaucracy. However, it is not in the banks’ interests to draw attention to the fact that their anti-fraud systems have failed, so they hope that the volume of fraud will not be too high and that they can absorb the losses. They remain silent and the crime is seldom, if ever, reported to the police.

I tabled a Question for Written Answer on this topic that was originally aimed at discovering the fraction of cases of electronic fraud reported by customers to banks that the banks had passed on to the police for investigation. I was told that this Question could not be answered because the Government grouped together online credit card and cheque fraud and did not separate out fraud reported by banks from that reported by individuals and merchants. Therefore, the noble Lord, Lord West, gave me the total number of cases of fraud from all sources reported to the police, thereby revealing that the Government have no comprehensive data on online or credit card fraud.

If you are defrauded via your credit card in the USA, your bank will not consider your case until you have reported it to the police and have sent it a copy of the police report. This enables the police to record and collate the information. If it is established that you have been the victim of fraud, under law the bank must refund you all but the first $50. In practice, they refund everything. The bank sends the information to the Federal Trade Commission, thereby ensuring that the Government have a record of all such electronic crimes and can monitor their growth or decline.

The Government rejected our recommendation that a cross-departmental group, bringing in experts from industry and academia, should be established to help gather and classify all forms of e-crime. In practice, data exchange over the internet and the storage of data are highly technical matters; they are so technical that very few people understand all the complexities of routing, encryption and decoding, and are therefore in a position to predict where the criminal experts are likely to practise their art.

Why are the Government resisting our recommendation? Do they think that they can do it themselves? The number of cases in which there have been losses of data from government and military organisations has been so large—there has been yet another today—that surely, had it occurred in the 1880s, it would have been the plot for a Gilbert and Sullivan opera. Do they really think that they can cope without advice? Why have they not accepted our recommendation to set up the expert group? I reinforce our recommendation that a data security breach notification law be introduced. The Government, fortunately, seem eager to admit their losses, but this is not the case with the banks and with industry. They, too, should be required under law to inform people when their personal data have been lost and they are therefore put at risk.

Finally, I will talk about the responsibilities of the network providers and the internet service providers. We recommended that the Government and Ofcom engage with the network operators and the ISPs to develop higher and more uniform standards of security in the industry. In particular, we recommended the development of a BSI-approved kitemark for secure internet services. Their response was that kitemarks were for products, not services, an out-of-date distinction in my mind, and went on to say that in any case this was up to industry, not government, and besides it was clear that the review of the EU regulatory framework for communications providers would address security and consumer issues and it would be unwise to do anything before the requirements of the European legislation had been clarified. Has there been any progress in Europe? How long are we prepared to wait before we do something ourselves?

Another aspect of the responsibilities of ISPs is whether they should be held responsible for the consequences of passing on false and damaging information. Sir Timothy Berners-Lee recently expressed concern over such misuse of the web. He was troubled by its use to spread fears that flicking the “on” switch of the Large Hadron Collider could create a black hole that would swallow up the earth. He had also been troubled by the misinformation that had been spread over the web that the MMR vaccine was harmful. He told BBC News that there needed to be new systems that would give websites a label of trustworthiness once they had been proved to be reliable sources. The label sounds rather like a kitemark to me.

He went on to discuss the difficulties that this would present, but none the less he felt that it was important to find a solution to this problem. Sir Tim’s World Wide Web Consortium, which has been strongly opposed to any controls being placed on the web, has changed its position on this. This is another example of how the headlong pace at which the web is growing challenges existing norms and requires new mechanisms for control. Can the Minister reassure us that the Government are putting in place the capability to react in time to threats that the relentless increase in the use of the internet presents, both with regard to the spreading of misinformation and ensuring that personal data are held securely? I beg to move.

Moved, That this House takes note of the reports of the Science and Technology Committee on Personal Internet Security (5th Report, Session 2006-07, HL Paper 165-1) and Personal Internet Security: Follow-up (4th Report, HL Paper 131).—(Lord Broers.)

My Lords, the response of Whitehall and of the Government to the Personal Internet Security report demonstrates a fundamental weakness in our system of government. The Members of your Lordships’ House who sat on the investigation are highly experienced, and the witnesses who we saw, both here and particularly in the United States, have tremendous knowledge and expertise. The costs that we incurred and the time that we spent in our deliberations were significant. We produced an outstanding report on a crucial topic, of which all of us should be proud. Yet the Government’s response to our original report was hugely disappointing. I would be the first this afternoon, but certainly not the last, to thank our chairman the noble Lord, Lord Broers. He has a powerful CV and he led us with great skill, determination and technical insight. I must also thank him for pushing hard to secure this debate.

The Government’s response lacked depth and urgency. It failed to address many of our recommendations. Indeed, from their first response, I began to wonder whether Ministers had even read the report. My view is that government pay scant regard to parliamentary Select Committee reports, especially those from your Lordships’ House. I have encountered Whitehall departments which are almost totally ignorant of the work that we do in this House. I suspect that in many cases attendance before a Select Committee is regarded as a nuisance—an irritating distraction to the Minister’s very busy and no doubt important day. This dismissive attitude diminishes the role of Parliament.

The noble Lord, Lord Broers, was correct not to accept the Government’s tepid response and to encourage the follow-up that the whole committee recommended. Eventually the Government started to take us seriously, and my noble friend Lady Vadera, to her credit, has shown a complete grasp of the subject. I hope that she is now on our side. I am sorry for my rant but this subject truly bothers me.

I would like to try to inject a sense of urgency into this subject. The IT industry is like no other. It moves dazzlingly quickly. When I re-read the report this week, I became aware of how much was missing, not because of any omission on our behalf, but simply because much has happened in the 16 or 17 months since publication. I wish to highlight a development that my right honourable friend the Prime Minister announced in his conference speech two weeks ago. He stated that £300 million would be made available to enable underprivileged children to have personal access to laptops and the internet. This will enable all children in this country to have access to their school work at school and at home. The objective is to make Britain’s children fully trained in the use of this crucial 21st-century technology. The digital divide, as it is called, separates children across class barriers and the announcement goes a long way to redressing the balance.

I declare an interest as chair of the e-Learning Foundation, which I set up in 2001 at a time when computers in the classroom were opposed on many levels. Now we are beginning to reach our goal, which is wonderful, but even so, I worry about the dangers that children face. Now, more than ever, computer manufacturers have a duty to inform the public and children of the dangers of inappropriate internet use. Children should be able to access tuition programmes on their computers, which tell them about internet etiquette and usage. Indeed, if the analogy cited in our report of driving on a motorway is to be extended, there should be an internet equivalent of a driving test for children.

One of the biggest changes in the 16 months since this report was published has been the explosion in social networking, particularly Facebook. It is estimated that 85 per cent of American students use it, and I bet that the percentage in this country is not much less among our students. My sons have more than 700 friends on their Facebook sites. For many young people it is their primary method of social contact. They use it for digital photos, e-mail, announcement of parties and other social events. It is ubiquitous. “Facebooked” has now joined “Googled” among the young’s vocabulary. However, Facebook is a security nightmare. It is easy to access such sites, which is open season for the bad guys. I am told that university admission departments in this country access Facebook to check out new students, and recruiters trawl such sites in attempts to find out more about potential job applicants. Facebook needs to do more to protect its customers. Government needs to be more aware of the dangers.

The next major development since the publication of the report has been the astronomical growth of smart mobile phones. Today there are 1 billion PCs worldwide. By 2011, I have been informed that 3 billion smart phones will be in existence. This development means that all the security problems associated with any standard PC will be significantly enhanced now that computing is becoming totally mobile. Today, almost everything that we can do on a PC, we can do on a mobile phone. Soon we will have the ability to conduct video conversations through our phones while on the move. Once again, security issues have taken on a higher level of concern.

Associated with the mobile phone is the use of mobile VOIP—voice over internet protocol—such as Skype. My iPhone now has a new application called Fring. It enables me to make phone calls to any destination in the world practically free of charge. It is true that the software is buggy and true that I need to stand close to a wi-fi hotspot but it is an indication of things to come. In the not-too-distant future, phone calls will be made not via landlines, nor via mobile operators, but via the internet. Again, the security aspects are formidable.

My final new development is a concept called SaaS—software as a service. The internet industry has frequently witnessed the arrival of disruptive technologies, and SaaS is truly disruptive. The development of fast internet connection and the proliferation of highly sophisticated hardware devices have combined to redefine how software is used. Today’s model, whereby software vendors sell their programmes on a DVD and the customers operate these programmes on their own computers in-house, is fast-changing. SaaS uses a technology called Cloud, where the software is located remotely—even continents away—and the customer inputs his data and receives data back from Cloud. To the customer, it has many advantages. It means that he pays by usage, not by original purchase price; it means that software is always up to date; and it means that the developer has immediate feedback from its customers. It is estimated that by 2011 25 per cent of all computer usage will be SaaS-based. As a measure of growth, Microsoft says that it is installing 10,000 servers a month for its own usage solely to deal with the SaaS explosion.

Security is key. The vendors say that it is more secure to keep data on Cloud than to keep it locally, and I probably believe them. After all, that is where I keep my own personal data. On the other hand, the vulnerability of SaaS to a global strategic attack is not hard to imagine and not out of the question. Facebook, smart mobile phone growth, VOIP and SaaS barely featured in our report, yet today they are pointers of future IT developments. They are a measure of the ever-changing technological thrust that is occurring in this industry. Security issues are becoming more crucial and the consequences more frightening, yet Governments everywhere respond ponderously to this threat.

At the very least, I hope that this report and this debate inject some degree of urgency into addressing the dangers and risks of the internet.

My Lords, I, too, thank the noble Lord, Lord Broers, for introducing this debate and for the seminal part that he played in the work of the committee in this area. We were very fortunate to have him and others in our team.

Sometimes the House of Lords is represented as being at some distance from real life. That is the perception that many have of us—they see pictures of ermine and all sorts of things. I dispute that view and cite as evidence this report and the follow-up report. We hit the target. We were right on track for the central issues in our society and have raised some fundamental questions, and I want to go through one or two of them.

Of course, another criticism of the House of Lords is that it ignores the elephant in the room and concentrates on details. The elephant in this Chamber, in the Chamber down the way and in many other rooms at the moment is the position of the banks in our society. Paragraph 20 of our follow-up report reads:

“Professor Ross Anderson … and Nicholas Bohm … in their follow-up submissions are critical of the Government’s reliance on the banking industry”.

Of course, we see the wider context for that but there is also a very specific context in relation to the focus of this report. Why is that so? Internet trading and purchase, which now form a significant part of our economy, depend on confidence and trust in a variety of ways but specifically, as we informed ourselves very clearly, they depend on confidence and trust in the processes employed by the banks and in the priority that they give to personal internet security. Every purchase online, every purchase of a ticket for the theatre or a train, or every purchase on eBay depends on one’s credit card functioning well and securely. A central question which we raise here is the role that the banks must play in future in guaranteeing the security of the information that flows so regularly and freely down those channels. I quote again from paragraph 25 of our follow-up report:

“A system which depends on a decision by a bank on whether or not a customer has been defrauded is flawed by the fact that the bank has a direct financial interest in denying the customer’s claim”.

We have learnt to be more careful about the reassurances given by banks. That is fundamental. My noble friend Lord Broers made the point so well that I need not elaborate on it. That is the elephant in the room today and relates to our report and to our concerns. Do we have confidence in the systems of the banks? Would that confidence be greatly increased if the banks were to be more transparent in reporting computer and internet fraud and in reassuring customers that they had this as a high priority in the processes which they put in place?

I want to comment on the government response to the original Select Committee report. We reported in July 2007 and the Government responded in October 2007 in a written reply which I regard as something of an own goal—what Harold Macmillan taught us to call “Events, dear boy, events”. The government response was effectively a brush-off and it was complacent. Since then we have had the loss of personal data from Her Majesty’s Revenue and Customs which resulted in 25 million individuals being exposed; further revelations from the MoD today concerning 100,000 personnel, plus 600,000 potential recruits and the loss of security information; the Driver and Vehicle Licensing Centre; and so on. The record of the Government on this is not good and, in the eyes of the committee, those failings became failings in capital letters, following as they did the Government effectively saying they had no concerns or worries about the issues raised by the report.

Of course, it is a mistake to refer to these as just, “Events, dear boy, events”, out of the blue and not their fault or responsibility, because they represent massive failings by public bodies on which we, the citizens, rely with regard to the security of personal information. They are not events over which we have no control, but the point of much in our report is that the Government must take charge of this, ensure that the controls are in place and that the information that we either reluctantly, in some cases, or freely give to these government sources is protected and that our personal information does not become a matter of the public market place.

We passed through the stage of thinking of them as events some way back. The government systems, as I have suggested, seem to be badly flawed. However, we are proceeding down the line. Consider ID cards and the databases required to service that policy. I am not discussing the policy of having ID cards, as that is a matter for another day and another debate, but I am simply alerting the House to something of which I am sure it is already well aware: that the protection of the information to be held in connection with that policy must have a very high priority indeed and, in view of what has happened, reassurances and words will not do. These examples—and one could add NHS information to them—indicate why the committee decided that the follow-up analysis and report were justified. The general picture is the initial report, a brush-off reply by the Government, the events—as I call them—and a follow-up hearing by the committee.

To be positive, because so far I have been critical of the Government, we had a good and, on both sides, helpful discussion with two Ministers, Vernon Coaker and the noble Baroness, Lady Vadera, on 20 May 2008. There were at least two outcomes of that discussion which I regard as positive. The first was a commitment by Vernon Coaker to write update reports every two months. We have received the first two, and they were helpful. I look for more, but they are a good start and a positive response that matches the contributions that the Ministers made to our discussion. The principle of such reports is important and is much appreciated by the committee and more widely.

More updates are anticipated. The Council of Europe Convention on Cybercrime was signed in 2001, but it has yet to be ratified by this Government. In the discussion, we were promised that ratification will take place before the end of 2008. We had our two-monthly update in September and the next is due in November. I hope that there is some indication that before the end of this year action will be taken. That is just one example. There are many examples of where updates and expansions of what we have already been told will be useful.

A second outcome is that the full Science and Technology Committee has underlined its determination to be a scrutinising committee that will hold the Government to account in those areas where science and technology affect government policy and practice. It will do that and will follow up. It will not simply send reports into the ether to be left there. This is simply a marker to the Government that, as regards this and other reports, the committee will expect responses of the desired quality.

My Lords, I thank the noble Lord, Lord Broers, for the way in which he introduced this debate and for the excellent way in which he steered the inquiry. I learnt a great deal from him, not least about the complexities of web-based navigational aids on ocean-going yachts, a subject to which I had not previously given much, if any, thought. I also want to pay tribute to the work of the committee’s Clerk, Christopher Johnson, who has now been elevated to the position of your Lordships’ Clerk of the Journals. I am not quite sure what the Clerk of the Journals does, but I hope the position makes full use of his excellent talents and skills. I also thank our adviser, Dr Richard Clayton from the University of Cambridge, who, along with the Minister, is a member of the bearded elite.

Since our report was published, much has happened. There have been well publicised data losses at HM Revenue and Customs and from other government departments and agencies. Indeed, today we heard of the loss by EDS of an MoD hard drive containing the details of 100,000 service men and women. All this confirms my view that the committee was right to call for a data breach notification law in the UK. I commend the Government for their willingness to come clean and admit problems as they emerge, but that does not alter my view that, with a few exceptions, the maintenance of information security is not a high enough priority in the minds of those in charge of public bodies or private companies. Moreover, recent reports have suggested that a significant number of major private sector losses have been reported to the Information Commissioner. For example, Virgin Media has been ordered to encrypt all portable media that it uses to move data after it lost data on 3,000 would-be customers. In another case, 1 million bank customers’ details turned up on a second-hand PC sold over the online auction website eBay. The data contained information on customers of American Express, NatWest and the Royal Bank of Scotland. It is reported to include mobile phone numbers, bank account numbers, mother’s maiden names and signatures. We have to recognise that it remains unclear whether all such losses have been disclosed, given that it will not be in a company’s commercial interest to do so.

A data breach notification law would not solve those problems, but it would certainly concentrate the minds of those responsible. We must alter the mindset. It must be clear that information security is not some optional extra, and that for every business and organisation, information security is just as important as physical security. That is about the culture within organisations. Every employee must understand the importance of maintaining data security and their responsibility for doing so.

Perhaps if people recognised the potential value of personal data, they might be less cavalier in its treatment. For many people, a stolen identity will take weeks or months of effort to sort out. The FSA estimates that the cost of identity fraud in the UK—admittedly, using a fairly wide definition—is about £1.7 billion. During the inquiry, we were told by Team Cymru that on a single server in a typical month, there were for sale the data from 32,000 compromised Visa cards and 13,000 MasterCards. The price nearly three years ago was $1 for a US card and, apparently, $2 for a UK card. Associated data were also for sale, including the cardholder’s mother's maiden name.

Perhaps if employees were told that each personal record was worth at least £100—it is probably more—they might treat a memory stick or, for that matter, the MoD hard drive containing 100,000 personal records as though it was worth £10 million. They would certainly treat it with substantially more respect. Engendering such a change in culture may require more than a data breach notification law. Perhaps we need something more akin to the framework created by health and safety legislation, where every manager would have to take personal responsibility for delivering information security in their area of responsibility or face prosecution. Perhaps we need an IT equivalent of the US Sarbanes-Oxley requirements to make people at board level take their responsibilities to heart. Nevertheless, as a first step, I ask my noble friend when he replies to reflect on whether the experience of the past few months and weeks has made it all the more urgent that we introduce data breach notification legislation.

The need for a shift in the burden of responsibility was also a key theme of the report in terms of those who should be responsible for ensuring personal internet security more generally. The underlying theme of the report was that the internet is a powerful force for good in society, but underpinning the success of the internet has to be the confidence of individual users, as we are all only too well aware at the moment. That matters. Government spending plans are predicated on the growth of e-government, with more citizens transacting with central and local government electronically. Similarly, economic forecasts are based on the continuing growth of e-commerce. If public confidence in the internet falters, the consequences are serious.

There is every reason to suppose that such confidence could falter. According to a survey commissioned by Get Safe Online, e-crime is now more feared than mugging, car crime or burglary. I believe that the Department for Business, Enterprise and Regulatory Reform contests that, but there is no question that many people are fearful of conducting transactions electronically. Moreover, as the inquiry concluded—albeit, I must say, with an eye to the soundbite—the internet,

“is now increasingly the playground of criminals”.

The government view, certainly as initially expressed to us, was that internet security ultimately rests with the individual. However, our view was that such a stance was no longer realistic and was in danger of compounding the perception that, in another soundbite from the report, the internet is a “lawless ‘wild west’”.

Responsibility for improving internet security should be shared. The committee used the analogy of road transport. Within the road transport system, the safety and security of the individual road user is protected at several levels. There is the network itself, with roads designed and engineered for safety, maintained, lit and signposted. Then there is the equipment that uses the network—in the road safety analogy, cars and other vehicles have safety features built into their design. Individual users are taught how to drive and subjected to testing and monitoring. Finally, the network is policed with a clearly defined legal framework for the use of the network, with those who breach the law risking prosecution.

As far as internet security is concerned, the network providers—the ISPs and so on—equipment manufacturers and software producers should all take some responsibility for making the network, the equipment and the programmes more secure. Similarly, businesses must have a role in making their interface with consumers safe and secure and protecting the position of those who transact with them. Finally, each user must be sensible and careful, although the Government can help by taking measures to raise IT literacy and improve understanding of security. The Government must ensure, of course, that the rules set are adequately and effectively policed.

The noble Lord, Lord Broers, referred to the value of a kite-marking security system. This is clearly necessary for equipment and software and for service providers. There should be better service advice given automatically on the first use of products. Default security settings should initially be set as high as possible. It should be an explicit decision of users to lower the settings. Security updates should automatically be downloaded, and security messages and warnings should be in clear and simple language. Let us be clear, however, that people are put at risk in a variety of ways: sometimes by their own ignorance, sometimes by the carelessness or ignorance of others, sometimes by deliberate criminal acts and sometimes by technological flaws or poor product design. This is often made worse by products that behave badly or lead people into trouble.

Why do so many commercial sites require information that is not necessary for the transaction concerned? The answer, of course, is that it provides them with useful marketing information—all the better to sell you future products. However, how well is that information protected? The impetus to complete the transaction will lead many people to provide more information that may not be strictly necessary but may be difficult not to provide, and to agree, or more likely not to disagree, to its use in all sorts of ways that in any event are probably outlined in a 20-page policy that most users will not bother to read.

As my noble friend Lord Mitchell has highlighted, of particular concern is the way in which some of the popular social networking sites encourage people, often teenagers, to reveal all sorts of personal details and information about themselves. This opens them up not only to identity theft but to sexual predators. Young people might also want to reflect on the impact on their future employment prospects when details of their wilder escapades may be readily available to would-be recruiters. The companies that run these sites have an obligation to warn people about these dangers, to enable people simply to remove material that with hindsight they wish they had not posted and to make it easier for users to report abuse and problems. Perhaps my noble friend Lord Brett will tell us in his reply whether the Government are happy to see social networking sites, which are used by so many teenagers and young people, operating so freely and in a way that could be so damaging to their users.

Then there is the problem of e-crime. The term is necessarily a loose one; fraud is fraud, whether it is committed using electronic means or any other means, and child abuse is child abuse, whether images of it are transmitted electronically or in any other way. However, to say that you cannot define it meaningfully does not alter the underlying issue that the way in which many crimes are committed or the ways in which they are facilitated have changed dramatically in recent years. It is therefore necessary to ensure that the police and enforcement agencies are equipped to respond effectively to this dramatic change. That is why the creation of the police e-crime unit is so important. I am grateful for the Government’s support for this and for the resources that have been made available. I pay tribute in particular to my honourable friend Vernon Coaker, who worked so hard to bring this about and has now, I am pleased to say, been rewarded by promotion to Minister of State.

The creation of a centre of excellence that provides support and policy leadership to police forces around the country is essential given the rapid pace of technological developments and the speed at which criminals exploit these developments. Such a centre cannot be the end of the process. Every police force will need to develop its own capacity in this area, and, increasingly, mainstream resources will have to be devoted to this area to reflect the changing nature and manner of crime.

My final point relates to what the report did not cover: the wider question of the national infrastructure and internet security. As a nation, the systems that are essential for our health and well-being rely on computer and communications networks, whether we are talking about the energy utilities, the water and food distribution networks, transportation, the emergency services, telephones, the banking and financial systems, and, indeed, government and public services in general. All of them are vulnerable to serious disruption by cyber-attack, with potentially enormous consequences. The threat could come from teenage hackers with no more motivation than proving that it can be done. Even more seriously, it could come from organised criminals, intent on extortion or fraud, or from cyber-terrorists, intent on bringing about the downfall of our society. We now know that, following the cyber-attacks on Estonia and the cyber-disruption suffered by Georgia earlier this year, the threat may also come from nation states.

Moreover, most of the critical national infrastructure is privately owned and operated. It may not be in the commercial interests of those owners and operators even to acknowledge to anyone outside their organisation that they have had a problem. Do I, as an operator, want my other customers to know that my security, and therefore their security, has been breached? I think not. It would certainly not be good for business. In any event, it cannot be necessarily assumed that the commercial need to maintain system security is of the same magnitude as the national interest in that security; nor can we be confident about those parts of the CNI operated in the public sector. We live in a target-driven world, and security constraints are not necessarily adequately addressed in each department’s key performance indicators, certainly when the key drivers of activity are improving the quantum of specific aspects of service delivery.

My final question to my noble friend is: are the Government really satisfied that our critical national infrastructure, which is now so dependent on the internet, is genuinely as well defended and secure as it should be?

I believe that Personal Internet Security has already had a significant impact on government thinking. However, there is still too much complacency on this issue: information security remains the poor relation of information technology and of physical security. Information security is not an optional extra. If we do not get this right, public confidence in the internet is at risk, and with it business confidence and perhaps, if we consider the reliance of our national infrastructure on electronic systems, even our national security.

My Lords, I, too, thank the noble Lord, Lord Broers, for introducing this debate and add to the cumulative thanks to all who assisted in the report’s production. They did an excellent job.

I find the report very interesting and useful because it taught me a certain amount. One of the more useful things was the philosophy behind the way we looked at things. We looked from the citizens’ point of view. Quite a lot of evidence came from large companies, including banks, and gave the large businesses’ point of view. “Oh well”, they said when in those days £33.5 million was lost through online bank fraud; but that was only the sum that the banks had not managed to offload elsewhere. From the citizens’ point of view, those were individual £500 and £1,000 losses, enough to destroy their mortgage payment for the month and to have a huge impact on their life. It is very important that it was a parliamentary committee that looked at the matter, because we are here to look after citizens, not necessarily to try to control them and tell them how they must run their life.

We also tried to think of incentives for people to do the right thing rather than having regulations. We have quite enough regulations already; they seldom prevent what they seek to forbid. They do not often modify behaviour or they only modify it in an unexpected way—the law of unintended consequences—because it is too complex to be controlled by simple systems of rules. Security economics became an interesting topic and taught me quite a bit; I want to mention that later.

One conclusion was that we should go back to good old-fashioned principles. We pass pots of laws to say that people cannot burgle houses but they still go on burgling houses. We try to deter people from doing it by locking them up from time to time or giving them mild penalties, which makes some of the newer generation decide that burglary is not a good career path. We have to be very careful that, by just looking at and analysing these issues, we do not turn Britain into a safe haven for e-crime because, though we know it is going on, there is nothing we can do about it.

Facebook has been mentioned a couple of times. The internet is changing how we have to look at things. We have work out where the dangers lie and what other things we should look at. The point of danger could be transferred to somewhere we would not expect. I shall make a couple of points on that. Online, including on Facebook, there will be records of very stupid behaviour that people may have done when they were young. Not always, but in many cases, we may be very lucky and our friends will have lost the photographs of us at a party. Unfortunately, now, such photographs will be preserved in digital form on the internet and they are probably sitting there somewhere.

We need to realise that we have a right to a moment of madness. If you are trying to hire an outgoing person who is very good with people, the life and soul of the party, good at getting contracts and getting into companies, you probably do not want someone who is so dull that they never appear at a party on Facebook. The person who may not behave quite correctly might be the person you want. For certain people, a few interesting Facebook pages might be useful.

As my children keep pointing out, there is a lot of security on Facebook. It has been hugely improved and they certainly keep their pages locked down so that only their friends can see them. They do not join generic groups, like the London group, where anyone can see their pages. Herein comes the point. Sometimes the advisers now do not understand how society has evolved and how it communicates. Children have to learn from experience, just as we did. They need to learn what looks wrong and right, how to defend themselves and what predators look like. They cannot be taught that in schools. They have to learn among themselves with help and supervision.

Most points on the report have been covered well by everyone else. Going back to us not being a safe haven for e-crime, the thing that really worried me is policing. I am delighted to see that the Home Office is injecting £3.4 million extra into a central e-crime police unit. I am worried that the Met’s £3.9 million will be taking police resources from somewhere else. There is not a full £7 million of new money going in.

Detective Superintendent Charlie McMurdie has been trying to push this forward for a very long time, at a certain sacrifice to her career. I respect her and others hugely for trying to drive this forward, so I am delighted to see that something is happening. Let us hope that this is built on and grows. It is all very well collecting, collating and analysing all these crime statistics, but something has to be done about disincentivising the rest. I echo other noble Lords when I say I hope that the APACS unit, which collects bank statistics, interfaces this new unit properly and does not just send stuff to SOCA when it thinks fit. SOCA’s remit does not cover this area. It is only concerned with large, serious, organised crime with an international flavour.

I turn to data loss and the headlines that EDS has lost a hard drive, as we have just heard. My first point on that is that all the data were on a drive owned by EDS and, therefore, was being processed by an American company, possibly in the United States. Some of our data, which we are forced to give the Government, are now processed in America. America has the Patriot Act which allows it to look at any data processed in the States, which is why SWIFT, the European banking system, removed its data centre from California to Switzerland. It got fed up with American companies getting business intelligence by putting in Patriot Act requests to look at European bank transfers.

We should take that very seriously. All sorts of interesting things could come out of it which could impact, when combined with other data, on the UK citizen. It has been suggested to me that American companies or subsidiaries operating in the UK, processing the data of UK citizens, still may be subject to the Patriot Act indirectly, possibly through Sarbanes-Oxley mechanisms or some other rules. I do not know whether that is so, but, if it is, it is extremely concerning for government contracts.

The second point about data loss is this: why did the HMRC disk go missing? Apart from various factors like the two single points of contact within HMRC, a wonderful concept which interests me, and all sorts of issues around muddle accountability, the main reason involved targets. Parliament insists that HMRC should report to Parliament every year, and the National Audit Office has to collate information from HMRC to do that. It is a career-threatening issue not to produce information for the report to Parliament, and various MPs and noble Lords would jump up and down and get cross if it did not appear. If HMRC does not get its information to the NAO, careers will suffer. On the other hand, there was no £10,000 sitting in a budget to clean up the disk when the NAO said that it did not need all the personal information on it and asked for the data to be taken off. The NAO has good people in it who would not do anything wrong with the information, and the fact that the data were going on to another outsourcer to do the real analysis was fine because they, too, were probably all right. I do not know if that outsourcer is properly vetted or cleared, but let us hope it was, and in any case, the system had worked well in the past. Someone followed standard procedure and popped the disk into an envelope because no disks had been lost for years—they normally get there and it is a very rare occurrence for these things to go missing. The chance of anything going wrong was pretty low, as was the awareness of any impact if it did. So people simply go with the flow, particularly if they are junior. They do so because the targets are the most important thing, not the security. Until we work out how to change those attitudes, I do not think we will clean this up. Perhaps we should be very careful about the targets we set.

The third point on data loss is the data breach notification stuff. It is an excellent idea from the point of view of trying to get a grip on the thing. How we decide what a data breach is is another matter in that if no harm is done, is it still a data breach? We have to ask whether the data are encrypted adequately and so on. I would say that that is then not a breach. But if the notification is published widely, it presents a huge phishing opportunity. Quite a lot of letters were sent out by certain illegals saying, “We notice that your data have been lost by HMRC. We would like to secure your bank account. Please send us your details”. A much wider phishing opportunity can be opened up which can catch poor innocents who do not understand all this. We need to be careful how we react to and handle these situations. It is not as simple as just informing people.

I turn now to economic issues concerning banks and the “card not present” problem. The reason I feel strongly that liability should be loaded back on to the banks for all transactions through credit cards where those cards are stolen is that the banks decide the security of the token which merchants big and small have to accept in order to conduct electronic transactions either over the telephone or on the internet. The token is not adequate because chip and pin does not work remotely. But the banks have no commercial incentive to upgrade the token because in all “card not present” transactions, the liability is offloaded on to the merchant. The big ones can cope with it, but the small ones cannot. Ridiculous situations arise such as when my wife tried to buy a ticket over the internet for my daughter and another to fly out to Thailand on holiday. She got a very good price from some people in Wembley who said, “In order to protect ourselves because you are spending £1,000, could we please have a photocopy of the front and back of your credit card and your passport so that we are covered?”. That is not good security and she did not send the details. I have internet banking, so I transferred the money. But the company had to ask for those details in order to protect itself. We are putting the liability in the wrong place. I would pop the liability back on to the banks so that they have a financial incentive to ensure that there is better tokening.

I want to wind up with two brief points. We face a new threat because we are about to be hit by what I think will be the communications data Bill, but they will not tell us what is in it. The proposal is to centralise all communications information in the UK in the Home Office so that it can more efficiently search that information for clues when a terrorist attack takes place. The information will be accessible under RIPA to all sorts of other bodies, but I shall leave that to one side because it is not what I am really worried about. Of more concern is officials searching all that data and the danger of inaccurate inferences instigating intrusive investigations into the private lives of citizens, with potentially unsafe outcomes. If officials start thinking, “Is this person this or that?”, they will eventually embark on data matching and data mining. The information will also become a possible target for foreign intelligence. If you want to find out if one company is looking at another company, what better way is there than to look at what web searches it is making? The information will include a record of web searches, what is being looked at, emails and everything else. It will not set out the content, but that is less important. It is what someone is up to, the pattern of use and the inferences to be drawn that matter. There is an opportunity not for people to lose disks, but for people inside the system who might be corrupt. GCHQ has a long tradition of security and is very careful in this area. I am not sure that the same standards are inculcated in the Home Office, but if this proposal is serious, I hope they are before it is introduced.

Finally, I am worried about the plethora of people who try to protect us as citizens—there is a surveillance commissioner, an Interception Commissioner and perhaps a couple of others. They tend to report via the heads of the departments that they are reporting on or to the Prime Minister, who is basically the head of all executive departments; he is the head of the Executive. So someone who is keeping an eye on the Executive reports to Parliament via the Executive. That is not right.

The Information Commissioner reports directly to Parliament but feels quite swamped sometimes—he is under funded, under resourced and comes under attack, some of which is quite personal. I think the idea that he had of setting up a new authority to bring together all of the services that protect personal information is quite a good one. With the right people in it, plus extra people from outside, it could make sure that people’s privacy and information are protected properly. It could consider whether data breaches should be notified more widely and so on.

I am worried about the incentives for this organisation, which I would call the Personal Information Protection Authority—or PIPA; and, because he who pays the piper calls the tune, I would make it answerable to Parliament and not the Executive.

My Lords, this is an enormously important topic and one on which the well-being of a great number of companies and families rests. The effectiveness of the report and what has been said is shown by how far the Government have travelled since their first response last year. For this contribution, the noble Lord, Lord Broers, and all the members of the committee deserve the thanks of all of us who are concerned about data security in this interconnected age.

As a society we are becoming increasingly dependent on technology, particularly the internet and communications networks; we use them at home, at work and throughout commerce and Governments across the globe. Risk, however, is less tangible in cyberspace. People know what it means to lock their front doors, but they do not have the same knowledge of what to do when online. It is not intuitive, we cannot use the senses upon which we depend in everyday life to help us.

For example, a large online gambling company was recently discovered to have had “super-users”. Certain players were able to win large sums at poker by knowing the cards that their opponents held. As those who are familiar with card games will recognise, that is a significant advantage. It became public knowledge only because customers of the company became aware of unusual play by such super-users. This triggered an online investigation by members of the internet forums and, as a result, the company concerned has so far repaid some $6 million to consumers who lost money on its site.

There are some interesting lessons here. First, the company was incorporated under the jurisdiction of a Canadian Indian tribe, the Kahnawake. The company was a respected and trusted brand. It was regulated in the same way as its competitors, and the consumer’s only regulatory remedy was through the Kahnawake gaming commission. That is not satisfactory, to say the least. Millions were effectively stolen, and yet there is no clarity about who benefited or where the money went and no data trail on who lost out. Most remarkably of all, after having announced that their software contained holes that allowed the winning of millions of dollars through underhand means, the sites concerned are still trading and still prospering.

We require a multi-layered approach to addressing these problems. That will involve building technology of higher integrity which is not pervaded by vulnerabilities to be exploited by those with malicious or criminal intent. But this will always occur. No matter how many safeguards you build in, there will always be someone with criminal intent. In turn, this means that we must make security solutions easy to use, not so difficult that users simply turn them off because they are unaware of the protection that they offer. The final step is to provide the necessary regulation and checks and balances so that we can deter misuse.

The report used the helpful analogy of the road networks to describe a shared burden of responsibilities. It makes the key point that while great responsibility rests with the road users, their safety also relies on those who design and maintain the road network, with its signs, lines and markings.

Online, I am concerned by the lack of security education on the part of software and hardware developers, business managers, civil servants and all those who have to interact with digital information. I believe we need to investigate the programmes developed by the United States; it has made it a priority to develop centres of national excellence to provide a framework and guidance for students and institutions in information assurance education. Consider the road example again: we provide awareness campaigns on specific issues and education on principles through driving lessons. Very little work has been done to understand how the computer users comprehend the risk that they are taking and what their actions or inactions actually mean.

Alongside dealing with the problems of today, now is the time to design in security for the future. Traditionally, research on e-security has been focused on specific solutions for individual problems which results in individual products for each problem. Security solutions have followed only after the discovery of security gaps, so we have had firewalls, anti-malware program, anti-phishing measures, and so on. This is not scaleable and is limited in effectiveness since we only respond as we encounter problems, as opposed to proactively planning security for the future.

We are now developing the networks and services for the next wave of technologies. We should not make the same mistake of failing to design in security from the start. With advances in mobile communications, we could soon be connected wherever we are and whatever we are doing, as noble Lords have said. Access to information and services via the internet will be as necessary as water and electricity.

The increasing number of devices that will store and hold our information also increases the potential threat to our security and even our personal safety. Consider mobile healthcare in the future: tomorrow’s pacemakers might be part of an integrated body area network able to transmit patient healthcare data to doctors and allow them to modify patient treatment. With researchers already developing wireless attacks on current pacemakers, it is easy to see how this more complex internet-connected system raises concerns not only about data privacy but the potential for risk to patient safety.

In other words, we will need to prevent new technologies and systems being attacked, and we cannot afford to wait for failures in order to plan our protection. We need to understand the changing threat and how to manage our risks dynamically and in response to it. We need to consider how to build systems to tolerate intrusions while still offering degrees of security, not have them fail. We need to develop technologies to allow individuals to have meaningful control over their information and online activities while still maintaining accountability. We need to provide tools to reduce and remove vulnerabilities and holes in our systems. We need to design the interfaces and controls of security technologies so that they are easy and intuitive to use, and so more effective when deployed. These are just a few examples of technological responses that must be researched now if they are to succeed.

I welcome the decision of EPSRC and the Technology Strategy Board to invest in a range of projects on data security and privacy, but I believe that this can only be the beginning of such interdisciplinary research objectives. In the short term, we can focus on the current risks and make users aware of these and the techniques needed to keep them safe online. Raising consumer awareness to the dangers helps stimulate the adoption of the products and service which offer safety. At the same time, regulation has its place to play, and without teeth to remove business contracts, fines and penalties, business may decide that a lack of protection for their users’ data is a risk worth taking. The penalties have to serve as a deterrent to businesses that fail to act as well as the criminals who wish to take advantage of their weaknesses.

This has to be an international effort—I cannot see it happening within our national boundaries alone. I hope that following the judicious use of the carrot and the stick by the committee, the Government will ensure that a similar carrot-and-stick approach to regulation is a high priority in the European and global forums, in which this issue must ultimately be resolved.

My Lords, I declare an interest as a director of PayPal Europe. I applaud the diligent and painstaking work of the noble Lord, Lord Broers, and his committee, an example of the House of Lords working at its very best.

E-crime on the scale which we now see it has emerged only during the past four or five years. Before that, it was mainly a few geeky kids showing off; now we face a massive and sustained criminal attack. Many millions of emails are sent on phishing expeditions, aiming to trick the innocent into revealing their security details. Malware is infiltrated, like the creature in “Alien”, into the inner workings of our PCs to steal our most confidential personal data. Botnets, networks of ill intentioned software robots, can attack and sometimes bring down major and sophisticated entities, and sometimes ransom them. Far worse is surely to come.

The losers are not just major merchants offering products and services online and the online payment providers, but many tens of thousands of ordinary individuals who are not always protected from loss. The scale of the economic loss is now enormous. Gartner estimates the current global cost at $3.2 billion, but I suspect that that is a serious underestimate.

Who are the perpetrators? Many perpetrators have highly advanced computing skills. Some are lone wolves, who, when they get up in the morning, devote their whole day to internet crime, knowing that they are highly unlikely to be caught. But those anti-fraud experts who have most studied online theft have good reason to believe that as much as 70 per cent of economic crime on the internet is now the work of organised crime syndicates

As the noble Lord just said, e-crime is now primarily global, not national. The bulk of syndicates have home bases in Russia—which is interesting for those of us who sat through the previous debate—and elsewhere in eastern Europe and in some other identifiable nations. In all these countries, e-crime syndicates are largely ignored by local authorities. In addition, there is now an emerging black market in services. Botnets can be rented; phishing software can be bought wholesale.

How can this growing threat be countered? First, individual consumers and merchants can of course be more savvy and alert, and can be better educated to be so. Secondly, online providers can intensify their work of hardening targets, making it increasingly difficult to commit e-crime. They are developing ever more ingenious means of achieving this.

Thirdly, ISPs could stop averting their gaze from manifest criminality. Their technology is sophisticated. They can detect peer-to-peer theft. They can identify which of their customers’ PCs have malware. ISPs can pinpoint the originators of phishing expeditions sending out their millions of ill intentioned emails. But, so far, in the UK and around the world, ISPs have not been inclined to fight crime.

Fourthly, government needs urgently to focus on this mushrooming economic threat, yet the UK Government’s first response to the Science and Technology Committee’s report was deeply disappointing—and, indeed, shockingly inadequate, as almost every noble Lord who has spoken in this debate has observed.

There is a strong case for regulating and licensing ISPs and for placing requirements on them. A fit-for-purpose national agency is needed in the UK to focus exclusively on every kind of online crime. I know of one instance in which the police will not consider investigating a syndicate operating here in the UK until it has stolen more than £500,000 of goods—and one has almost done that. Imagine if the police said that about bank robbers. Britain’s police have not yet made the psychological shift from the physical to the digital world. I am sceptical that the recently announced unit will be remotely fit for purpose or of the required scale to deal with these problems. Moreover, a global and not just national approach is needed to counter a category of crime that is committed overwhelmingly across national frontiers. Here the UK Government could bring international leadership.

In recent days, weeks and months we have seen the calamitous cost to Governments and governance of failing to manage risk in the financial sector. The internet is one of the glories of the age, as I am sure we all agree, with a profound and largely beneficial impact on all our lives. Government needs rapidly to engage with managing the risks arising from the internet’s dark side before a cancer takes hold. As yet, Whitehall, too, has been painfully slow to adjust to new digital realities. Let us hope that the excellent stimulus provided by the Science and Technology Committee eventually bears fruit.

My Lords, I welcome this debate, introduced by the noble Lord, Lord Broers, on the Science and Technology Committee’s original and follow-up reports on internet security and the Government’s responses to these reports. I, too, am disappointed by the generally unenthusiastic response of the Government to the initial report and I am concerned with their response to the follow-up report. I should say that I was not a member of the committee when the original report was produced.

I share with other speakers concerns about the situation concerning bank fraud and where the responsibilities of the various parties lie. I wonder how many people have counted up how many passwords and the like they have. I did—it amounts to six PIN numbers, five passwords, two account access numbers, two security numbers and various other items. I suspect that this quantity is modest, compared with many people. But for the less able computer and card users, it is horrendous, and it is hardly surprising that people write them down or use family information and names for them and do not change them as frequently as they should. I know that I do not change them as frequently as I could because, if I do, I cannot remember them. Surely it must be possible to devise a better system than this. I am terrified at the possibilities of a key-stroke recorder residing on my computer and me being totally unaware of it. One hopes that one’s anti-virus software picks up things like that.

I shall now raise the international perspective. In June, I attended as a representative of this House the IPAIT conference in Sofia—that is, the International Parliamentarians Association for Information Technology. This was the sixth such conference, earlier ones having been held in Seoul, Bangkok, Rabat, Brasilia and Helsinki last year, which I was also able to attend. The theme of this year's conference was information technology and ethics, which is relevant to this debate today. It was attended by about 120 people from 24 countries worldwide. There are 60 members of IPAIT. The UK is only an observer member.

At the end of the conference, we issued a declaration of IPAIT's ethical aims for the future of information technology, and the internet in particular. The document is too long and verbose to read out now, but I will arrange for it and other supporting documents to be sent to members of both the Science and Technology and Information Committees, the latter committee having sponsored my attendance at the conference. I think these papers are well worth reading. The main proceedings unfortunately are in the form of four DVD discs of the televised process of the conference, and are not practical to distribute.

The declaration from the conference contains some 13 individual clauses calling for internet regulation and standards of ethics; misuse of information; measures against cyberattacks—remember both Estonia and Korea have been subject to these, and of course Georgia was mentioned by an earlier speaker—protection of children; dissemination of ethical conduct for users; requirements for internet service providers to block illegal and harmful information, and require their full co-operation in the investigation of criminal internet activities; the safeguarding of civil rights; privacy and freedom of expression in all forms of communication; and so on. I appreciate that this goes somewhat wider than the reports we are discussing. The main thrust of all this was the need for international agreement on such ethical matters, and international participation in fighting e-crime because of the “wild west” nature of the internet, to quote the noble Lord, Lord Broers.

The keynote speech was by academician Professor Kyril Boyanov of the Bulgarian Academy of Sciences. After reviewing the many benefits of information and communication technology, both to the economy of the nation and the individual citizen, he went on to discuss the benefits that technology could bring to the crisis in representative democracy occurring in many countries where we have very low turn-outs in elections. The benefits of e-voting and e-participation could go some way in providing the citizen with a more meaningful method of connecting with our democratic processes, and obviously are subject to the security issues we have already discussed.

Noble Lords may think that this has little relevance to our debate on internet security, but if you consider e-voting via the internet in particular, as is already being used in Estonia, it becomes highly relevant. This subject was much discussed at the recent EPRI conference in Dublin. EPRI looks at ICT from a parliamentary point of view, looking out to the voter and enabling him to communicate with his MP and see and understand what Parliament is doing.

Professor Boyanov pointed out that the internet is changing our lives, socially and commercially. The level of trust in the internet varies widely, ranging from 3 per cent in Brazil to 65 per cent in Korea. In the UK it is 44 per cent. Again, the level of accessibility by households varies widely throughout the world, from a high of 95 per cent in Korea to 10 per cent in Mexico and Turkey. These are figures for 2006.

With all these benefits comes the downside—the easy and widely spreading use of malicious information, co-ordination of criminal activities and unauthorised access to information, all helped by inadequate legislation on internet crime, both at national and international level. Professor Boyanov goes on to discuss the various types of security threats, of which noble Lords are all too well aware.

In conclusion, I suggest that we need national and international agreements and co-operation in fighting cybercrime in all its forms if we are to maintain public confidence and safe use on the internet.

My Lords, I welcome the noble Lord, Lord Brett, to the first debate to which he will respond from the Dispatch Box. The whole House will be grateful for this well researched report in which the committee makes constructive recommendations. We particularly thank the noble Lord, Lord Broers.

Your Lordships will be well aware that in 2007 nearly two households in three had the internet and 53 per cent of adults purchased goods and services on it. The latest fraud figures published by APACS show that plastic card fraud losses are up by 14 per cent year on year in the first six months of 2008. We all have our pet stories. One sophisticated scam involves inviting, with a very plausible story, a user to part with her PayPal code number. I have no doubt that I am not alone in experiencing a current plague of phishes, supposedly from the major UK clearing banks, designed to obtain clients’ account numbers. However, the noble Lord, Lord Birt, chillingly reminded us that this is child’s play compared with what we can expect in the near future, and that organised crime is becoming increasingly involved.

The committee recommended a cross-departmental group involving internet security experts to develop a co-ordinated approach to collecting data on internet crime and classifying the offences. We are pleased to note that the Government have acted on this recommendation and I am sure the House will be interested to hear more from the Minister about the role of the new police central e-crime unit, announced two weeks ago, which will work with the National Fraud Reporting Centre and the National Fraud Intelligence Bureau. I hope the Government will also take account of my party's suggestion that there should be an e-crime specialty within the Crown Prosecution Service. I hope that when the Government read this debate they will note particularly the eloquent vision of the noble Lord, Lord Bhattacharyya, regarding the duties and challenges which lie ahead of us in fighting cybercrime.

The committee’s report made the further related point that there was insufficient research in this area and that one or more interdisciplinary research centres needed to be set up. Several noble Lords have made it clear that the Government’s response was inadequate and has been very badly received. However, I am pleased to note the intervention of the two new Ministers, which I hope will rectify the situation.

These Benches have made a number of criticisms of the Government's approach. In your Lordships' debate on 20 March this year, I made the point that in our view,

“the Government do not consider cybercrime to be a serious offence”.—[Official Report, 20/3/08; col. 384.]

Indeed, that sentiment has run through this debate. I make no apology for repeating our criticisms here. The National Hi-Tech Crime Unit, which was set up in 2001 in response to the threat of online crime, provided a good link with police forces and business. In early 2006 it was absorbed into SOCA, despite widespread criticism that it would leave a yawning gap between local forces and national policing. In April 2007, ring-fenced funding for computer crime units in individual police forces was cut off. Furthermore, financial fraud can no longer be reported to the police directly. That important point was made by the noble Lord, Lord Broers. It must first be reported to the financial institution concerned, which then decides whether the matter should be reported to the police for further action. He was particularly critical of that. All these issues still very much concern noble Lords on this side of the House. This all emphasises the disconnect between the police and the increasingly electronically sophisticated public.

It is hardly surprising, therefore, that nine out of 10 offences go unreported because the victims believe that the police are unable or unwilling to investigate. This view is reflected by the police, who in January 2007 reported to the Metropolitan Police Authority—I am sure that the noble Lord, Lord Harris, will be familiar with this—as follows:

“There is an issue of under-reporting across the UK. There is an unspoken public perception that e-crime is so pervasive that the police service does not have the capacity to investigate each individual allegation. The public have reported difficulties in reporting e-crime to the police. Also many organisations may be unaware of their computer being compromised, making it difficult to establish definitive annual financial harm”.

It has been our view for some time that a police national cybercrime unit should be set up, with adequate specialist support. That is why we very much welcome the setting up of the new e-crime unit, which I hope will go a considerable way towards addressing the deficiencies to which I have referred. We would also like to see the industry working towards a common standard, with the establishment of a kitemark. That was a key recommendation of the committee, which again got a very disappointing reaction. I hope that can be rectified.

The noble Lord, Lord Broers, made a point about the responsibility of the banking industry. I have had sight of a letter from Angela Knight, chief executive of the British Bankers’ Association, to my honourable friend James Brokenshire MP, in which she states that under the revised banking code,

“customers do not have any liability for losses suffered through their online banking service unless they have acted fraudulently or without reasonable care. The burden of proof always lies with the bank to provide evidence that a customer has acted fraudulently or unreasonably”.

That is refreshingly unequivocal, especially in view of the fact that I am assured by my son that a substantial proportion of online banking and credit card fraud is caused by the failure of customers to keep their passwords or PINs secure, for example, by leaving them in the vicinity of the relevant cards. The computer press recently featured articles on the steps that the clearing banks are taking to counteract cybercrime, so we can say that the banking industry is playing a responsible part in the fight. However, I entirely agree with the noble Lord, Lord Broers, that statutory control of the banks in this respect is required and that we cannot rely on the voluntary code.

We must be aware that cybercrime extends beyond fraud. I refer to denial of service, to which the noble Lord, Lord Harris of Haringey, referred, in which an external source hacks into a computer system and swamps it with incoming messages, thus making it impossible for the victim to exercise its proper functions. As the noble Lord said, that was spectacularly used in Russia’s dispute with Estonia and, more recently, during the short Russia-Georgia war. This can clearly be a problem of international proportions, especially when practised, as it clearly was in that recent incident, at government level. Theoretically, it is outwith the scope of this debate, but there can be no reason why this particular scam or operation could not be used just as easily against individuals. Are there any plans to address this potentially very large problem?

I have a number of specific questions, of which I have given notice to the Minister. First, there is the matter of ratification of the code. In their response to the committee’s recommendations, the Government stated that they were implementing changes to the Computer Misuse Act, following which they would proceed with ratification of the Council of Europe Convention on Cybercrime. That was in April, and it is now October. What is the present position, and when will the Government be in a position to proceed with ratification?

Allied to that is the lack of effectiveness of the Computer Misuse Act. A record of an average conviction rate of 15 per annum for computer fraud cases is derisory, and I hope that the Government will address the apparent anomaly that 25 offences under the Computer Misuse Act are not categorised as “serious” under SOCA. The fact that salmon poaching is categorised as “serious” is passing into folklore.

My third point—I emphasise that this is based on hearsay only from within the police service—is that inquiries and action on computer fraud are being hampered by inadequate forensic resources, which has resulted in a backlog of cases. I hope that we can have an assurance from the Minister that this subject is being addressed.

This has been a most interesting and constructive debate. I repeat the thanks from these Benches to the noble Lord, Lord Broers, his committee and staff. I look forward to the Minister’s reply.

My Lords, when I was allotted the privilege of responding on behalf of the Government to the distinguished report written by a distinguished group, I admit that I felt some trepidation. After reading the report, the trepidation increased. After hearing the contributions to the debate, the trepidation has continued to increase, but for a variety of reasons. One of them is due to the speed at which the internet develops, as has rightly been said. A number of issues raised in this debate developed after the report—indeed, after government action. That development will continue. Therefore, the ability of the human process—whether it is the legal process or the commercial process—to keep up to speed with changes is a challenge to us all.

The Government welcome the report and this debate. The report comes at a time of growing interest in the safety of individuals and their information on the internet, and is a very valuable contribution to this broad, continuing and, perhaps, endless debate. The Government beg forgiveness—at least I do—if their first response to the report was seen to be, or was thought to have been, insulting in any way. It was never meant to be. I would view this report as being a spur to the Government and a challenge for us to recognise, as a Government and an Administration, the need to protect the public.

It is clear from the take-up of broadband access across the UK, and from the growth in online commerce, that the public to a large degree is comfortable in using the technology and increasingly enjoys the services available. However, the Government are not, and cannot be, complacent about the risks to the public, and have taken legislative and organisational steps to ensure that the public can have confidence in the internet and is protected from harm. Many of the comments in this debate and in the report are requirements that we give force to that statement in terms of legislative and other measures.

The Government’s response to the threat to the safety of the public and business has grown, and will continue to grow, as the use of the internet has risen and continues to rise. The noble Lord, Lord Mitchell, vividly reminded us of that in terms of the speed of developments. It affects all areas of society. We should seek to increase protection of our population through the development of legislation, the provision of specialist law enforcement bodies and co-operative working within the UK and internationally.

The Government welcome the recognition in the report that the problems of making the internet safe cannot be addressed by government, or by any other group, alone. It is vital that all relevant sectors of society work together to ensure that the internet is as safe as possible and that information is available to the public to empower it to protect itself.

The Government and the agencies for which they are responsible work with a number of different groups to support work on internet security. We are working with the internet crime and disorder partnerships, established through EURIM, which brings together government, Parliament and civil society. Some noble Lords will be familiar with many of the acronyms in this area. In this debate, I have heard many other acronyms used by the internet and the computer industry. When information technology meets the Civil Service, perhaps the slogan might be, “Acronyms rule OK”. Therefore, one should not seek to use acronyms, where possible; but I am afraid that on this occasion there are so many acronyms that it is impossible to do otherwise. The importance of the partnership through EURIM and the collaboration of industry, government, Parliament and civil society is that they will develop a co-ordinated approach to online crime and establish a co-operative regulatory framework for the internet, capable of adapting with the necessary speed and flexibility required in this rapidly changing area.

The challenge set by many noble Lords is to see whether the Government are capable of keeping up the speed and degree of flexibility that we require. In the eyes of the Government, it is one of a number of vital and complementary initiatives that we need to tackle general electronic crime, alongside the law enforcement response provided by SOCA e-crime, the Police Central e-crime Unit and the National Fraud Strategic Authority—three very important bodies.

The Government recently sponsored the Byron review, which considered how children can be protected on the internet and made a number of recommendations, all of which the Government accepted. The key recommendation was that the UK should establish a forum that brings together government, law enforcement, industry and the third sector to look at how the internet can be made as safe as possible for children. On 29 September, the Prime Minister launched the UK Council for Child Internet Safety. I am very pleased to report that there has been a positive response from all sectors and that well over 100 organisations have applied to join the council, showing that there is a broad commitment across society to support safety for children.

The Government strongly support the work of Get Safe Online, which brings together industry and law enforcement to provide safety information to the public and industry. We believe it is right for government to work alongside industry: by working together they will help to ensure that people are kept safe and are empowered to stay safe online. Additionally, officials from the Department for Business, Enterprise and Regulatory Reform are committed to working with representatives from the Internet Services Providers’ Association to achieve this. We hope that over the coming months we will see a serious elevation of the debate on the clear and consistent role that industry can take to demonstrate the protection it is offering, with advice on how people can protect themselves online.

In that context, there is nothing like a personal interest to bring about concentration on a piece of legislation. This morning, I received a letter from my bank telling me that in the course of an hour someone had attempted to use my details to purchase about £1,200-worth of goods in Venezuela. The impressive thing about that is that fortunately the bank refused to accept any of the transactions and has now written to me saying that it suspects fraud. Nothing like this has happened to me before, and that incident demonstrates the risk but also the comfort that can be gained from efficient and effective protection—in this case, from my bank.

Earlier this month, the Government brought into force changes to the Computer Misuse Act 1990 that increase the maximum penalty for the Section 1 offence of unauthorised access to computer material to two years to better reflect the seriousness of such offences. The changes also ensure that the offence is extraditable, which, in the international context, is very important. Similarly, we have increased the maximum penalty for the Section 3 offence of unauthorised modification of computer material to 10 years. We have broadened the definition of the Section 3 offence to clarify that all means of interference with a computer system are criminalised, and in particular to ensure that adequate provision is made to criminalise all forms of denial of service attacks—a matter raised by several noble Lords—so that they can be better dealt with. We have also created a new offence of making, adapting or supplying articles for use in computer misuse offences to discourage the market in the production and distribution of hacking tools. We believe that these changes have ensured that the legal framework to tackle offences on the internet is robust and relevant.

In 2006, the Government set up the Child Exploitation and Online Protection Centre, or CEOP, to protect children from those who would seek to harm them online. CEOP has grown into a world leader and has had remarkable success in rescuing children, arresting offenders and building relationships with law enforcement in the UK and overseas. CEOP has also developed a widespread educational programme for children and parents, which allows children to understand the risks on the internet and to protect themselves from harm.

The noble Viscount, Lord Bridgeman, raised the question of the police e-crime unit, which has now had funding approved. It will be hosted by the Metropolitan Police and will co-ordinate activity across the police service to tackle cybercrime. A theme from today’s debate is the need for interaction and co-ordination between agencies, police forces and others, so that they work together, without overlap, in dealing with this problem. The unit will provide support and advice to the National Fraud Reporting Centre on electronic fraud reported to the centre and will respond to intelligence packages produced by it. While the unit will not investigate every electronic fraud, it will work to tackle major frauds and bundles of smaller frauds that are assessed as being the work of one person or group. The unit will also work across the police service, in co-operation with the National Policing Improvement Agency, to develop the overall response to electronic crime and to ensure that police officers have adequate knowledge and training to tackle such crimes—another important point made by noble Lords.

The Government also support the SOCA e-crime unit, which is dedicated to tackling organised crime groups that operate online. We will ensure that the work of all the law enforcement groups does not overlap—a point made by the noble Earl—and I understand that the senior officers in each of those agencies communicate regularly to ensure that the work that they do is co-ordinated and not duplicated.

Much has understandably been made of data losses. I was not aware of the one reported today. We appreciate and understand the serious concerns set out in the reports regarding the loss of data by government departments. As part of the response to the losses of data, we commissioned a report to look at how data should be handled in the future. The report was delivered in June this year and contains far-reaching mandatory recommendations, which departments are already investing time and energy in to ensure that personal information is managed properly and used securely for the public’s benefit. As part of our drive for greater openness and transparency, departments have already published details of data security incidents in their 2007-08 resource accounts. Clearly, the call for higher security transparency means that we also see headlines on these unfortunate incidents.

The report recognises that the problem of cybercrime cannot be addressed by the UK alone and that international co-operation is essential to ensure that law enforcement within the UK can obtain assistance, when required, from countries where cybercriminals might be operating.

With the changes to the Computer Misuse Act now enacted, we believe that the UK meets all the requirements necessary for us to ratify the Council of Europe Convention on Cybercrime and to give effect to the EU framework decision on attacks on information systems, a point raised by the noble Viscount, Lord Bridgeman. I am pleased to say that we expect the Convention on Cybercrime to be ratified by the end of the year, or certainly in the early part of 2009.

Many points and comments were made in the debate. If I try to deal with them now, I will fail, because I have not yet learnt the paper-juggling skills required of a Minister at the Dispatch Box and, more important, some of the questions require detailed answers which I would not be able to give orally. As this is the first time that I have responded to a debate, I probably would not do justice to the questions. Given that my knowledge of the retail industry exceeds my knowledge of the IT industry, I make a once-in-a-lifetime offer to any Member who feels that the response that I have given does not cover points raised by undertaking to write to them, even if they have not asked a question.

I have identified a number of issues that were raised, which require us to make responses in any event; for example, there was a question about the resources to the Metropolitan Police and whether they are additional or taken from somewhere else. I will reply to that in writing.

I can respond on some issues. The noble Viscount, Lord Bridgeman, asked about CPS prosecutors in relation to e-crime. I confirm that prosecutors in the CPS are already trained to deal with electronic crime, but I do not think that they are identified as a separate group within that institution. There was concern about cross-departmental groups. We accept the need to co-ordinate interests across departments, and the Cabinet Office has established a forum for that purpose. We hope that it will enhance our position. However, I do not think that I can do justice to individual questions without writing.

The internet and the technology that underpins it are changing rapidly—“changing rapidly” does not do justice to the speed, which has been very much on noble Lords’ minds—and the challenge that the Government must meet is to ensure that there is a safe environment for all. For many people these are exciting changes, which bring tremendous benefit and enjoyment. However, they also bring new challenges, of which keeping up with the speed of technological change is but one. I assure noble Lords that the Government are prepared to meet those challenges as they arise.

The Government will actively consider updating legislation to ensure that the UK has sufficient legal powers to tackle crime committed on the internet. We will work with and through international partners, both bilaterally and through institutions such as the EU and the G8, to build a common approach to preventing such crimes and ensuring that there is an adequate response. The Government will work with all sectors of the UK economy to develop a safer internet and to ensure that the public can have confidence that they are free to trade, communicate and enjoy the services available to them.

The Government will continue to support the law enforcement agencies that provide protection and support to the public and tackle the criminals operating in cyberspace. Above all, with groups across the public, private and third sectors, we will seek to ensure that all of us play our part in ensuring the security and safety of the internet.

My Lords, I thank the Minister for his response, especially as it was his first one and this field is extremely complex. I am reassured to hear that there will be serious elevation of the Government’s consideration of these issues. We look forward to these issues gaining the strength that has been applied to children’s issues. Every citizen deserves the same attention on this serious matter. I congratulate and thank all noble Lords who spoke in this debate on the Select Committee’s report. The breadth of expertise and experience in this House is impressive.

On Question, Motion agreed to.

House adjourned at 2.53 pm.