asked Her Majesty’s Government:

What responses they have received to their distribution of the Consolidated Statement on the Use of EU Funds in the UK to European Union Finance Ministers.

My Lords, the statement has been welcomed by the European Commission, the European Court of Auditors and a number of member states, including the Netherlands, Sweden, Denmark and Spain. The Council of Ministers will continue discussion of national statements in the new year. The Government are, of course, very grateful for the support expressed by the sub-committee of this House’s Select Committee on the European Union.

My Lords, I thank the Minister for his Answer. The EU published a qualified audit opinion on the transactions underpinning the budget and urged member states to try to manage European funds better. Does my noble friend accept that member states are to blame and what do the Government intend to do about it?

My Lords, over 80 per cent of European expenditure is conducted and carried out through member states. We expect the highest quality of probity and pursuit of value for money in the expenditure of European funds, as we do in our own national funds. The UK has set an example in providing leadership to our fellow European states in setting high standards of audit and we will continue to make representations to our partner countries in Europe to encourage those that have not yet introduced national audits to do so. I am encouraged by the fact that a number of other countries have already indicated that it is their intention so to do.

My Lords, can the Minister turn his attention not to countries but to programmes? Can he confirm that the highest incidence of accounting problems exists with regard to the cohesion fund and the new rural development fund? Does that not indicate that those programmes ought to be looked at again?

My Lords, I thank the noble Lord, Lord Trimble, for his question. He is correct in his observation. Indeed, the Government have put considerable resource in this country towards increasing our monitoring of the efficacy of those programmes and will be making representations in Europe to the same effect.

My Lords, the Comptroller and Auditor-General says in the report that we are discussing that he has,

“identified a number of accounting and other issues which need to be addressed in order to ensure that the accounts represent a true and fair view”.

How quickly does the Treasury hope to be in a position to give him the assurances that he is looking for?

My Lords, I can advise the noble Lord, Lord Newby, that the Treasury is putting considerable resource behind this issue and will tender those answers as swiftly as possible.

My Lords, is it not rather odd to suggest that all the blame rests on the member states and none on the EU? What right has the EU to dish out money to member states without being satisfied that they have proper accountancy arrangements in place to ensure that the money is properly spent?

My Lords, I thank the noble Lord, Lord Waddington, for his question. Our representations about improving the quality of national audit are an integral part of improving the efficacy of European fund distributions. That will ensure that there is a link-up between the supervision and direction that come from Brussels and the quality of expenditure implementation in member countries.

My Lords, has the Minister read the Thunderer column in yesterday’s Times by the much respected Marta Andreassen, now the treasurer of the UK Independence Party? She is, of course, the former EU chief accountant who was disgracefully sacked in 2002 for refusing to sign off its fraudulent accounts. Are the Government aware that the position of Miss Andreassen and others is that the problem lies not at all—or comparatively little—at the member state level but almost entirely at the level of the Commission, which refuses to put in the controls that would make auditing our moneys possible?

My Lords, we wish to see the highest quality of integrity in the preparation of the EU’s accounts and the control of EU expenditure. That requires efficacy at every level in Brussels and in member countries.

My Lords, section 8 on page 2 of the statement says that,

“at least 5% of expenditure at project level is subjected to internal audit and verification”.

Is that percentage realistically high enough and how does it compare with the level of other leading countries in the EU?

My Lords, I thank the noble Lord, Lord Dykes, for his question. I believe that that figure compares—it is in roughly the same range—with those of other European countries and is, in my judgment, at an adequate level.

My Lords, is my noble friend aware that, during our debates in this House on the amending treaty on the European Union, it was reported that the Comptroller and Auditor-General very much doubted whether, if we applied the same auditing standards in the United Kingdom as those required by the statement of assurance, we would have received a statement of assurance in this country—we would have been on a par with the European Union?

My Lords, I thank my noble friend for his observation.

My Lords, is it not a fact that the European Court of Auditors has qualified the accounts for the past 10 years? I ask this as someone who has sat on the Public Accounts Committee. Is it not also a fact that not a single country—not even ourselves—comes up to the required standards? While we have had hope from the Minister, when will we get some real, positive results?

My Lords, I thank the noble Lord for his observation. There has been consistent progress, as indeed the European Court of Auditors noted in its statement yesterday. However, there is still some distance to travel.

My Lords, is it not the height of stupidity and neglect for an organisation such as the Commission continually to hand over money to member states that then fraudulently convert it for other purposes?

My Lords, I thank the noble Lord for his observation. We have to be very careful. When the EU Court of Auditors points to areas where it cannot give assurance, that does not necessarily mean fraud. In fact, the EU is quite specific in saying that it believes that the amounts that can be attributed to fraud are less than 0.03 per cent of total expenditure. However, there is a serious problem and a continuing challenge to us all to encourage our partners in Europe to improve the quality of monitoring the effectiveness of expenditure.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare my interest as an arable and grassland farmer in Warwickshire.

The Question was as follows:

To ask Her Majesty’s Government whether they support the European Commission’s proposals for further regulation of the use of pesticides in the European Union, which are currently being considered by the European Parliament.

My Lords, the Government generally welcome the European Commission’s proposed thematic strategy for the sustainable use of pesticides but are concerned that any strengthening of the already strict authorisations regime for pesticides should be justified, science-based and proportionate. We are particularly concerned about the possible impact of the proposed marketing regulation in the absence of a detailed impact assessment from the European Commission.

My Lords, I am most grateful for, and rather heartened by, the Minister’s response. I think that this directive is to be signed off in January next year and it will then be 18 months before it becomes law. Will the Government use their best endeavours to ask the Council of Ministers and the Commission to set up an expert working group to examine, as he says, the scientific risk-based proposals and to carry out an impact assessment in respect of agriculture, horticulture and consumers in the EU?

My Lords, I have considerable sympathy for the noble Lord’s point and I shall certainly consider it. He is right to suggest that decisions in relation to the directive are likely to be made over the next few weeks. He will know that this Government have raised concerns in the appropriate quarters, and we continue to do so. I thoroughly agree that any decision in this area ought to be based on the science.

My Lords, what scientific evidence exists to suggest that pesticides other than organophosphates carry any significant risk to human and animal health which would justify further constraints on their use?

My Lords, the noble Lord is well qualified to ask that question. I am not aware of any such evidence, and we have consistently asked the European Commission to undertake the necessary work to provide the evidence. It is very important that in this, of all matters, any decision should be based on the evidence and the science.

My Lords, if these regulations are passed, will supermarkets be able to import from outside the European Union food which has been treated with these pesticides?

My Lords, the position is not entirely clear at the moment. We will have to await the conclusion of the discussions and then, if a directive is passed, see what the impact on the import regulation is. The position is not clear because the directive is based on what are described as hazard criteria, whereas the regime for regulating maximum residue levels in treated produce, which is how imports are dealt with, is based on a risk assessment. The noble Lord will know that one of our concerns is the move from a risk-based to a hazard-based assessment.

My Lords—

My Lords—

My Lords, let us hear from the Liberal Benches and then the government Benches.

My Lords, I am pleased that the Minister agrees that the regulation of pesticides should be based on objective scientific evidence. Can he tell us whether the vote of the committee of the European Union in favour of banning certain chemicals will have an impact on human health, or will reduce the productivity of arable crops? In other words, are we going to have a second Irish potato famine without copper sulphate sprays and so on, or are there going to be increased cases of cancer among certain people in the community?

My Lords, I hope that it does not come down to that choice because we do not believe that the introduction of the directive as currently proposed will have any direct impact on consumers’ health. As far as the potential impact on production is concerned, my understanding is that the withdrawal of one triazole that is crucial for protection against fungal disease of wheat could result in a loss of yield of up to 30 per cent in cereals. There are other potential losses in the horticultural area, particularly where there is nothing in the pipeline at the moment that could replace those pesticides. That is why we are continuing to press our concerns within Europe on this matter.

My Lords, would the Minister agree that, if implemented, these proposals could lead to significant declines in crop yields, an increase in food prices and many arable and vegetable farms becoming unviable? Will he therefore seek to ensure that the European Parliament considers these proposals within a much wider strategy for European and world food security?

My Lords, it is a little early to talk about increasing prices. I have already referred to the potential reduction in yields. That is why we are concerned and why we continue to make representations in Europe.

My Lords—

My Lords—

My Lords, we have not heard from the Labour Benches on this Question.

My Lords, can the Minister throw any light on the reasoning of the Commission in not producing an impact assessment?

No, my Lords. I suspect it is a genuflection to greenness without scientific evidence.

My Lords, will the Minister return to the impact of these regulations on consumers? He said that he saw the regulations having no impact whatever on consumer health, but they undoubtedly reduce the availability of local, home-grown produce for consumers, and there is a risk that the food that is available may not be subject to the same controls as those on European-grown produce. I have to declare an interest as a farmer and grower.

My Lords, I find it difficult to disagree with the noble Lord.

asked Her Majesty’s Government:

Whether they will invite the Financial Services Authority and the UK Statistics Authority to produce a statistical time series on bank leverage ratios.

My Lords, the Financial Services Authority and the UK Statistics Authority do not routinely collect information on leverage ratios. However, the FSA is currently considering whether a leverage ratio could be adopted as a useful supplement to risk-based measures of capital.

My Lords, I thank my noble friend for that positive reply. Does he agree that at the heart of the disaster which the banks and other financial institutions have recently inflicted on everyone, including themselves, in part through their bonus-driven irresponsibility and lack of transparency, was the pushing up of their average leverage ratios by 50 per cent, to unprecedented heights? Secondly, does he agree that we should no longer rely on the City’s self-serving mantra that self-regulation brings international competitiveness?

My Lords, there undoubtedly was a trend over recent years on the part of banks both to increase their leverage and to reduce their liquidity and holding of marketable instruments. The sources of the problems affecting the banking industry are numerous and global. Certainly, questions are being asked throughout the world about the need to strengthen regulation. Indeed, we have invited the noble Lord, Lord Turner, the chairman of the Financial Services Authority, to look at the opportunity for reforms in UK financial services regulation. Remuneration policies have been an issue there; we have made specific requirements in that connection where we have participated in the recapitalisation of banks; and the FSA has said that it will be looking with increased intensity at the issue of remuneration as an incentive effect for recklessness in regulated institutions. On my noble friend's final point, I suggest that we are no longer in an environment of self-regulation; we clearly have strong regulation through the Financial Services Authority; self-regulation was a feature of the past.

My Lords, given the degree of reckless lending by the banks, does the Minister think that there is now a case for having a separate regulatory regime for, on the one hand, retail and day-to-day business banking and, on the other hand, investment and the more esoteric types of banking which have brought the bulk of the problems on the banking sector?

My Lords, the noble Lord, Lord Newby, makes an interesting point, which is being debated in academic circles: the distinction between thin banks and wider banks. However, the reality is that banking institutions are increasingly complex and it is very difficult to identify a bank that fits neatly into either of those categories. In this respect, it is interesting to note that in the United States, the investment banks have very recently sought registration under the Federal Reserve Bank, so they have become wider banks, rather than remaining narrower banks. The issue of defining effective regulation and ensuring that we are aware of the consequences—to ask ourselves who we are regulating and why—is at the heart of the work that the FSA and the Treasury will be doing on regulation in future.

My Lords, does the Minister agree that splitting the regulation of financial companies and businesses between three separate organisations, the Treasury, the FSA and the Bank of England, made a significant contribution to the muddle that we are in today?

My Lords, I fear that the noble Lord, Lord Howard, is misdirecting himself. The responsibility for the regulation of institutions rests with the FSA, and the FSA alone.

My Lords, does my noble friend agree that it is not yet time to assess the crisis, because the crisis is not over yet? Should we also not be careful not to design a regulatory system to cure a crisis which has already passed but to anticipate what may arise in future?

My Lords, my noble friend exhibits great wisdom in his observation. That is precisely why we have asked the Financial Services Authority to reflect in a considered way on the lessons to be learnt, and why we are working with other states, because this is not just an issue of national regulation, there are clearly challenges here concerning international regulation of financial institutions. Our Prime Minister will be putting that to the fore in his representations at the important meetings due to be held in Washington this weekend.

My Lords, following the observations of my noble friend Lord Howard, was it not a great mistake to remove bank supervision from the Bank of England? It was widely recognised to have the expertise to deal with banks, which is certainly something that the FSA has not got.

My Lords, the expertise that the Bank had in the regulation of banks transferred almost en bloc to the FSA.

My Lords, I congratulate the Minister on not having a brief in his hand or on the Dispatch Box for either this Question or the first one, an example much to be applauded.

My Lords, the noble Lord says that new regulation is on its way. Will that regulation be made entirely in this country by the British Government, the Bank of England, the FSA, and so on, or will we have the new regime imposed on us by the Commission in Brussels, of all people?

My Lords, noble Lords know that the initiative for regulation will remain in this country with the Financial Services Authority, the Bank of England and Her Majesty’s Treasury through the tripartite arrangements.

My Lords, my noble friend spoke about pay. We have a Low Pay Commission, which he knows a lot about. Does he think that we should have a high pay commission?

My Lords, I thank my noble friend for that question. At this point, I wish that I did have a briefing book in front of me. It has been interesting in the past 10 years to see the significant progress that there has been in reducing inequalities of income. The Gini coefficient of wealth distribution has significantly reduced. The rich, as we know, have got richer in this society, but the poor have become distinctively better off. That is a great testament to the Government’s record in managing the national minimum wage through the Low Pay Commission and through benefit programmes. The super-rich in the City and the incentive effects that allowed them to earn those high returns are of considerable concern to many Members of this House and to the Government.

My Lords—

I am sorry, my Lords, but we must move on.

asked Her Majesty’s Government:

Whether they will introduce measures following the report of the Organisation for Economic Co-operation and Development that gas and electricity prices in the United Kingdom have risen by 29.7 per cent in the past year, compared with increases of 14 per cent in France and 12.2 per cent in Germany.

My Lords, the Government fully appreciate the impacts of high energy prices, particularly on vulnerable people. Despite recent increases, UK domestic gas and electricity prices in January to June 2008 remained respectively the lowest and fifth lowest in Europe. UK prices rose by particularly sharp percentages this year, because retail prices fell here in 2007, unlike in other EU member states. The regulator Ofgem monitors the markets to ensure that wholesale price decreases pass through to consumers without unjustified delays.

My Lords, I thank the Minister for his Answer to my Question. It sounded amazingly plausible and I am not quite sure why we are all so worried, except that Consumer Focus, the Government’s own organisation under the noble Lord, Lord Whitty, who has been a Minister in his own Government, has declared how very worried it is about this. Given that we have dithered over gas storage and that one reason why we pay so much for our gas is because we have to buy it from France and Germany, which do not seem to have such high prices as we do, will the Minister kindly comment on the breaking news that Portland Gas has said today that it will not build its gas storage?

My Lords, on the general concern expressed by my noble friend Lord Whitty, when consumers, and indeed businesses, see a sharp increase in prices, they are of course concerned about it. The noble Baroness will know about the Ofgem review. Although that review identified a number of problems, particularly with pre-payment meters and the supply of electricity to customers who have not switched, overall it found that the market was still competitive. I cannot comment on the decision about gas storage, but I can say that we remain committed to ensuring that there are sufficient storage facilities in this country.

My Lords, would my noble friend be prepared to suggest to Ofgem that there is a case for a fresh look at the nature of the British energy market? In the past 10 years, we have been largely guided by the original authors of the regulation of energy, who were inspired by the now widely regarded as bankrupt Austrian school of economists, who took the view that we should eschew long-term contracts in favour of the short-term market—a course of action that was warmly applauded by those on the opposition Benches. The French and the Germans, who remained loyal to the long-term contracts, are now enjoying lower rates of increase than we are, and there is a case for us eschewing the right-wing nonsense of these half-baked economists of the past, who were applauded by the Conservatives in recent years, and considering the matter afresh.

My Lords, I will not comment on schools of economists. But I would say to my noble friend that, clearly, the UK consumer has benefited from the competitive market that this country has had over the past few years. I would also say to my noble friend, which he will know, that in our debate on the Energy Bill we discussed the role of Ofgem. As the result of a government amendment, in the light of discussion in your Lordships' House, we have placed renewed emphasis on Ofgem’s role and responsibility to work in the interests of the consumer now and in the future. It is very important to tell my noble friend that we think that that is significant.

My Lords, it is generally recognised that gas storage is a key issue in terms of the fluctuating prices of gas, as well as an energy security issue. In the UK we have some two weeks of gas storage capacity, whereas France and Germany have 100 days or more. What is the current gas storage target in terms of days or weeks and when is that target likely to be met?

My Lords, the noble Lord is right to raise the issue of gas storage and, because of the North Sea, we have had our own natural storage for a considerable number of years. My understanding is that our current storage capacity is around 4 per cent of current annual demand, which is 4 billion cubic metres. We are seeing around 1 billion cubic metres under construction and a proposed 14.5 billion by 2020-21.

My Lords, on the simple point of the prices that consumers have to pay—I join the Minister in welcoming Ofgem—although we have the power to fine considerably when flouting occurs in relation to price increases, that does not directly benefit consumers. They do not get any of that money. They do not get a refund on any overpayments that they may have made. What would the Minister suggest to amend the situation?

My Lords, one has to accept that there is inevitably a lag between the time when wholesale gas and electricity are bought and when the price of them goes through to consumers. It is important for that lag time to be as short as possible and for companies to be transparent. The general Ofgem conclusion is that there has been no undue delay in reductions likely to come through. Clearly, we cannot be complacent and we are entitled to ask the companies to be transparent.

My Lords, before the House begins the Third Reading of the Education and Skills Bill, it may be helpful for me to say a few words about the Third Reading amendments. In line with the guidance recommended by the Procedure Committee and agreed by the House, the Public Bill Office has advised the usual channels that four amendments on the Marshalled List for Third Reading fall outside the guidance given in the Companion and by the Procedure Committee. They are Amendments Nos. 3, 4, 8 and 9.

The usual channels have considered the advice of the Public Bill Office and I therefore propose that it may be for the convenience of the House if leave is given to the noble Lord, Lord Elton, to move Amendment No. 3 and to the noble Baroness, Lady Sharp, to move Amendment No. 4. That would allow the Minister to respond to those issues on the record in Hansard. I understand that Amendments Nos. 8 and 9, in the names of my noble friends Lady Turner and Lord McIntosh, will not be moved.

moved Amendment No. 1:

My Lords, on behalf of Members on these Benches, we strongly support the amendment.

My Lords, I appreciate my noble friend Lord Layard’s dedication in promoting the interests of those young people learning while in work. It is our policy that learning for those in work should be personalised, high quality, accredited and delivered in a way that engages the young person and suits their individual needs and interests. Some young people learn best when they can see the immediate practical relevance and application of what they are learning. I absolutely agree with my noble friend that the learning that young people are undertaking must be of the very highest quality, that it must involve actual, guided learning, and that young people must be learning new things, not simply doing their day-to-day jobs.

I know that my noble friend previously had concerns that Clause 8 as drafted could allow a “way out” for employers, but the clause states that a young person can be deemed to be participating in enough training if they are participating in a course or courses leading to an accredited qualification that has been assigned enough guided learning hours. This does not mean that employers can simply sign a young person up for a qualification for which they already have the skills and get them accredited without providing any actual guided learning. That would very clearly not meet the terms of the legislation.

I said on Report that we would consider whether, in the specific and limited case where employers are providing and funding the accredited training themselves, there is more we need to do to ensure that the clear requirements set out in the legislation, as I have just described, are actually adhered to in practice. Having considered this further, I can say today that we will indicate in statutory guidance to local authorities that where a young person is registered as participating in employer-funded training, we expect the authority proactively to check that a course involving actual guided learning is being followed. Given that I agree with my noble friend that it is unlikely that a high quality learning programme would not involve time away from the work station, we will also indicate in the guidance that we would expect a substantial amount of the guided learning to be away from the work station. We will ensure that this is also set out in the guidance that we have promised to give to employers, and on which we will consult with employers and their representatives.

I am grateful to my noble friend for continuing to raise these important issues, and I hope that he will be reassured that we are equally committed to ensuring the quality of the learning experience for young people. I hope also that he will agree that the commitments I have made today emphasise this, and that he will withdraw his amendment and support this important Bill.

My Lords, my noble friend and I are delighted with that reply and extremely grateful to the Minister for the undertaking. It is wonderful news for young people and illustrates, if I may say so, two of the strengths of this Government: their willingness to listen and their commitment to offering the best possible chance to every young person in the country. I thought that, without a guarantee, one could not call this a landmark Bill. With it, however, one certainly can. On that basis, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 2:

My Lords, while we share the Government’s ambition to see each and every 17 and 18-year old receive the best education or training to help them realise their full potential, our main concern throughout the Bill has been the issue of compulsion and the attendant sanctions this brings. Our desire in all this was to ensure that no young person received a criminal record simply because they were disaffected with the system, especially at such a critical age and stage of their life, when a criminal record could be disastrous.

We had hoped that this could be dealt with by the civil, rather than the criminal, courts, but after hours of discussion that proved unworkable. We then thought we had cracked the problem by writing into the Bill that the sanctions would not constitute a criminal act for the purpose of the Bill and so would not lead to a criminal record, but that would have introduced changes to the law that would have resulted in much wider implications than this Bill alone, and it would have been very late in the Bill to introduce such changes, not to say somewhat above my pay grade—or non-pay grade, as it is in your Lordships’ House. The Government constantly reassure us that the checks and balances put in place by the Bill will make criminalisation extremely rare. We hope that it will not happen at all. However, we welcome the independent review offered by the Government.

We thank the Minister, the right honourable Jim Knight MP, the Bill team for its help throughout the Bill but particularly on this issue, and the officials at the Ministry of Justice for their time and patience in reaching this conclusion. I also thank noble Lords across the House who have been staunch supporters of our attempt to avoid criminalising young people. I sincerely hope that all will be done to help young people to take up learning and training before any damaging sanctions are imposed.

My Lords, I thank the Minister for agreeing to our proposal at a meeting last week to put a review of the Bill’s enforcement elements into the Bill, and that that should be carried out by 2016, when one whole cohort of young people has gone through the system.

As the noble Baroness knows, we have been consistent in opposing the compulsion element of the Bill. We believe that the Government could have put all the duties on local authorities, employers and indeed themselves to help young people carry on in education or training until they are 18-plus without criminalising them. We laid various amendments to remove the compulsion element and replace it with an entitlement to free tuition up to level 3, but sadly we were not in a position to win that argument because, unfortunately, the Official Opposition would not allow the noble Baroness, Lady Morris of Bolton, and her noble friends to support us. That would have been the simple way of addressing the issue of criminalisation.

So we were reduced to mitigating the effects as far as possible. I am pleased to say that the Government have come a long way towards us by accepting our learning and support contracts under another name, clarifying that there will be no custodial sentences and ensuring that young people will be able to appeal in their own right at every stage of the enforcement process. This amendment is another of those concessions.

The Government claim that the full enforcement process will not be necessary except in a tiny minority of cases. We challenged them to prove that by laying a review of the operation of enforcement before Parliament at an appropriate stage after enactment. I am glad to say that they have taken up that challenge, which indicates that the Minister is very confident in what she says.

I have a few questions, however, about the operation of the criminal offence, about which I have given the Minister notice. First, when the Home Office issues guidance to the police about the relevance of disclosing offences under what are currently known as CRB checks, will it be made clear that the offence of non-participation in education under the Bill will not be considered relevant and therefore not disclosed? Secondly, will the Minister give me a similar assurance on employers’ discretion, when filling positions exempt from the Rehabilitation of Offenders Act 1974, that this offence should not be relevant in an objective assessment of the candidate’s ability to undertake certain roles, since it is not a violent or deception offence? Finally, will she clarify the position of 18-plus year-olds who have been convicted of this offence after they turn 18 compared with those who have outstanding fines when they turn 18? I would like an assurance that they too will not be liable for a custodial sentence and that the offence will be spent in two and a half years.

I look forward, if the Bill is ever fully enacted, to scrutinising the review carefully in 2016.

My Lords, I thank the noble Baronesses for their response and support for the amendment. I offer the noble Baroness, Lady Walmsley, the reassurance that I think she is looking for. Having said that, I do not think that I will ever be able to reassure her until we have finished the review, which we are absolutely committed to undertaking for exactly the reasons that she espouses. We are confident that a tiny number of young people, if any, will reach the stage where they incur a criminal sanction.

When the Rehabilitation of Offenders Act provisions are reviewed, which the Government have committed to do, we will work closely with the Ministry of Justice on disclosure. We recognise that there is a strong case in the disclosure period for fines for these offences to be reduced. We will be working with the Home Office on using these offences as an example in its guidance on disclosure when it is reviewed. I can assure the noble Baroness that we will be answering her concerns through guidance and taking great care to make sure that all the professionals who work with young people through the administrative and then the youth justice enforcement regime have proper, full and appropriate guidance.

This is about raising participation in education and training for young people. We know that it is through participation and progression in education and training that young people are best served by this Government and by the education system.

On Question, amendment agreed to.

moved Amendment No. 3:

My Lords, I have added my name to this amendment. Like the noble Lord, Lord Elton, I am extremely grateful to be given the opportunity to raise points that I have raised before in this House. I make no apology for raising them again. I very much appreciated the meeting that the Minister and her officials arranged last week to discuss these issues and the detailed letter that she has sent to those of us who took part in the meeting. I say that because, in this amendment, I do not just include the learning difficulty, dyslexia; other learning difficulties are mentioned in subsection (3) of the proposed new clause.

Noble Lords will not be surprised that my concern is very much based on those who come into custody. I have already explained to the House that in 1999, thanks to having a speech and language therapist carry out an assessment in a prison in Scotland for the first time ever, I found that discipline, education and healthcare staff were made aware of a whole range of problems faced by young offenders. Armed with that, they were able to institute proper programmes to help to give those young offenders a start in life.

I then began campaigning to have speech and language therapists on the staff of every young offender establishment, secure training centre and youth place of custody, to make certain that that assessment was given to every young person. The great thing that came out of all this assessment in the young offender establishment was the realisation that this should have happened a long time before, preferably before all these young people started school. Without people being alerted to their difficulties at that stage, the young people were frankly unable to engage with the teacher and, therefore, with the education system.

The implications of all this have been stated over and over again. I could list the number of Ministers to whom I have referred this matter since 1999, in many cases twice: Mr Charles Clarke, both as Education and Home Secretary; Dr John Reid, both as Health and Education Secretary; and Mr Jack Straw, both as Home Secretary and Secretary of State for Justice. There have been numerous Ministers, including Hilary Armstrong, the previous Minister for Social Exclusion. All listened, all agreed, but nothing happened.

The nearest that we got to anything was when in 2005 Mr Paul Goggins, then the Prisons Minister, was charged by the Secretaries of State for Education and Health and the Home Secretary to examine the question of money. It all boiled down to who was going to pay the £33,000 a year to fund a speech and language therapist in each young offender establishment. Of course, the cost savings of having a correct assessment made that £33,000 pale into insignificance. I gnashed my teeth when I heard the Prime Minister at the time demanding £90 million for his respect agenda, £30 million of which came from the Home Office, because less than £1 million would have funded these speech and language therapists—and what is more respectable than to be able to conduct relationships with your lips rather than with your fists?

I hope very much that the Minister, in considering the new Bill, which I understand will include new arrangements for juveniles, will review all the evidence put to her and other Ministers and officials over the past nine years to my certain knowledge and probably longer. Evaluation has been carried out by academics; observations have come from people working in the field. Advice comes from all quarters, all of which seems to be disregarded. We owe a duty to these young people to let them engage with the education system. We have an opportunity to do so in the next Bill. I hope, therefore, that having reviewed the evidence, the Minister will ensure that measures are in that next Bill to make certain that every child has this assessment to enable them to set off on the road that we would all wish them to be on.

My Lords, I add my voice to those describing the enormous importance of this amendment. I am grateful that we have been able to hear an able defence of it. The crucial word in the amendment is in subsection (5), which says that anyone nominated for a full assessment should be entitled to receive “appropriate” support. It is of the greatest importance that schools, particularly when they deal with children under the age of six, should not be able to get away with saying that there is support and extra help, with classroom assistants and other people who can help these children to get started.

Anyone who supplies support to children with dyslexia, or any of the range of problems coming under this heading, must have had special training and must be an expert. A non-expert may be full of good will but may do more harm than good to a child because she will not have the expertise and the child will not progress. The child will feel that his position is hopeless and will therefore get worse. A child, as we heard not long ago, can learn more in eight weeks from an expert than in many years from someone who has not been trained. I hope that, in the new Bill, it will be emphasised that when every child enters school they will be assessed and have appropriate access to a genuine expert teacher and not simply be propped up by someone who has not been trained.

My Lords, it would be difficult to argue against the amendment and I defy the Minister to try to smuggle it into a non-statutory framework. Our knowledge of the behavioural aspects of the human being has expanded so much that this kind of screening has become essential.

My Lords, I will say a few words about the processes that we have gone through to get here. Having received the Minister’s letter, I appreciate that there is a considerable degree of commitment to carrying this further. Dyslexia was first mentioned in statute in the Chronically Sick and Disabled Persons Act 1970. The 1981 Act said that we should do something about it and legal action has been taken on numerous occasions. There have been few Acts since then about which we have not thought that we have got it right. We have said that there should be greater entitlement and that these problems must be addressed. Ministers—whatever colour rosette they wear on election day—have all said, “Yes, we have done more than before. We have talked to and engaged with more people. We have done so much more than ever before”. But we have never reached a sufficient bite point. Often, that is because of a failure to identify those who should be receiving the help. Also, everyone defends their budgets. How do we say which proportion of the budget should go towards the problem?

I recognise the limitations of lists. As the noble Lord, Lord Ramsbotham, said, one term cannot cover everything, but it is appropriate to talk about dyslexia because it was used to cover virtually all the conditions in this list at a time when we understood the process less well. You may be going through the process and not know what is in front of you. You may refuse to recognise dyslexia and say, “Can we have yet another test or assessment?”. It is always possible to deal with it in that way. You can give someone a little bit of extra help.

However, as the noble Baroness, Lady Warnock, just pointed out, inappropriate help is probably the best way to put somebody off the educational process. That is one problem with the Prison Service. Most prisoners are education self-excluders by the age of 14 at the most. Half the prison population has dyslexia or one of the other conditions in this list. Most of them have problems with acquiring education and therefore acquiring employment. The Minister has an opportunity to say what commitment the Government will give.

I hope that the whole House will remember that, when you go through this process, there will always be a series of opt-outs. One is that people will disagree about what dyslexia really is. I remember as a 16 year-old being dragged along to a conference on dyslexia by my mother, where I shifted chairs around. Sulkily, I sat down to listen to part of the conference. I remember a long discussion between two people about what exactly dyslexia was. I then heard somebody criticise them by saying that we had got over the problem 10 years before. The dancing on the head of the pin that can be done in academic circles defies belief. It was first said of economists that, if you laid them all end to end, they would never reach a conclusion. Take three or four more disciplines, stick them together and the possibilities are infinite. There can be great agreement on about 90 per cent of these problems. We must deal with the real problems and, for once, do whatever we can to ensure that initial teacher training contains enough to enable teachers to stand a chance of recognising dyslexia.

We cannot be dependent on a Minister’s enthusiasm. In the meeting, the noble Lord, Lord Elton, pointed out with a degree of delicacy that I am afraid I do not possess that Ministers tend to come and go. I remember David Blunkett saying when he was at the Department of Education that he was enthusiastic about dyslexia and something should be done, when he knew that he would be moved after the coming general election. Ministers do not stay for ever. Unless some structure is put in place, all their statements mean nothing. Ministerial enthusiasm will always be there and Ministers will always be moved on in a few years’ time.

I hope that the Minister can start to address these points. There is no one simple answer. Unless proper screening is backed up by a long-stop, people will always be missed. The best chance of success is cutting the amount of missed people to a minimum.

My Lords, we are particularly lucky to have my noble friend Lady Warnock in her place and to hear her endorsement of the proposals and her backing of the amendment tabled by the noble Lord, Lord Elton. I join others in expressing the gratitude that we all felt to the Minister for the time and detailed attention that she gave us last week on this whole issue and for the valuable range of experts whom she brought with her, all of whom addressed the subject and were working as hard as they could for the right solution.

I am entirely in favour of what everybody else has said. However, on prisons, I have considerable sympathy with the frustration of my noble friend Lord Ramsbotham at what has happened over so many years. Again, I suspect that it all has something to do with the churn of Ministers and sometimes even the churn of civil servants; a lot of the experience gets lost.

We will hear a lot of our points answered when the Minister replies. However, we know that prison governors are autonomous in their own prisons. They can decide what to do about pay, for example. Equally, a lot is being done to improve prison education, which one hopes will be rolled out—if not, we will all quickly be on the trail yet again. However, if prison governors can pay their inmates more for working in the kitchen, or wherever, than attending the education and skills training that would better equip them for the outside world, that battle will be lost. I hope that the Minister will address that issue as well as others.

My Lords, I shall let the House into a little secret. Over the past few months, my party has been reviewing its education policies. I can tell the House that, although Ministers may not have listened to the noble Lord, Lord Ramsbotham, the Liberal Democrats have. All the elements of the amendment tabled by the noble Lord, Lord Elton, are already in our policy paper. All we need to do is elect a Liberal Democrat Government and we will get all these good things.

My Lords, I am not sure about that. But I support the forceful points that my noble friend Lord Elton made both today and in Committee. Far too many children with learning difficulties are undiagnosed, and it has a major effect on their ability to participate in school, to keep up with their peers and to engage with their education. From personal experience I know the difficulties that a child can face when he suffers from a learning difficulty. Without diagnosis, the problems can only multiply.

I was encouraged by the brief exchange that we had on this topic on Report, in which the Minister indicated that a review of dyslexia is being undertaken. I hope that she will be able to expand on that. I know that she had a fruitful meeting with Members of your Lordships' House. I believe that a diagnostic reading test at the age of six, or after the first year at school—this is one of the Conservative education policies—is vital in preventing children with learning difficulties slipping through the net into underachievement and disillusionment. This issue goes right to the heart of so many of our discussions on the Bill. One of the key elements in keeping children fully engaged with their education—and more, to inculcate them with a love of learning that will benefit them so much in later years—is to identify their individual needs and to ensure that they are catered for. My noble friend is right to say that identifying specific learning difficulties must be a priority. To do anything else would be to fail some of the most vulnerable children in our schools.

My Lords, I thank noble Lords for their kind remarks and for the passion that they have brought to this debate. The noble Lord, Lord Elton, triggered—as he has done previously—an important and enlightening debate which gives me the opportunity, for which I am grateful, to put on the record some of the comments made in the letter I sent to noble Lords.

It would be foolish of me to comment on Ministers coming and going, but I shall comment on their enthusiasm, which I am glad has been noted. I, too, am enthusiastic about this issue. However, noble Lords are not interested in that; they want to hear what we are going to do. I do not want to make any jokes about waiting for a Liberal Democrat Government, because we need to get on with the task. I thank noble Lords for the helpful discussions that we have had with my honourable friend, Sarah McCarthy-Fry, the Minister responsible for this matter in another place. I am absolutely sure that the debate will be the beginning of many conversations that we will have with your Lordships on this subject, to which I look forward.

I share noble Lords’ concerns that we should continue improving the school workforce’s identification and teaching of children with special educational needs, and that we must continue improving educational provision in custodial settings, including for prisoners with learning difficulties. However, as noble Lords are aware from discussions and from the correspondence last week—I am glad that noble Lords found that helpful—we are currently addressing these concerns in ways that are different from those proposed in this amendment.

There is already a statutory duty placed on schools to use their best endeavours to ensure that necessary provision is made for pupils with special educational needs. That is a very important duty. The professional standards for teachers require trainee teachers to demonstrate that they can make effective personalised provision for those they teach, including those who have special educational needs.

The Training and Development Agency for Schools is encouraging training providers to use new specialist units which include material on learning and teaching for pupils with dyslexia or who require support with speech, language and communication. The noble Baroness, Lady Warnock, is absolutely right to highlight the importance of high-quality training for all our educators. As the noble Lord, Lord Elton, is aware, although we cannot require higher education institutions to include these specialist units, we expect that, with support and encouragement, nearly all providers will be using them by the end of this year. I believe that that will meet noble Lords’ concerns about initial teacher training.

We have also developed the inclusion development programme for the serving school workforce. In addition, we have asked Sir Jim Rose, who noble Lords recently had the opportunity to meet, to make recommendations on the identification and teaching of children with dyslexia. I think that he indicated at our meeting that he was drawing the definition of dyslexia quite widely. He will report early next year. We are also preparing our action plan responding to John Bercow’s important review of speech, language and communication provision, which we plan to publish before the end of the year. We have already announced £12 million to take forward his recommendations.

The noble Lord, Lord Ramsbotham, and the noble Baroness, Lady Howe, raised concerns about the education of young people in custody. We intend to place statutory duties on local authorities to fund and commission education in juvenile custody. That will include legislation relating to those with special needs. In the mean time, we are developing training materials on dyslexia and speech, language and communication needs during 2009-10 for those responsible for the education of young people in custody.

On the education of adults in prison, through the Learning and Skills Council we are broadening the assessment requirement for learning difficulties which is placed on offender learning and skills service providers, with effect from August 2009. As noble Lords are aware, the Learning and Skills Council is developing tools to identify additional learning needs and a training programme to support their use.

I recognise noble Lords’ concerns about the need to do more for children and young people with dyslexia or speech, language and communication needs and the need to do more for offenders with those needs. I share those concerns and the sense of urgency. I hope that I can reassure the noble Lord, Lord Ramsbotham, that we will be looking at the evidence in developing proposals for the new Session. We are taking practical steps to improve the position and undertaking expert reviews which we will take seriously and move forward on with speed. I appreciate that this is a subject that we will return to on many occasions, and I welcome that opportunity.

My Lords, when the noble Baroness is evaluating the information, will she read in particular the marvellous series of reports by Professor Karen Bryan of the University of Surrey which have been made available thanks to the generosity of the Helen Hamlyn Trust? Everything that the noble Baroness needs to know about what needs to be done, and how it needs to be done, is contained in those reports.

My Lords, I thank the noble Lord for that very helpful suggestion. I will read the reports.

My Lords, I am grateful to the noble Baroness for what she said. There are within what she said hooks on which policies can be hung and, more importantly, urged forward in the months to come. Before I withdraw the amendment, I must emphasise the importance of getting to children early. My noble friend was talking about six; it is by six that the Jesuits need to get to a child to keep him for life, and I think the same can be said by the teachers of dyslexic children. That does not mean that you do not have a later screening, because some children slip through the net, and that is why the amendment provided for three screens.

We touched on the question of cost. I have introduced the idea of screening as something less than assessment, with an idea that this would make it much less expensive. It is not rocket science to identify children with real difficulties, and I am glad that the Government are moving towards every initial teacher training programme having a compulsory module on identification of SEN. I am a bit puzzled by the academic inviolability, for two reasons. First, the Government fund the whole education programme and therefore they are the customer. They buy the teachers, so they can specify what they want to be produced by the producers. Secondly, there is something called the QCA which is supposed to have a voice in all of this and which, as far as I can make out, operates almost entirely at the behest of the Government. So I think that any problem there can be swept away.

The real anxiety is money. My noble friend—or rather the noble Lord, Lord Ramsbotham, although he is in fact my friend—put his finger on it: where there is more than one source of funding for one activity, no funding is forthcoming, just a cat fight. I hope that the Government’s decision to put this responsibility on to local education authorities will simplify that. However, as long as prisoners are banged up because of staff shortages due to overcrowding of prisoners, they will not be let out to receive the education. Therefore, it is essential that she and her successors pursue this matter with their colleagues who control the Prison Service.

I add my thanks to those which other noble Lords who have spoken have given to the Minister for her courtesy and patience at our meeting with her. I also thank Sarah McCarthy-Fry for coming to listen to what we at this end of the Corridor are proposing so that she can understand it at the other.

It is difficult to overstate the importance of what we are talking about. Every child is born with a divine spark of enthusiasm, intelligence and energy. When that comes up against a barrier of misunderstanding, the result is frustration and the deforming of a life. We now discover that an enormous proportion of our population—some 10 per cent, and at least 53 per cent of the prison population—are victims of learning difficulties. It is on their behalf, and the behalf of those who will follow them if we do not act, that I make this plea to the Government to carry on in the faltering but welcome steps that the noble Baroness has announced. With my thanks, hopes and a promise of not letting this matter go in the next Session or the next Parliament, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 4:

My Lords, I shall speak to Amendment No. 4. As I am sure all noble Lords will recall, on Report I called for a review of the provision of careers education in England in order to compare the service provided in England with the all-age services available in the devolved nations of the United Kingdom. We on these Benches have made it clear that we are not satisfied that the existing structure provided through Connexions is the best that could be available to young people.

Providing careers education for 16 to 18 year-olds would be an obvious complement to the other provisions in the Bill. The thrust of this Bill is to keep those very same young people in education and training. The aim, which I have said many times before is a great one, is to provide young people with the wherewithal to stand on their own two feet and to go into the world of work with sufficient, if not always ample, skills to succeed at their chosen job or career. But that may not be enough—a great many people do not know what they want to do or might be capable of doing. This seems a natural time to provide them with specialised and professional advice on their career prospects. I believe that this would only help to reach the desired outcome of the Bill.

My Lords, I have added my name to Amendment No. 7 but I very much support both amendments. As president of the National Governors’ Association, I am particularly interested to hear what the Minister will say. The NGA and the head teachers’ association have recently entered into a joint understanding of their respective responsibilities, and it would seem entirely appropriate that there should be equal representation of both bodies.

My Lords, careers education is essential in helping young people to understand how their choices and learning will contribute to their future lives. It is great to have this brief debate; it gives me the opportunity, as noble Lords have requested, to put some important points on the record.

As I set out on Report, we have already put in place a substantial programme of work to improve the quality of information, advice and guidance, but we know that more needs to be done. To set out how the Government plan to improve the quality of careers advice in all settings, my department will publish a new information, advice and guidance strategy document in the spring of 2009. I can confirm that this strategy will look at reviewing our position on the need to extend the careers education duty to 18.

In this context, the strategy will need to consider several complex issues. For example, if we extend the statutory duty to 18 year-olds in schools and FE colleges, it would also make sense to place a similar duty on other providers of post-16 education, such as work-based learning providers, training providers and youth offending institutions. However, this would raise a host of practical and legal difficulties, while again not necessarily showing clear benefits. Given the lack of hard, outcome-focused measures on careers education, it might also be difficult and expensive to enforce such a duty.

We would want to go down this path only if we were convinced that it was the only way of securing the impact that we seek for all young people. The next Bill will transfer the responsibility for securing education and training provision for 16 to 19 year-olds from the Learning and Skills Council to local authorities, as noble Lords have heard relentlessly in our discussions. This, coupled with our proposals to raise the participation age and the transfer of the Connexions Service, is a significant change. It will place local authorities firmly in the lead in ensuring that all young people can access the support and provision that they need. We would need to position any change within this new landscape.

Addressing these important questions through the new strategy will allow us to give it the consideration that it deserves and, I hope, the opportunity to have further discussions with noble Lords concerned about how comprehensive the offer is for young people as they go through transition from 16 to 18 and into adult life.

I turn to Amendment No. 7 on schools forums. As we know, the role of a schools forum member is to represent the interests of schools and children in their area and not their own school. Therefore, head teachers and governors should be viewing the discussions from a similar point of view. In addition, the schools forum is essentially a consultative body and does not, in general, make decisions itself; these are made by elected members in the local authority, having first consulted the schools forum.

The Government highly value the work of governors—I cannot stress that enough—but we are also conscious that the commitment to being on a schools forum can amount to about 10 working days per year in addition to those given to the individual school as a governor. Therefore, it places an additional time pressure on people, and many governors can find the commitment too much. Consequently, some local authorities can have difficulty filling governor vacancies.

The good practice guide will continue to state that parity of governors to head teachers on a schools forum is the aim but that the precise constitution should be left to local discretion. However, we believe that the majority of schools forums, where the constitution is known, satisfy this aim.

Furthermore, we will challenge authorities with a small number of governors on the forum and support them in filling vacancies by putting them in touch with authorities that are more successful. We know that this kind of peer-to-peer working can be very productive. Therefore, we would prefer not to accept this amendment, as it could lead to a number of authorities breaching the law without them wishing to do so. We already have the power to change regulation on this subject and will do so if we find that other measures are ineffective.

The Government value the work of the National Governors’ Association and would welcome further input from it on this issue.

With that reassurance on careers and governors in relation to schools forums, I hope that the noble Baroness will feel able to withdraw her amendment.

My Lords, I am extremely grateful to the Minister. I think we all agree about the importance of good-quality careers education backed up by information, advice and guidance. I am extremely grateful to the noble Baroness for the reassurances that she has given us on this and for the fact that the department will be working on it further and we shall be hearing about it in the Bill that comes forward in the next Session. The assurances in relation to schools forums are similarly well received. I am most grateful and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 5:

My Lords, those of us who stressed the importance of placing listening to the voice of the child in the Bill are extremely grateful to the Government, particularly to the Minister, for supporting the well argued, detailed amendment tabled by the noble Baroness, Lady Walmsley. She is particularly to be congratulated on her persistence, and I thank her for the kind comments she made about my part. Noble Lords will, like me, wish to thank many organisations, such as Participation Works and the Children’s Rights Alliance for England, for their invaluable briefing. It is good to know that they are equally pleased with the Government’s decision, which the Minister will be pleased about.

The amendment is clearly necessary. The recently published Ofsted/DCSF survey of nearly 150,000 children and young people across 145 local authorities shows that when asked, “How much do you feel children’s and young people’s views are listened to in the running of your school?”, 34 per cent of them replied “not very much” or “not at all” and a further 7 per cent had not got a clue one way or another. The amendment, if implemented effectively, should ensure that significantly more children are involved in decisions that affect them in their education. Above all, it brings us much closer to implementing the provisions of the United Nations Convention on the Rights of the Child.

I may be going over the same ground as the noble Baroness, Lady Walmsley, but the Government will be drafting further regulations about issues in which children should be involved. Perhaps I can raise one or two points that the Minister may be able to address. First, when are the regulations likely to be issued? Secondly, does she agree that regulations should be broad in their nature? Will they cover the wide range of school functions, including matters related, for example, to the curriculum and schoolwide policy? Thirdly, the amendment specifically allows governing bodies to consult a representative group of pupils. Would that include, for example, school councils or other collective mechanisms in schools? Lastly, what moves do the Government intend to make to ensure that school leaders and children are aware of the new duty?

My Lords, I am so glad that the Government have recognised the importance of listening to children, 19 years after Recommendation 75 of the report into discipline in schools that I was fortunate enough to chair was enthusiastically accepted. One word of caution. I am sorry that it has to be in legislation. We are a litigious nation, and it would be very unfortunate if we were to have a rash of cases of parents saying, “You were not listening to my little Johnny”. Therefore, I am glad to see the flexibility written into the amendment—the variety of ways in which consultation can take place. I merely urge the Government to maintain that flexibility clearly in the regulations.

My Lords, I follow my noble friend Lord Elton. We on these Benches have spoken in support of the various permutations of the amendments at different stages of the Bill. I think that, on Report, we saw the simplest version and agreed that taking into account the ascertainable views of children was a desirable goal.

We have argued consistently throughout debates on the Bill and outside your Lordships' House that engaging with young people is a necessity. We have had long and thoughtful debates on the consequences that young people will suffer if they do not participate in education or training. None of us wants to see the worst-case scenario, which we have striven to avoid, in which young people will be punished if they insist in dropping away from their educational duties. It is my fervent hope that the engagement necessary to help those young people participate willingly and fully can be encouraged wherever possible. It should be quite plain that taking their views into account when decisions about their future are being taken is a good idea.

My Lords, I am delighted to add my name to that of the noble Baroness, Lady Walmsley, in support of this group of amendments. I am sure that the whole House will agree that the voice of pupils and young people is extremely important. As my noble friend Lord Young, the Under-Secretary of State with responsibility for skills and apprenticeships, said on Report, the Government are committed to involving young people as widely as possible in matters that affect them. That is why, in the Education Act 2002, we required schools to have regard to statutory guidance about consulting pupils in decisions that affect them.

However, on Report, noble Lords made persuasive arguments for us to go further and set out the merits of placing a duty on schools to listen to the views of pupils. These included benefits for young people such as the opportunity to develop critical thinking, advocacy and influencing skills, thereby helping every child to fulfil his or her potential. I fully support the views expressed by the noble Baronesses, Lady Walmsley, Lady Howe and Lady Verma, and I very much hear the words of caution of the noble Lord, Lord Elton, about a litigious society.

The new duty in these amendments sends a clear message about the importance that we place on the involvement of pupils, which the Children’s Rights Alliance for England also eloquently advocates, in matters that affect their education and school life. Through regulations, we intend to require governing bodies to invite views on a core set of policy matters. As a minimum, schools should seek and take account of pupils’ views on policies on the delivery of the curriculum, behaviour, the uniform, school food, health and safety, equalities and sustainability, not simply on what colour to paint the walls.

We are not minded to require governing bodies to take account of pupils’ views on matters such as staff appointments or the school budget. I am sure noble Lords will understand that. As the Government have said previously, we are also keen to ensure that a duty on schools does not end up with centralised prescription. Schools will not be restricted in the matters on which they can invite the views of pupils. The regulations will simply set out the issues on which they must invite views. If they want to go further, they can.

Key to the success of this amendment will be effective implementation. We intend to consult schools, schools’ representative bodies, and children and young people on the matters that will be in the regulations and on which governing bodies should invite and take account of pupils’ views. We will of course satisfy the concerns of the noble Baroness, Lady Howe, about consulting children and young people effectively. In line with the spirit of this amendment, it is important that time is taken for proper consultation on the regulations. We plan to undertake this during the spring term, which I believe means soon in Civil Service language.

The amendment tabled by the noble Baroness, Lady Walmsley, on Report included a duty on local authorities to consult children when exercising their school functions. It is important that local authorities take account of young people’s views, as they are already required to do when preparing their children and young persons’ plan.

The Local Government and Public Involvement in Health Act 2007, which your Lordships’ House spent many hours considering last year, introduced a duty on local authorities to involve local people in decisions—the duty to which the noble Baroness, Lady Walmsley, asked me to point. This means that, from 2009, local authorities in England will be required to involve local people in the discharge of their functions where they consider it appropriate. The statutory guidance produced alongside this duty makes it clear that local people include children and young people, and that information should be produced in a way that is accessible for different groups.

Given this new duty, and the fact that we do not want to impose overlapping duties on local authorities, we do not believe that a new duty is required specifically for local authorities’ school functions in England. The duty is already there for matters at a local authority level. The Local Government and Public Involvement in Health Act does not apply in Wales, so Amendment No. 6 would leave on the statute book the duty, in Section 176 of the Education Act 2002, on local authorities in Wales to have regard to any guidance issued by the National Assembly for Wales.

I want to be clear about the strength of this new duty. The noble Baroness asked whether the duty to “consider” is as strong as duties to “have due regard to” the views of children in other legislation. I reassure her that it is, and that governing bodies must do more than simply solicit pupils’ views. In drafting the new duty, we have sought a balance in defining a responsibility that is both unambiguous and manageable for school governing bodies. After all, that is what we need to do for it to have the desired effect. To this end, statutory guidance made under subsection (5) of the proposed new clause to be inserted by Amendment No. 5 will help schools to understand the scope of the new duty and will set out examples of how best to involve pupils and invite their views.

School self evaluation, which informs Ofsted inspection, features the role pupils play in decision-making within the school as part of the school’s discharge of its duty. The department is working with Ofsted to produce a set of indicators which will be consulted on shortly—in fact, I think that they are being consulted on now. They will form the basis for monitoring and tracking how schools discharge their duty on a consistent and systematic basis.

The noble Baroness, Lady Howe, asked how we would make schools aware of these new developments. We intend to reissue the guidance, Working Together: Giving Children and Young People a Say, to all schools, with a letter from my honourable friend Sarah McCarthy-Fry, the Minister responsible for citizenship, setting out how the new duty reinforces our policy commitment to engaging pupils’ views and involvement, and inviting schools to participate in the consultation on the regulations, which will underpin the new duty. I am also advised that we will bring it to the attention of schools via email.

I think that I may have not answered a question.

My Lords, in order to assist the Minister, perhaps I may say that my question was about when this new clause would be enacted.

My Lords, I am advised that we plan to enact this clause after the consultation. I can reassure the noble Baroness that we do not intend to drag our heels. With that, I hope noble Lords will feel able to support the amendment.

My Lords, I thank the Minister very sincerely for the helpful way in which she has answered my questions. I thank her for clarifying where the duty on local authorities lies in other legislation; for giving us examples of the functions that the duty would relate to in schools; and for telling us about the consultation and the date of that. She was very clear that the word “consider” is equivalent to the words “have regard to”. Finally, after the consultation, I hope that we will get the enactment of this clause. I am aware that Clause 170 tells us that various bits of this Bill will be enacted at different times. Obviously, it would not make sense to enact it before the consultation, but I hope that it will be enacted very soon after that. I thank the Minister for that clarification.

On Question, amendment agreed to.

moved Amendment No. 6:

moved Amendments Nos. 10 to 13:

moved Amendment No. 14:

moved Amendment No. 15:

moved Amendment No. 16:

My Lords, I beg to move that the Bill do now pass. In moving this Motion, I should like to detain your Lordships' House for a short while to say thank you to all those who have worked with us on the Bill. In particular, I should like to thank all Back-Bench Peers who have taken part in debates throughout this lengthy process, particularly the Back-Benchers on the Opposition Benches, who have been very patient with me as a new Minister, and the Cross-Benchers who have, as ever, shared their wisdom with us. Of course I would never want to forget the value of so many positive suggestions made by my noble friends on the Benches behind me. I offer warm thanks to Members on the Opposition Front Bench for their thoughtful and constructive contributions to the Bill. It has been a real honour to work with them. Lastly, I thank Anna Bush, Rupert Ainley and the very able Bill team who have supported me and my noble friends Lord Adonis and Lord Young. We are fortunate to have such able support in the department and I am very grateful to them.

This is an historic Bill. We are sending it back to the other place as a stronger, fuller and better Bill. As I said in closing the debate at Second Reading, I believe that it is a landmark Bill in education terms, possibly comparable with the Fisher Act of 1918. It is important that we press forward with it, given the climate we find ourselves in today.

Moved, That the Bill do now pass.—(Baroness Morgan of Drefelin.)

On Question, Bill passed, and returned to the Commons with amendments.

My Lords, I beg to move that the Bill be now further considered on Report.

Moved accordingly, and, on Question, Motion agreed to.

moved Amendment No. 47A:

My Lords, I thank the Minister for his explanation of the amendments, which come rather late in the day. The House will rightly have concerns about rushed legislation and the risk that it can pose of powers being used inappropriately. That is not just a theoretical remark. We need only think back to the use of the counterterrorism legislation to freeze Landsbanki’s assets to see a case in point—and I share that kind of worry.

Nothing that I am about to say should be taken as condoning inappropriate use of power. That said, we entirely agree with the Government that there is a pressing need to address gaps in our ability to tackle terrorism financing, proliferation financing and money-laundering. It is a policy objective that we on these Benches entirely share with the Government. We are therefore supportive of the thrust of the amendments. It is indeed worrying that, for some time, the Treasury has not had the powers to allow the UK to apply the full range of financial restrictions and measures recommended by the Financial Action Task Force. That has been a matter of international embarrassment to us and it is right that we should close that gap. As the Minister said, we are not at present able to require business to be aware of risks, take extra diligence or supply systematic reporting when transacting with jurisdictions of concern. Those are things that we need to be able to do. We also need to be able to limit or cease transactions with countries of concern. That is obviously a considerable power and needs to be drafted with great care.

The Financial Action Task Force issued a call for member states to address the gaps in their domestic legislation in October. Certainly, my colleagues on the Front Bench who deal with foreign affairs may wish to see us able to take action to respond to that. Given its subject matter, I agree that, while the Bill is not necessarily the ideal vehicle, it is the best we have available to put these powers in place at this time, and we think it reasonable to do so. It is the only vehicle, it has to be said, that will allow us to get these powers on the face of primary legislation by February 2009, the date of the next meeting of the Financial Action Task Force.

Taking all that into account, as the Minister said, we have sought to work closely with the Treasury from these Benches to secure agreement on amendments over the past week or so. In doing that, we specified a number of safeguards that were not in the original draft of the amendment that we saw. In particular, we focused on the need for annual reports to Parliament on the use of the proposed new powers. I know that the noble Baroness, Lady Miller, has tabled a probing amendment and, like the Minister, I am interested to see what information she thinks should be included in the report.

We went into fairly detailed and specific points in the drafting, so that the amendment put forward here is thought through. I thank the Minister for the constructive way in which he and his officials engaged with us. Our joint work is reflected in the amendment before us and in the Explanatory Notes sent to your Lordships' House last week. I am sorry to say that something seems to have gone wrong with the circulation of the Explanatory Memorandum. I did find it, but it was in the Library rather than the Printed Paper Office, so I fear that a number of noble Lords may not have seen it. That is a great pity because it is very helpful. I commend sight of it because it is a helpful explanation of what the Government are trying to do. Given that, it is all the more important, if noble Lords will allow me, to raise a number of points and questions on the Floor and have various assurances and points on the record. The Minister has already seen these questions so they will not come as a surprise.

We tabled a number of amendments based on our work with the Treasury. One is probing and I hope that the Government are able to accept the other two. My first two questions are related. When would a failure to comply with a direction from the Treasury incur a civil penalty as opposed to constituting an offence? It is important to have clarity on that. Will the Minister give the House some indicative examples beyond those included in the Explanatory Notes of what “appropriate” action by an enforcement authority would be? “Appropriate” is defined as,

“effective, proportionate and dissuasive”.

That point about the action of enforcement authorities leads on to my next question. The amendment makes clear that the powers of enforcement authorities and their officers are not exercisable in relation to items subject to legal privilege. Can the Minister explain how an enforcement officer would distinguish between items that are not subject to legal privilege and those that are? This is obviously included in the PACE codes. What if an item is viewed or removed, and is later found to be subject to legal privilege? What would its fate be?

My Lords, I wish to add to what the noble Baroness said about the Delegated Powers and Regulatory Reform Committee. Owing to the extremely short notice that was given to us to deal with a very substantial set of amendments, the committee has been unable to look at them so far but will consider them tomorrow. We may recommend that certain alterations should be considered, which would take the form of amendments to the provisions passed by your Lordships' House today. I cannot say what will happen until the committee has met, but I think that there may be one or two matters on which we will make recommendations.

My Lords, we on these Benches support the broad thrust of these amendments, which introduce important powers to help combat money-laundering and terrorist financing and proliferation by restricting financial interactions with the designated groups or individuals that the Minister talked about. We understand that this is a very important step which is in line with the recommendations of the FATF. Therefore, we are sympathetic to the introduction of the powers. However, we believe that it is necessary to introduce an amendment at least to seek some assurances from the Minister. These are very potent regulations with the ability to require, at the say-so of the Treasury, a business to completely cease trading with another business or with the whole of a Government. In fact, they constitute some of the widest powers on finance matters that I can remember coming through this House. As the Minister said, only any one of three conditions needs to be complied with. After the recent example, which the noble Baroness, Lady Neville-Jones, mentioned, of the Landsbanki Freezing Order, we really have to be very careful about hasty decision-making which can lead to problems later on.

Although I have heard the Minister’s explanation, I am surprised that the Government have introduced the amendments so late in the day. I emphasise that, and I would be grateful for the Minister’s comment on that. The FATF conducted its third mutual evaluation report of UK compliance and made its recommendations over a year ago, in June 2007, as I understand it. Why has the Treasury left it until now to introduce the amendments? Unless I have that date wrong, it has had more than a year to think about it. I would be grateful to understand why it has taken that length of time.

The difficulty created for Parliament by that lateness has been compounded by the fact that the Government have presented Members of this House with a moving target. I am very grateful to the Minister for giving us sight of the amendments in advance, and to members of his team, who went into considerable detail on questions that my researchers raised. However, the Government have changed the amendments over the past few days, so that it almost seems as if the Treasury is conducting an ad hoc consultation right up to the wire. Its willingness to discuss the amendments in depth with us has helped that, but it is certainly a very difficult situation to deal with.

My second point relates to the mutual evaluation report published by the FATF last year. Why has the Minister chosen to react to only a small selection of the FATF recommendations in bringing forward these recommendations? The UK has a comparatively good record on powers to combat money laundering and terrorist financing, and some of the suggestions made by the FATF have since been met in the third EU money laundering directive, but other FATF concerns still seem to be outstanding. For example, in 2007, its analysis of preventive measures in this country found the UK to be non-compliant on obligations for politically exposed persons and correspondent banking, and it had concerns about record keeping in shell banks. Will the Minister give the House an assurance on all the other recommendations made by the FATF in June 2007, including institutional concerns, for example, as to why the UK does not maintain comprehensive statistics on cross-border disclosures or the breakdown of offences and the number of requests granted for mutual legal aid assistance?

I tabled Amendment No. 61B to compensate for the scrutiny gap that comes with the speed with which these powers are being introduced. We are grateful that the Minister has decided to include the annual report to Parliament, which we considered to be the biggest gap in the amendments that were initially brought forward. My amendment is intended to probe what would be in that report. I would not want to see the amendment added to the Bill, because by specifying exactly what should be in the report, one is bound to overlook something. It would then be said, “That is not in the report because it was not specified”.

I would very much like the Minister to comment on the specific issues raised by my amendment. Of particular concern is the fact that under proposed new paragraph 3(1)(a), the Treasury can issue a direction to a particular person, which could be a financial institution, without any sort of parliamentary oversight. For directions that apply to a sector, on the other hand, an order would have to be laid before Parliament.

The Minister’s team tells me that the reason why individual firms could not enjoy the same parliamentary protection is that it would be resource-intensive and would waste time. However, they also told me that they do not imagine that the power would be used very often; but those arguments seem somewhat contradictory.

How often do the Government anticipate using these powers to issue directions to sectors and particular persons? I recognise that that might be a difficult question to answer, but there must be a little bit of history to rely on. The government briefing suggests that they are ready to use these powers in relation to Iran. Perhaps that provides some indication of the number of occasions on which they intend to use them, if they have carefully looked into this matter. Because of these concerns, my amendment requires the justification of the use of a direction against a person, rather than a sector.

My amendment then requires the Government to provide a breakdown of each of their three new powers and the countries to which they will apply. In addition, I specify that the Government should disclose the names of businesses affected and a summary of the intelligence that backs up the decisions, with a safeguard specified at the end of my amendment that national and commercial interests should be protected. That detail may be so redacted as to be somewhat worthless, but I have included it as a discussion point for the Minister. In a major piece of new legislation we need as much detail as possible on what will be in the report. I would be grateful for replies on those issues.

My Lords, like the noble Baronesses, Lady Neville-Jones and Lady Miller of Chilthorne Domer, I support the general thrust of this group of amendments, which are important in addressing a genuine and real problem. Like them, too, I have some concerns about the amount of time that noble Lords have had to consider the amendments, but I am particularly grateful to my noble friend Lord Myners for the considerable efforts that he has made in the past week or so to allow the fullest possible consideration of these detailed changes.

One of the problems with these provisions appearing in a counterterrorism Bill, as they have had to because of the timetable with which we are now faced, is that this will lead, when the powers are used, to the sort of comments that we have heard in your Lordships’ House today about the use of so-called counterterrorist powers in freezing the assets of Landsbanki. That is unfortunate because, as I understand the situation, the powers used in that case were not specifically counterterrorism powers but, as they resided in a Bill that was primarily about counterterrorism, the assumption was that they were. There is a danger that a similar situation will arise in respect of these provisions, which are, quite properly, much broader than counterterrorism, because they will reside in what will ultimately be an Act that relates to counterterrorism. That is a problem that we have to face and the greatest possible clarity must be given to explanations relating to this.

I have a specific question, which I hope that my noble friend can answer. He assured us that estate agents, casino owners and lawyers were not the subject of this Bill. We all acknowledge that they are popular categories of persons among some of your Lordships, but I wondered whether paragraph 8(1) of the new schedule would enable the Treasury to amend the paragraphs to which it refers to include other categories of persons. Perhaps we may have some clarity on that when my noble friend replies.

My general point is that, if a country’s arrangements are so weak that it is easy for people to engage in money-laundering activities, the financing of terrorist activities or the financing of weapons of mass destruction, it is imperative that as a nation we have put in place powers that mean that people in this country who are engaged in trade or financial transactions with those countries are subject to the widest possible warnings and the widest possible expectations of what they should do to safeguard the position. Without such powers, we may not know what people in this country are implicitly supporting in terms of money-laundering. These provisions are important for that reason.

My Lords, I underline what the noble Lord, Lord Goodhart, said as chairman of the Delegated Powers Committee. These are quite complex amendments; I find them extremely complex to read, as they relate to the area that I normally do not think about at all—finance. However, they are an important proposed addition to the Bill and no one is objecting to them.

The noble Lord, Lord Goodhart, pointed out that not only does the House have to consider the amendments at short notice but the Delegated Powers Committee has to, too; it is meeting tomorrow. Having been a member of that committee, I know that quite often there are emergency meetings—they have to happen—and that the committee attempts to respond to emergencies. However, from what we have been told, this is a somewhat unnecessary emergency. The Delegated Powers Committee could make a mistake because of speed. I do not suggest that it will—I am sure that it will not—but it could.

The Government should not move the amendments today but should wait until Third Reading so that the House can consider what the Delegated Powers Committee says. The order-making powers in the amendments are important and this simply must not be done wrong. That may sound a silly suggestion to the Minister but I do not think that it is; the Government would do well to wait and move the amendments at Third Reading, when the House could consider the whole thing properly.

My Lords, I endorse what has been said about the general thrust of the amendments, which I of course support, and what my noble friend Lady Carnegy said about complexity and the dangers that go with attempting to legislate at such speed, albeit in necessary circumstances.

I have one small point to raise, which I have not made the subject of an amendment. It is a faint point that I raise in the interests of consistency about the drafting in line 213 of government Amendment No. 61A, which is to be found on page 12 of the Marshalled List that was published on 7 November—I hope that there has not been a subsequent one. My point gives rise to the question whether there is any difference in meaning between undertaking enhanced customer due diligence measures and taking enhanced customer due diligence measures. This is very much a nit-picking point but nits, if left undealt with, can turn very toxic. It is a point for Committee, but there is no opportunity to take it elsewhere.

Paragraph 10(1) of the proposed new schedule, beginning on line 213, states:

“A direction may require a relevant person to undertake enhanced customer due diligence measures”.

Paragraph 10(2), states:

“The direction may do either or both of the following … impose a general obligation to take enhanced customer due diligence measures”,

and so on. Immediately after that, we read that the direction may,

“require a relevant person to undertake specific measures identified or described in the direction”.

I do not think that a technical distinction is intended between taking and undertaking enhanced customer due diligence measures. Paragraph 11(2) states:

“The direction may do either or both of the following … impose a general obligation to undertake enhanced ongoing monitoring”,

and so on. There is scope for tidying this up, in case leaving it at large gives rise, in some later litigation, to a quite unintended distinction and to difficulty.

My Lords, I shall speak to the amendments in my name. One problem with legislation being produced in this way at a very late stage in the consideration of a Bill is that it is impossible fully to understand its purpose. Consequently, my amendments are largely directed at clarification and are probing. I do not propose to refer to Amendment No. 61AC but, so far as concerns Amendment No. 61AD, I ask the Minister why offences of this nature require jurisdiction throughout the United Kingdom. Paragraph 34 of the new schedule proposed in Amendment No. 61A says:

“Where an offence under this Schedule is committed … proceedings for the offence may be taken at any place in the United Kingdom, and … the offence may for all incidental purposes be treated as having been committed at any such place”.

I follow the argument that it mirrors the provisions of Clause 29 in the Bill but I am not sure why it is applicable to offences of this type. I look forward to hearing the explanation.

My next amendments refer to the time limits of summary proceedings in paragraph 35 of the proposed new schedule. Normally magistrates’ courts have limited jurisdiction for six months and sometimes 12 months, but apparently jurisdiction may be claimed in a magistrates’ court,

“at any time within three years after the commission of the offence, and … within twelve months after the date on which evidence sufficient in the opinion of the prosecutor to justify the proceedings comes to the knowledge of the prosecutor”.

Why do we require the jurisdiction of magistrates to be extended in this way? Paragraph 35(4) states that,

“a certificate of the prosecutor … as to the date on which such evidence … came to their notice is conclusive evidence”.

In other words, the prosecutor can say, “Well, we didn’t think in this particular month that there was a case but we did in a later month, and that is conclusive. Our view is absolutely conclusive as to when the time runs”. That strikes me as an odd sort of provision, which goes against many of the principles relating to time limits in a magistrates’ court.

With regard to paragraph 36 and my remaining amendments, I question why an officer of a company or of a body corporate should be guilty of an offence not if he or the company does something with his connivance or consent but merely if he is neglectful. Why do criminal sanctions have to be applied and why is negligence brought into the criminal concept in this schedule? I should be grateful for explanations.

Had we had these provisions before us at the beginning of our consideration of the Bill, there would have been no need for these questions to be raised. However, they have been thrown at us at the very end, when we have only Report and Third Reading in which to take stock of what is being assessed. That makes it extremely difficult for us to pass legislation, particularly when it appears to be in breach of some of the principles of jurisdiction and of the time limits to which we have always adhered in this country.

My Lords, this has been an interesting, helpful and illuminating debate, and I thank all those who have participated in it. I also recognise that there is a great deal of good will in the House on this issue, for which I am very grateful, as I am for the constructive basis of the comments that have been made. I shall endeavour to cover the various comments and questions. If I fail to deal with any of them, I shall examine Hansard and communicate with an explanation with those who participated in the debate.

I start by thanking the noble Baroness, Lady Neville-Jones, for her helpful contribution and expression of support. I have apologised for the lateness with which this legislation has been brought to the House but have explained that we judge it to be a matter of urgency. The point about lateness was also made by a number of other Peers, including the noble Baroness, Lady Miller, my noble friend Lord Harris and the noble Lord, Lord Thomas. I apologise to them as well for the lateness. I also appreciate, however, that the noble Baroness, Lady Neville-Jones, said that she regards this Bill as in some ways the least-worst option as the carrier for this particular legislation. My noble friend Lord Harris made a point about the affirmative order on the Landsbanki freezing and was right to point out that the full wording of the Act was not limited to terrorism but had wider coverage. That is also the case with this Bill.

My Lords, before the Minister leaves the point about lateness, will he comment on the fact that the FATF made the evaluation in June 2007? The Treasury has had over a year.

My Lords, I was going to come to that issue. I shall do so promptly. The first thing to note is that the UK’s record is among the most compliant in the world on FATF measures. No country is able to satisfy all the FATF conditions but we have a very strong record of achievement in that respect. We have taken action more recently to comply with further FATF requirements, including new money-laundering regulations in December 2007, and we have brought in regulations on politically exposed persons and shell banks. So we have taken action to address some of the areas where the FATF said that we could do better. We wish to be exemplary and lead others in the actions that we are taking.

The noble Baroness, Lady Neville-Jones, asked whether there would be a civil or criminal penalty. Each supervisory body has an established set of guidelines and precedents from the wider money-laundering regulations. They will adopt the same approach here as they are already using in the implementation of those regulations. In particular, they will take into account the nature, seriousness and impact of any non-compliance. Generally, I would expect civil penalties to be applied when a failure to comply is less serious in manner and consequence.

The noble Baroness, Lady Neville-Jones, also asked about the use of the term “appropriate”. This replicates a provision in the money-laundering regulations and will depend on the circumstances of the case. Circumstantial factors that will be taken into consideration include the deterrent effect and the size and capability of the financial resources of a firm that might be in receipt of a civil penalty.

The noble Baroness, Lady Neville-Jones, asked about legal privilege. The approach to legal privilege in the Bill and in this amendment will be carried over from existing money-laundering regulations. Supervisors are open about their policies on handling issues of legal privilege. For instance, the FSA has a number of guides on its website, such as the Decision Procedure and Penalties Manual and the Enforcement Guide Review 2008, which usefully highlight its approach to such issues. Furthermore, enforcement officers will have ready access to legal advice about privilege. The issues of legal privilege raised here are therefore very similar to those that already arise under existing legislation.

The noble Baroness, Lady Neville-Jones, also asked about HMRC and the amendment of its review procedures. HMRC has not yet finalised the order amending its review procedures, so I am unable to say exactly what final form they might take. The order will be an affirmative resolution order, so the House will have an opportunity appropriately to consider it.

I believe that the noble Baroness, Lady Neville-Jones, asked about the functions of the tribunals set out in proposed new paragraph 28(6). These have not yet been transferred to the first-tier or upper-tier tribunal. Until that happens, the Treasury will need to make an order providing for appeals to be made to the existing tribunals.

The noble Baroness, Lady Neville-Jones, raised two other issues on which I shall comment. She asked that we agree to review various pieces of legislation providing for powers to impose financial restrictions and consider the need to consolidate them. I fully agree with the request; it makes considerable sense, and we wish to avoid any situation where there are inconsistencies. We will do that as soon as we can in a manner consistent with doing the job thoroughly and professionally. Finally, she asked whether we wanted further to amend the Long Title of the Bill. I am very happy to give that further consideration.

I am grateful to the noble Lord, Lord Goodhart, for his comments and to the noble Baroness, Lady Carnegy, for her observations on the Delegated Powers and Regulatory Reform Committee. In my short time in Parliament I have come to appreciate the respect and authority which this committee commands among noble Lords. We look forward to seeing the outcome of its consideration of the Bill when it meets tomorrow, and noble Lords will have ample opportunity to take its comments into consideration when the Bill comes back to the House. I apologise to the committee again that it is being placed under time pressure, but I do so in the knowledge, based on everything that I have been told, that it will do a thoroughly professional piece of work despite the time pressure under which we have placed it.

I have already partly addressed the comments of the noble Baroness, Lady Miller. The UK is, as I say, largely compliant with a significant number of the FATF’s measures of effectiveness and among the best jurisdictions. On this basis, only the USA and Belgium scored higher than the UK. She asked why we are acting only now. That is an aspect of the lateness question. There has been a changing dynamic in the FATF. The way in which it is operating means that, among other things, we have concluded that we need the power to take unilateral decisions if necessary. I cited in particular the difficulty we had with using countermeasures and whether those were included in any statement made by the FATF. This problem became evident to us only at the October meeting of the FATF. We realised then that we had a problem of which we were not previously aware because the FATF was changing the way in which it was approaching issues and the language it was using in its recommendations.

The noble Baroness, Lady Miller, asked whether we will use the powers against Iran. The Prime Minister, in his powerful speech at the Guildhall last night, urged Iran to be part of a world that is addressing the issues of terrorism and to pull away from any actions designed to facilitate the proliferation of weapons of mass destruction. We want that to be the case and will use all our diplomatic resources to secure that objective. At the same time, we recognise that Iran may not choose to do that. If that is the case, the legislation will contain powers that we would be obliged to consider in certain circumstances if the evidence so justified.

I believe that I have dealt with the point raised by the noble Baroness, Lady Carnegy, about waiting for Third Reading. Obviously, we await the outcome of the Delegated Powers and Regulatory Reform Committee meeting under the chairmanship of the noble Lord, Lord Goodhart, tomorrow.

I shall now give the government view on some of the amendments. I thank the noble Baroness, Lady Neville-Jones, for raising the point about proportionality. Proportionality is a very important requirement for the operation of any administrative power of this type, and I can assure the House that it will be a key consideration in the exercise of these powers. In any use of these powers, Ministers will seek to balance the need to take effective action against the potential impact on UK business. That will require careful consideration of the money-laundering, terrorist-financing or proliferation risks, and of the burden of any requirements imposed on business. I am therefore happy to recognise the need for proportionality in the Treasury’s exercise of the powers. If the noble Baroness will be content, the Government will therefore table an amendment at Third Reading to include a provision that gives proper effect to that.

I understand the reasoning behind Amendment No. 61AB, but it would remove an important provision that it is necessary to retain. The Treasury needs the ability to act quickly, if necessary, to give effect to orders containing general restrictions, but these should be subject to ultimate parliamentary approval. Removing the provision could unnecessarily inhibit our ability to act. However, let me reassure the House again that we will be concerned that use of the powers does not impact unduly on business. To that end, I have given a commitment to establish a formal requirement for proportionality.

Nevertheless, there may well be circumstances where a direction will require businesses transacting with jurisdictions of high risk to limit or cease business. In some cases, that will require the cessation of current business, and it is important that we can implement that power quickly. It will, of course, be possible for any firm affected by a direction to apply for a licence to exempt transactions from its scope. That will be an important means in appropriate cases for firms to mitigate the effect of any direction.

Where an order is not approved by Parliament, I can assure the House that we would consider the circumstances carefully to see whether compensation is justified. Ultimately, the courts could in appropriate cases consider whether a firm was due any compensation as a result of actions taken to comply with a direction that subsequently ceased to have effect or as a result of an order failing to secure approval. I therefore cannot agree to the amendment, but I hope that the noble Baroness, Lady Neville-Jones, will be satisfied with that response.

I appreciate the points made in the tabling of Amendment No. 61AC, but it is important to retain that provision, which provides an appropriate sanction for people who attempt to obtain a licence by duplicity. We have made provision for a licensing regime to enable the Treasury to reduce any avoidable impacts on third parties from a direction requiring the limitation or cessation of business.

I understand the significant issues mentioned by noble Lords in respect of Amendment No. 61AD. The provision has a dual purpose: to give UK courts jurisdiction over offences committed outside the UK; and to provide for UK-wide jurisdiction for offences regardless of where the offence took place. I say to the noble Lord, Lord Thomas, that such provisions in respect of offences committed outside the UK exist in other legislation—for instance, in Section 17 of the Terrorism Act 2006. We consider that such provision is necessary, given that directions may apply to action outside the UK and that offences may be committed by action outside the UK.

The provision replicates Clause 29, which deals with specific terrorist offences. Given the nature of the offences that we are discussing in relation to these powers, namely the breaching of directions, I accept that they are of a different order to such terrorist offences, and that there is therefore less requirement for such provision in relation to offences committed in the UK. Therefore, although I cannot agree to the amendment, the Government are prepared to table an amendment at Third Reading so that the provision applies only to offences committed outside the UK.

Amendments Nos. 61AE to 61AK all concern the same principle of the appropriate time limits for summary proceedings across the three jurisdictions in which prosecutions might be commenced. I believe that it is necessary to provide for extensions of the standard time limits due to the nature of the offences concerned. In these circumstances, it is quite possible that an offence may not come to light for some time, and that the subsequent investigation into it may be a complicated process involving the analysis of large amounts of documentation and computer records concerning complex transactions.

Furthermore, it is not unusual to extend the time limits by this amount. I note it has been done, for instance, in the Terrorism (United Nations Measures) Order 2006; by Section 1128 of the Companies Act 2006; and by Section 431 of the Insolvency Act 1986. I hope that that will reassure the House that the provisions are useful and consistent with other legislation, and that noble Lords will understand why I cannot agree to the amendments.

I note the points made by the noble Lord, Lord Thomas, on Amendment No. 61AL, but this is not an unusual provision. It is simply designed to prevent unjustified delay to any proceedings resulting from argument over precise dates. Similar provisions exist in other legislation, including the legislation I just mentioned.

I shall deal with Amendments Nos. 61AM, 61AN and 61AP together, as they concern the same issue: that if an offence committed by a company is shown to be attributable to neglect of an officer of the company, the officer is guilty of an offence as well. Subsequent sub-paragraphs in the schedule replicate that provision in respect of partnerships and unincorporated associations.

I appreciate the concern of the noble Lord, Lord Thomas, that that makes individuals potentially liable for non-compliance with a direction. However, I think that that is justified. It is a standard provision in relation to criminal offences that may be committed by a company, and it replicates the existing situation under the money-laundering regulations. Similar provisions exist in a number of other pieces of legislation, including the Energy Act 2004, the Animal Welfare Act 2006 and Section 78 of the Anti-social Behaviour Act 2003.

An important point was raised in connection with Amendment No. 61B. We are keen to provide Parliament with appropriate information on the Treasury's use of the powers. Paragraph 38 of the schedule makes provision for the Treasury to submit an annual report to Parliament that sets out how it exercises those powers. The noble Baroness, Lady Miller, said that that was a probing amendment. She kindly said that it was in the nature of these things that whatever one listed, there would always be something that one forgot—rather like packing for a holiday—so it is probably not right to be prescriptive about the content. However, the general sense of the points that she made is well taken.

The Government feel that their approach is the right one from a legislative point of view. It would be unusual for specific details to be included in primary legislation. Given that much of this information would already be in the public domain as a result of the Treasury providing it to Parliament for the making of an order and/or subsequently publicising directions, it would be helpful to maintain some flexibility in the preparation of each report. I assure noble Lords that the Government intend the Treasury’s annual report to be helpful and informative.

On Amendment No. 61A, I should point out that guidance by industry bodies and supervisors has been of great assistance in enabling firms to implement the money-laundering regulations consistently and on a risk-sensitive basis. This guidance was developed by the supervisors and industry-led bodies, and was ultimately approved by the Treasury. The Treasury expects in this instance as well to help supervisors and others to develop guidance to ensure that any directions issued under the legislation can be implemented effectively and without undue burdens on business. We have begun initial discussions and engagement with the industry, including the British Bankers’ Association, to consider potential issues of implementation. Given this, I am ready to table an amendment at Third Reading to provide for such assistance to be given, although such a provision is not strictly necessary. We will consult noble Lords on the wording of that amendment.

I can best say to the noble and learned Lord, Lord Mayhew, that I undertake to consider the point that he made about drafting. We will bear in mind his careful and precise observations.

In conclusion, I thank all noble Lords for their constructive engagement. I hope that I have been able to respond fully to their questions about these important issues. If I have failed to do so, I apologise. I will be happy to answer any questions that I may have missed. Alternatively, I will write to noble Lords and to those who have participated in the debate. I very much hope that the House will support the amendment—again, I apologise for its late appearance—and that it will also support the other government amendments in this group.

My Lords, will the Minister clarify one point? When dealing with what the noble Baroness, Lady Carnegy, said, he used words that indicated that he might be proposing to accept what she suggested and to delay adopting these amendments until a later date. I should make it clear on behalf of the Delegated Powers and Regulatory Reform Committee that I did not and would not ask for that, because we can deal adequately with any necessary amendments by tabling them at Third Reading as amendments to the new schedule.

My Lords, I thank the noble Lord for giving me the opportunity to clarify anything that I misspoke, as Mrs Clinton would have said. He correctly summarised my intention, for which I thank him.

On Question, amendment agreed to.

Clause 62 [Application to set aside asset freezing decision]:

moved Amendments Nos. 47B and 47C:

moved Amendment No. 47D:

moved Amendments Nos. 47E and 47F:

moved Amendments Nos. 47G and 47H:

moved Amendments Nos. 47J to 47N:

moved Amendment No. 47P:

moved Amendment No. 47Q:

moved Amendment No. 47R:

moved Amendment No. 48:

My Lords, I am grateful to the noble Baroness, Lady Miller, for dealing with this matter in Committee and again today so very effectively. I have added my name to the amendment in order to support the noble Baroness. I have little to add, except to say that we now have two inquests pending. Two people have been killed in circumstances that require an inquest. Until the law is clarified it seems that these inquests will remain in limbo.

The Minister has encouraged us to look forward to the forthcoming coroners Bill. Even if that were to take place as we have been led to expect and the inquest was subsequently dealt with expeditiously, the family would have had to wait at least four years before there was a conclusion to the matter. If the forthcoming legislation does not come in as planned, it may be very much longer for the first case that we are discussing.

The obligation under Article 2 of the European Convention on Human Rights to have a prompt inquiry into a death at the hands of an agent of the state is a heavy one. It is a vital part of the state’s accountability to its citizens. At the moment, this cannot happen in those cases because of the anomaly that this amendment seeks to remove. As the noble Baroness, Lady Miller, has said, I, too, hope that the Minister has had second thoughts about his objections to this provision and will be able to support what is being proposed.

My Lords, I rise from the Opposition Benches to support the amendment tabled by the noble Baronesses, Lady Miller and Lady Stern.

Article 2 of the European Convention on Human Rights places a duty on the state to investigate any death in custody by means of an inquiry which is capable of enabling those responsible to be identified and, if necessary, punished. I trust that that is indisputable.

However, under existing English law, coroners are not permitted to see, let alone disclose to interested parties, any Regulation of Investigatory Powers Act 2005 material, even if such evidence is crucial in ascertaining how a person came to die. The consequence of that state of affairs is that our coronial law is not Article 2 compliant.

In Committee, the noble Lord, Lord West of Spithead, said that the amendment would allow,

“wide disclosure of very sensitive material”.—[Official Report, 21/10/08; col. 1063.]

On any objective assessment of the situation, this simply cannot be the case. The proposed change to the Bill would merely bring the treatment of such material into line with the way it is treated in criminal proceedings, generally.

For the terms of the amendment to be applicable in any given set of circumstances, the coroner would have to be a High Court judge, appointed under Section 14 of the Coroners Act 1988. The material in issue would be only RIPA-related material and the judge would have to be satisfied that it was essential to discovering how someone died before authorising its disclosure to the family of the deceased and to the jury. Reporting restrictions, in-camera hearings and confidentiality undertakings are all available to the judge to prevent matters receiving a wider audience.

My Lords, I was glad that the noble Baroness, Lady Miller, said that she did not intend opening the whole debate as regards moving details of coroners and inquests from this Bill. After very extensive consultation with noble Lords, we correctly decided that it was best to withdraw this aspect and that we would address it in the context of a much more detailed look at all aspects of coroners and inquests in future legislation.

There has been mention of ongoing cases. Clearly, I cannot touch on or talk about those in the Chamber. All I would say, even though I know that the noble Baroness, Lady Miller, did not mean to raise the issue in that way, is that we have to be very careful about raising issues such as “shoot-to-kill” as if it is something that is under way. It is very dangerous to mention that on the Floor of the House because there is no way that that is the case.

I shall address in detail some of the points made. It is worth saying again that, for a number of reasons, sensitive material cannot be publicly disclosed without harming the public interest. Such material can cause great damage to national security and police investigations of serious organised crime. Indeed, in terrorism cases we have seen how rapidly the people who wish to cause us harm pick up on the techniques we use. Even if they are mentioned only a little bit, those people react by not using certain equipment and so on. As has been said, Article 2 of the ECHR makes it obligatory to hold an investigation into deaths in certain circumstances; there is no discretion not to hold such an investigation. Accordingly, and unlike in the case of criminal prosecutions, the state cannot protect this sensitive material simply by discontinuing the investigation. A means must be found for bringing sensitive material before an independent fact finder while protecting the public interests involved.

In order to address this problem in relation to inquests, we intend to bring forward proposals in legislation regarding coroners. That would permit the Secretary of State to issue a certificate requiring an inquest to be held without a jury if, in the opinion of the Secretary of State, the inquest would involve the consideration of material that, in the public interest, should not be made public, including to a jury or interested persons. As a result of certification, the finder of fact would be a coroner rather than a jury, as already occurs in 98 per cent of inquests. The coroner, who would continue to be a fully independent judicial office holder, would be security cleared to receive all relevant material. Any parts of the inquest involving the consideration of material which should not be disclosed publicly would be held in private in the absence of the next of kin. Where necessary, the coroner would be able to appoint independent security-cleared counsel to the inquest to represent the interests of the next of kin and probe all the relevant material on their behalf, including the sensitive material, thereby ensuring that the interests of the family are properly protected. The inquest would, of course, continue to take place in public as far as possible and the next of kin would be able to attend all public sessions with their legal representatives where they have them. Taken together, these proposals will ensure that coroners’ inquests can always be compatible with Article 2 of the ECHR.

I have to disagree with the noble Baroness, Lady Miller, because I believe that Amendment No. 48 would allow for the wide disclosure of very sensitive intercept material not just to the coroner but also to juries and other interested parties such as bereaved families. This creates the potential for public disclosure of all intercept material regardless of sensitivity, thereby undermining the very real need in some circumstances to protect from public disclosure such material and the capabilities and techniques by which it was obtained. While Amendment No. 48 would, in principle, allow the finder of fact to have access to all the relevant material, it does so at the expense of preserving the “ring of secrecy” which is necessary to protect sensitive techniques, capabilities and sources. It cannot be overemphasised how valuable those capabilities are to the nation. Certainly for over 40 years in peace and war, I have made use of those capabilities; I know that they save lives and help us stop those who want to damage our nation.

Disclosure of intercept capabilities would have a real and damaging impact on our ability to gather the intelligence that is vital to our national security. The Chilcot review on intercept as evidence recognised this, and that is why we are taking forward a detailed programme of work to ensure that we can meet the tests set out in the review and allow intercept to be used safely, without putting national security at risk. This amendment affords no safeguards or protections. We recognise the importance of ensuring that bereaved relatives and other properly interested persons should be involved in as much of an inquest as possible. But it is necessary to strike a balance between the interests of the families and the public interest when there is material that is central to the inquest but which cannot be disclosed publicly. We are confident that the measures we intend to bring forward in coroners’ legislation, with the relevant safeguards, will strike the right balance of enabling the coroner to consider all the relevant material while protecting sensitive material from public disclosure contrary to the public interest.

I am aware of the delay—it is an unpleasant and unfortunate delay—but it is right that we should get this legislation correct because we are considering issues that are so important to the nation that we cannot afford to rush it. I know that two cases are outstanding, but this has to be right. The Government will therefore resist Amendments Nos. 48 and 62, which makes a consequential amendment to the Long Title adding a reference to inquests.

My Lords, the amendment is drafted entirely in relation to England and Wales, and the Minister’s reply is likewise drafted. Presumably future legislation in so far as it deals with matters related to terrorism, which are reserved under the Scotland Act, must be put right in relation to the whole of the United Kingdom. Will the future coroners’ legislation he referred to be balanced by Scots legislation that does the same thing?

My Lords, I shall get back to the noble Baroness on that. I am not trying to forget Scotland—I was educated there—but there are some difficult nuances that we found during our work on the Bill. I shall respond in writing.

My Lords, I am grateful to the noble Baroness, Lady Stern, and the noble Lord, Lord Kingsland, for their support. I am very disappointed with the Minister’s reply because it does not take us any further forward than his response in Committee. In my opinion he has not addressed the question of why a High Court judge can assess such material in criminal procedures of every other kind when coming to a judicial view as to what material should not be disclosed, but not in inquests. I do not feel that the Government’s position is logical.

The Minister took me to task by saying that it was dangerous to use a phrase like “shoot to kill policy”, and I agree that it is. I said in my introduction that we must avoid at all costs a view on why agents of the state act in this way. However, the only way to make such a judgment is through holding an inquest to discover what actually went on. In the absence of any further explanation than we had in Committee, I have no option but to test the opinion of the House.

moved Amendment No. 48A:

My Lords, as I have said before, I intervene rarely in these debates as the independent reviewer of terrorism legislation, but I thought that I ought to intervene on this occasion because I think that I am largely responsible for the idea that the term “racial” should be inserted into the definition. I shall explain why.

I was asked to carry out a review of the definition of terrorism in UK law and did so. In carrying out that review, I issued a call, which was advertised publicly, for papers and for views. I received a great many written views in formal documents, by e-mail and in other ways. I also took a roving seminar out to five major cities. I was assisted in inviting to those seminars members of the public, members of the academic community and members of community groups. The attendance at the seminars was variable but overall they were well attended.

One of the messages that came across from the representations that I received was that black and minority ethnic communities felt that the inclusion of a term such as “racial” in the definition would make it clear that activities such as those of, for example, the white supremacist movements that have arisen in certain parts of the United States could, in certain circumstances, be regarded as terrorist activities. It seemed important that, if we could do so without damaging the definition in any way, we should meet those concerns, so I recommended that the term “racial” should be added, or something along those lines.

I am not sure, if I may say so with respect, that it is helpful to parse the words and their many possible meanings on the Floor of either House of Parliament. I think that I could argue the case for “racial” being distinct from the other words that are included, “political, religious or ideological”. That does not mean that every racial cause would be treated as terrorist. Every ideological cause is not treated as terrorist; for example, it has become the practice to deal with animal rights terrorism not using terrorist provisions—at least, wherever possible—but under criminal law without giving the protagonists the cachet of regarding themselves, or being regarded, as terrorists. The same could apply to racial causes.

I say to your Lordships, without delaying the House further, that the term is included to meet a perception that is potentially damaging to the reputation of the law and which can be met without doing any damage to the integrity of the law.

My Lords, as has been said, this amendment to the definition follows recommendations by the noble Lord, Lord Carlile. We accepted this recommendation in our response to his report on 7 June 2007. The change in the definition of terrorism is an opportunity to make it clear that terrorism includes acts and threats done for the purpose of advancing a racial cause.

I do not deny that acts of terrorism motivated by a racial cause are already covered by the definition, since such acts are also likely to be political or ideological. However, the same could also be said of acts of terrorism motivated by a religious cause, but Parliament chose to include religiously motivated terrorism in the definition of terrorism. The position that I have elaborated on makes it important that we now include racially motivated terrorism in the definition. The reason is that, with the exclusion from the definition of racially motivated terrorism and the inclusion of religiously motivated terrorism, there is potential for an argument to be made that racially motivated terrorism has been specifically excluded. More important, there is an opportunity for perceptions to be formed about that. As the noble Lord mentioned, this came out strongly in all his regional visits and the various seminars that he held.

That argument can be developed, too, as religious and racial motivation are so often intertwined in other pieces of legislation—for example, in racial and religious hatred and racially and religiously aggravated offences. Racial motivation is also referred to alongside other motivations, such as religion and politics, in the definitions of terrorism used by the United Nations in Resolution 1566 and by the Council of Europe Convention on the Prevention of Terrorism. As I said, perception is important and we should be clear that those who commit acts of terrorism with a racial motivation are covered by our legislation.

We are making this change to the definition of terrorism following a long and detailed study on the issue by the noble Lord, Lord Carlile, who has just made the case for it far more eloquently than I could. We believe that the change will help to clarify our legislation. As I made clear on the first day of Report, I have made every effort to take the Bill forward on a consensual basis. Where possible, we should all try to reach agreement on measures that are relatively uncontentious and relatively minor in their effect. This is such a measure and I have heard nothing said today that would suggest that retaining this clause in the Bill would cause any problems. It therefore seems odd that this is something on which the House could possibly divide. Where there are major differences in this House we should of course put the issue to the vote; I would expect that to be the case. This does not seem to be such an issue, however, and I ask the noble Baroness to withdraw the amendment.

My Lords, I confess that I remain unpersuaded that it is a good idea—or good legislation—to introduce unnecessary categories, but I shall leave it at that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 48B:

My Lords, what I have to say is not about the merits or otherwise of control orders, which is subject to another debate. In my experience, prosecution is always preferred as the answer to dealing with some of these problems. Control orders came into being for those cases where the evidence was insufficient or did not exist sufficiently because it was based on intelligence. People from my service and the police always prefer prosecution if that is feasible.

Secondly, from my experience, and perhaps without the formality of the second amendment, the case for prosecution was regularly reviewed, much more frequently than every three months. It was far preferable to go down that route if at any stage it was possible. The case for prosecution was constantly and regularly considered.

As to whether the Secretary of State has available to her material that is not available to the police, I find that really strange. The intelligence that my service and others produced was shared with the police and summarised for the Secretary of State or given to her in its entirety if she so wished. I am mystified by the suggestion that the police would not have access to that material, because that is certainly not my experience. I am not taking a view on the amendment as such, but that is the background from my experience of how these cases are handled.

My Lords, the Minister will know that we on these Benches have always had worries about control orders and their continued use. The words of the noble Baroness, Lady Manningham-Buller, provide some reassurance but we support the added reassurance contained in the amendments.

My Lords, with this and a subsequent group of amendments, we are returning to control orders. I am grateful that noble Lords listened to the explanation in Committee of the Government’s position on the JCHR amendments on control orders, to the extent that not all those amendments have been retabled on Report. I note, however, that these amendments are essentially the same as those debated in Committee. Unfortunately, no account appears to have been taken of the Government’s concerns on the amendments, and I hope that I can convince noble Lords that our concerns are serious enough to ensure that this amendment is withdrawn.

The amendments deal with points relating to the prosecution of controlled individuals. As I explained in Committee, and as has been supported by noble Lords, the Government’s preferred approach, when dealing with suspected terrorists, is prosecution. That is absolutely clear. So there is no disagreement between the Government and noble Lords on the principle to be followed; our disagreement concerns what is needed to achieve the desired results.

Amendments Nos. 48B and 48C are not necessary to ensure that prosecution is always considered and kept under careful review. There are a number of robust safeguards already in place—some touched on by the noble Baroness, Lady Manningham-Buller—in the current legislative requirements to ensure that whenever possible, suspected terrorists are prosecuted rather than made subject to a control order.

First, there is consideration of the prospects of prosecution before a control order is imposed. Under the 2005 Act, the Secretary of State must consult the police regarding the prospects of prosecution for a terrorism-related offence before making or applying for permission to make a control order. The police must then consult the Crown Prosecution Service. This consultation process already goes beyond what is expected in many investigations where the police decide whether or when it is necessary to consult the Crown Prosecution Service. The position is set out in a letter from the police to the Home Office and laid before the High Court as part of the court’s review of each order. This information is available to the controlee.

The second key safeguard concerns the ongoing consideration of prosecution, where the 2005 Act rightly lays the duty of keeping the prospect of prosecution under review on the chief officer of the police force, who must consult the CPS as appropriate.

The third key safeguard is fulfilled by the control order review group. During its quarterly meetings, the Home Office seeks the views of law enforcement agencies on the prospects of prosecution of controlees. As the noble Baroness, Lady Manningham-Buller, said, this is done almost continuously, because that is what we would like to achieve.

The fourth key safeguard is the judicial review of each control order. If the public interest was demonstrably better served by prosecution of an individual against whom there was a sufficient evidence to prosecute, the order would be extremely likely to fail the test of necessity and so would be quashed by the High Court. This, as I outlined in Committee, was reflected in the court judgments in the case of E. It is interesting how that case seems to be quoted by those on both sides of the argument—but it seems to support what I am saying.

These four key safeguards have been subject to extensive scrutiny by the courts. The current legislative provision and procedures have been accepted by the courts as adequate, including by the House of Lords in the E judgment, and ensure that, whenever possible, individuals who are or may become subject to control orders are prosecuted for terrorism-related offences. No changes to the legislation were required by the Lords. So that is the context in which we are considering these amendments.

The absence of prosecutions of controlled individuals for terrorism-related offences, other than breaches of their control order, is not an indication that the current provisions have not been applied diligently. Rather, it demonstrates that at the time when the control order was made there was, and continues to be, no realistic prospect of prosecution. Moreover, since control orders are designed to prevent, restrict or disrupt individuals’ involvement in terrorism-related activity, it also arguably indicates that the control order against them has been successful in disrupting their terrorism-related activity.

Amendment No. 48B proposes that non-urgent control orders can be imposed only if the Director of Public Prosecutions has certified that there is no reasonable prospect of successful prosecution. I want to start, as I did in Committee, by querying the basis on which the amendment is proposed. Successful conviction and imprisonment offers the best outcome for the protection of the public. For that reason, the strong preference of the Government, law enforcement agencies and the CPS is to prosecute suspected terrorists. This amendment rather supposes that the Government and law enforcement agencies would rather put suspected terrorists on control orders than prosecute them. There is no logical reason for that assumption; indeed, it is counterintuitive. That in itself should lead noble Lords to question the necessity of this amendment.

As noble Lords who attended the debate in Committee will know, there are a number of reasons why the Government oppose this amendment. I remind noble Lords that this amendment was effectively explicitly argued for by a controlled individual in the case of E, where it was said that the lack of a reasonable prospect of prosecution was a condition precedent, or in other words a pre-condition, to making a control order. The Law Lords scrutinised this matter at length and explicitly rejected it. They concluded that no changes to Section 8 of the Prevention of Terrorism Act were required. Indeed, they considered that there were “strong practical reasons” for the current approach, and that changes would have the,

“potential to emasculate what is clearly intended to be an effective procedure”.

As I have explained, the Secretary of State is already statutorily obliged to consult the police on the prospects of prosecution before an order is made or applied for. The police are obliged to consult the CPS even where it is clear to them that there is not sufficient evidence to prosecute. However, this consultation, still less the results of that consultation, are rightly not a condition precedent of making an order. There are good reasons for this: providing certification by the DPP may not be practicable before the making of an order.

Amendment No. 48B makes an exception for urgent control orders to try to address the urgency point highlighted by the Law Lords. None the less, it is not appropriate to include certification on the prospects of prosecution as a condition precedent. There are both principled and practical reasons for this, in addition to the issue of urgency. I set these out to the Committee, but I believe that it is worth reiterating those reasons.

First, the amendment would undermine the constitutional position, effectively giving the DPP a veto over the Secretary of State’s decision to impose a control order. In other words, she would not be able to impose a control order even if she thought it necessary to do so to protect the public from a risk of terrorism, if the DPP said there was a reasonable prospect of prosecuting that individual. This is clearly inappropriate, as such decisions are properly a national security matter. I am sure that all noble Lords appreciate the potential dangers of interfering with proper constitutional arrangements.

Secondly, and related to the first point, it could expose the public to an unnecessary risk from terrorism by leaving a public protection gap. It is not therefore just a dry constitutional matter. A control order may be necessary to protect the public from a risk of terrorism posed by an individual, even though prosecution of that individual is possible. For example, an individual may be on bail pending trial for a relatively minor offence and so the risk posed by the individual is much greater than the bail conditions that a judge would lawfully be able to impose on the individual. In those circumstances, a control order might be required in the interim to manage that risk.

Thirdly, it could damage other investigations, other prosecutions, or otherwise damage the public interest. To reiterate the examples I gave in Committee, in rare circumstances the CPS may decide that a prosecution is not in the public interest, even if there is evidence available that may be sufficient to prosecute, perhaps because a prosecution could bring into the public domain a valuable intelligence-gathering technique, reducing its future efficacy, or the prosecution of a particular individual for a particular offence might damage a more complex, ongoing investigation of that individual and a wider group of individuals. This is not an issue limited to control orders or terrorism. In every case that goes to the CPS, even if the CPS concludes that the evidential threshold is met, it must separately assess whether a prosecution is in the public interest. This amendment covers only the first element.

Fourthly, it would likely have the presumably unintended effect of reducing the initial judicial scrutiny of control orders. The operational reality is that providing an answer to whether an individual can be prosecuted is a much longer and more complex and resource-intensive task than simply beginning the process by consulting on the prospects of prosecution. Consequently, the amendment might well force the Government to use the urgency procedure more, when the national security case meant that a certificate could not be waited for any longer. This would mean that the normal requirement for the Secretary of State to seek permission to make the control order from the High Court would not apply. As a result, a valuable initial judicial oversight mechanism will not apply in a much greater number of cases, as it will simply not be possible to obtain the necessary response from the DPP prior to the need to make and serve a control order in the interests of national security.

Fifthly, and on a point of detail, specifying the DPP personally rather than the relevant prosecuting authority is inappropriate. It is unusual to do so, places an unnecessary resource burden on that post and creates an unnecessary potential bottleneck. Nor would specifying the DPP cover control orders in Scotland and Northern Ireland.

In summary, therefore, this amendment undermines current constitutional arrangements, potentially exposes the public to an unnecessary risk of terrorism and damages other national security investigations or the public interest, would likely reduce the initial judicial scrutiny of control orders, and inappropriately singles out the DPP. I hope that noble Lords will understand that whatever the intention behind the amendment, the effect is none the less damaging to the public interest.

Amendment No. 48C deals with the ongoing review of the prospects of prosecution. This amendment contains a combination of inappropriate and unnecessary elements. Proposed new subsection (6A)(a) in the amendment proposes that the Secretary of State ensures that the prospects of prosecution are reviewed every quarter. This is an inappropriate interference in the current constitutional position. The CPS, not the Secretary of State, is responsible for considering whether a person should be charged with a criminal offence. Any shift in this responsibility could undermine the independent role of the CPS and the police. It is therefore inappropriate to require the Secretary of State to “ensure” the actions of a department not under her supervision or control. The CPS is independent of the Secretary of State. Nor does it make organisational or business sense to do so, as it cannot be sensible to task someone in relation to an organisation for which she is not responsible. It is perhaps worth reminding noble Lords of a passage from the House of Lords judgment in E, on the respective constitutional roles of the Secretary of State, the police and the CPS. It states that,

“the Secretary of State does not control the prosecution process. The police investigate and the Crown Prosecution Service decide whether or not to prosecute. There are very good reasons for this division of responsibility: it injects an important element of independence and objectivity into the decision to prosecute”.

The 2005 Act reflects this constitutional and organisational position. It already contains a statutory obligation on the chief officer of police to keep the possibility of prosecution under review throughout the period that the control order is in force. As the noble Baroness, Lady Manningham-Buller, already mentioned, that is done regularly. The CPS is also consulted as appropriate.

As with the previous amendment, I am sure that noble Lords do not wish to undermine the accepted constitutional roles of the Secretary of State, the police and the CPS. Indeed, I have no doubt that noble Lords would express extremely grave concern about any government proposal that the Secretary of State should have a role in deciding whether an individual should be prosecuted.

My Lords, I am most grateful to the Minister for giving such detailed consideration to the two amendments that we tabled. I am somewhat puzzled that he thinks that our drafts are in some way inconsistent with the judgment of the case of R v E. I have just glanced at paragraph 69 of the 10th report of the Joint Committee on Human Rights for the Session 2007-08. It states:

“The Secretary of State argued in the Court of Appeal in E that, having consulted the chief of police at the outset, she need do no more thereafter than make periodic inquiry whether the prospect of prosecution had increased. The Court of Appeal rejected that argument and held that more was called for from the Secretary of State”.

The Court of Appeal stated:

“Once it is accepted that there is a continuing duty to review … it is implicit in that duty that the Secretary of State must do what he reasonably can to ensure that the continuing review is meaningful … it was incumbent upon him to provide the police with material in his possession which was or might be relevant to any reconsideration of prosecution”.

Paragraph 70 of the Joint Committee’s report states:

“The House of Lords in E endorsed the Court of Appeal's approach”.

I cannot understand what is inconsistent in our Amendment No. 48C with that conclusion of the Appellate Committee of your Lordships' House. It sets out as accurately as possible the nature of the appropriate relationship between the Secretary of State and the police stipulated by the Appellate Committee.

I was pleased to hear from the noble Baroness, Lady Manningham-Buller, that co-operation in the post-control order process between the Secretary of State and the police was as good as it possibly could be in the circumstances of the raw material with which they had to deal. If that is so, what possible harm could the amendment do the Government or the public interest? The great good that it does the rule of law is to make the statement explicit in legislation rather than leave it implied in a case which is, anyway, binding on the Government.

The principles set out in Amendment No. 48C are principles that the Government are obliged to accept as a result of the law of the land determined by its highest court. Why are the Government frightened of having it set out in legislation? Perhaps it is because they have further thoughts about how they might resile from the court's judgment. That could well be implied from what the Minister said.

As far as Amendment No. 48B is concerned, particularly in the latter part of his speech, the Minister went out of his way to emphasise the importance of the CPS as an independent body; but that importance is nowhere emphasised in the Prevention of Terrorism Act 2005 itself. The main purpose of Amendment No. 48B is to state, in terms, in the Bill that prosecutorial decisions are taken not by the police but by the CPS.

The Minister then drew my attention to the way in which the amendment might damage the public interest; but as far as prosecutorial decisions are concerned it is the DPP who is constitutionally responsible for determining where the public interest lies before he decides that a prosecution should go forward. He will undoubtedly consult on this matter. He will consult in many directions and if necessary take the view of the Attorney-General. If he does, the Attorney-General is almost certain to approach the Home Secretary before she makes her mind up as to what advice to give to the DPP about where the public interest lies. It is through that process that the public interest under our constitution is defined. It is not defined by the Secretary of State, the police or the security services. It is defined by the DPP, if necessary on advice of the Attorney-General.

There is nothing inconsistent with those constitutional principles in our Amendment No. 48B. I am grateful to the Minister for setting out his views in such detail but, in the circumstances, I wish to test the opinion of the House.

moved Amendment No. 48D:

My Lords, before I speak to the amendment, I shall take the opportunity to mention one issue related to control orders that is not directly related to the amendment. In Committee, the noble Baroness, Lady Miller of Chilthorne Domer, moved her probing amendment to what is now Clause 77. The clause provides the police with powers of entry and search in specified circumstances. The noble Baroness expressed concern about whether the clause was sufficiently tightly worded, while acknowledging that it did not seem likely that the police would undertake any inappropriate search.

In responding to the noble Baroness, I indicated that I would ask officials to take another look to see whether the drafting of the relevant powers could be improved to ensure the desired clarity in the Bill. I am pleased to say that we have now identified a form of words that will preserve the power of the police to search appropriate premises but that will also make clear that the right to search previous properties must be based on there being a current or recent connection between the controlled individual and the property. I propose to table an amendment to that effect at Third Reading.

Amendment No. 48D is one of a group of amendments previously tabled by Members who sit on the JCHR and debated in Committee. All of them were concerned with ensuring that a controlee has the right to a fair trial accorded to him under Article 6 of the European Convention on Human Rights. As I explained in Committee, this issue has been considered at length, including extensively by the courts. One of the House of Lords judgments of October 2007, MB, dealt explicitly with the right to a fair trial in the context of control orders, as mentioned by the noble Lord.

In MB, the Law Lords did not say that any control order case before them had breached the right to a fair trial, but the majority view was that, in rare cases, the provisions in the 2005 Act might lead to a breach of Article 6. The Law Lords therefore applied Section 3 of the Human Rights Act, to make the 2005 Act compatible with Article 6 in all cases. The Law Lords also concluded that the High Court should consider compatibility with Article 6 on a case-by-case basis. The cases before the Lords on this issue were referred back to the High Court.

As a result of the MB judgment, the Prevention of Terrorism Act 2005 is fully compatible with the European Convention on Human Rights. No further changes were required by the Law Lords. The amendment seeks to amend the 2005 Act to reflect the read-down by the Law Lords in MB, but it also adds some additional wording that was not part of the read- down. I am afraid that the arguments put forward in Committee and again today that the amendment is necessary to provide legal certainty and fairness are simply wrong. The Government are clear that there is no need to legislate to reflect the principles formulated in case law as currently interpreted by the courts. As I explained to noble Lords in relation to the previous group, that is because we operate under a common law system. It is widely accepted that public authorities, among others, are bound not just by statute, but by case law. Case law can and does provide sufficient precision and clarity to comply with the important concept of legal certainty, just as much as statute can.

It has been argued that without an amendment to the Act the position as a result of the Lords judgment is unclear and controlees are not guaranteed fairness. That assertion has no basis in fact. The proposed changes would be of no practical benefit to controlees. At the risk of repetition, as noble Lords know, both statute and case law are sources of legal authority. The courts interpret, and are bound by, both. Transposing identical wording from one source of authority to another—that is, from case law to statute—will not make any difference. It is also considered bad practice to legislate unnecessarily.

For those reasons, proposed new subsections (3) and (4) in the amendment, which add in the exact words already effectively added to the Act by the MB judgment, are redundant. Proposed new subsection (5) makes a further amendment to paragraph 4 of the schedule to the 2005 Act. It is also unnecessary, for related but not identical reasons. It reflects the wording included in the asset freezing provisions in Clause 66(6). The provision in Clause 66(6) is included in the asset freezing clauses, instead of the words of the MB read-down, to give effect to the MB judgment in legislation to which the judgment did not directly apply but which makes provision for a comparable situation. There is no need to include the wording of Clause 66(6) in the 2005 Act, because the MB read-down already makes things clear for the 2005 Act. It would involve unnecessary duplication. The bottom line is that neither of the approaches is necessary, given the MB read-down.

Proposed new subsection (2) is unnecessary for different reasons; those reasons mean that the subsection is also potentially damaging to the public interest. It amends Section 3(13) of the 2005 Act. Section 3(13) can only be understood in conjunction with Section 3(12). They read as follows:

“If the court determines, on a hearing in pursuance of directions under subsection (2)(c) or (6)(b) or (c), that a decision of the Secretary of State was flawed, its only powers are … power to quash the order … power to quash one or more obligations imposed by the order; and … power to give directions to the Secretary of State for the revocation of the order or for the modification of the obligations it imposes … In every other case the court must decide that the control order is to continue in force”.

Proposed new subsection (2) adds to the end of Section 3(13) the words,

“except where to do so would be incompatible with the right of the controlled person to a fair hearing”,

That was not part of the read-down by the House of Lords, because the read-down means that it is not a possible outcome of a control order hearing. If the court considers that disclosure of material would be contrary to the public interest, but that such material must in any event be disclosed for the controlee to have a sufficient measure of procedural protection, the Secretary of State will be put to her election. That means that the Secretary of State is then given a choice whether to disclose the information or withdraw it from the case. If the latter, the case then proceeds without that material included. Either way, the case continues in a manner compliant with Article 6. That means that a judge will never be put in a position where he has to uphold a control order where the proceedings have not been compatible with Article 6. There is thus no need for the qualification to Section 13(3) provided by proposed new subsection (2) in the amendment.

If proposed new subsection (2) could be interpreted as going beyond the scope of the read-down, meaning that it was the court’s job to quash the order without first putting the Secretary of State to her election, it is also damaging to the public interest, because it would potentially expose the public to an unnecessary risk of terrorism.

In summary, no element of the amendment is necessary or has any practical benefit. The amendment as a whole is not just unnecessary, it is also undesirable and potentially damaging to the public interest. First, it undermines the purpose of Section 3 of the Human Rights Act. As noble Lords will know, Section 3 states:

“So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights”.

That is in contrast to Section 4 of the Human Rights Act, which provides courts with the power to declare primary legislation incompatible with convention rights.

By including Section 3 in the Human Rights Act 1998, it was clearly Parliament’s intention to give the courts the power to alter legislation where they felt that it was necessary and appropriate to do so in order to guarantee convention rights. No further corrective action is required by Parliament. Legislation that simply repeats a Section 3 read-down therefore has the potential to undermine the clear purpose behind Section 3 and is wholly unnecessary.

I emphasise that the Government’s general policy is that we do not legislate to reflect read-downs by the courts on any issue where the read-down is sufficiently clear and precise. There is no need to take a different approach in this case. The read-down in MB is sufficiently clear and precise, and noble Lords opposite clearly accept that, because their amendment tries to replicate it. That brings me back to my previous point. What is the purpose of the amendment? A shift of wording from case law to statute serves no beneficial purpose.

Secondly, the timing of the amendment is deeply unfortunate. There is ongoing litigation on whether controlled individuals have received a fair trial. The right to a fair trial is an autonomous concept in the European Convention on Human Rights, as is deprivation of liberty. It is subject to continued interpretation by the courts, and the concept goes far wider than simply control orders. Following the House of Lords judgment in MB, there has been ongoing litigation in the High Court and the Court of Appeal about how the court should assess compliance with the right to a fair trial in a number of different cases. The majority view in the Court of Appeal essentially supported the Government’s position.

As noble Lords will know, that judgment will be considered by the Law Lords, and the House of Lords has agreed to expedite those cases. I suggest that in these circumstances, it would be presumptuous and an unwarranted interference with the judicial process for Parliament to legislate further on the point at this time. Nor will domestic litigation be the end of the matter. One of the controlled persons involved in the control order cases covered by the House of Lords judgments of October 2007 has lodged proceedings in the European Court of Human Rights on both the Article 5 and Article 6 issues raised by him before the Lords last year.

In conclusion, the Government do not agree that this amendment is necessary. It does not provide any greater legal certainty than is already provided by the 2005 Act and case law. It will not provide any practical benefit to controlees and has the potential to be damaging to the public interest. It is also badly timed, given the ongoing litigation on what constitutes a fair trial. I ask the noble Lord opposite to withdraw the amendment, and if he will not, I urge all noble Lords to reject it.

My Lords, I thank the Minister once again for his very careful and thorough reply. I do not really understand his point as to its timing being unhelpful. The principle of a fair hearing has been established in R v MB. What a fair hearing is in the circumstances of any particular case is a matter for other courts to decide. The amendment does not seek to stipulate, in any particular circumstances, what a fair hearing is or is not. It simply reiterates the principle established by the Appellate Committee of your Lordships’ House. So, with respect to the Minister, the timing of the amendment cannot be in any way unfortunate.

The Minister seemed to say towards the end of his response that the amendment was an accurate reflection of what the Appellate Committee decided. All that the amendment seeks to do is to obtain clarity by enshrining the decision in the Bill. Since the law is as it is as a result of the case, the principle should not be hidden in the complexities of the judgment. I remind the noble Lord that there were five separate speeches. If the noble Lord is clear that the content of the amendment is an accurate reflection of what the Appellate Committee decided, surely, in the interests of legal certainty, it is desirable that the amendment should appear in the legislation. Once again, I wish to test the opinion of the House.

moved Amendment No. 48E:

My Lords, we on these Benches support this moderate amendment. In view of how little time we had to peruse the document that the Minister’s department sent through this morning, it would be helpful if the Minister could assure us that he will take the amendment away and consider returning to it at Third Reading if he is not able to agree to it today. In the document, there was not so much a list of tasks as a list of possible tasks. It was one of the vaguer documents that I have read. I would not have called it, even on an initial reading, an implementation document; it was more an aspirational document of where this might go. Given the importance that everybody around the House has attached to the use of intercept evidence, it is important that we get this right.

My Lords, it is clear from what the noble Baroness, Lady Neville-Jones, said that she feels that the Government are not intent on meeting our commitment to push ahead with the Chilcot process. However, that is just not so. We are absolutely doing that. I am sure that if the noble Baroness talks to members of the Advisory Group of Privy Councillors—for example, the right honourable Michael Howard—she will find that that is the case and that we are pulling ahead and moving forward with this.

I reiterate my comment of 21 October that it remains very much our intention to update both Houses on progress against the first, design phase of the implementation work programme agreed by the AGPC, well within three months of Royal Assent. Indeed, we would hope to do so before the Christmas Recess because that would fit in with the programme agreed by the AGPC.

Equally, as I also made clear, the update report cannot form the basis of a final decision to proceed because of the further phases of work, as agreed by the Advisory Group of Privy Councillors, required to build and test the model prior to any implementation. However, the noble Baroness seems to be saying that, even if the Chilcot tests are not met, we should proceed with this. I absolutely disagree. I hope that she is not saying that, because we would be taking some very real risks. Clearly, we have to build and test, and that comes after the first phase.

The noble Baroness mentioned the intercept as evidence work programme, a copy of which I have put in the House Library. I apologise for its not having been there earlier but, as I am sure the House is aware, these things are highly complex; we had to be careful that we did not include anything in it which should not be seen but which would have been available for public view.

Turning to the second part of the proposed new clause, I strongly reiterate my previous comments. Most important, as was made clear in the cross-party Chilcot report, hasty or ill considered legislation could do real damage to our national security. There have been seven attempts to introduce this over the past few years and it is interesting to note that, whichever party has been in power, it has found it extremely difficult to do so. It is not easy or straightforward. We have to ensure that the tests are met.

However, it is fair to say that my right honourable friend, the then Minister with responsibility for counterterrorism, Tony McNulty, said before the Counter-Terrorism Bill Committee on 15 May that we would hope, subject to the necessary issues having been resolved—that is, the tests having been done—to legislate for this in 2009-10. That is still our intention if we can meet those tests. If we do not meet the tests, it will be a different matter, but we have to go through the necessary steps.

We believe that the amendment represents pre-emptive legislation that risks doing real damage to the confidence of the communication service providers—the CSPs—and of our international partners. The Chilcot report underlines the importance of CSPs to our strategic intelligence capability and ability to combat serious crime and terrorism. It also points out how any increased risk of disclosure could harm our international relationships. These issues are highly complex. That is why the matter has been looked at so many times and is so difficult. It is what lies behind the strong emphasis in the Chilcot report of the need to create, and not undermine, that confidence. Therefore, the Government remain unable to accept the amendment.

I hope that the House will continue to back the implementation process recommended by the Chilcot report, which is working forward steadily. We are committed to fulfilling it so that our intelligence capability and public protection are safeguarded and so that, if we are able to do so, we can use intercept as evidence, but we have to have those safeguards in place. This process is underpinned by the cross-party Advisory Group of Privy Councillors, which is ensuring that it is moving forward correctly. On that basis, I ask the noble Baroness to withdraw her amendment.

My Lords, I wish that I felt happier with the answer that the House has had from the Minister. Once again, he has emphasised the difficulties rather than the will of the Government to find a way to implement the report’s recommendation, which is that a way should be found to move forward with this on the basis of PII Plus. It is already between nine and 10 months since the committee reported and I confess that it would have been reassuring if, in the report that the Minister put before the House, he had given an assessment of where the committee had got to. That would have been a fair interpretation of what these Benches have been asking for.

I consider our amendment to be extremely reasonable. It is not constraining and is in the spirit of the Government’s undertaking to find a way through with this legislation. Had there been time, I might have strengthened the amendment; as it is, I am minded to test the opinion of the House.

moved Amendment No. 49A:

moved Amendment No. 50:

My Lords, I am extremely grateful to the Minister for tabling the amendments, which so much meet the concerns that we expressed in Committee, and for fashioning them so that they are based around case law, which will be very helpful. I am further grateful to him for giving such a full explanation, which will be very helpful to everyone interested in this extremely important issue.

On Question, amendment agreed to.

moved Amendments Nos. 51 to 54:

moved Amendments Nos. 55 to 61:

moved Amendment No. 61A: