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Lords Chamber

Volume 709: debated on Tuesday 24 March 2009

House of Lords

Tuesday, 24 March 2009.

Prayers—read by the Lord Bishop of Chester.

Waste Management: Refuse Collection


Asked By

To ask Her Majesty’s Government what steps they will take regarding the reduced frequency of domestic refuse collections and the resultant increase in rat and mouse populations.

My Lords, any waste collection scheme, including alternate weekly collection, should be designed to minimise the risk of attracting vermin. Independent research published by my department has shown that, as with all types of household waste collection, simple, common-sense measures such as keeping waste tightly wrapped and bin lids closed should prevent any rodent problems.

My Lords, I am greatly obliged to the Minister for that reply, as always. In addition to the homespun advice in the second part of his Answer, which I am sure is very much appreciated by all householders, can he say what we now do about the increase in numbers of rats and mice, which is a significant problem?

My Lords, I am glad that the homespun advice of my department found such favour with the noble Lord. One has to understand that the rodent population tends to go up and down. The latest report shows an increase, but this is mainly due to the exceptionally mild winter of 2007-08 and good breeding conditions in the following early summer. Of course, local authorities are responsible for ensuring that appropriate measures are taken. Many of them provide services for the destruction of such vermin, and we shall make sure that they continue to do their job effectively.

My Lords, is the Minister aware that rats can chew through stainless steel, which means that shutting the lid on a plastic bin and wrapping your stuff in plastic bags is not very effective? Does he agree that bin collections were introduced as a public health measure? Rats and mice spread disease and, if we get too many, a lot of contagious diseases will be spread. Is the Minister’s department aware of this—Defra is often unaware of things such as disease—and what is it doing to prevent disease from spreading to members of the public?

My Lords, I am not sure that I accept what the noble Countess says about Defra’s awareness of disease; it is only too well aware of some of the major problems caused. Of course she is right about the impact of rats and mice spreading diseases, but that is why having effective rubbish collections and giving effective advice to householders is the way to tackle this effectively.

My Lords, the Minister prayed in aid climate change, but was he able to help on the Climate Change Act, which provided the Government with powers to give five local authorities the possibility of developing refuse collection schemes as exemplars? What has happened? What authorities are involved and what lessons have the Government learnt?

My Lords, I am not sure that I gave a climate change Answer to the Question. Whatever the impact of climate change, which is certainly happening, there will also be variations in winter temperatures. If you have an exceptionally mild winter, it is likely that the rat and mice population will grow. The noble Lord is absolutely right to refer to the ability to develop pilots. We have invited local authorities to put their names forward. None has yet done so.

My Lords, local authorities have a duty to give and receive the best value for council tax payers’ money and there is growing capacity in the economy. What advice and encouragement are the Government giving to local authorities to renegotiate and improve services such as refuse collection, which they contract for on behalf of local taxpayers, and what are councils doing to improve competition by encouraging smaller, local businesses to tender for this work?

My Lords, that is very much a matter for local authorities; it is not for the Government to dictate what they should do in this area. I am surprised that that suggestion has come from the Liberal Democrat Front Bench given the number of amendments on local government that noble Lords from that Bench have tabled to the everlasting marine Bill over the past few months. Of course, the point is well taken that local authorities should seek value for money in their contractual relationships with the private sector. Certainly, as regards sustainability, local suppliers may be one option that they wish to use.

My Lords, has the Minister allowed for the ingenuity of the rodent population? When I suffered an infestation, the rats were looking through my drawing room window to see either me or the television, and it took weeks to get rid of them.

My Lords, now that regulation is back in vogue, why do we not regulate the thickness of black plastic waste bags, as thin bags leak and attract rats?

My Lords, there is regulation and there is regulation. I hesitate to say that we should regulate the size of black bin bags, but I understand what my noble friend is saying. Undoubtedly, very thin bags tend to break easily and can cause a major problem if they are left outside for a long period. That takes us back to the whole point of this Question, which is that it is up to individual local authorities to sort this out and to have effective strategies for rubbish collection.

My Lords, can the noble Lord give any advice on the increase in the number of moles, although that may be rather a long way from the Question?

My Lords, is the noble Lord aware that there is a feeling of great unfairness about the fact that some people get their bins collected every week but others do not and have to wait for a collection every two weeks? Although he suggests that this is solely a matter for local government, will he please have a word with it not only about this unfairness but about the health dangers?

My Lords, I am not aware of any research that suggests that alternate weekly collections have had a damaging impact on health. I make the point that these are alternate weekly collections. The normal local authority process is to pick up recyclable waste one week and to pick up the remaining waste the other week, so it is not a fortnightly collection. When done well, it can enhance the environment: the amount of recyclable waste goes up while the amount of waste going to landfill goes down. Therefore, there are considerable advantages in local authorities doing the right job here.

My Lords, is the noble Lord aware that the upset in household collections is due to the EU landfill tax? I am sure that he will not be surprised to learn before long that rats are decreasing rather than increasing in number as they leave the EU economy and the British economy in particular, as it sinks under the burden of excessive and unnecessary EU regulations.

My Lords, the fact is that as a result of landfill tax and other measures we sent a quarter less waste to landfill in 2007 compared to 2001. Household recycling rates have quintupled in the past 10 years, up from 7 per cent in 1997-98 to 35 per cent in the last year of complete data, ending July 2007, which shows that the combination of policies developed by this Government has proved very effective indeed.

Children: Young Mothers


Asked By

To ask Her Majesty’s Government how many children have been born to mothers under the age of 16 during the most recent five-year period for which figures are available; and how many of those children were adopted at, or shortly after, birth.

My Lords, 2,940 children were born to mothers aged under 16 in England in 2007, which is the latest year for which data are available. That is 265, or 8 per cent, fewer births to under-16s than in 2003. In total, 15,283 children were born to mothers aged under 16 during this five-year period. No data are available on how many of those births resulted in the child being adopted.

My Lords, does the noble Baroness agree that, for a Government who claim that every child matters, it really would be right for statistics to be collected on what happens to these children, whose future can be very much at risk? However, my main question is whether she is aware of a scheme that exists in some states in the United States called open adoption, under which the birth mother has the possibility of participating in the selection of the adoptive parents. Sometimes there is also an agreement for a reasonable and sensible degree of continuing contact between the birth mother and the child. Is that not a system that would greatly reduce the trauma of giving up the child, and therefore one that would help the birth mother to return to school and normal life and to have a normal family in the normal way?

My Lords, I think that the noble Lord has a point about the counting of children, and I undertake to take this up with my noble friend Lady Morgan, the relevant Minister. The noble Lord, with his vast experience of such matters, points to an interesting issue. It appears that in England there is no use of open adoption as it is practised in the United States. However, where a baby is relinquished for adoption, the birth mother may consent to the child being placed with specified prospective adopters or with any adopters chosen by the agency. Where it is in the child’s best interests for there to be ongoing links, including contact with the birth parents, the birth parents will be involved in discussions about how best to achieve this and help with agreed plans—for example, through practical or financial support. The noble Lord will fully appreciate that the main consideration is what is in the best interests of the child.

My Lords, does the Minister agree about the importance of school nurses in relation to unwanted teenage pregnancies? In the Choosing Health White Paper, the Government set a target of 2010 for having a full-time school nurse for each cluster of primary schools and its related secondary. How are the Government getting on towards reaching that target? Are there enough nurses in the pipeline doing the specialist community public health nurse qualification for school nurses, so that we have enough for the future?

My Lords, as usual, the noble Baroness makes a very good point. I am answering this Question on behalf of my noble friend the DCSF Minister, and I do not have those figures in my brief. In the Department of Health, we are focusing on that, and I undertake to write to the noble Baroness with those detailed answers.

My Lords, clearly, there has to be concern about the high level of teenage pregnancies, and we have to look for means by which we can reduce the level of those pregnancies. I appreciate that all the evidence shows that good-quality sex and relationship education in schools makes positive behavioural changes in young persons’ attitudes towards risky sex, and that the vast majority of parents support SRE being taught in schools. What progress has been made on the Government’s principled support for the introduction of PSHE, including SRE, as a statutory subject in the school curriculum?

My Lords, my noble friend points to a very important matter. We know that the provision of sex and relationship education is patchy, which is why we recently announced our intention to make it statutory, to increase the priority that schools give to this important aspect of young people’s education and to ensure greater consistency across schools. Sex and relationship education is a key part of a child’s education, and we hope that it will give young people the knowledge and skills that they need to make safe and healthy choices and, importantly, to work in partnership with their parents—so that parents have the confidence to have the discussions with their children necessary to make sure that young people are making the choices that we would wish.

My Lords, does the Minister acknowledge the contribution made by community, voluntary and faith-based organisations that provide permanent and long-term placements for vulnerable children? What can be done to secure the financial future of some of these organisations in these very challenging days? I declare an interest as president of Family Care, Nottingham.

My Lords, the right reverend Prelate is correct to point out the important work in children’s services undertaken by the third sector. I worked with Action for Children for many years. We recognise the invaluable services that the third sector provides, which are important in improving outcomes for some of our most vulnerable children. At a local level, we contract with these organisations, which do a significant amount of work in this sector. As far as I am aware, that will continue. At a national level, in 2007-08 we made £500,000 available to all voluntary adoption agencies, in recognition of their need to provide advice and to maintain and develop their services for difficult-to-place children.

My Lords, despite the Government’s spending £280 million on a strategy to reduce teenage pregnancies, why has their number increased, with the UK having the highest teenage pregnancy rate in western Europe? Does the Minister accept that the figure of 8,196 pregnancies among those aged under-16 shows the Government’s complete failure to get to grips with the problem?

My Lords, teenage pregnancy is the cause and consequence of social exclusion and health inequalities. It is a complex and challenging issue.

My Lords, we are very disappointed that we have not met the target that we set ourselves. However, the British Government are about 20 years behind European Governments, because it seems that this issue was neglected in the1980s and 1990s.

Conservation: Farmland Birds


Asked By

To ask Her Majesty’s Government what outcome they expect from the South West Farmland Birds Initiative which is being carried out in conjunction with Natural England, the Cotswolds Conservation Board, the Royal Society for the Protection of Birds and other organisations.

My Lords, the South West Farmland Birds Initiative plans to create key habitats for six declining species of farmland birds using environmental stewardship and targeted advice. The partnership project aims to demonstrate how a similar model might be applied across England in other areas that support these species. The project expects to work with 1,500 farmers and over 40,000 hectares of farmland. This should deliver improved habitat for birds, leading to sustainable populations of the six target species.

My Lords, I thank the Minister for his reply. I declare as a farmer and a landowner that it is important that the decline in farmland birds be reversed. However, how can that decline be reversed when this initiative is delivering only on habitat and does not include the predation of farmland birds? An RSPB report said that there is growing evidence, and good evidence, that ground-laying birds such as the lapwing and the grey partridge are being limited by not only habitat but predation. How can this initiative deliver if it does not deal with the predation part of the problem?

My Lords, I am grateful to the noble Lord for his support of the initiative in general. Predation is clearly the main reason for egg and chick losses in many bird species, but many species can withstand high levels of predation. My understanding is that the RSPB work has shown, and this has been corroborated, that predator control is really effective in increasing bird populations. We are interested in the noble Lord’s views. These matters will have to be taken into consideration as we take the project forward.

My Lords, does the Minister acknowledge that the era of set-aside was unexpectedly successful in maintaining a wide variety of species of farmland birds? Is he satisfied that the move to single farm payments, taking into account the habitats directive and cross-compliance rules, will be equally successful? If not, why not, and what will the Government do about it?

My Lords, the noble Lord is right. We think that set-aside had a positive impact and, with its removal, we have been looking at mitigating factors that might be brought into play. Sir Don Curry chaired the group, and we have consulted on two options in particular on the mitigation of set-aside. We will consider the way forward in the light of comments that we have received.

My Lords, the species that are subject to predation include sparrows and song birds. Can we ever expect the RSPB to recommend a controlled cull of sparrow-hawks, which are doing an awful lot of damage, or is that too much to hope for?

My Lords, I am happy to pass on the noble Lord’s comments to the RSPB. It is notable that in a report this morning the RSPB seems to have come to a refreshing view on the attributes of inland wind farms, so I have no doubt that it will pay careful attention to the noble Lord’s comments.

My Lords, has my noble friend seen the work of the Game Conservancy Trust, which shows that, by having proper land management with some predation control, one can increase the population of many woodland birds, as well as upland wading birds?

My Lords, that is a very helpful comment and I shall certainly ensure that my department is made fully aware of it. The whole point of this project is to give tailored advice to farmers through workshops and one-to-one advice. We are very keen to ensure that farmers do all that is necessary. My noble friend made a point about proper management, which can have a very positive impact on birds’ habitats and future survival.

My Lords, will this very worthwhile project draw on the experience and expertise of the Allerton project team, and is there a role for Defra’s so-called RADAR zone—the Rapid Analysis and Detection of Animal-related Risks information system?

My Lords, we clearly wish to have to the fore all elements of good advice that can be made available, so of course we welcome input from RADAR and all the other organisations that noble Lords have suggested. This project has not yet started but it will run for two and a half years, and the aim is to see what impact it has. If it is seen to have a positive impact, it can be rolled out in other parts of the country. Clearly, we want to learn from all organisations that can give effective advice in this project.

My Lords, I am a landowner in Northern Ireland. Looking at the four organisations that have been appointed to carry out this initiative, I find it difficult to see them working successfully towards the result for which we would all hope. The RSPB, Natural England and the other groups in this field are not really natural bedfellows. What is the Minister’s view on that?

My Lords, that is all the more reason for bringing them together. We need to ensure that there is proper ownership and that many of the inevitable tensions, to which the noble Lord has alluded, are dealt with effectively. The four organisations are all supported by the National Farmers’ Union, Plantlife International, the Game & Wildlife Conservation Trust, the Ministry of Defence and the National Trust, so we are not short of advisers and supporters on this initiative.

Banking: Tax Avoidance


Asked By

To ask Her Majesty’s Government what plans they have to legislate on tax avoidance schemes used by banks.

My Lords, since 1997, the Government and HM Revenue and Customs have moved quickly and effectively to tackle tax avoidance in all its forms. Avoidance is not illegal; it aims to reduce tax in ways that may go beyond the spirit but not the letter of the law. The Chancellor has announced a code of practice on taxation for the banking sector so that banks will comply with not just the letter but the spirit of the law.

My Lords, I thank the Minister for that reply. Does he agree that it is crucial to maintain the distinction between tax evasion, which is illegal, and tax avoidance, which is not? If it is the Government’s view that some tax avoidance schemes are objectionable, does he agree that the right course of action is for them to legislate to make them illegal? Introducing a non-statutory code of practice, as the Chancellor of the Exchequer is now suggesting, blurs the crucial distinction between evasion and avoidance and puts company directors, trustees and others in a vulnerable position in the light of the fact that they may not be fulfilling their duties.

My Lords, I agree with the noble Lord that there is a clear distinction between tax evasion and tax avoidance. The authorities pursue with rigour and vigour any examples of tax evasion. Since 2004, we have introduced a system whereby those who are contemplating creative tax strategies or the marketing of those strategies are encouraged to pre-discuss those with HMRC. We have found considerable willingness on behalf of the financial services community to do that. As a consequence, we have stopped tax avoidance strategies that otherwise would have cost the Revenue approximately £11 billion. That is at the heart of ensuring that we respect the spirit of the intent of law and Parliament while recognising that a creative accounting and financial services industry will always explore ways in which it can push against the boundary. The new code, which we are in the course of discussing with banks, appears to be well received by them. They are finding it a good basis on which they can be guided on their future tax planning and tax marketing.

My Lords, I declare a past interest in advising clients, although not banks, on the avoidance of tax—I would have lost most of them if I had not advised them of how best to avoid tax. We know the difference between avoidance and evasion: it is the thickness of a prison wall. But on the question of avoidance, although I welcome the potential international agreement at the G20 on opening-up tax havens and getting rid of the secrecy, does my noble friend accept that that is not the whole answer? At the end of the day, will there not have to be legislation to deal with the whole question of major tax avoidance, whether by banks or anyone else?

My Lords, I thank my noble friend for his questions, which are always well informed. The simple fact is that no single jurisdiction can itself stamp out tax avoidance because there is, as the Prime Minister would say, a race to the bottom in terms of moving business to other jurisdictions through double-dip arrangements and transfer pricing. There needs to be international co-ordination. Over recent months, through the work of the OECD and in the G20 Finance Ministers and central bank governors’ meeting 10 days ago, we have seen a real enthusiasm to get to grips with this issue. There is already evidence in steps that have been announced by jurisdictions as different as Hong Kong, Singapore, Liechtenstein and Andorra to break down some of the previous tax avoidance structures, which were creating such a problem for developed nations.

My Lords, will the Minister assuage the anxiety of many Peers that when it comes to the business of drawing up legislation on tax avoidance and tax havens there are sufficient senior civil servants who are aware of the cover-ups and duplicity in setting up tax havens in faraway islands and inviting the British taxpayer to invest in them? Will he ensure that there is knowledge not only in the Civil Service but in the Government of the tricks, ruses and deceits in this business, the purpose of which is to defraud the British Treasury?

My Lords, the noble Lord, Lord Baker, will know that if it is a question of defrauding, that is tax evasion. I have already commented on that. This morning I met the permanent secretary for tax of HMRC, who assured me that he was confident he had the resources in terms of numbers, skills and attitude to combat the increasingly creative tax avoidance strategies that are being brought forward by professional firms and banking institutions.

My Lords, will the noble Lord indicate whether he believes that the European Union will speak with one voice on this subject in the forthcoming G20 talks?

My Lords, I think there is considerable reason to believe that there is more unanimity on this issue than there ever has been before.

My Lords, the Minister is something of an expert in tax avoidance strategies, or so we read in the newspapers. Can he help the House and explain the difference between strategies designed to avoid or minimise tax for banks and those, say, for reinsurance companies or fund management companies?

I did not see that question coming, my Lords. I believe that the noble Baroness, Lady Noakes, refers to press reports about my involvement in establishing a reinsurance business in 2002. This business was based in Bermuda, although its principal operating company was in the UK. I am no longer involved with the company, but I am pleased to say that it is capitalised on the New York Stock Exchange at more than $2 billion, it employs 550 people, of whom 350 are in the UK, and since inception it has paid $360 million in tax, the majority of which has been paid in the UK at an effective tax rate of 24 per cent compared with UK tax rates of 28 per cent, which I do not think can really be described as tax avoidance.

My Lords, how is my noble friend going to deal with the millions of pounds that have been received from United States investments that have been granted tax relief on the basis that United States tax has already been paid? In the United States, interest payments already have tax relief and there has been double relief that needs to be dealt with. What is he going to do about that?

My Lords, my noble friend raises a fascinating question about a very complex issue. As I have only one minute to answer, I do not think I can do justice to it. However, the UK was the first major jurisdiction to introduce double-dip taxation legislation, which is designed to frustrate people claiming tax credits in two separate locations for the same liability. We are working with other authorities to tighten up control in this area. I suggest to my noble friend that we can seize the opportunity provided by the UK’s chairing of the G20 meeting next week to take a major step forward in pushing towards a more effective, equitable and fair system of domestic and international taxation.

Arrangement of Business


My Lords, with the leave of the House, at a convenient point after 3.30 pm, my noble friend Lord West of Spithead will repeat the Statement on the United Kingdom’s strategy for countering international terrorism.

Postal Services Bill [HL]

Committee (1st Day)

Clauses 1 and 2 agreed.

Amendment 1

Moved by

1: After Clause 2, insert the following new Clause—

“Post Office company review

(1) Within one year of an order being made under section 2, a post office company must review the services a post office may provide to the public under arrangements with a government department.

(2) The Secretary of State must lay the review, and the government response to it, before both Houses of Parliament as soon as reasonably possible.”

First, I declare my interests as set out in the register and, in particular, as a partner in the national commercial law firm Beachcroft LLP. At the outset, I make it clear that the Conservative Party supports this legislation in principle. However, I have to add that Ministers are now guilty of the most negligent, costly and culpable late delivery of all time. By failing to act until now, this Government have condemned the Royal Mail to 10 years of unnecessary uncertainty and inevitable decline. The loss of potential revenue and the consequent damage to staff morale has been little short of catastrophic, particularly for the pension fund and the status of the company, despite Royal Mail’s best efforts. Furthermore, as we now scrutinise this Bill line by line, I fear that its shortcomings will become all too evident. We have endured the injury of 12 years of inaction followed by the added insult of a cobbled together rush job of a Bill, so we are going to do our utmost to make this legislation work.

The first group of amendments to be discussed in Committee, and which I have tabled, relate rather unusually to an issue that should be addressed in the Bill but is not; I refer, of course, to the post office network, which at Second Reading was the problem that dared not speak its name. There have been two swingeing rounds of post office closures in recent years, and under this Labour Government some 40 per cent of post offices and sub-post offices have now been closed. Perhaps Ministers truly believe that such enormous cuts to such an integral component part of our society were necessary, but it is utterly irresponsible of any Government not to consider seriously how to prevent any future closures, or even how to allow for the reopening of many of these businesses.

We on these Benches were deeply sceptical of the business case that Ministers made for these closures, and of their contention that they made a real effort to find an alternative way forward. There are enormous numbers of references, particularly in the other place, to post office closures, so the Minister, Pat McFadden, has had every opportunity to come forward with some alternative strategy. Ministers’ strategy in responding to the many debates on post office closures has been to say that this is not a matter for them; it is up to the Post Office. On 13 March last year, Pat McFadden said:

“For the future, the Post Office must keep developing new products and new reasons for customers to go through the door”.—[Official Report, Commons, 13/3/08; col. 512.]

This was against the background of what he described as a “difficult closure process”.

If any noble Lords decide to search Hansard for references to the Post Office, I ask them to sit back and just let them all come, because there have been so many debates about closures. Ministers have said so many times, as Pat McFadden did on 20 June last year, that,

“the Post Office has to innovate”,

and that,

“There are new areas of work for the Post Office”,—[Official Report, Commons, 20/6/08; col. 1270.]

as though it was all the Post Office’s fault.

In all the debates that I have read through, there seemed to be no clear or genuine understanding of the importance of post offices in many communities not only in rural areas but in some of the poorest areas of our towns and cities. The post office is usually the heartbeat of any parade of local shops and usually the centre of any rural community. If it goes under, particularly in a parade of shops, the shops inevitably follow.

I see from the Marshalled List that my concerns are shared by many around the Committee, so I welcome this opportunity to raise this issue.

Before the noble Lord goes any further, will he tell us how many post offices closed between 1979 and 1997, and perhaps even more significantly between 1992 and 1997 when he was a Cabinet Minister in the other place?

There is so much wrong with that question. First, let us look forward and not back. But in looking back, let us see where 40 per cent of the closures occurred. The noble Lord may want to play general election games—I suppose there has to be an election in the next 12 months—but let us now work out and hear his ideas on how to ensure that these closures no longer take place. I certainly will give some examples to the noble Lord, and to other noble Lords, about how we can at least do something constructive in this Bill.

As I was about to say, Amendment 14 in my name, seeks to explore what the relationship between Royal Mail Group Limited and Post Office Limited will look like after part privatisation. We also have an amendment from the Benches to my right on the board of directors and, to be debated much later in these proceedings, on the question of an investment fund. I look forward very much to those debates. I hope that we will get some idea of the Government’s thinking in this area.

My amendments in this group focus in a slightly different direction. We on these Benches strongly believe that this Bill should have come many years ago. We also feel that the Bill was produced in a rather unhelpful rush. These views—I recall the Secretary of State said this at Second Reading—are not mutually inconsistent. Proper analysis of the problems and proper consultation on the possible solutions, and proper pre-legislative scrutiny, should all have their place in the process of producing a Bill, particularly one as contentious as this. I hope that my amendments will encourage the Government to start the process as soon as possible, before it is too late.

Amendment 1 states:

“Within one year of an order being made under section 2, a post office company must review the services a post office may provide to the public under arrangements with a government department”.

The Secretary of State must lay the review and the Government response before both Houses of Parliament as soon as reasonably possible. Amendment 2 would insert a new clause relating to the Post Office company report. That is because the Government have on every occasion when closure has been discussed said, “It is not for Parliament to have a view about this closure or that”. I hope that these two amendments will ensure that that does not happen any more.

Amendment 2 embodies an attempt to ensure that a proper analysis is undertaken of why post offices around the country are closing, not only putting people out of jobs, but also causing many villages and areas to lose a vital centre of their community. Amendment 1 seeks to ensure proper consideration of what more could be done to support post offices. I recall that the noble Lord, Lord Whitty, said at Second Reading that government departments should look at what services they could deliver through the post office network. He is right. We were extremely pleased that outside campaigners, and MPs and noble Lords from all sides, were able to persuade the Minister to reaward the Post Office card account to the Post Office. However, I felt and I still feel that the handling of these matters by the Government was a disgrace. Such a destabilising retendering process should never have been forced on the Post Office network. Cancelling it midway smacked of panic—and pretty expensive panic too.

There are a number of other services we feel the Post Office could provide. Our amendment would seek to ensure that the establishment of a post bank, in particular, to take one example, is properly explored. I look forward to hearing what the Secretary of State has to say about that. I think we all were very impressed indeed with the documentation launched about the post bank. The documentation, Post Bank at the people’s Post Office, makes the case for a post bank, and the comment was made, quite rightly, that the Post Office network is a unique national resource. Communities, businesses and individuals all depend on it. That raises the idea that as well as the universal service obligation, we should have a universal banking obligation. I look forward to hearing from the Secretary of State what he is going to do about all this, because there have been hints in the press about how other services could be provided. We want to know what is going on and what could be included. Not only do we want the idea of the post bank to be explored, but also its feasibility based on evidential grounds.

The noble Lord, Lord Razzall, quite rightly raised the issue of private mail expansion in this area and many others that could be looked at, such as the provision of expert advice on pension entitlements or tax returns. None of this must be rushed into. I participated in many of the debates on the setting up of the Financial Services Authority, and as noble Lords know, financial services are very heavily regulated. It would therefore be helpful if the Secretary of State could give us an idea of exactly what he has in mind. The drafting also discloses that we are providing for reviews to be undertaken by Post Office Limited. I would prefer to see a more independent review, particularly on the consideration of future services, but that is another matter.

The Hooper review caused a great deal of contention, although we have had some helpful evidence from the Communication Workers Union that reflects the extent to which it agrees with certain parts of it. However, in his excellent report, Richard Hooper has finally made it impossible for the Government to sweep all these structural problems under the carpet. Post offices would also benefit from an equally rigorous analysis. In looking forward to the Secretary of State’s response, I beg to move.

I oppose this amendment. I feel that the absence of the noble Lord, Lord Hunt, from the other place over the past 12 years means that he has probably gone to sleep on the issue of the Post Office and that in a number of respects he does not know what has happened to our post offices. In 1997, the incoming Labour Government inherited the Horizon project, which was set up to provide benefit recipients with swipe cards for collecting their benefits. The instructions given by either the Civil Service or Ministers—ultimately it is a ministerial responsibility—were so incoherent that the problems encountered by the system providers were of such an order that it took the best part of a decade to fully computerise Post Office services in the United Kingdom. That is the first thing that we have to recognise.

During that period, a number of people decided that it would be better to get their benefits through the bank than from the Post Office. Certainly, if they went to a post office, they could not take advantage of automatic teller machines because the Post Office, with the acquiescence of the then Conservative Government, had refused to allow individual postmasters to have ATMs on their premises, as they would be regarded as competition with the state run Post Office as adumbrated by the Conservatives.

Let us get the facts correct. A number of people who already get their works pensions through the bank find it equally convenient to get their state pension through the same source so that they can take their money out of the one account. They can also make standing order and direct debit arrangements, which are so convenient for elderly people who cannot get out so easily.

Certainly, in my constituency when I was a Member of Parliament there was a significant drop in attendances at post offices, which then had difficulty in continuing. Some tried to diversify and it would have been an advantage if there had been a postal bank. There could have been a postal bank because there used to be the Girobank, but that was privatised, went over to the Alliance & Leicester and disappeared. So it ill becomes noble Lords on the Front Bench opposite to lecture us about the desirability of expanding services when they, more then any other group, were responsible for the contraction of a number of services and for the indifference of the then Government—and, in part, of the incoming Government—to the plight of some postmasters across the country.

As the footfall was declining and people ceased to go to post offices in numbers, in many attractive villages where the post offices were located in positions where their real estate value was far in excess of the business case for keeping the shop going, the buildings were sold off as private dwellings because planning permission, from what I imagine would be Conservative local authorities, was easily granted for a change of use from commercial to domestic purposes. There are a number of reasons why post offices closed and why they changed. The rather flip and inaccurate way in which this amendment, which is not superficially unattractive, has been presented is irrelevant.

The post office system is now on a far more rational basis than ever before. There are a number of franchise businesses across the country and, to all intents and purposes, the Post Office is a franchise business. In the past, franchises were granted with no regard to whether there was local competition or to the proximity of one post office to another—in some instances the distance between them was very slight and in others it was quite considerable—but that has now been rationalised. It might be said that it has been rationalised by a closure programme, but the closure programme was carried out with a rigour beyond the comprehension of the Front Bench opposite. Paradoxically, post offices could now be in a better position than ever before. There is less business, for the reasons that I have given, but there are fewer post offices, they are a distance away from one another and they should be able to stand on their own feet.

There was a complete change when the lottery started. The lottery was a franchise and there had to be a certain distance between shops; alternatively, an outlet had to be within walking distance of any citizen in the country so that we could all have access to the fabulous prizes that the lottery affords. If the Royal Mail, the Post Office and the then Conservative Government had applied these sensible rules to the allocation of post offices across the country, we probably would not have had half the problems that we have encountered in the past 15 to 20 years.

The crocodile tears being shed by the Tories are little short of hypocrisy. Certain things can be done and I would certainly be happy with a Post Office bank; I would be very pleased to have the Girobank brought back and available. However, if there were to be a change of government, I wonder whether the Tories would have the same priority following a general election as they have today. I very much doubt it. I am not satisfied that a report about the Post Office would come out. God almighty, there are so many reports about the Post Office. As I said on Second Reading, for 10 years we had about three meetings a year with the Post Office and the then Trade and Industry Select Committee. There is no shortage of reporting on it or debate about it. We do not necessarily need yet another report that will gather dust on the shelves of the Library of this House. The amendment is unnecessary and I hope that the Committee will reject it.

I shall respond to the invitation of the noble Lord, Lord Hunt, to look to the future rather than to the past. I have a couple of questions on these amendments, following up on the final point that my noble friend has just made.

When the report is delivered to Parliament, what would happen to it? What would change? So far as I can see, nothing in the Bill would require anyone to take any further action beyond delivering the report. If that is the case, I would like to know what this is all about. My reading of the amendment is that, notwithstanding the drive to improve efficiency and effectiveness in all other government departments—I am assuming that it covers not just Civil Service departments but the whole of the public service, including areas such as the NHS, which is a substantial user of the Royal Mail and Post Office at the moment—none of those departments or agencies could enter into any changes that would lead to an improvement in performance, efficiency and effectiveness without waiting to see whether the report was prepared and delivered and then awaiting the outcome from Parliament. That would mean a substantial addition of regulation in the area of improving public performance. Has the noble Lord addressed that? Does he believe that it would lead to more or less efficient and effective public service?

I have a few questions. We are in the position of looking forward today and of seeing what has happened. I agree with my noble friend that it is interesting to look to the past and note that these days some people are singing a different tune from the one that they used to.

I shall come on to the present structure. What I am interested in, and we may be able to get some answers on this, is the proposal to separate the Post Office from the Royal Mail. That raises a number of questions. The Post Office itself is the largest retail business in the country; in fact, nowhere does it stretch more than the Royal Mail and nowhere could it offer more services, particularly in relation to banks. When I was speaking before on this matter, I suggested that one of the banks that could be considered was the merged Co-op/Britannia mutual. Certainly, providing all the financial services would be the right way to go. Maybe there were broader reasons for going into a post office in the past, but at the moment you go in to purchase stamps, post a letter or have a parcel weighed and then delivered.

I am interested in what the new structure will be because at the moment the Post Office and the Royal Mail are intertwined and dependent on each other. What will the relationship be as we go forward? At the moment, many post offices are for delivery as well as access. Where does that leave them? Will there be access points only for the Post Office in future? We need to know this; we need to know what the structure might be. I will be interested in what my noble friend has to say. I am hoping for a bit of light to be shed on the new relationship; it is vital that we know.

I am all in favour of expanding the services, but I am very interested to know whether the access point will still be the Post Office. What about delivery? Indeed, what will be the definition of a post office in the future? We know what it is now, but what will it look like in the future? Will other people be able to deliver? Will we be able to go to other places as well? There are a lot of things that we need to know. Will there be a greater separation between Royal Mail and the Post Office? I look forward to my noble friend explaining the situation between the Post Office as it is now, part of Royal Mail, and as it will be in the future when there are two separate companies, although they will come under one holding company.

I do not know whether other noble Lords share my disappointment at the way in which this Committee stage has started. I had assumed, listening to the noble Lord, Lord Hunt of Wirral, at Second Reading, that we would be going through the Bill line by line and dealing with the detail. I understand that people who cut their political teeth in another place cannot resist making what are effectively Second Reading speeches in Committee, but I urge noble Lords to accept that, if we carry on in this way, we will need not three days to deal with the detail of the Bill in Committee but 33. It is particularly unfortunate that the noble Lord, Lord Hunt of Wirral, produced this as Amendment 1, because all the people who no doubt will not be here at 9.30 on a wet Tuesday night when we are going to discuss what happens to the Post Office under Part 3 wanted to get their Second Reading speeches in now, either to lambaste the Tories or their own side. They are entirely free to do so but it is a pity.

We all know the history of what happened to the Post Office and Royal Mail. During the 1980s and into the 1990s, the Tory party allowed them to take a pension holiday and allowed the Treasury to take a huge amount of revenue which was not reinvested in the network. We all know what has happened since 1997; the Government were slow to pick up what was happening to the post office network. Let us accept all that; let us accept that the noble Lord, Lord O’Neill of Clackmannan, wants to bash the noble Lord, Lord Hunt of Wirral, over the head, and the noble Lord, Lord Hunt of Wirral, wants to bash the noble Lord, Lord Mandelson, over the head. Let us move on to what is the Committee stage, to try to get a Bill that we can or cannot support rather than trading insults over the next 33 days.

This perfectly sensible amendment aims to get what is happening to the Post Office back into the arena of Parliament so that the public can look at the Government’s proposals. It is a small nut that has been given a large crack with a number of Second Reading speeches.

In response to my noble friend Lord Hoyle, who asked some pertinent questions, all the answers are very clearly set out in the Bill and in the policy statement that was issued to accompany it. We will of course be happy to elucidate further in response to later amendments in Committee.

The noble Lord, Lord Hunt, began his remarks by suggesting that the Bill represents the most negligent, culpable late delivery of all time, to which I say, “Better late than never”. However, I realise that some who oppose modernisation altogether would say, “Better never than late”.

Let me address the amendments directly and respond to the noble Lord’s remarks. I regard the amendments as being grounded in an admirable sentiment—the wish to ensure a secure future for the post office network, to which I say, “Hear, hear”. The closures of the past year were difficult but necessary. I can say to noble Lords this afternoon that the Government have no intention of supporting any further programme of post office closures.

The network is now on a more secure footing and better placed to look to the future. Its unrivalled network of branches, its strong brand and the face-to-face contact that it offers are all the Post Office’s real assets. We are working hard with the Post Office to build on those assets and identify new opportunities to help ensure a secure future for it, a process in which the Business and Enterprise Select Committee in another place, chaired by a member of the party of the noble Lord, Lord Hunt, is involved. Given the current economic and financial climate, this is the right time to look for potential new business opportunities that can build on the Post Office’s trusted brand, the geographical reach of its network and the option of face-to-face contact that it offers.

Let there be no question of the Government’s commitment to the post office network. We are investing up to £1.7 billion, including £150 million a year specifically to support non-commercial branches. This will help to ensure a network of around 11,500 branches across the country.

Despite this continued investment, noble Lords will recognise that, in certain limited and highly unfortunate circumstances, individual post offices close. However, protections already exist to address those very particular circumstances, without the need for the provisions in Amendment 2. The Post Office and Consumer Focus, the statutory consumer body, have agreed a new code of practice to deal with such changes in local provision. The code, which will come into force on 1 April this year, sets out how local communities must be informed about the changes, how they will impact on the service and why they are necessary. The code also requires that local stakeholders, including local authorities, disability groups and Members of Parliament, are consulted on the changes. The code is in addition to Consumer Focus’s existing powers to investigate post office provision and its statutory duties in respect of consumers who are elderly, have disabilities, are on low incomes, or who live in rural areas.

I turn to Amendment 1. Noble Lords will no doubt agree with me that the best way to ensure the continued sustainability of the post office network is to use it fully. That is why we are working closely with the Post Office to identify new opportunities to increase both its financial role—I am looking with interest at the post bank proposals to which the noble Lord referred—and its government business.

This process has already borne fruit with regard to the handling of government business. Last November, the Government decided to award the substantial new contract for the Post Office card account to the Post Office—for which I noted that the noble Lord, Lord Hunt, deftly tried to take credit by saying that we took our decision as a result of his extraordinary pressure. This was followed by the announcement in the Pre-Budget Report that the Post Office would provide the new saving gateway account for those on benefits. Just yesterday, the Post Office announced a landmark contract with the DVLA to provide the face-to-face service for the 10-year renewal of driving licences. This contract puts the Post Office at the forefront of ID verification technology and helps to open the door for future potential work on passports and ID cards.

We have made progress on government business as recently as yesterday, and we will continue to do so. As for the Post Office’s financial role, we already regard it as an important provider of banking and other financial services. In our view, with its financial services partners, the Post Office continues to look for products well matched to the needs of its customers, and we will encourage it to do so in future. On closures, government services and the Post Office’s future putative financial role, I think that noble Lords will see that the processes are already in place and are robust. The amendments would impose unnecessary duplication of those processes, without adding to the sum total of human knowledge or our responsiveness to the general public, and might even risk undermining them. I therefore ask the noble Lord to withdraw the amendment.

I thank the Secretary of State very much indeed for responding so positively with the statement “Better late than never”. I warmly welcome that admission. My criticism was that the whole initiative could have been so much more successful had he pursued it when he was appointed Secretary of State for Trade and Industry. The noble Lord, Lord O’Neill, has upbraided me already in a way that he never used to when he was chairman of the Trade and Industry Select Committee. If he does not mind, I must go back to some of those reports and remind myself what he was saying then, because the very idea that it needed 10 years to get it all sorted out was not something I recall him referring to when he chaired the committee. I may well be wrong and, if I am, I apologise.

I welcome the fact that the noble Lord, Lord Brooke of Alverthorpe, wanted to look forward, not back. To the noble Lord, Lord Razzall, who knows that I greatly respect his judgment in these matters, I would say that before we get in to the line-by-line scrutiny we must remind ourselves that out there, in local communities and elsewhere, there is real concern about the way in which post offices have closed, along with a wish to fulfil the intention of the Secretary of State to find some way through to those new business opportunities that he has just described. I strongly support what he said about those opportunities and about the post bank; a successful post bank would offer real long-term financial security to individuals and businesses and provide a vital role for the Post Office commensurate with the high esteem in which it continues to be held by the British people. It would have been wrong to embark on the line-by-line scrutiny without spending a little time on the issue that really does occupy a lot of people out there, in communities up and down the country.

I should say to the noble Lord, Lord O’Neill, that we are not arguing, as he does, that post offices should be able to stand on their own two feet, because that fails to recognise the importance that they have for local communities. When the report is delivered, what happens is a very relevant question. We got a little indication at last from the Secretary of State that things are beginning to happen. My wish is to see more. I agree with the noble Lord, Lord Hoyle, that when people go into a post office, certainly in rural areas, they go not just for services from the post office, because post offices have often extended their services widely to become the local village store. We have to work out what the new structure should be—with access points—and what the definition should be of a post office in future.

In this short debate, there has been a bit of confusion about Crown post offices and sub-post offices. Otherwise, I thought that the noble Lord, Lord Razzall, made the sort of speech that he was criticising other noble Lords for making. Noble Lords should understand that we are not going to shirk the line-by-line scrutiny. The noble Lord called it a sensible amendment. Perhaps he will allow me to treasure those words.

I say to the noble Lord, Lord Mandelson, that his statement on the Floor of the Chamber that the Government have no intention of supporting any further closures was welcome news indeed and will be welcome news to a whole range of communities up and down the country. I suppose I should thank him for that. If that were all he had said, that would be enough for me.

In this vein almost of comradeship, will my friend confirm—he is a friend; Wales lost on Saturday and it was a very bad day for us—that there is no prospect of the Opposition privatising the Post Office?

We have no present plans to increase the extent of the privatisation. I still await our debate on the very clauses to which the noble Lord referred. I have been restricting my remarks to just these two amendments. If he will allow me, I will return and properly answer his question when we debate the meaning of public ownership, privatisation and all those things. I am trying not to stray into that area. If I did, I would be criticised for making a Second Reading speech, which was the last thing on my mind. This has been a useful occasion. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendment 2 not moved.

House resumed.



My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend the Home Secretary entitled, “The United Kingdom's Strategy for Countering International Terrorism”. The Statement is as follows:

“Mr Speaker, I have today published the revised version of the Government’s strategy for countering international terrorism. Protecting the safety of everyone in Britain is the primary duty, and abiding obligation, of government. Recent events in Northern Ireland were a chilling reminder that the threat of terrorism has not left our shores. They demonstrate the need to continue to adapt our approach so that we can deal with this threat wherever it emerges.

As we set out in our CONTEST strategy today, the greatest security threat we face comes from al-Qaeda and related groups and individuals. Our aim will always be to reduce the risk to the United Kingdom and our interests overseas from international terrorism, so that people can go about their lives freely and with confidence.

We know that the threat is severe. We know that an attack is highly likely and could happen without warning at any time. And we know that this new form of terrorism is different in scale and nature from the terrorist threats we have had to deal with in recent decades. This new form of terrorism is rooted in conflicts overseas and the fragility of some states. It is grounded in an extremist ideology that uses violence to further its ends. It exploits the opportunities created by modern technologies and seeks to radicalise young people into violent extremism.

The threat now comes from the al-Qaeda leadership and its immediate associates located mainly on the Pakistan/Afghanistan border, as well as from its affiliates and from others, including rogue individuals, who espouse similar views. As honourable Members across the House will know, not least my right honourable friends my predecessors, on whose important work this strategy builds, these groups have planned a succession of attacks against the United Kingdom, with the aim of causing mass casualties. Thanks to the hard work and dedication of thousands of people, we have had considerable success in stopping terrorists in their tracks and bringing those responsible to justice. I pay tribute to their work. We have disrupted over a dozen attempted terrorist plots in the UK, and since 2001 almost 200 people have been convicted of terrorist-related offences.

But the threat remains and is always evolving. This strategy takes that into account, draws on what we have learnt about how to counter it, and reflects the increased resources we have rightly made available to keep Britain safe. In recent years, the number of police dedicated to counterterrorism work has grown from 1,700 to 3,000. The Security Service has doubled in size. We have trained tens of thousands of people throughout the country in how to prepare for and protect against a terrorist attack, and we are working with communities to prevent the spread of violent extremism. We currently spend £2.5 billion on countering terrorism. By 2011 this will rise to £3.5 billion, the majority of it on the main focus of work—pursuing terrorists wherever they are and stopping their attacks.

The CONTEST strategy remains centred on four key areas: ‘Pursue’, ‘Prevent’, ‘Protect’ and ‘Prepare’. We have updated each of these. ‘Pursue’ will make use of new resources and new legislation available to the intelligence agencies and police to investigate and disrupt terrorist networks here and overseas, and to prosecute those responsible.

‘Prevent’ will reach more people than ever before, as we step up our efforts to stop people becoming terrorists or supporting violent extremism. This reflects our better understanding of the causes of radicalisation and includes new programmes and new partnerships with communities here and overseas.

‘Protect’ aims to strengthen our defences against an attack, through a strong border, improved resilience in our critical national infrastructure and greater protection for the crowded places where we all live, work, shop and play.

‘Prepare’ will limit the impact of any attacks that do occur, with tens of thousands of emergency services workers, security guards, store managers and others trained and equipped to deal with an incident. Every region of the country now has plans to deal with an attack, and so to improve our ability to recover and ensure a return to normal as soon as possible. There is also dedicated cross-government work on the specific threat posed by terrorist use of chemical, biological, radiological or nuclear weapons and explosives.

The vital work to counter terrorism cannot be done by central government, the police and agencies working alone. That is why this revised strategy is based on work right across central, devolved and local government, together with our international partners and with local communities. In addressing both the immediate threats and their longer-term causes, and how we will deliver action at a local, national and international level, our aim has been to publish as full and as open an account of our work as possible.

The strategy also draws close links with other government policies that are essential to its delivery, including conflict reduction, our international aid programme, counter-proliferation, our work in Afghanistan and Pakistan, and our support to communities here, building cohesion, empowerment and equality in this country. The strategy is also closely co-ordinated with the national security strategy, published for the first time last year.

The challenge that all of us in this House face is to strike the right balance between measures to protect security and the right to life with the impact on the other rights we hold dear. CONTEST is based on clear and unambiguous principles. And my approach to protecting Britain’s security in the face of the terrorist threat will always be underpinned by our core shared values, including the protection of human rights, the rule of law, and democratic and accountable government.

The Government have sought that balance at all times. But we remain uncompromising on a number of issues. We oppose the use of torture in all its forms. We have always condemned the practice of extraordinary rendition and will continue to do so. This strategy is comprehensive and wide-ranging. In publishing it, my primary aim is to reassure the British people that we are doing all in our power to protect this country through our relentless pursuit of terrorists and our determination to prevent violent extremism. We continue to depend on the determination, engagement, and vigilance of all in Britain to keep us safe. I commend this Statement to the House”.

My Lords, that concludes the Statement.

My Lords, I thank the Minister for repeating the Statement. On behalf of your Lordships' House I express my dismay that once again documents published by the Government were released to the media before being introduced to Parliament. That is not acceptable.

The attacks in Mumbai and Lahore show us that the international terrorist threat we face remains real and is constantly evolving. The updated counterterrorism strategy makes this point and outlines the complex nature of the threat. The importance of having the right strategy to guide the public servants who work tirelessly to protect us each day therefore cannot be underestimated, and I pay tribute to those who engage in this work. It is also right for the Government to communicate it openly to the public and to involve all of us actively in increasing our own safety. We on these Benches consider the framework for CONTEST—the four Ps: pursue, protect, prevent and prepare—to be sound, and we are glad that the Government have kept them as the framework for the updated strategy.

The issues we are discussing today affect our national security. I am sure that the House is united in wanting to support all necessary action to combat terrorism. The Opposition certainly support the Government’s efforts to tackle the terrorist threat. It is a threat to us all, not just a physical threat but one to the values of one of the world’s oldest liberal democracies. But it is also our role on these Benches to hold the Government to account for their implementation and delivery of the strategy, and to point out where we think they have made important mistakes, or where aspects of policy are wrong. We know that very good work has been done under “Protect” to strengthen our critical infrastructure and address the threats to public and crowded places and it is certainly right that this work should continue. We also know that the pursuit of terrorists has been relentless. Our intelligence and security agencies have been expanded and regional counterterrorism units, a model of best practice worldwide, have been established, and this has contributed to the disruption of a number of significant plots.

It is right that, as the nature of the terrorist threat evolves, so our intelligence and security capabilities are developed to meet it, but I add a note of caution. In improving our ability to pursue terrorists we must be careful that the security measures we take do not undermine our values or change the nature of our society. The Government were not able to justify their proposal to extend pre-charge detention of terrorist suspects to six weeks, which is why these Benches so strenuously opposed it. Similarly, we do not accept the Government’s claim that in order to protect us and look after us it is necessary for them to accumulate vast quantities of our personal data, or to impose identity cards on us all.

We are greatly worried at the risk to our privacy from the collection of communications data, particularly as the strategy itself on page 68 says that the Government will,

“exploit new data analysis and information sharing and management tools”.

I might add “if Parliament permits”, since the necessary legislation has yet to come forward. We are also concerned that, in the light of the type of attacks we saw in Mumbai and Lahore, we need a more structured contribution to homeland security tasks from our Armed Forces. Our first responders have asked for this, but the strategy appears to say that the military contribution will remain restricted to specialist capabilities. This concerns me.

In responding to any attack it is vital that the public are prepared. We back the Government’s action in broadening knowledge of the terrorist threat to thousands of people who work in public places in our shopping centres, leisure centres and sports grounds. Over the past few days it has been reported that 60,000 people or more have received training to help stop attacks. Presumably, this is under Project Argos. Can the Minister provide further detail on what type of training they have been given? Is it merely a voluntary three-hour course, including a coffee break, as the project’s website says? The Prime Minister and the Minister said that they were trained and equipped. We would be curious to know more. How do the Government intend better to prepare other members of the public for the risk of attacks?

Just as the public have a vital role to play in helping to spot suspicious activity, so there is a vital role for those who help to tackle the drivers of terrorism, and the strategy makes this point. It says that we need to increase “the resilience of communities” and that there is a,

“duty on all of us … to challenge”.

Here, I must ask the Minister: to challenge what? On this point, the strategy seems confused. In various places, it says “violent extremism” and in other places it says,

“the ideology behind violent extremism”.

Can the Minister give us a definition of violent extremism? Surely, violent extremism refers to the physical act of terrorism, but challenging the physical act of terrorism comes too late in the day, does it not? We need to tackle the extremism that encourages or drives people to this point. The Government must shift their “Prevent” strategy from preventing violent extremism to preventing extremism per se, and it is very disappointing that the Government have not taken the opportunity, in revising their strategy, to take on this point in an unambiguous fashion.

Of course, people have the right to campaign peacefully for change in our society, but the state does not have to give these groups its blessing, and it is quite another thing to have these groups openly suggesting that it is not possible to be both British and Muslim, advocating separatism and rejecting participation in society. This sows division between communities, and when a climate of hatred, fear and mistrust exists, so the pool of people who are vulnerable to radicalisation continually increases. This argument applies whether we talk about al-Qaeda or about those trying to destabilise the peace process in Northern Ireland. The noble and gallant Lord, Lord Guthrie, makes this point forcefully in an article in the Times today. Can we have an assurance from the Minister that, in their engagement with groups and especially when spending taxpayers’ money, the Government will do so with the aim of breaking down community divides? Will they conduct an evidence-based review of projects under the Preventing Violent Extremism programme to ensure that projects meet this objective?

The strategy is not wrong to say that there is a duty on all of us to tackle extremist ideas and hatred. Writing recently to the Muslim Council of Britain, the Minister of State for Policing, Crime and Security said that we must mount civil challenges against those who promote extremist positions—that is how he put it—that actively seek to undermine our values. How can the public be expected to do this if the Government do not set an example and seem confused? The Government must be unashamedly tough on those who advocate hate and who foster a climate of extremism, but they have not completely banned the terrorist organisation Hezbollah and they have not shut down terrorist websites under Section 3 of the Terrorism Act 2006. Their progress on deporting foreign nationals who pose a threat to our security has been very slow, and they do not have a good track record of refusing preachers of hate and extremists entry into this country.

The Government are right to ask us all to stand up and meet the terrorist challenge, but they must facilitate that and set an example. “Prevent” lies at the core of counterterrorism. It has to deal with the tough issues that we face in this country, and the Government will be judged by its delivery. I look forward to the Minister’s replies to the points and the questions that I have put to him.

My Lords, I thank the Minister for updating us on this strategy. We heard version one of the strategy in 2003, which necessarily concentrated on the role of the security services. In 2006, it was expanded into the “Prevent” strand by recognising the nature of the home-grown threat. Today, we seem to have a more rounded version, although it is hard to detect any new direction in thinking.

On “Pursue”, there has certainly been lots of new enabling legislation and some successful prosecutions. I join in the tributes paid to those who brought them and all the work that went before them. The Government, as the Minister said, have increased the spending, which remains on track from when the previous strategy was published.

I agree with the Government’s statement that the time has come to recognise the fact that this fight cannot all be conducted behind closed doors and that there needs to be a stronger emphasis on what happens in the open-door scenario. The “Prevent” strand is admirable, but it was rather spoilt this morning on the radio. I join the Conservative Front Bench in expressing sadness that the policy was launched, as always, on the “Today” programme and in the media, rather than in Parliament. The launch was also spoilt by the muddle that the Home Secretary got herself into when she talked about which groups would benefit from funding, which groups would be friendly, and the giving of money to them by the Government to counter terrorism. Actually, we have laws to prevent incitement, a fact which she seemed to overlook. The more that she wished simply to fund those who would counter terrorism in our communities, the deeper was the hole she was digging.

I am sure that the House will want to hear from my noble friend Lady Falkner of Margravine, with all her experience, on the complexity of the issues that are being dealt with. For example, I remind the House that only yesterday Ms Blears decide to break links with the Muslim Council of Britain.

As regards the “Protect” strand, of course we should protect our critical national infrastructure. It would be useful to learn more details on just where the fragile points of that are. The Minister may like to brief on that in private those of us in opposition responsible for speaking on this subject. When one thinks of radiological or biological weapons—a dirty bomb— the work on non-proliferation and on verification of nuclear material is urgent. I welcome the Prime Minister’s speech last week on nuclear issues when he talked about the importance of a “proliferation-proof” nuclear fuel cycle. No doubt, we will have an opportunity to hear more about that on Thursday, when my noble friend Lady Williams of Crosby introduces an important debate in this House.

On the “Prepare” strand, I was slightly reminded of the 1980s Home Office approach to a nuclear attack—so brilliantly parodied by Raymond Briggs in When the Wind Blows—which suggested hiding under the kitchen table. On training the 60,000, I agree that it is an admirable idea to train responsible staff, whether in shopping malls, sports venues or restaurants, to look after their venues. However, I have been told by someone who has been trained that their training involved a three-hour “multimedia show” with a coffee break. Perhaps the Minister could say how it is intended to build on that. The public need much greater involvement in a plan B to prepare for an attack. It was noticeable after the 7 July bombings here in London that the lack of mobile phone coverage threw many people into a real panic. The need for the public to have a plan B in that situation was very evident. We have not even had a drill here in Parliament. The last time there was an incident, Members were locked both in and out. That was inevitable but no one knew what was going on, and I hope that the Minister will be able to give that some thought.

The Statement talks about local authorities. Of course, for decades local authorities have been required to have a plan for emergencies that is regularly tried and tested. The Statement suggests that that is something new but, in fact, in most cases local authorities have been well ahead of the game.

I am surprised that the Statement does not mention education. I think that work in schools and colleges is critical, and we on these Benches would have put far more emphasis on that.

In terms of the international dimension, the Minister rightly mentioned issues in Pakistan. However, the Government continue to cut back on funding for institutions such as the British Council, and the BBC World Service, while concentrating on some parts of the world, continues to feel under threat every year. Those are two examples of very useful instruments for furthering the sort of approach that I think the Minister is talking about.

Finally, we support the Government’s efforts on counterterrorism provided that there is no confusion between terrorists and innocent UK citizens who protest. The Government need to tighten up on the term “extremist”. If they keep the terminology and the application of terror laws tight, they will have our support; if they misuse them, they will not. We do not want an excuse for invading privacy or for keeping databases; we want focused work, which we will support.

My Lords, I thank the noble Baronesses for their comments, which I think overall I can take as a positive welcome for this document. I can only apologise that they were not able to have a copy earlier. I do not think that it was finalised until yesterday or the day before due to some final bits and pieces requiring work, and I apologise for that.

I have travelled the world and have been involved in this area for a long time, and I have no doubt whatever that this is the most complete, all-embracing and coherent document on counterterrorism produced by any Government in the world. We are already talking to the Americans about it and they are very impressed. It is built on the original CONTEST strategy. We have been working on its various aspects over the past 18 months—a year has been mentioned but it has been a little longer than that.

The noble Baroness, Lady Miller, asked whether there was much new in it. There is a lot that is new. The whole of the initial assessment and delivery sections are completely new. The main chunk in the middle, concerning how we are going about this work, deals with things that have never been done before. It refers to the four Ps and looks at the cross-cutting measures of CBRNE, which has been touched on. It looks at industry, science and technology and innovation, and at how they are going to be linked into this. It looks at how the various government departments are going to work, and at how, for the first time, in “Prevent” we have something that goes from the community level in this country right through every layer to the international level—to Pakistan and elsewhere. This is a ground-breaking document. I absolutely accept that it is the duty of the noble Baroness’s party to pick up various points in the document, but I hope that when noble Lords opposite read it and absorb it more, they will realise what a ground-breaking document it is. It is important because, as I think everyone in this House would agree, this is a very important issue that we have to grasp.

Of course, it is a living document and things in it will change. For example, we are taking into account what happened in Mumbai and Lahore. I have a report that I had hoped to take to the Home Secretary last week but it will now be this week. Certainly some of the things that I found are now being followed up and that means that parts of this document will change. The same applies in other areas: as we move, so things will change.

There was a certain amount of questioning from both noble Baronesses about the issue in “Prevent” and the noble Baroness, Lady Neville-Jones, particularly talked about extremism and violent extremism. In the national security strategy with which I was heavily involved last year, there is a set of guiding principles that relate to what we believe in this country are our core values—the things that drive us in this country. Those core values were seen as the shared values that we reflected in the CONTEST strategy, which goes through in detail how we should promote those shared values within our society.

There was mention of the article in the Times this morning by the noble and gallant Lord, Lord Guthrie. I fear that he has got the wrong end of the stick. The strategy explains clearly that we are careful about who we will give money to in promoting what we see as shared values. I do not recognise the figure of £90 million. I think the actual figure is more like £15 million overall. There are some people we do and should engage with, but if a group is anti those shared values, we will look at each one on a case-by-case basis and ask whether that organisation deserves public money. If it does not support our shared values, it does not deserve public money. That does not mean that it is against the law: that is a different issue entirely. As the noble Baroness, Lady Miller, said, we have very clear laws in this country that we can apply when we need to.

There was talk about the figure of 60,000. We have done a lot of the Argos training. Both noble Baronesses seem to be anti coffee breaks and we do tend to give people a coffee break when we teach them things. The Argos training is important. After the attack in Exeter, I asked people to go down and specifically ask the people in that shopping centre whether that training helped them. The answer was yes, very much so, in terms of keeping them calm and being aware of what they needed to do to avoid mass casualties. As regards the Tiger Tiger incident, in London, we know that the second bomb was placed so that if the building had been evacuated, it would have gone off and killed many hundreds. People are taught simple things that assist them—things to look for and that they can point out if something is about to happen. It is only for half a day, but it is important. We are also training 15,000 security guards in project Griffin and 10,000 managers in the private sector are involved with Secure in the Knowledge, so it is a much more composite and all-embracing project.

Can we do more and keep it going? The noble Baroness, Lady Miller, is absolutely right. It is something that we need to address. We need to look at how we update and keep this going so that people are aware of it. When we were going through CONTEST, I was adamant, especially in the “Protect” area, that I would not do anything that did the terrorists’ job for them. I do not want to frighten the nation. Yes, there is a huge threat—we are at severe—but we should be able to live our lives. We should be able to work, play and travel. We should be able do all those things because if we put too many obstacles in the way of that in a so-called attempt to tackle terrorism, we have done the terrorists’ job for them. That is not what I intended to happen and not what I want to happen. I am sure that we will not let it happen.

The noble Baroness, Lady Neville-Jones, talked about proscription. It is a difficult area. We do not like some of these organisations, but there are strict guidelines and rules and they have to break the law for us to be able to proscribe them. That does not mean that within the structure of our society we cannot challenge those ideologies and have a debate about them. That is an important thing to do. That is what we mean about shared values: we should all be involved in that. We do not necessarily have to accept those views, but it does not mean that they are illegal. People are allowed to say what they want in this country. One of my sons said, “What if some mad person said, ‘The only people who can stand for Parliament are those who know the value of a good forward defensive’? Would you actually give them public money to enable them to run with that?”. I said, “No, but they are entitled to have that view”. In exactly the same way, people can have views that we do not like, but we do not give public funds to support them in proselytising those particular views.

On the CBRNE side—and, again, I do not want to frighten the horses—there is no doubt that there is much greater availability of dual-use substances and a lot more about these things on the internet and in publications, which is why I have a real worry about this area. It is not because I have a huge mass of extra intelligence; we have a lot of intelligence showing that they have always been interested in it, but it is the other aspects. I do not believe that we have put as much effort into it as we should have done, but over the past 18 months, we have put a huge amount of effort into it. This has to go on; it is a rolling programme. We are closely linked with the Americans on this.

The noble Baroness, Lady Neville-Jones, mentioned the internet. We have the legal powers in place but, until now, we have not really had to use them because in co-operation with the ISPs, which is very good, we have been quite successful. We have quite a good package on the internet side, and there is other stuff on that that I cannot talk about it, where we are having great success. This is a living document, and we have to keep moving, but we have come on in leaps and bounds and have achieved some very good things in that area.

I like the idea put forward by the noble Baroness, Lady Miller, about an exercise in Parliament. It could be quite an amusing day, or a half a day. I shall have to think about how such a thing could be done in terms of “Prepare” because we have done a lot of work on it. The noble Baroness referred to lack of mobile cover and things like that. Sometimes that can be done on purpose, so there are all sorts of funny aspects to how we run what happens after an incident. We have done a great deal of work there, and the more exercises we do, the better we get at it. We have trained more people from local government to be involved with these things. We issued the National Risk Register last year, for the first time ever, which enabled local government and the citizen to see the risks. These are important things.

The noble Baroness, Lady Miller, talked about the money we are investing in Pakistan. DfID has put in something like £90 million and the largest amount of our CT foreign spend is in Pakistan. We realise how serious this is, and we are doing a very good job there.

I hope that has answered most of the points. My key message is that this is a good document. People around the world will be looking at it. In the “Prevent” area, with all the massive complexities that both noble Baronesses referred to, we have tried to tackle something that no one else had really got to grips with. Now lots of countries are beginning to follow us. In some areas, they are doing some things better than us, but in terms of an all-embracing policy, they are not. I hope that answers the questions.

My Lords, has the Minister had the opportunity of reading the report of the committee of House, of which I happened to be chairman, which reported within the past month on exactly the matters he has been talking about? Does he accept that a major CBRNE attack in any country in western Europe, including the United Kingdom, could completely overwhelm the resources to deal with it? He will be aware that NATO and the European Union have parallel command structures, resources and exercises to come to the aid of a stricken nation whose resources could not cope with an attack of this sort, and I include the United Kingdom in that. He will also be aware that, as our report demonstrated, NATO and the European Union barely talk to each other. They do not exercise together—indeed, the United Kingdom hardly participates in these exercises—and they run these parallel systems, which is ludicrous. Will the Minister explain why there is no reference in the Statement to the resources of NATO and the European Union? Now that France has decided that it will rejoin the central command structure of NATO, will the Government make renewed efforts to bring together those resources of NATO and the European Union to come to the aid of stricken nations, which should be done not separately but in unison?

My Lords, again, I go back to the point about not wanting to frighten the horses. The bottom line is that if one looked at CBRNE and came up with a worst-case scenario, it would be very easy to overwhelm any nation in the world, I fear. We have done exercises in this country specifically in relation to these issues. The Americans have done rather more complex ones than we have. We were very much involved in those exercises with the Americans. As I say, about 18 months ago we had perhaps not done as much as we should have done. We have done a great deal since, but it would be extremely foolhardy to say that we are there yet; we are not.

As always in all these areas, we could spend our entire national wealth on CBRNE countermeasures. That would clearly be stupid, because again we would be doing the terrorists’ job for them and would have no money for anything else. One always has to balance risk with exactly what one can do. We have a project called Cyclamen, which we use to monitor the radiological and radioactive stuff that is coming in and out of the country. We have other things, which I cannot really mention, by which we are focusing on some aspects of this. We have done a lot of work in the “Prepare” area. We now have whole teams that are made up of volunteers from the ambulance services who can do triage and operate within the contaminated area when something goes on.

The noble Lord, Lord Jopling, is absolutely right; cleaning up after the murder committed with polonium took a huge effort. Cleaning up after something like a dirty bomb would also be terribly difficult. That does not necessarily mean that a lot more people will be killed, but the implications are huge. We do not underestimate this. We have taken a big cross-cutting measure across all the pillars. We are doing a lot. Yes, there is a long way to go. We have very close links with the EU. I have talked to Brussels about these issues. If anything, we are rather more prepared in some areas than it is, but we all need to be at that level.

I have not addressed the question of NATO and EU resources very closely, but I will ensure that my team does so after this debate. I am not sure at the moment of the exact status of those resources.

My Lords, does my noble friend agree that it is important to reach out to the often young and vulnerable members of our society who fall for the argument that, just because bad things happen in a democracy, democracies are somehow no better than the often closed and authoritarian societies that they seek to criticise? Surely the real issue is not defining extremism, useful though that may be, although it can be a bit like chasing your tail, but how we reach groups that fall for that argument. Is it not clear that a democracy is not some organisation in which bad things do not happen but a situation in which, when bad things do happen, there are ways of getting redress through the courts, holding government or other institutions to account or many other measures that are not available in closed authoritarian societies? Surely that is the message that we have to get over to these people, who, as I say, are often young or from vulnerable groups. Members of both Houses have a real opportunity to lead on that. Perhaps we should try to find a way in both Houses of getting that message over.

My Lords, I agree. My noble friend has opened up an area that demands a very complex answer, but I am tight on time so I will not give one. I agree that we absolutely have to engage with these people. We have achieved things with our “Prevent” strategy. For the first time ever, we have started to identify what makes someone become a violent extremist and what causes radicalisation. We do not yet know all the answers, but 18 months ago we did not have a clue.

We have done a huge amount of work, and to assess how successful this has been we have set up mechanisms by which we can learn key lessons. We have had the Pathfinder year, and the Audit Commission and the HMIC undertook a learning and development exercise. We are putting mechanisms into place to measure our success, but I would be lying if I said that it is easy to measure; it is really difficult. However, I am reassured by the fact that the vast majority of our Muslim population are absolutely on side with us on this. They absolutely abhor the violent extremists, and they do not like people who tend to lead people towards that route. That is very reassuring, and it makes me feel very sure about our success in the future.

My Lords, the Minister has slightly misunderstood what was said by the Front Benches about not having received the document a couple of days ago. The problem is not so much that we did not get to see it, although obviously that would have been very helpful, but that it was aggressively trailed by the Government through the media: the Statement was available on the internet several hours before the Printed Paper Office had it. That is the point we were trying to make.

I should say to the Minister that I am the daughter of an intelligence officer. As regards the strategy of 161 pages, I would think that if you are talking about counterterrorism strategy, which by definition is predicated on not knowing very much—that is what the gathering of intelligence often is and you cannot have absolute certainty in what you know—investing so much, as I see on the face of it, detail, particularly where the detail is rather confused and contradictory, only adds to the confusion.

I will stick to the points I want to make on confusion. What the Government can do confuses us. On the one hand they talk, as the noble Baroness, Lady Neville-Jones, said, about violent extremism and on the other hand they talk about ideology. This morning, we were completely confused as to whether the Home Secretary was against unlawful acts, which I would have thought we were all against, or whether she wanted to put a chill through expressions and restrictions on freedom of speech. I think she said she was going to launch “civilian challenges” against people who said things of which she did not particularly approve.

I have the scars on my back. I took up and challenged Hizb ut-Tahrir more than once and have gone through a campaign of intimidation by Hizb ut-Tahrir against me personally and very publicly. But I would argue with the Home Secretary that the people to take on the challenges in terms of ideology in the community are those from within the community itself. It is not the role of the state, a particular government department or a particular Home Secretary to decide that right thinking rather than wrong thinking can go on in communities, which, if I might say, are very socially conservative.

Finally, the strategy seems to want to be all things to all people, so it says that it will address the grievances which these ideologies exploit. If the Minister had been here on 26 February and had heard the speech on challenges to foreign policy, he would have heard several noble Lords raise the issues of the challenges of not providing counterinsurgency training in Pakistan to the intelligence services; the problem with the ISI, whose head has only recently said that the terrorists have the right to think that way; and the other challenges that Pakistan faces. The Minister has told us that he has increased—

My Lords, I am delighted that the noble Baroness is the daughter of an intelligence officer. Just by that definition almost, she must be a good chap. In terms of how we approach the shared values, I would rather see this as promotion of the shared values, which were originally identified in the national security strategy and are now covered within CONTEST. It is very important that within that community those shared values are promoted, but it is incumbent on all of us to promote them.

On foreign policy and grievances—I will be short to let others ask a question—I am on record already as saying that foreign policy does have an impact. But when you argue and discuss this with people, which I have done, initially one gets quite a rough ride. But when you engage and talk about it, slowly people understand why we might have done what we did. They will not always agree with it, but it is not very helpful when we do not engage or get involved. We need to do that. This engagement, the understanding of some of those things and the promotion of shared values are all extremely important and I believe will move us in the right direction.

My Lords, I thank the Minister for his Statement, which obviously deserves further study. In the light of his answer to a previous question, is he aware that, perhaps by coincidence, the Department for Communities and Local Government this very day has put out a press release announcing an inter faith week to take place throughout the country in November? Does the Minister agree that good relationships between the faiths, and between each faith and the Government, is of supreme importance if terrorism is to be combated?

My Lords, I was not aware of the inter faith week. Under the CONTEST strategy, all government departments are involved and linked into this effort, and I can tell the right reverend Prelate that that is no mean feat. I have been involved in trying to get things done on a cross-government basis since 1982, and sometimes it is like herding cats. But we have achieved it and the Department for Communities and Local Government is very closely involved. However, the right reverend Prelate is absolutely right to say that having all the faiths involved is crucial to what we are trying to achieve.

My Lords, I have two brief questions for the Minister, the first of which concerns the four “P” points set out in the Statement. On “Pursue”, while I accept quite happily that lawful intercept activities should be available to the intelligence agencies, I am worried that “prosecute” comes under “Pursue” when it ought to be a fifth point. That might get rid of the problems we have with control orders and the detention of people without trial for long periods. We should be aiming to get cases through the law courts and not going against habeas corpus.

My second question is this. Towards the end of the Statement it says that,

“the challenge that all of us in this House face is to strike the right balance between measures to protect security and the right to life”.

Does this mean a shoot-to-kill policy, or does it mean what I think it probably does, a right to a private life? If the latter is the case, would the Minister take into consideration my first comment that lawful intercept is acceptable? However, data mining and communications data probably are not because we have the right to a private life and we need to make sure that that right is maintained. Also on the right to life, security measures mean that I often have to queue for hours in various places for security checks. That effectively deprives me of some of my life because there is nothing else I can do in those hours. An overreaction to the terrorist threat can actually be counterproductive.

My Lords, the Government’s aim wherever possible is to take people through the courts in the judicial process. Sadly, that is not always easy to do because a lot of what we have is based on intelligence, which is not evidence and therefore cannot be used in the courts. I turn to the right to life. The nature of the threat means that these people wish to kill as many innocent people as they possibly can, and it is interesting to note that they have killed far more Muslims than they have those of any other faith, which shows how random and extraordinary they are. However, that is what they want to do. Therefore under the right to life, people have a right to be alive and not to be killed. It is a very important right. I see things pass across my desk which show that these people have every intention of killing large numbers of the innocent. I believe that the right to life is very important and one of the rights that any Government should hold dear. Sometimes that impacts on other judgments.

My Lords, I have been listening to the responses of the noble Lord, Lord West of Spithead, with great interest, but I do not think he has replied to the question put by my noble friend Lady Neville-Jones about releasing documents to the press before they are made available to Parliament. Will he answer it now if he has not done so already?

My Lords, has the Minister read the Prime Minister’s article in the Observer last Sunday which trailed this Statement? If so, did he notice that the Prime Minister said that UK support for conflict prevention and stabilising fragile states was an integral part of our counterterrorism strategy? Does he believe that when he wrote that, the Prime Minister was aware that the British Government are in fact cutting back their support for those two matters? If so, will he now reconsider those cuts?

My Lords, I read the article by the Prime Minister, and I was at a Cabinet meeting on Monday about Afghanistan and Pakistan. In all these areas—conflict prevention, support for fragile states, how DfID money goes in—there are a number of routes through which money goes. All those things are looked at in balance. While some bits might have been cut, we are still putting a large amount of money into those areas. Whether we need any more is something we have to decide all the time on the basis of the work we do there, but we are not talking about a straight cut so that less money is available to help in two areas that are crucial to us. Pakistan is a great worry—of course, the Fatah—and we have Afghanistan. We are looking constantly to see how we can best utilise the resources we have.

My Lords, control orders have so far caused the greatest concern of any anti-terrorist power. They do not even require the probability of involvement of the defendant in terrorism, only grounds for suspicion, and they have not been very effective because of the number of absconders. When control orders were first introduced, the Government said that they were interim provisions and would be reconsidered. Nothing has happened, however, in the intervening four years. Have the Government therefore abandoned attempts to modify the control order system to make it more acceptable?

My Lords, we had a long debate on control orders only recently and I made it clear then that the Government do not like control orders—that they are the least worst option. We use them where we are not able to put someone into prison because, as I said, intelligence is intelligence and not evidence and much of it is hearsay; however, that does not mean that it is not pointing clearly at a person who is going to try to do something horrible to us. If we cannot deport that person with assurances—either because they are a British national or because we could not safely send them to the country to which they would need to go because they might be tortured or killed—then we have to have another way of monitoring them. Within that context, we try to put in as much judicial cover as we can and senior judges consider the issues involved. It is the least worst option but we do not like it. There are 17 people under control orders at the moment, all of whom, I am assured by the Security Service and by Special Branch, need to be monitored for the security of our nation. I am willing to accept that. Work is going on to see whether there is another way to provide the same security, even if it costs a lot more money. We do not like control orders but they are necessary for the safety of our nation; that is why, at the moment, I support them.

My Lords, while accepting the rationale and the thrust of the Statement, perhaps I may ask the Minister a question about torture, which was referred to in one of the last paragraphs of the Statement. While appreciating that ongoing inquiries have still to report, can he give an undertaking that if any country requests of Britain information relating to a British subject or a British protected person, such information will be handed over only on the solemn undertaking that torture will not be resorted to in relation to that individual?

My Lords, our position on torture is clear: we absolutely condemn it. We do not torture people and we do not ask others to do it on our behalf. The Prime Minister has said that we will publish our guidance to intelligence officers and service personnel concerning the standards to apply during detention interviewing of detainees overseas. We will ensure that standards of practice are maintained by inviting the former Lord Justice, Sir Peter Gibson, the Intelligence Services Commissioner, to monitor compliance with that guidance and to report to the Prime Minister annually.

Postal Services Bill [HL]

Committee (1st Day) (Continued)

Amendment 3

Moved by

3: After Clause 2, insert the following new Clause—

“Provisions for employee ownership scheme

Any issue or disposal of shares in the original holding company, or any of its subsidiaries to a party other than the Treasury, the Secretary of State or any nominee of either of them, must include making some of those shares available for purchase by employees of the original holding company or any of its subsidiaries.”

The amendment seeks to create a scheme which I know has the support of many Members of the Committee and, I detect, does not meet with total opposition from the Secretary of State. The noble Lord, Lord Razzall, has tabled an amendment in this group which offers a slightly different model of employee participation to my own and I look forward to hearing him speak on the subject.

The incentive of giving employees a stake in the success of their own company is well understood. Royal Mail has, of course, set up ColleagueShare, a phantom share scheme giving employees the opportunity to receive dividends if the company hits its targets and to sell the shares back at the end of five years, presumably at a profit if the modernisation process goes through and goes well. The scheme set out under the heading “Provisions for employee ownership scheme” attempts to mirror the incentives that apply in an equity-based share scheme. Does the Minister feel that the real deal would offer many more rewards for employees?

As my noble friend Lord Fowler mentioned at Second Reading, there are a range of views about whether or not to give employees more of a share in the company for which they work. Historically, there are some in the trade unions who do not like giving employees that power, and he has set out some examples in the past. However, there are others in the trade union movement, truly representative of the workforce, who I have always found have great popularity among their members because they advocate employee share ownership. The noble Lord, Lord Brooke of Alverthorpe, was also quite right to point to the improved relationship with employees that results when staff are given that greater involvement and participation in the running of the undertaking for which they work.

I declare an interest not only as a solicitor but as one who used to act for the Transport and General Workers’ Union for many years and who is a strong supporter of the trade union movement when it offers real incentives and real benefits to its members. Indeed, there is no better organisation at looking after its members than the trade union movement that I used to serve, in tending to those who were injured or who had lost a member of their family. The amount of help and resources that came from the trade unions was remarkable. Those in the movement and those who represent employees have, rightly, often welcomed the opportunity for their members—and, indeed, for employees—to have the right to own shares.

As I understand it, the Bill in its present form does nothing to rule out the establishment of an employee share-ownership scheme, but the reality is that any such scheme would naturally have an impact on the negotiation and establishment of a private partnership deal.

I understand what the noble Lord is saying about the benefits to employers, and I do not disagree with him for one minute on the issue of share-owning, but as we have seen, for example, with bus companies that were municipally owned, many of the shares were given to employees who then sold them when they had a higher offer, which defeated the object of giving the shares to employees. Might it not be better if there were a clause somewhere that said that if the shares were going to be sold, they would have to be sold back to the company rather than to some predator who wanted to get their hands on them?

The noble Lord is right to point out the dangers of a predator. No doubt we will be dealing with that when we move on to the next amendment. My view is that it will be difficult to restrict the ownership in future. It is an inhibition that I do not favour, but I readily recognise the motivation behind what he has pointed out.

I refer back to the Minister’s telling phrase, “Better late than never”. Now that we are dealing with the prospect of a deal, my question to him is, “Deal or no deal?”. The impact assessment states clearly that,

“Doing nothing is not a viable option”.

He owes it to the Committee and to Parliament to tell us what is going on. Of course, it may be that he is unable to go into any detail because of commercial in-confidence negotiations. However, it might be helpful if he could give us some sort of timeline within which he is operating. A lot of us are troubled by the fact that there is no evidence of any deal at all, at present or in prospect. We need clarification of exactly what is going on. There were some indications at Second Reading. Where are we today? Where will we be when we get to May or June? Is the Secretary of State still working towards having a deal this summer?

I do not think it is enough for the noble Lord to say that he will look at employee share ownership some time in the future. It needs to be considered now. Indeed, the private partnership will no doubt impact heavily on ColleagueShare, for example. While we are talking about a possible equity-based scheme, I should be glad to have clarification of how the current phantom scheme is likely to operate, for it still has several years to run. If it continues, will the nominal value of the shares be tied to the real value that any private partner pays for its shares? How will the dividends be set against the profits paid to the minority partner?

I have no wish to take up any more time in putting all these questions, and there are many more. I hope that the amendments will give the Secretary of State the opportunity of answering some of those fundamental questions and giving us an idea of what lies in the future. I beg to move.

I agree with the noble Lord, Lord Hunt of Wirral, that now is the time to determine whether we have an employee share trust. It will come as no surprise to the Minister to hear that we have for many years advocated that some element of the public ownership of the Royal Mail should be in the hands of the staff rather than the taxpayer. Clearly this is a complicated issue. We are suggesting that if the Government get their Bill through, under which up to 49 per cent of the Royal Mail can be in private hands, of the remaining 51 per cent, half should be retained by the Treasury and the other half should be in the hands of an employee trust.

I agree with the noble Lord, Lord Hoyle, that staff shares should not be sold in the market when someone makes a higher offer; they should be protected so that when someone leaves, those shares come back into the employee share trust. The model that we seek is the one adopted by the John Lewis Partnership and the Co-operative Society, although in both cases they have 100 per cent employee ownership. That may be a model for the post-capitalist world that we seem to be inching inexorably towards. It is no surprise that the largest takeover in the past month has been the Co-operative Society buying the Somerfield supermarket chain. How, in the modern world, can a company organised on a mutual basis be able to borrow the money necessary to acquire a major supermarket chain—as a result of which it is now back to fifth in the list of UK food retailers—whereas a number of organisations organised in a traditional manner find that more difficult to do?

The Government initially proposed having 30 per cent of Royal Mail in private hands, but the Bill, if they get it through, would permit them to make it 49 per cent. We propose that half the balance should be in an employee share trust, with the other half retained by the taxpayer. Our Amendment 26 in this group floats a proposal for a figure of 25.5 per cent and makes it clear that that will not affect the definition of public ownership. We do not think that more than 49 per cent should ever be in the hands of anybody other than the Treasury and the staff.

We made clear in the policy statement which we issued when the Bill was published that the issue of appropriate workforce incentives was high on our agenda and that the Government would want to talk to potential partners about incentives, including employee share ownership.

We heard at Second Reading, and again today, that several noble Lords believe that it is important to give Royal Mail employees real shares in this business to drive the transformation that we all agree it needs. We share the view that getting incentives right to drive modernisation in the business is important. However, in tabling this and other amendments, noble Lords have acknowledged that Royal Mail employees already benefit from some such incentives. As has been stated, Royal Mail staff currently participate in a shadow or phantom share scheme known as ColleagueShare. This was introduced in 2007 and provides members with an incentive scheme linked to the value of the business, driven by modernisation, akin to real shares. The scheme is only part way through and will run to 2012.

It is true that in 2007 the Government considered Royal Mail’s proposal for a significant proportion of its shares to be provided to employees. It was decided at that time that the ColleagueShare scheme was more appropriate, not least because I gather there was no interest in or enthusiasm for a full scheme among the workforce. This was before the unequivocal findings of the Hooper report which made it clear that for the universal service to be sustained, an injection of capital from a strategic partner would be required. I do not know whether that might influence workforce attitudes now. That remains to be tested.

I accept that the ColleagueShare scheme has not been a resounding success in inspiring the modernisation of Royal Mail that it was designed to produce. However, the scheme is only part way through and runs until 2012. I think that its success should be judged then and not now. The benefits which could accrue from the present scheme are potentially generous to Royal Mail’s employees. Each participant in the scheme could get up £5,300 in total, which is equivalent to a total payout of £0.9 billion over the life of the plan. This level of payout to staff would be more than five times the reported operating profits of the group in the year to March 2008. It demonstrates the importance that we place on ensuring that Royal Mail’s workforce shares in the company’s success. We do not, however, want to be obliged to offer shares for sale to employees at this stage as Amendment 3 contemplates. We need to reflect on the benefits of the existing shadow scheme in driving Royal Mail’s modernisation before putting in place any alternative incentive scheme. Any incentives must be linked, and be seen to be linked, to successful performance of the company.

We acknowledge that as the years go by the appropriate staff incentive arrangements may change. However, these arrangements would rightly be a matter for the Royal Mail management and any partner to consider in the context of their transformation plans for Royal Mail. The legislation should not prevent the right arrangements being put in place, and the noble Lord, Lord Hunt, has acknowledged that that is the case. The legislation does not prevent any such arrangements being put in place. It is entirely permissive but leaves the judgment for subsequent discussion between the current management, the new partner and the workforce. Accordingly, the draft Bill allows the Secretary of State to transfer up to 49 per cent of the shares of the letters business to third parties. We would not want to reduce that percentage. As I made clear at Second Reading, we expect around 30 per cent to be acquired by a partner, but the precise level of any equity stake will be a matter for commercial negotiation. This will take place alongside and in parallel to the passage of this Bill through this House. The original timeline that I described at the time of Second Reading still stands; it remains the basis on which the Government are operating. Nevertheless, this should still leave sufficient headroom for some shares in Royal Mail to be transferred to employees if that was thought desirable.

The percentage of such shares would be a matter for debate. We could not accept provision of shares to employees that would dilute the Government’s own stake in Royal Mail to below half, which would stop the company from being publicly owned. Amendment 26 could allow that to happen. However, let me stress again that Royal Mail is not restricted under this Bill from providing shares to employees.

We are happy to engage in further discussions with interested parties in both Houses to ensure that we put in place the very best form of incentives to drive modernisation in the business. It is also vital that any incentive arrangements represent value for money for the taxpayer and that Royal Mail should be maintained in public ownership so as to ensure that the Government have the right and ultimately the ability to ensure Royal Mail’s future and that it is run in the public interest.

In light of what I have said on the current provisions in the Bill and the employee scheme that already exists, I ask the noble Lord to withdraw the amendment.

That was a very helpful response, but it raises a number of further questions, particularly over the timeline. If I recollect, at Second Reading the Secretary of State talked about summer this year. Could he clarify that a little? Will what is happening in these discussions and negotiations be announced at least in principle before the Bill has completed its passage? He says that anything is possible, but there is no provision in the Bill for the sort of employee share ownership that I outlined—or, indeed, that the noble Lord, Lord Razzall, outlined.

We really want some sort of assurance that, if a private partner is greatly encouraged by the thought of extending share ownership as part of the deal, there will still be time to set out the scheme in much more detail. No doubt we will come later to what will happen to the proceeds of any sale of shares—or will we have to leave all that to the Secretary of State, who has not really outlined whether discussions have taken place with one, two, three, four or five different partners? I know that a lot of commercial in confidence negotiations must be going on—or at least I hope that they are, because we all want to see a satisfactory resolution to all this. But could the Secretary of State give a little more indication of what will happen if the private partner with which he starts to finalise discussions wants to see in this Bill some more detailed provision for an employee share ownership scheme, and whether he envisages that there will still be time to introduce that in the legislation?

The relationship between Government and any partner will be subject to a shareholders’ agreement. This will be a legally binding contract between the Government through Royal Mail Holdings as seller, and the buyer. That document will make clear what the buyer can do, for example on board appointments, and what it cannot do—for example, by placing restrictions on the sale of its shares. I am perfectly happy to respond further to questions about this agreement in due course. I think that it would more naturally arise in debate on subsequent amendments. What I would say at this stage is that the possibility of introducing a full employee share scheme would be something that we would discuss with the prospective partner. Should we reach a joint view that such is desirable, it is something that I think we would want to discuss with the workforce itself to test its opinion. Every last dot and comma of that does not need to be tied down as part of that agreement. That is the context in which we would address this issue.

Does the Secretary of State believe that if that were to happen in these discussions, the present Bill would allow the sort of scheme that is being envisaged? It would be helpful to know that we are giving the Secretary of State enough power in this legislation to do the sort of thing that we have been discussing under the heading of employee share ownership. Any indication of that would be very welcome.

There is also talk about a share agreement—the Secretary of State has just mentioned one. Does that already exist in draft? There are shareholders’ agreements, and there are shareholders’ agreements. They are not all standard form. However, there may be a standard form that the Secretary of State and his fellow Ministers are working towards. It would be very helpful if he could perhaps share with us, or place a copy in the Library, the sort of provisions that he believes should be contained. We could then better adjudicate on whether the legislation in its present form would allow that to happen.

I appreciate the spirit of the noble Lord’s inquiry. No such shareholder agreement exists because no such negotiation has yet taken place. We do not have some sort of putative agreement hanging around on a shelf waiting to be taken down, dusted off and shared. In answer to his previous question, which is very important, there is no legal bar on the Secretary of State or on Royal Mail and its prospective strategic partner agreeing to such an employee shareholding scheme. However, what the Government would say as shareholder, and what I have already said, is that any such scheme would have to be on the basis and within the terms and limitations that I have described—that is, one that does not push the Government, representing the public, into a minority ownership position in Royal Mail.

I do not think that the Secretary of State quite said that there would be no need for any further legislation. I take it that he is virtually saying that. The noble Lord says, “That is what I meant”. I think we are reassured by that. There is still the question about what happens to colleagues’ share under any such agreement. I know that the Secretary of State will not have gone quite the route that he has outlined to us; namely, that no Minister and no official has even given any thought yet to what the shareholders’ agreement would say. However, perhaps the main assurance I seek is that, as soon as there is a little bit more of a focus on this, he will share with the Committee the stages that are reached. In view of the spirit with which he approached my amendment, I have no hesitation at this stage in seeking the leave of the Committee to withdraw it.

Amendment 3 withdrawn.

Amendment 4

Moved by

4: After Clause 2, insert the following new Clause—

“Post Office board of directors

(1) The Secretary of State must appoint a board of directors for each Post Office company.

(1) The board of directors for each Post Office company must further the objectives that it sets itself.

(2) OFCOM, as determined by section 28, must monitor the board of directors’ efficiency and compliance with such objectives.

(4) OFCOM must also be responsible for the setting of charges.”

I have no intention of repeating my Second Reading speech. I trust that the Minister, who was not present then, might have read it.

I have considerable experience of the governance of publicly owned industries. Those running them have to put up with constant government interference. We have heard this afternoon of two cases—pension holidays and payments to the Treasury—which have no doubt damaged the Royal Mail considerably.

We also have the problem of uncertain funding streams, but I believe that the Bill addresses that in Part 3, in the setting up of the new regulator, Ofcom, which we hope will be better than Postcomm. If Ofcom follows the pattern set by the Office of Rail Regulation for the railways, at least it will establish as firm a funding stream for the industry over five years. Of course, it is possible for the industry to make representations to the regulator about the following five years.

It seems that political interference turns on, first, setting not vague but very clear objectives of what the boards of these bodies are to do. One of them is, of course, to maintain the universal obligation. However, there is a need for a few objectives. The next thing is to appoint competent and able people to run them, free of political interference but subject to the regulator’s control. The regulator has done well in the railways industry, but in others—perhaps the national grid is an example—the regulator has not done so well.

Thirdly, the public sector has of course had its fair share of the industrial relations problem. It has often been fairly constrained politically in what it can do by, for example, constant interference by the Government in wage negotiations, or rate or fare setting. However, the public sector is now moving to a point where it should have compulsory arbitration of disputes. I draw the Secretary of State’s attention to the fact that there are six ballots outstanding on strike action in railway companies around London. Many of them concern small issues that ought to be cleared by arbitration and not by thoroughly inconveniencing lots of passengers.

I want the Secretary of State to think broadly in considering Amendments 4 and 10, and perhaps to think afresh about these problems. We must move the Post Office on to a new plateau which is reliable in terms of its industrial relations, its financing and its objectives. I beg to move.

I shall not be able to be present when the Committee discusses later amendments relating to the governance of Royal Mail. I declare my interest as chair of Consumer Focus. Confidence in the future of Royal Mail and the Post Office is key to this discussion. I do not agree with this amendment and I consider that the noble Lord has wrongly interpreted the relationship with the regulator. The board is not subject to the regulator; the regulator regulates certain aspects of the business but the board must be independent of the regulator and the Government. Therefore, I consider that the amendment is misconceived. However, the Government must indicate clearly how they expect the governance of the new structure to work. I am very grateful to the Secretary of State for sending me a copy of the envisaged structure of the new industry. However, governance issues arise at every level of the company and will be different for the different parts of the structure. Whether or not we need to go into huge detail in the Bill, it is incumbent on the Government to indicate how they see the governance structure emerging.

In that context I am bound to say that it is not only a question—as some have said—of representation of the potential partner or of the workers. You also need people on the board who have experience, as business or individual consumers, of the services both of Royal Mail and of Post Office Counters. Therefore, I do not support the relevant amendments on the Marshalled List today, but I hope that the Secretary of State will give a clearer indication of the thinking on governance.

The amendments of the noble Lord, Lord Bradshaw, raise important questions and we look forward to hearing the Secretary of State’s response. It is right that we should look at how best to support the network and encourage its expansion, modernisation and diversification. A strong board with, as the noble Lord, Lord Bradshaw, said, clear objectives, is, of course, a necessity as much for the Post Office as for Royal Mail, and I have a lot of sympathy with his concerns in this area. The noble Lord also referred to regulation. An interesting point arises here about the regulation of post offices. The Bill is, of course, largely focused on Royal Mail and Part 3 concerns Ofcom’s responsibilities over Royal Mail, and potentially private sector providers of services within this sector. However, I believe that the reorganisation of Royal Mail Group will—the Secretary of State will correct me if I am wrong—bring Post Office Limited out of the remit of Postcomm. If I am right, it is important that we hear his reasons for excluding post offices from Ofcom’s remit, and the Government’s plans for the ongoing regulation of Post Office Limited. Of course, we will go into these issues in much more detail when we reach Part 3, but, as was made clear on earlier amendments, we certainly support the noble Lord’s concerns that Post Office Limited should not be forgotten.

Ensuring the appropriate governance arrangements for the Royal Mail Group of companies is absolutely vital. At Second Reading, the noble Lord, Lord Bradshaw, raised very important points about corporate governance, as he has done again today, and the serious consequences which can arise if companies do not have sufficient clarity in this regard. I agree with the noble Lord’s sentiments if not his amendments.

As required by company law, the board must discharge its duties in the best interest of the company, which is owned by its shareholders. The Combined Code on Corporate Governance states that,

“if this is ignored, the consequence may well be vulnerability or poor performance”.

It is right, therefore, that the shareholders—in this case the Crown, and in the case of Royal Mail Group Limited, the private sector partner—should have their views represented on the board. The Government will maintain their existing rights of appointment to the board of Royal Mail Holdings plc, which will remain owned in its entirety by the Crown. Additionally, the Government will create a new board for the Post Office with a non-executive chair. This will provide a new level of support and challenge for the Post Office’s management team. I hope that that specific proposal will be applauded by all Members of this House and will give the necessary reassurance and confidence in this Government’s commitment to the future of the Post Office remaining not only wholly owned by the Crown but also being given a place within the corporate governance of the group as a whole that will enable it to develop fully in the future.

In relation to Royal Mail Group Ltd, the Government’s intention under the partnership proposals is that its board should comprise both executive and non-executive directors, with a majority of non-executives. The precise composition of that company’s board will be a matter of negotiation with the prospective partner. The Government expect to appoint the chairman and a majority of the non-executive directors.

Amendments 4 and 10 seek to give Ofcom the responsibility for monitoring the boards of Royal Mail and the Post Office. Of course, I agree that Ofcom has an important role to play in the postal services sector. That is why the Bill includes many provisions covering its powers and duties. To my knowledge, in only one very specific case linked to the maintenance of a free media does Ofcom have a role in appointing the board of an organisation—that is Channel 4. That rationale simply does not apply here. In response to the noble Lord, Lord De Mauley, on the question of the regulation of the Post Office, it is currently regulated through its contractual relationship with Royal Mail, and that will remain the case.

The sentiment behind the amendments is that the noble Lord is concerned about the Government’s ability to operate and behave appropriately as a shareholder in relation to the company. While I appreciate that there may have been problems in the past, the Government have come a long way in how they behave as a shareholder, and they take their role very seriously. In 2003, we set up the Shareholder Executive, which is part of my own department, for the precise purpose of improving the Government’s performance as a shareholder in business. The Shareholder Executive is a professional group that aims to create a climate surrounding ownership that, while challenging, is genuinely supportive and provides the framework for success. To achieve this, it works with the boards and management teams of the government-owned businesses to create long-term shareholder value. That role has been recognised as being highly successful, not least in a report by the National Audit Office in 2007.

I hope that I have reassured the noble Lord, Lord Bradshaw, that we have come a long way in how we approach governance. We take our role as shareholder very seriously; we do not spend our time second-guessing the board or exerting political pressure on the board. This approach is very much in line with the original legislative principles set down all those years ago by my grandfather in respect of nationalised industries. I say that to demonstrate that I did indeed read the noble Lord’s Second Reading speech, in which he referred to my forebears.

The noble Lord also touched on industrial relations and the difficulty for management properly to manage when, in this business, it is possible for the union to go round the backs of the management to the shareholder to get matters—if I may put it in this way—“settled” without actually being resolved in the interests of the business as a whole and in the public interest. That situation gave rise to some unfortunate cases of, if not second-guessing the management, then a perception that the management was being destabilised—a sense in which there never seemed to be a bottom line in this business as the discussions went back and forth as people came in and out of the front doors and back doors of the sponsoring department. One of the reasons that the Government are particularly keen to see this legislation go through in its present form with the new private sector minority partner coming in is to bring about a much-needed, timely and refreshing change to that sort of atmosphere and climate that surrounded the management of the business and the conduct of its industrial relations.

I am also not persuaded that a role for Ofcom in the appointment of the boards of these companies will make a real impact on delivering the transformation that Royal Mail desperately needs or delivering the vital services provided by the Post Office. In light of the reassurances that I have offered and the arguments that I have put in response to the amendment, I kindly ask for it to be withdrawn.

I thank the Minister for that reply. I would just draw his attention to Network Rail—a company without shareholders and, apparently, without responsibility to government. Whenever I ask a Question on it, I am invited to write to the chairman at an address in Euston. No doubt that means that the Government take no responsibility for it. I am quite sure that neither the passengers nor the workforce are considered. So, we want in the Post Office a much, much more effective type of governance than that which we put up with in the railway.

I noted what the Minister said about the appointment of the executive and non-executive members. I shall be very anxious to see that the board is dominated by people with the public interest in mind, not the interests of shareholders in Holland or Germany or wherever. I shall read what he said.

If I have given the impression that I want Ofcom to appoint the board members, that is wrong—I do not. I do want Ofcom to fix the charge that the Post Office can make for providing services to third parties so that, for example, TNT cannot dump bags and bags of mail and pay less than it costs to deliver it. In the case of the Office of Rail Regulation, I think that a great deal has been done to bring the accountancy system into line.

Before I withdraw the amendment I would caution the Minister against taking too much comfort from the work of the National Audit Office. I have seen a recent NAO report that applauds the Government for the way in which they conducted a particular process. In fact, however, the NAO had simply ticked all the boxes of what the Government had done. It never asked whether or how it could have been done better.

With those thoughts, which I hope the Minister will reflect on, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Clause 5: Royal Mail companies to be publicly owned

Amendment 5

Moved by

5: Clause 3, page 2, line 15, leave out “publicly owned” and insert “owned in its entirety by the Crown”

I shall speak also to Amendments 7 and 8. If it is permissible, I would like to degroup Amendment 13, which is contingent on the previous three. I hope that that is all right.

These amendments are intended to be helpful, not hostile. They start from the premise that the Government are correct in seeking to promote constructive change within the postal service. There has been a great deal of argument about the managerial and financial record of Royal Mail, but clearly it needs to raise far greater funds to run the service efficiently—by how much is debatable. The Compass booklet correctly said that the Hooper report did not give a precise indication of the amount of investment required, but it is beyond dispute that much more is required. It is needed in part because Royal Mail has suffered under the existing regulatory framework from private companies picking off profitable bits of the business on unfair concessionary terms, but there is also a clear need to promote technical innovation, as other postal services have done.

The reason for these amendments is that the current government solution involves part-privatisation, which the Bill calls a “strategic partnership”. The words “strategic” and “partnership” are taken from the politicians’ lexicon, and when the two terms appear together they are a particularly toxic combination. In fact, what we have is part-privatisation—an equity sale to a third party. A 30 per cent private stake in the service will be owned by foreign firms as outside partners. If there is a 30 per cent stake now, why should there not in time be perhaps a 100 per cent stake?

The opinion surveys show overwhelming public support for Royal Mail being kept wholly in public hands. This is seen as a guarantee of a nationwide universal service run for the public good, not for the sectional private interest. This was very much the view of that great man, Mr Herbert Morrison, the grandfather of my noble friend and architect of the post-war policy on public ownership. The principle enshrined in it was a cornerstone of the Warwick agreement with the trade unions. It was also enshrined in that historic document, the Labour Party manifesto. I think that these pledges should be honoured. It is a reason for much fundamental opposition within the Labour Party towards the Bill. The Bill consequently suffers although it deals properly and constructively with many other issues, including the pensions of postal workers. I suspect that once the Bill is removed from the rather tranquil atmosphere in this House—not to mention the empty Benches opposite that yawn at me—it will face much more difficulty in the Labour Party, particularly in another place. It might be helpful to address the issue here.

I have tried in these amendments to combine two important principles: first, that no part of Royal Mail should be placed in private hands; and, secondly, that Royal Mail should nevertheless be free to attract the investment that it needs. We are therefore talking about investment, not the surrender of equity. Amendments 5, 7 and 8 are designed to remove the bits of the Bill that deal with the part-private ownership of Royal Mail. The phrase “publicly owned” leads to a good deal of confusion because the Bill says that “publicly owned” equals the public owning 51 per cent. That is an extension of language, as I understand it. I therefore suggest instead the phrase which the Government favour:

“owned in its entirety by the Crown”.

That seems to me to remove any ambiguity.

Amendment 13 will enable Royal Mail nevertheless to accept private investment, with safeguards for the public interest. I have suggested a new Clause 4 on the financing of Royal Mail companies which will allow a Royal Mail company to accept private loans as long as it does not involve the transfer of any of the company’s shares. I have set down a condition that,

“for a loan of £1 billion or less, the Secretary of State must have the consent of the Treasury”;

and that for a loan of more than £1 billion, there should be an affirmative resolution in each House of Parliament. It may be said that that would happen anyway, but it is highly desirable to spell it out in full. In time, we will need another clause to amend the articles of association to change to £1 billion the limit that Royal Mail can raise. This would delete the requirement from the articles of association for the Secretary of State to give specific approval for it to borrow from other sources.

These amendments are intended to be constructive. They are probing amendments and I shall certainly be happy to withdraw them in time if the Government come forward with proposals that distinguish between investment on the one hand and equity and control on the other. Without some redefinition of this issue, constructive change and modernisation of Royal Mail, which we all seek, will not be achieved. I beg to move.

I do not know whether the noble Lord, Lord Hunt of Wirral, will take the same view as I do on this amendment, but I certainly would not wish to intrude on the private grief among the Labour Benches. I look forward to the debate between those on the noble Lord’s side and the Minister.

As the Minister knows—this is the same position taken by the noble Lord, Lord Hunt of Wirral—for some time we have been in favour of a minority stake in Royal Mail while leaving the Post Office 100 per cent owned by the public. You have only to read the Hooper report to understand the importance of a minority stake in Royal Mail but, as I said, on this amendment I do not really want to intrude any further on private grief.

As the noble Lord has degrouped his Amendment 13, which was grouped with our Amendment 94, I assume that we will deal with Amendment 94 when we get to it on 13 May or whenever we reach the end of what will undoubtedly be a lengthy discussion.

I support the mover of this amendment and want to underline one thing that he said towards the end of his speech. Many of us think that we are modernisers—we have been in the modernising business for a long time. The issue is whether the Hooper report as a whole is being a bit overambitious, and I shall give a couple of examples before I accept the Treasury doctrine. I say “Treasury doctrine” because a Treasury Minister in the Commons said that the Hooper report was sacrosanct and had to be accepted in its entirety. A similar case is treating this amendment in isolation. Many things need to be done to modernise the Post Office. We come down to the practical problems and, on this occasion, I ask my noble friend to reflect aloud so that his comments can be placed on the record in Hansard.

Let us take one example. On the parcels side, why would DHL and TNT not simply want to merge the business with their own parcels businesses? Why would they want to improve the competitive position of Royal Mail against TNT and DHL? If you were to raise that sort of proposition in the pub, everyone would say, “You must be joking”. Would it work like that in practice? I have an old Australian friend with whom I play tennis, and donkeys’ years ago he was an original partner in TNT. I asked him, “What’s your view on all this?”, and his response, which was almost word for word what I have just said, was, “Just like in Holland, with 30 per cent, after two years it would be more or less TNT”, or what in Holland is now called the Dutch Post Office, which runs the worldwide TNT operation.

Of course, the question is whether a corporate partner can fit into the structure and do many of the things that Hooper wants to do without this ratcheting of equity. I will come on to this point later when I speak to Amendment 9. As we found in the Bullock report years ago, one problem with equity is that there is secrecy and confidentiality when it comes to giving information to and having proper consultation with workforces at every level. Those workforces need to be part of the modernisation process but people say that Stock Exchange rules make everything price-sensitive and they cannot really talk about it. As I said, that will come up later. Here, we are talking about part of a package that some of us are very sceptical about. We do not know whether we are trying to kill three or four birds with one stone, although two are very difficult when they are flying in different directions. I should like to put those questions to my noble friend.

I support the excellent speech that my noble friend Lord Morgan made in moving the amendment. He has saved me an awful lot of time because his analysis of where we are and what needs to be done was absolutely accurate. Like him, I hope that when the Bill gets to another part of this building, Labour Members of Parliament will start to remember their responsibilities to the electorate and continue with the programme that they put before the electorate at the last general election. I have used emotional words such as “betrayal” before and I shall not fall into that trap. I took note of the noble Lord, Lord Razzall, when he talked about Second Reading debates.

I am sorry; I should have declared an interest. I have practised this because I might be speaking once or twice during the passage of the Bill. My interest is simple: I was a postman; I had a number of jobs at the Post Office; and I ended up as the deputy general-secretary of the union and as a trustee of the pension fund, which I hasten to add was in great surplus when I left the board of trustees. My only financial interest is my pension. I have nothing from any other source. That is my interest and I hope that noble Lords will understand if I do not repeat it over the next few months. I hope that this debate will go on for months. I think that the noble Lord, Lord Razzall, said that it would take 33 days, and possibly it will last that long.

My noble friend Lord Morgan was, as I said, excellent in moving the amendment, and I thank him. For the sake of accuracy, with regard to the 12 wasted years mentioned earlier, some of my noble friends might like to consider the number of times over those years that I raised the question of Girobank. They might also like to look at the various references that have been made to the Post Office in a number of debates and, in particular, to the obscenity of Postcomm ripping off Royal Mail and the Post Office in general.

I have another reason for supporting these amendments. The Post Office is often symbolised with a Crown. As a postman, I was proud to wear that Crown, especially after I came out of the Army, where I had been wearing His Majesty’s, and then Her Majesty’s, Crown on my cap badge. That Crown symbolised worldwide integrity and efficiency, and therefore it means an awful lot to many postmen in the world. They were not wearing a badge like the ones on the shirts of overpaid footballers who kiss them when they score a goal; there was a pride in this badge. However, somewhere along the line, someone decided that the Crown was no longer a part of the badge. I bemoan that, although I may be the only one who does. There are people on these Benches who say that I am sentimental and that I must not go down memory lane, but I want the Bill to be amended and to make progress so as to ensure that we go back to the efficiency of the service of which I was proud when I wore that Crown.

I should also mention my interest in Amendments 11, 12, 27, 33 and so on, which all deal with ownership. In one amendment we say to leave out Clause 4(4), which would be unnecessary if the earlier amendments dealing with ownership were included in the Bill. It is a tidying up amendment.

Amendment 27 talks about the indirect ownership of companies. It states:


(a) the Crown owns (directly or indirectly) all of a company (“company A), and

(b) company A owns all of another company (“company B”),

then company B shall be regarded as indirectly owned by the Crown”.

You are very clever indeed if you can understand that. I am simply saying that the indirect ownership of companies must be transparent and spelt out in the final legislation. Amendment 97 deals with group ownership, where I suggest leaving out paragraph 7 of the schedule.

I say to my dear friends in the Committee that this is my first contribution to what I hope will be a long, long debate on the Bill. As was said at Second Reading, we will go through it line by line. If this question of ownership is put to a vote tonight—I do not suppose for one moment that it will be—I will march through the Lobby saying, “Keep our Post Office under the title of Crown ownership”. I support the amendment.

At Second Reading I made some points that address some of these issues. This group of amendments recognises the need for investment, but it begs the question of who would lend money to the Royal Mail as it is presently being run. Would it be enough money to secure the investment and working capital that this organisation requires to keep its pension fund in good nick, and buy the equipment that it requires to take the drudgery out of much of the work required by the delivery part of the job? Would anybody be sufficiently confident that the existing multilayered system of management could introduce the kind of capital investment that we all recognise is required? None of the supporters of the amendment has addressed those questions.

I understand this business of the Crown in its entirety. It is quite simply a wrecking amendment. Its objective is to do away with the Government’s part privatisation of the Post Office. It is a legitimate weapon of those who do not agree with the principle. But I wonder whether it is doing more than that. Maybe one of the supporters of the amendment could answer that along with the other questions that I put. Does it preclude the possibility of the Royal Mail entering into joint ventures with the mail services of other countries? Does it mean that the ability of the Royal Mail to think outside of the British box, as it were, would be a problem here? Would that be precluded as a possibility?

At present, the money is not available for Royal Mail to enter into joint ventures. I doubt whether the borrowing capability would have to be exercised, because there would not be many people prepared to lend the money. Certainly, if they were prepared to lend it, I am not sure on what time basis it would be made or what interest rates would be charged. If it were to be some kind of bond, these things would have to take place fairly quickly. I do not envisage the Government putting up the £1 billion. They would have to go to the private sector, which would not give the money.

At the end of the day, apart from the fact that the entire amendment is a wrecking amendment, the other ones are just a waste of time because there will not be anybody there to lend the money. Therefore, there is no need to have that borrowing capability. There is not sufficient confidence in the existing or proposed management of Royal Mail to carry through the necessary changes that would facilitate the implementation of the investment programme that the Royal Mail so desperately requires.

My noble friend Lord O'Neill asked a question of the supporters of the amendment. We can all ask questions later of the Secretary of State. I have just glanced round and, so far as the supporters are concerned, there is no reason in our motives that there should not be—indeed, there should be—partners around the world. To return the compliment, the real question is why they think it is precluded. Do they think that it is precluded because of company law? My noble friend says it is precluded because of raising the money. But if we sell the family silver, to coin a phrase of Harold Macmillan’s, that is capital. Are we talking about current expenditure?

I am pleased to hear the questions posed by my noble friend Lord O'Neill, because we are getting down to the nitty-gritty. What has been tantalising and frustrating so far is that we have not got down to the nitty-gritty. I should like to look at the different models. I should like my noble friend to invite some of us to discuss some of these models, because it raises the axiom and begs the question of whether we can even talk about these things without being accused of being dinosaurs. That is not a word yet appearing from the Secretary of State. I will acknowledge every word other than dinosaur, but it is interesting that my noble friend Lord O'Neill, as a supporter of the Bill in its entirety, I guess, has raised some interesting questions for the first time.

I will be brief and do not wish to repeat all that has been said by my noble friend Lord O'Neill. I covered my view fairly clearly at Second Reading in support of the Bill. It was principally on two grounds—the nitty-gritty, to use the phrase of my noble friend Lord Lea. The first was investment and where it would come from. That is a fair question to put to the noble Lord, Lord Morgan. Does he believe that the money will be forthcoming? Anybody who has read the Hooper report will see the projected losses that are about to be approved and the failure to deliver in certain areas on performance.

My second point concerns management. Where is the assurance from the mover and the supporters of the amendment that the management can deliver? There is a world of difference between having plans to deliver and actually delivering the changes that are needed. The nitty-gritty behind the change that is being proposed is similar to the one that was the case with NATS when it became a PPP, which was to inject a different management style into the model that would deliver efficiency and effectiveness and defend the service and safety in the way that we would all expect. It is the same here. I would certainly support amendments for investment if we could be guaranteed that it would come from the Government or there were others with the investment lined up, provided, at the end of the day, that it would be value for money. We need to know that the increase in performance that is required would be delivered—not promised in the programme but actually delivered. That is the question that I put to the noble Lord, Lord Morgan. What is the guarantee that anything would be any different in the future even if you are getting your hands on the money?

I believed that I was making exactly the same point about practicalities as the noble Lords, Lord Lea and Lord O'Neill. We must look at this realistically. I fear that I am approaching this as a lawyer. What guarantee is there that you will find a partner to participate on a loan basis? There is no empirical basis for that statement. If we amended the Bill in the way that is now sought it would tie the hand of the negotiators in an absolutely appalling manner. We need a much looser arrangement so that a strategic partnership can be achieved. That is the aim. But you have to trust your negotiators to do that in a manner that protects the interests of the state but that is commercially feasible.

Do not say now that it must be done by way of loan. If you are going to raise the question of loan, start asking yourself who is the big player who is going to bring in a sum of up to £1 billion, or perhaps more. What sort of commercial conditions will he want to put in his loan agreement? What sort of fetters is he going to want to put on the power and control vested in the board? They would be binding—I referred to case law on the previous occasion—if an agreement was made that the board would act in a particular way unless that was contrary to some provision in the statute. My plea today is not to tie the hands of the Secretary of State in an impossible manner at this early stage.

I support what my noble friend Lord Morgan said when moving this amendment. I also support my noble friend Lord Taylor. At Second Reading, I supported noble Lords who spoke against privatisation. I am a former union official, and I said that I supported the union’s position. I still feel that way about it. However, a number of points have been raised that have to be answered. One relates to the kind of private partner we are going to have and what sort of managerial experience he will bring. What is the business plan as far as he is concerned? We do not know whether he will have the necessary expertise to produce the managerial revolution that everybody wants to see within the Royal Mail. We have no idea about that. None of this is stated in the Bill. Therefore, I still support those who speak against privatisation. I do not think there is any proof that the private partnership envisaged in the Bill will produce the managerial revolution that everybody expects to see. I am not a fan of privatisation generally. I do not regard it as always the answer to efficiency problems. I still remain an opponent of the part-privatisation suggested in the Bill.

I did not think I would have to go over some of the points I made at Second Reading. However, my noble friend Lord O’Neill, whose words I always listen to with great attention, has forced me to do so. I pointed out that a lot of things have happened in Royal Mail over the past 10 years. Fifty thousand people have gone and half the money for modernisation, which my noble friend said was needed, has already been spent. The orders have been placed, and some of them are coming in. The modernisation is due to take place. Call centres have been closed. Why do we not allow that to take place and take time to see how successful that is?

My noble friend Lord Morgan was right when he said that 30 per cent could also be 49.5 per cent. The Bill may say 30 per cent now, but will they be coming back to Parliament because they want to increase it? I do not think they will. My noble friend Lady Turner is right to ask for the outline of a business plan because it could be far more far-reaching than the assurances we have had from the Secretary of State that it will be only 30 per cent at this stage. It will be a 30 per cent stake and a partnership, but what kind of partnership will it be?

If I look at TNT, which has been mentioned, it has not had liberalisation in its own market. It will happen this year. It is already starting to squeal and say that liberalisation will have a dire effect on it, and its profits are down by 20 per cent. It has said to the workforce that it must take a pay cut or be sacked. If that is the kind of industrial relations that will be brought in by this company, I can see only trouble and calamity ahead for the Royal Mail. In addition, TNT does not have a good record at keeping things and delivering them. We know about the child benefit records it lost. What will it bring to the partnership, if it is the partner? Where is it going to get the money? It does not have it on its balance sheet and will have to go to the bank for a loan. Why cannot the same thing apply to Royal Mail?

I wanted to put forward the question of a loan, so I asked the Library to find out the problems facing Royal Mail and the Treasury restrictions. I got a very interesting reply:

“Dear Lord Hoyle, Postal Services Bill Further our conversation earlier today, I have spoken to the Postal Services Bill team who advise me they are not able to comment before the Committee stage tomorrow on your query regarding the continued control by the Treasury over the Royal Mail”.

Why can I not have that reply? Why can I not know what the restrictions are so that I can make the point here and ask for them to be lifted? Why the secrecy? What can we not be told before we have this debate? Can my noble friend give me the answer to that question?

My noble friend Lord O’Neill mentioned co-operation. Why should there not be co-operation between the various post offices? To suggest that Royal Mail is not in Europe at the moment is wrong. It is in Europe in a big way—the noble Lord shakes his head—in the parcel industry. One of the most successful elements of Royal Mail is the parcel company. One of the things I am concerned about in relation to TNT, as is Royal Mail, is that it might be interested in taking over the successful European parcel business, GLS. I have had a Written Question down for a while about this. The view is that the partner being proposed will take it over, yet Royal Mail is depending on it for 50 per cent of its business in future years because that is where the growth lies. With modern communications, growth lies in the parcel industry, and that is in danger from the partnership being proposed.

Why are we going down this road at this moment? Why do we not let it settle and see whether the efficiency measures that are already in place and those that are to come are successful? If we are going to sell off part of the Royal Mail, in a recession is the worst possible time to do it. We will get the worst possible price if we go ahead now. That is another good reason why we should allow things to develop before we take up dogma. Dinosaurs have been mentioned. They might know the financial crisis in which we are taking over the banks and other things and be on the other side of those who are advocating that private must always be right and public must always be wrong. It is a dogma that is not proving successful worldwide at the moment.

I appeal to the Government not to be hasty but to think again, allow the dust to settle and see how the company is going. It is making a profit, which is likely to be more than £250 million in the current year. If it did not lose £100 million in access and, instead, made £100 million, it would be highly profitable, and then it would be acceptable to ask for a loan in the market. Remove the shackles and let the Post Office become a company that can go. I still do not know why—

We are all trying to get the same objective delivered at the end of the day; the defence of the universal service is certainly paramount to us. However, is my noble friend denying the projected loss for Royal Mail next year in figure 19 of the Hooper report? Present expectations are that the losses will be £52 million, £43 million in the following year, £86 million in the following year, and £96 million in the following year.

I read the Hooper report very carefully. Is my noble friend taking into account the loss of £100 million which Royal Mail is making at the moment under access arrangements? I am asking for a revision of that loss. It was mentioned that Ofcom might look at removing that loss. I am saying that Royal Mail could be £100 million better off, and I do not think that the figures cited by my noble friend take that into account.

Will my noble friend clear something up for us? Is the £100 million that has been lost through liberalisation clear profit or just £100 million of business? If it is £100 million of business, it is not profit; it represents only a bit of the turnover. To keep bandying about this figure of £100 million in these circumstances is somewhat less than accurate and helpful.

If I am being less than accurate, I am only citing the figures that Adam Crozier gave as chief executive of Royal Mail when the committee, of which my noble friend was previously the chairman, asked for them. He remarked that it had cost Royal Mail £100 million. I am saying that if that loss were removed, £100 million could go to the balance sheet. That is pretty plain for everyone here to see.

I hope that my noble friend Lord Mandelson will look at this again. I admire a lot of what has been said in the Hooper report, and I agree with it, but I do not agree that 30 per cent of Royal Mail—as I say, it could be more than that—should be sold. We should allow things to develop. Let us see how things go, because Royal Mail is losing on one thing but is very strong on the other—the parcel business—which would be lost with a public/private partnership. I think that it will be taken over. As I say, I have not had a reply to the questions that I have been asking, but I think it is possible for Royal Mail to be profitable if the shackles are removed. I see no reason why it should not be. It cannot go for a loan. I hope that my noble friend will give us some words of encouragement when he replies. I shall be very interested to hear what he has to say.

I have no wish to delay the Secretary of State’s response to the challenge that he has just received from his noble friend Lord Hoyle, but it is important that my party’s position on this issue is set out very clearly. That will come as no surprise to the noble Lords on the Benches opposite who have tabled these amendments. I have listened with great interest to some distinguished contributions during the debate, but I have to say that we support the Secretary of State’s intention to part-privatise Royal Mail Group Ltd and that we will support him in rejecting the amendment if it is put to a vote today or on Report.

I think that I covered at Second Reading many of the arguments behind our policy. We support the Hooper report in principle. The influx of private capital and expertise, especially at the management level, is necessary—it has long been so—to give Royal Mail the support and the impetus to revitalise a company that must overcome the challenges of market liberalisation and the rise of digital communication. It will not be an easy task, but I found Richard Hooper very persuasive when he said, although it is unfortunate that this should be under headline 13:

“We recommend a strategic partnership between Royal Mail and one or more private sector companies with demonstrable experience of transforming a major business, ideally a major network business”.

I agree.

We hope that a partially privatised Royal Mail will be able to seize the opportunities that new technology and the expansion of the parcel market offer, for example. That said, it is quite right that the policy should be challenged, as it has been, by the contributions that we have just heard. However, the Hooper review is an extremely useful document in bringing together in one analysis, which the Government have finally accepted, what so many of us have known for so long. The noble Lord, Lord O’Neill, took me to task before. I recall having a number of debates with him over the years. These go back even to when the Secretary of State and I used to run something called the British Youth Council and the noble Lord, Lord O’Neill, was chairman of the Scottish Union of Students. However, I do not want to look back—well, not that far back.

It is sad that the Government have done so little over the past 10 years to address the slow rate of modernisation and the inability to compete effectively with private sector providers, although I acknowledge what noble Lords have said about the past, particularly about Girobank. I remember Girobank, which I think had been Post Office Giro and became National Giro, National Girobank, Girobank and then the Alliance & Leicester Commercial Bank. There is still a need for that sort of service. I think that Girobank was the first organisation to offer a free banking service and telephone banking. I met the workforce on several occasions, and there is still a contribution to be made there.

Two years ago, however, the chairman of Postwatch submitted a proposal—it was called, rather dramatically, Project Neptune—which suggested a public/private partnership to supply the necessary equipment for fully automating mail centres. In contrast to what the Government are now suggesting, it did not involve any transfer of ownership to the private sector and, by the time it was rejected by the then Minister, it had established three private sector companies that would be willing to invest some £2 billion in Royal Mail in return for leasing and operating costs, with Royal Mail retaining any profits. I am certainly not suggesting that we bring that option back to the table—we are now long beyond that point—but it was very sad that it was not taken more seriously at the time.

With this Bill, the Government have now finally accepted that something needs to be done, and we are glad that they are implementing the report. I have asked a number of questions about the method by which they are doing it. We have alluded several times—I will not repeat myself—to the speed with which the Government are trying to go forward. A number of noble Lords have asked for the case to be set out quickly in Committee, which is why I very much look forward to hearing from the Secretary of State.

In the first instance, I will respond to two specific questions. Other contributions have been wider and more general, and I shall come to them in a moment. My noble friend Lord O’Neill asked why the Government did not use Section 67 of the existing Postal Services Act to sell shares in Royal Mail Group Ltd. It is true that there are powers that allow for a joint venture, but it was not clear that Section 67 covered a partnership arrangement of the type being considered. The Government therefore decided that it would be better to give Parliament the opportunity to scrutinise proposals for any minority sale of shares to achieve a partnership through the passage of a Bill.

My noble friend Lord Hoyle asked a number of questions about TNT. It would be inappropriate for me to comment on speculation about potential bidders for the minority stake. TNT has publicly declared its interest, which I welcome, but we are conducting a fair competition to identify a suitable partner for Royal Mail. We will judge bids against the strict criteria set out in our previous policy statements.

If my noble friend Lord Hoyle really wants to liberate the Royal Mail from what he calls the shackles and the tyranny of the Treasury, the logical conclusion he would reach in pursuit of that end would be to privatise Royal Mail completely and take it out totally from the public sector. What better liberation could you imagine from the shackles and constraints imposed by the Treasury or anyone else than to remove it entirely from the public sector? I thought that that was exactly the logic he did not want to follow, and that he shared my view and that of the Government to keep the Royal Mail in the public sector.

I wish to keep it in the public sector as a separate company, but not to be shackled by the Treasury. A stand-alone company is quite simple and would be very much like other companies have been.

No scheme has been devised in similar circumstances for my noble friend to have his cake and eat it in the way that he has described. But perhaps he is even more ingenious than those who have previously addressed these issues.

This group of amendments relates to the provisions which deal with the public ownership of a Royal Mail company and go to the heart of the Hooper recommendations and the Bill itself. In his moving of the amendment, my noble friend Lord Morgan suggested that it would be much better all round if I simply adopted the approach of my grandfather—the architect, as my noble friend described him, of post-war nationalisation. I think that my noble friend, an eminent historian, should reflect on my grandfather’s character and his approach to these matters. He was no dinosaur, if I may use that term for the first time. His very strong view was that when the facts change, so must the conclusions about those facts change. In other words, he was a pragmatist, a sort of dynamic moderniser and not a static one, whose pragmatic dynamism gave rise to his firm belief that socialism is what a Labour Government do. I think that all Members of the Committee would agree that that is a very dynamic definition indeed.

The amendments tabled by my noble friends remove the concept of “publicly owned” from the Bill. They go to the heart of what we are trying to achieve for Royal Mail under this legislation. Before turning to the specifics of the amendments, I therefore remind the House of the importance of a strategic partnership for the future of Royal Mail. As presently organised, managed and financed, the Royal Mail simply is not in a position to sustain its universal service indefinitely, which is why we are seeking changes through legislation.

As I made clear at Second Reading, the future of the Royal Mail, and therefore the future of the universal service, is under very real threat from the challenges of the digital age. None the less, despite those challenges, mail is still a critical part of our social fabric, our communication infrastructure and our economy. The Government are therefore fully committed to maintaining the universal service by means of a publicly owned Royal Mail fully restored to good health. Perhaps I may remind my noble friend Lord Morgan that that is what we said precisely in our last manifesto. That is what our policy, if implemented in full through this Bill, will achieve. I want to see Royal Mail modernised and made fit for its future purpose. Previous attempts by this Government and by previous Administrations to achieve this have failed. In spite of the best efforts of management, supported by vast amounts of government funding, modernisation has simply not happened in the way, on the scale and at the pace required in a fast-changing marketplace of the sort in which Royal Mail has to compete.

At Second Reading, a number of noble Lords commended Richard Hooper’s excellent report on the postal sector, which is the basis for this legislation. His report clearly identified the constraints faced by Royal Mail. They include that the company has relatively little room for manoeuvre on pricing—the higher the prices, the quicker business will be driven away. Also, he said that industrial relations in the business were strained; I think we are all agreed that that is an understatement. He said that it has a very large and volatile pension deficit—indeed, it does—and it does not make the profits required to modernise its business and, crucially, to diversify, which I think is common ground. Opponents of this Bill, some of whom we have heard today, have simply not addressed these issues and constraints in their contributions with arguments or viable alternatives to what we are doing, which the House might reasonably have expected in their contributions to our discussions today and previously.

The Hooper review’s final judgment was that the introduction of a strategic partner will bring the capital, experience and confidence needed to tackle these challenges. No one has been able to counter this conclusion with equal strength or argument. We agree with the review that this dynamic—the best route to accelerate modernisation, and to enable Royal Mail to diversify and expand its operations—is a partnership with a private sector company that has real expertise in transforming a postal or network business. Consultancy or contractorisation, as some have mentioned previously, is simply not an adequate basis for the sort of partnership that Royal Mail needs. A minority sale of shares is needed to give the partner a real stake in the business and a real motivation to generate the necessary drive and synergy to bring not only the opportunity for fresh capital into the company but the much-needed confidence, expertise and dynamic that this business needs if it is to turn around its finances and transform itself as a going concern.

Amendments which remove references to “publicly owned” and replace them with,

“owned in its entirety by the Crown”,

would effectively prohibit any sale of shares—even a minority of shares—in a Royal Mail company. I have made clear again why this is not desirable and why Royal Mail needs a strategic partner to help transform the business. The details of the partnership have yet to be negotiated. I therefore ask my noble friend Lady Turner to have a little more patience, if she would not mind. I am sure that that generosity will be extended to me. But it is clear that potential partners will be motivated and driven only if they have a real stake in the business, and we want them to have such a stake. As I have said, hiring in a consultancy—sort of McKinsey-style—or contracting out work, as if we are just talking about the transformation of a single operation somewhere in the country, would simply not begin to have the same effect or results. If these amendments were passed it would kill off the partnership arrangements and, in doing so, would threaten the future of the business and therefore the maintenance of the universal service provided by Royal Mail, which it is the intention of this legislation to sustain for the future.

Amendment 12 removes the duty on the Secretary of State to designate Royal Mail Group as a Royal Mail company before the current restrictions in the Postal Services Act can be removed. This duty was included in the Bill to give an assurance that Royal Mail Group Ltd would be designated and must therefore at all times be publicly owned. The amendment itself is arguably consequential on Amendment 97, but the provision in question provides an important additional protection that we would not wish to see removed.

As I have said previously, the Government are committed to a publicly owned Royal Mail, fully restored to good health, as our last manifesto made clear. In our view, partnership—a real, strategic and integrated partnership cemented through a minority share sale in Royal Mail Group—is the best way to deliver it. Amendments that remove our ability to achieve that would in effect sentence Royal Mail and its employees not to the status quo, because yet further decline would set in, but to inexorable decline and possibly worse. In my view, the employees of Royal Mail deserve better than a sentence of decline. They deserve a future that comes with Royal Mail’s own use of technology and innovation, of it becoming a real player in a wider marketplace. I therefore ask my noble friend to withdraw his amendment.

We have had an interesting debate and I am grateful to all those who have participated, and I thank my noble friends Lord Hoyle, Lady Turner, Lord Clarke and Lord Lea for their support. I notice that the Liberal Democrat spokesman has disappeared from his place. He might as well have disappeared earlier because his comments were totally vapid. He simply made jokes about private grief and did not address any of the issues. We did not hear “God gave the land to the people”, and the contribution was nostalgic and unhelpful. However, the Minister was constructive and I am very grateful for his clear exposition.

There has been an assumption, including by my colleagues on these Benches, that an improvement in effective and efficient management necessarily means a change in share ownership, in the equity. I simply do not see the logic of that. I see no evidence that the kind of companies that have been mentioned would imply improvements in management. Indeed, my noble friend Lord O’Neill gave an interesting example in his remarks of a self-sustaining prophecy. You begin by giving an account of the finances of Royal Mail, which are hopeless and devastating, and then ask who on earth would lend money to it. The answer is obviously that no one would. It is a well known logical trick and it was recreated by my noble friend.

The main point is that we have drawn from my noble friend on the Front Bench a clear explanation of the rationale linking efficiency with a substantial and perhaps increasing degree of privatisation. I want to make only two comments because we have important debates following this one. First, contrary to what my noble friend said, this is not a wrecking amendment at all. I think that that was an abuse of language. The amendment is intended to be constructive—it is meant to enable us to get around the great impasse over privatisation which is and will cause problems as it attempts to release the Post Office from this difficulty. My second point is not a debating trick, but it concerns my noble friend’s very distinguished grandfather. As my noble friend rightly said, he was a practical man. When he said that socialism is what a Labour Government do, the point was that he was distinguishing between public ownership and socialism; that is to say, public ownership is a technical and practical matter and not one of abstract doctrine. That is the spirit in which I have moved this amendment, in the spirit of Herbert Morrison, whom I greatly admire and have written about. I shall withdraw the amendment, but sufficient doubt has been raised to reconsider it on Report.

Amendment 5 withdrawn.

Amendments 6 to 8 not moved.

Clause 3 agreed.

Amendment 9

Moved by

9: After Clause 3, insert the following new Clause—

“Membership of the Royal Mail board

The Royal Mail board shall comprise—

(a) Crown representation,(b) workers’ representation,(c) corporate partners’ representation.”

In the amendment I have identified three key and well known stakeholders represented in successful board models operated in northern Europe. Responsibility to shareholders is regarded in the amendment, as in much of northern Europe, not as the sole criterion of a business’s success. That works in northern Europe and this is a good opportunity to think how something like it might work here. Perhaps it is only due to a lack of imagination that we do not seem able to think through how to set up what I would describe as a social democratic model in this country. The debate about the corporate partner has already been held in part, and the three key stakeholders are the Crown, the corporate partner and the workforce.

The noble Lord, Lord Bradshaw, criticised the Network Rail model. I would simply say that that model of finance illustrates the fallacy of the doctrine of “there is no alternative to the raising of finance”. I put this challenge to my noble friends on the Front Bench. Could they publish—on an independent basis, although it would be derived from DBERR and Treasury assessments—all the different models rather than simply say that there is no alternative or other model? If the whole of Hooper has to be accepted on the basis that it is a package deal and amendments are redundant or offensive, that makes us all redundant. There is no point in being here if that is the prior statement of the position. It has been put to us like that, so I am not being pedantic. I hope that we do not have to accept Hooper in its entirety as a magic solution. I hope we are not prevented from amending it in any way at all.

I see that there would be a business partner, but I want to say something about workers’ representation. One of the issues in a normal Companies Act company is that one cannot simply spatchcock in workers’ representation, because the only interest is that of the shareholders. There are ambiguities even in the Government’s own model, and certainly there would be a new situation in the model I am proposing, particularly when it is linked with the other amendments we have been discussing. It would not be a typical Companies Act company. However, can my noble friend, who is highly skilled in these matters, tell us in what sense the Government’s model is a typical Companies Act company, when clearly it is not? We ought to analyse this in a little more detail, and if invited, we would all be ready to discuss it and see if any fresh light can be thrown on it.

As far as board membership by the workforce is concerned, I used to think that I was a radical and a progressive in meeting the attitude seen in the trade union movement that you could not possibly have any form of partnership or worker representation because that would undermine confrontation through the single channel of collective bargaining. This is perhaps a field on which my noble friend cannot reflect without a caricature of the 1970s in her mind, but some of us used a great deal of our limited political capital to become heretics. We all have to be heretics at some stage in our lives, howled down for talking about something that is quite unrealistic. But we do not yet have a clear social democratic model of society to put before the British people. I say that because, given the world economic crisis, something new has to emerge from this chrysalis.

There was a progressive experiment in the 1970s in which my right honourable friend Alan Johnson, the Secretary of State for Health, was one of the worker members of the supervisory board set up at that time. It worked quite well. The only reason it did not get down nearer to grass-roots level is that it was in its early days when the plug was pulled by Mrs Thatcher.

I repeat: this model works quite well in northern Europe in different forms. It gives some metaphorical ownership to the workforce. That is far more relevant to the modernisation programme than the shares question, which I think is a big red herring. BT shares started off at £20 and are now £1, but this is nothing to do with that; this is to do with the fact that a number of workers’ representatives are signing off the modernisation programme. It is simple in principle but what is happening at the moment is a bit of a contradiction. We are hearing that the union is useless; the workers are useless; industrial relations are useless; everything is useless—and yet the only magic wand is to bring in private equity and that will solve the problem of industrial relations. If I was in a pub and said that, people would say, “You must be joking”.

We have to consider what kind of business model is most conducive to change and modernisation at the present time. The last thing we want is a climate of suspicion and insecurity and no information. But on the Government’s model there will be no stock-exchange-sensitive information. Yet how can you have the workforce’s full involvement in modernisation without providing information about, for example, the capital investment and the arithmetic on introducing automation? A new technology agreement, however it is arrived at, will crucially depend on information being shared. We have got to get beyond the stock exchange rules governing everything that happens. This is different from many other sectors of the economy.

The biggest resource of the Royal Mail by a mile is of course its workforce, but one point that has not been made is that we are talking here about productivity on established sites. We are talking not about greenfield sites—which I fully acknowledge DHL and TNT are experts in creating—but about sites and philosophies of industrial relations, industrial sociology or whatever you like to call it, which have been around for a long time. It is not a fashionable subject to talk about these days but I would be much happier if the Secretary of State and other Ministers occasionally acknowledged that this is a difficult nut to crack. It follows that if rapid change is to be the name of the game and is to be supported by the workforce, there has to be a partnership. You can have rapid change by running down the Post Office and doing unmentionable things to the workers’ representatives, but no one is suggesting that. If we are to have some degree of ownership, in a metaphorical sense, and mutual understanding and resonance, we need this model of worker representation.

I fully acknowledge that anyone, including my noble friends on the Front Bench, could ask me how this would work, that would work and the other thing would work; but we are now at Committee stage and it is high time to expose not only the pros and cons of the financial models but the magic solutions which are supposed to transform industrial relations. I am very pleased that surveys have shown that something like this model could, given a fair wind, have the support of the workforce. It worked well in the 1970s when they were getting to grips with modernisation.

We have to remove the suspicion of the workforce that it will be 30 per cent now, 50 per cent later, and then it will be privatised and everything will be up for grabs. If we are to remove that suspicion, there will have to be a transformation of some of the structures that give workers an input. I trust that my noble friend will recognise that this is a constructive contribution. She perhaps will not say, “This is a good idea. We will accept it today”, but new thinking has got to be given to improving workforce participation and solving the ownership problems, because they form two-thirds of the issues we are facing.

My noble friend Lord Brooke was quite right to quote the Hooper report, and obviously the issue of finance is important. But if you analyse the increasing loss, you have to take into account that there is a world recession and the ongoing problem of letters in Land’s End and John O’Groats. I am not sure how the cross-subsidy relates to the government subsidy on guarantees of delivery, but we know that that is what the British people want. Indeed, put round the other way, have the Government now decided that they do not accept that that is what the British people want? I think the Government’s position is that that is what the British people want but the only way to give them what they want is to sell the family silver to get some money, and then to bring in a private sector partner whose interest would ultimately be to merge it into their own business.

Obviously the board structure I am proposing is not like that. It is an idea whose time has come, and it is in favour of modernisation, not against it. I beg to move.

In listening to my noble friend speaking about the 1970s, I was reminded of an exciting experiment in industrial democracy within the Post Office which set up boards on which union representatives were members. It was not necessarily only union members because anyone could stand for election, but it was unlikely that anyone else would be elected. The key was that representatives were elected at a local level. In north-west London, where I come from, two of our people were on the local board and two people were elected at regional level. In fact, the noble Lord, Lord Sawyer, was a board member for the north-east region at the time and played a part. At national level, two officers were elected by ballots of the membership and they were accountable. Built into this experiment in industrial democracy were accountability and the need for the people who were placed on these boards by their trade unions or by the workforce to answer questions. Sometimes they were difficult questions for those people to answer. Sometimes they had information at the board meetings, at whatever level, that they had to convey to their colleagues, and it was not always understood. This came in after some people tried to copy the method from Deutsche Postgewerkschaft of workers’ participation, which it described as “codetermination”. The British experiment was supposed to build upon that.

As I say, there were problems, but the experiment opened lots of doors and windows to people realising that, given this responsibility, their friends were able to convey real concerns—in those days, mostly about productivity and the introduction of improved working methods when facing and cancelling tables were brought in. By and large, it worked. The tragedy is that after the election that the noble Baroness, Lady Thatcher, won, one of the first things she did was to abolish the experiment. That was sad. I just wanted to let the Committee know that there is not much new in this world. This method has been tried. My noble friend Lord Lea has suggested that we have worker representatives, and if this proposal ever sees the light of day, we should try to go back to the days when they were at all levels. That is a better conduit for understanding problems than megaphone diplomacy.

I have already detained the Committee a great deal today. I shall take, at most, one minute now. I have two small points to make in support of my noble friend Lord Lea’s amendment. The first is that it indicates that those of us who have taken a critical view of some aspects of the Bill are not Luddites; our minds have moved on since the Tolpuddle martyrs, and we see this as an opportunity for remodelling the structure of management and the board in a constructive way so that something new can be done. It would be wrong to paint us as being totally negative and defensive—or, to use the analogy from the Darwinian world, “dinosaurs”.

The other point is that, as a historian, it seems to me that this is a chance to reclaim one of the great lost opportunities of post-war Britain, the Bullock report of 1976-77, which was strongly supported at the time by the greatest living trade unionist, Jack Jones, and proposed a formal structure. I recall being told by the late Lord Callaghan how the people working on the Bullock report were sent to Germany and had a seminar with Chancellor Helmut Schmidt, who described how German economic performance had been improved by codetermination. This could be a chance to grasp what was a key missed opportunity to change the adversarial system of industrial relations in this country.

The noble Lord, Lord Lea, raises an interesting point that adds to the debate we had on Amendment 4. As in so many areas, there is a great deal of confusion over how control of the privatised Royal Mail will be exercised. I would like to explore what influence the private sector minority partner will have.

I am sure that the Minister will inform your Lordships that details of what the partnership will look like are impossible to go into at this early stage, there being as yet—as the Secretary of State has assured us—no deal on the table to be discussed. Helpfully, though, when we discussed Amendments 4 and 10 he was at least able to confirm that the Government will specifically ensure representation for the private partner on the board. Anything else the Minister can tell us about the shape and detail of the partnership and its management would be helpful, particularly what sort of control the Government see the private sector having—control over modernisation presumably being something the Government expect to cede, because they have given it as a major reason for the whole exercise. How do the Government see this being structured and exercised?

I am grateful to my noble friend Lord Lea. I was interested in the philosophical points that he raised about the social democratic model but, if I may, I will stick to discussing the amendments at hand and the more specific points that he made.

My noble friend asked for an independent review into alternative models. That is exactly what we did; we had the Hooper review, which consulted widely, considered alternative models for preserving the universal service while delivering modernisation, and came up with a package of measures to achieve those objectives.

I am sorry to ask my noble friend to give way, but it was in precisely this area that the analysis in the Hooper report was superficial and contradictory. Why say that the Hooper report is sacrosanct and we must accept it, as if it is a package that cannot be amended? A Treasury Minister in the House of Commons said, “You can’t amend it because it’s a package in every respect”. I ask my noble friend to reread the Hooper report and say, if she were marking an examination paper, whether she would give the section on how management and the equity stake could magically transform industrial relations any more than a beta minus.

I can certainly commit to rereading the Hooper report many times between now and Royal Assent, and indeed well into the negotiations of the strategic partnership. Richard Hooper considered the not-for-profit and not-for-dividend models and concluded that they were not appropriate for Royal Mail; they might have been more appropriate for more stable industries, such as water. Richard Hooper was clear about the risks that the Royal Mail was facing, which we have already discussed, with regard to e-mail substitution, the pension deficit and facing competition, and that there was significant structural change in the market. He concluded that what we had was correct.

The Royal Mail is currently a company governed by company law. It has a board that discharges its duty in the interests of the shareholders, and it will continue to remain a company under the Companies Act. It is in that situation that the fiduciary responsibility of a board member is to the company and its shareholders, not to any special interest group or stakeholders. Indeed, the issue that is discussed in the report, and that we have discussed, is having the appropriate set of directors with commercial expertise able to deal with the modernisation of a company facing the competition and liberalisation that this company does.

We recognise the central importance of the workforce in the future of the Royal Mail; indeed, that is what the transformation of the Royal Mail is going to be about. A change is certainly required in industrial relations and the climate of, to quote my noble friend, “suspicion and secrecy” that has sometimes invaded the company. The workers are the backbone of the company. We are not opposed to the employees’ views being represented on the board if that would enhance the board’s effectiveness in fulfilling its role, so long as it was able to fulfil its fiduciary responsibility where the company’s interests in the round came first.

The Committee will be aware that the Royal Mail already has a much respected trade unionist on the board: my noble friend Lady Prosser. Prior to her appointment in 2004, trade union experience was provided by Derek Gladwin and John Lloyd. We also know that the partner will have a view on this and that board composition will be a matter for negotiation and will be reflected in the shareholder agreement.

Before we considered an amendment, we would have to be persuaded that another form of direct worker representation on the board would make a real difference to the transformation and modernisation of the Royal Mail and deliver the change that is necessary for the company. We do not believe that that case has been made. We would be obliged, therefore, if my noble friend could see his way to withdrawing the amendment.

The noble Lord, Lord De Mauley, asked about the shareholder agreement. I believe that this issue will be dealt with in Amendments 20, 21 and 22. Perhaps I may provide my answers then.

I thank my noble friend for that reply, which has been very revealing. I was a member of the Bullock committee, which my noble friend Lord Morgan mentioned, and matters of accountability were looked at in great detail. I am very sorry that my noble friend Lady Vadera has simply repeated, parrot-fashion, what company law is at present; we all know what company law is at present. My noble friend has reiterated that, despite all the innovations and complexities, this is a Companies Act company. Responsibility is solely to the shareholders, if there are shareholders. My noble friend said that we have no responsibility to “interest groups”, yet the workforce is 90 per cent of the value added. The Royal Mail is not a particularly highly capitalised company. It should be more capitalised—that is what we have been debating. But for the value added, the workforce, now to be described as an interest group and not part of the system—a system which is broken, according to some, including the Government—is a huge contradiction.

If any progress is to be made, this matter must be considered before Report. If it is not so considered, and the Bill proceeds to the House of Commons unamended, with nothing to show for this entire debate, there will be a train crash in the House of Commons as far as I can see.

I ask my noble friend to ensure that she does not repeat the word “philosophical”. It is a philosophical question. I do not mind using the word about the social democratic model, but why do we have to go round in circles? The Government are saying that this is what the Companies Act says and this is a Companies Act company, so they cannot do what we say. The Government should change the law so that they can do what we say.

I have had no assurance on any of these matters. Now is the time to ask my noble friend and the officials at BERR to go away and think. On that basis, I shall be withdrawing my amendment.

Before the noble Lord withdraws his amendment, I should like to ask the Minister a further question. She suggested that my questions would be tackled under the group containing Amendments 20, 21 and 22. Those amendments deal with reporting as the deal goes forward. I have asked about the situation now as regards the Government’s intentions towards control, and I should be grateful for an answer.

I am happy to provide the answer under this group of amendments. The Government are committed to ensuring that we have the controls over a Royal Mail company that the ownership of the majority of the shares brings. The noble Lord will be aware of the technical definition that determines control of the provision of more than half the voting shares or otherwise controlling more than half of shareholders’ voting power. Clause 12 follows the definition and ensures that the Government will have the majority of the voting rights in Royal Mail. That would include the appointment of directors, amendments to articles and the issuing of shares to the company. However, as we believe that Royal Mail’s board and management are best placed to run the company and should do so wherever possible without specific political interference, we have ensured that we have the types of controls that are essential to a shareholder.

The relationship and specific rights that would be granted to a partner will be as set out in the shareholders’ agreement. My noble friend the Secretary of State has already suggested that that has not yet been negotiated and it is therefore difficult to have any specific discussion. However, it will reflect a partnership rather than a ceding of control. The Government will have greater control rights than the partner, as would be appropriate for a majority shareholder, but there will be, in key areas, shared responsibility with the partner.

We also need to ensure that the partner has sufficient rights to enable it to influence the decision-making process and to deliver the transformation that is required. That is the purpose of the exercise. We expect the partner to have these shared responsibilities, particularly in operational matters, and a meaningful say in the running of the company, as has been the point of having a strategic partner.

I am very grateful to my noble friend for giving way again, but I think that she has missed the point of the symmetry in the partnership model. How can we be asked to buy into symmetry in a partnership between equals, when all of a sudden only one of the partners has any sort of control on the board? I do not understand. I ask my noble friend to recognise the contradictions of her philosophical position, as she calls it, and then we can make some progress.

I think that that is a clear and complete misrepresentation of what I have said. I said that the Government will have greater control rights than the partner. Indeed, I said that they would have the majority voting rights, which involves the majority rights in terms of the appointments of the directors to the board. I was then going on to explain that within that context, there are certain areas of shared responsibility with the partner. This will be a publicly owned company where the Government have majority shareholder rights; therefore they will have majority voting power and majority appointments rights on the board.

I was then going on to explain what other rights a minority shareholder might have as a partner. Obviously, the purpose of having a strategic partner was to enable it to help with the transformation of the business. Therefore, it was essential, in that context, for it to have certain—

I hope that the Committee will forgive me for making one final intervention. This is revealing the ambiguity of the Hooper report, which uses the word “partnership” in two totally different contexts, with two totally different meanings. One minute my noble friend is talking about a partnership with a business and its accountability to shareholders with the majority accountability being to the public. But the second use of “partnership”, which is by some sort of osmosis thought to be the same thing—it is a different thing altogether—means partnership with the workforce. The speeches relating to the Hooper report show that there are two types of partnership. This is a partnership between the management, for innovation, and the workforce. Why should the workforce not be an equal partner with these whizz-kids who are supposed to be helping to transform the company? I am not talking about partnership in an equity sense. Does my noble friend agree that the Hooper report used “partnership” to mean two quite different things?

I was of course answering the question of the noble Lord, Lord De Mauley, about the partnership with the strategic partner. In that context, I was providing an answer about that partnership.

My noble friend has already made his points about workers’ representation on the board. We have explained our position and I have said—clearly, I believe—that there is complete acknowledgement of the centrality of the workforce to Royal Mail, its transformation and its future. I say in the context of a previous intervention that it was not our intention to suggest that the employees were a special interest group; I was simply pointing out the requirements of a board director.

Perhaps I may finish my answer to the noble Lord, Lord De Mauley, about the influence of, and the partnership arrangement with, a strategic partner. The point of having a strategic partner is to assist Royal Mail in the transformation of the business. Therefore, it would be a shared responsibility and partnership in operational matters. The shareholder agreement will also set out the structure of the group, which reflects our policy of partnership but with the Government retaining ultimate control. We expect that the majority of board appointments will be made by the Government, including the chairman, and that the partner would appoint a minority of non-executive directors. As my noble friend the Secretary of State has already said, no such agreement has yet been negotiated with a partner, but I hope that my answer gives noble Lords a sense of the direction of travel.

I am very disappointed that two-thirds of the Minister’s reply was to something which is not part of Amendment 9, which stands on its own and has been degrouped. Confusingly, a lot of other material is being replied to. I am talking about a partnership with the workforce. I invite my noble friend to correct herself in writing if she denies that “partnership” is used in the Hooper report in relation to partnership with the workforce. I shall not divide the Chamber on this occasion, but if no progress is made on Report, I probably shall.

Amendment 9 withdrawn.

Amendment 10 not moved.

Clause 4 : Meaning of “Royal Mail company”

Amendments 11 and 12 not moved.

Clause 4 agreed.

Amendment 13 not moved.

Amendment 14

Moved by

14: After Clause 4, insert the following new Clause—

“Report on impact of re-organisation

(1) Before any order under section 2(1) or 4(1) can be made, the original holding company shall publish a report setting out—

(a) the existing commercial relationship between its subsidiaries;(b) the impact any reorganisation under this Part will have on this relationship.(2) The Secretary of State shall lay a copy of the report before Parliament as soon as reasonably possible after its publication.”

My amendment is prompted by concerns that the reorganisation envisaged by the Bill will lead to a weakening of the relationship between the Royal Mail Group and Post Office Limited. As many noble Lords will know, the current relationship is not just helpful but absolutely critical for the post office network. In fact, neither can exist without the other; that would be unthinkable. Neither organisation can flourish if the other is failing. Nor can one ever leech off the other. This relationship must be about symbiosis, partnership and balance. The inter-business agreement to handle Royal Mail letters provides one-third of the income of post offices. If this reorganisation fractures or even damages that relationship, we will undoubtedly have another round of closures very soon. I say that against the background of the Secretary of State assuring us that no closure will take place, which was surprising but very welcome indeed. However, I still await an answer to Amendment 14. Of course, I recognise that there is no reason why closures should take place. As I understand it, the Bill would open up the possibility for post offices to generate revenue from contracts with private postal service providers in addition to maintaining the existing agreement with Royal Mail.

Post offices still offer a unique physical network. Despite the many closures that have taken place, post offices continue to provide customer access throughout the United Kingdom. That potential should be exploited to the full. However, there is naturally some concern that reorganisation will undermine the security provided by what is, as I understand it, £356 million a year from Royal Mail. A neat diagram was helpfully sent out from the department yesterday which shows a continuing commercial relationship being maintained between the two. I look to the Minister to give us some more detail as to whether the Government expect this commercial relationship to be different from the current inter-company agreement and, if so, in what respect or respects. Has there been any discussion about whether the privatisation deal will contain any assurances about the renewal of the contract on current terms?

There are concerns among stakeholders, which have been expressed to a number of noble Lords, that greater mechanisation will reduce the amount of sorting work that Royal Mail pays post offices to do for it, particularly in rural areas. There is also concern that the end of the exclusive relationship between the two companies and the introduction of possibly unsupportive private management will lead to a reduction of the flat-rate payment that is presently made.

These concerns are not necessarily well founded. Better regulation, the lifting of the burden of the pension deficit and improved exploitation of growing markets such as parcels could all benefit post offices as much as they will help Royal Mail, but this cannot be known for sure. My amendment therefore seeks to ensure that proper thought is put into assessing the risks, possibilities and opportunities. If it is shown that the relationship will be put in genuine danger, steps can and should be taken to protect it before thousands more post offices are threatened with closure. I hope that we shall hear a positive response to these questions from the Minister. I beg to move.

It is important that we look at the effect of any partnership on the companies. The noble Lord is right that the existing commercial partnership and relationship between the subsidiaries should be looked at. I said earlier that the future growth of Royal Mail lies in its parcel services. Its European arm has gone into Europe, particularly to Poland, and won orders. A rumour has been put about by one of the partners that it will take over the successful companies. The relationship between the companies should be set out as soon as possible. If a partner comes in, might it be able to take over one of Royal Mail’s successful parcel companies lock, stock and barrel, thereby depriving it of the expansion that it desires?

I welcome the amendment, not because I believe that it is necessary but because it provides a welcome opportunity to explain some of the proposals in detail. I say in response to the question of the noble Lord, Lord Hoyle, that the strategic partner is invited to look at Royal Mail Group Limited and not at any part separately. Therefore, it is not possible for it to take over separately another element of part of the group. I hope that that sufficiently reassures my noble friend Lord Hoyle on that subject.

I understand the concerns around the protection of the Post Office. The introduction of the strategic partner would have no impact on the relationship between the Post Office and Royal Mail, because this is a currently and contractual relationship, with Royal Mail using the post office network across the country and able to provide access to its products to the public through that network—for example, special delivery, airmail and stamps. On the other hand, the Post Office derives about 30 per cent of its revenue from that relationship. If anything, we believe that, as the noble Lord acknowledges, it improves the Post Office’s ability to attract revenue from elsewhere. I therefore assure the noble Lord that the reorganisation will not lead to weakening the relationship between the Post Office and Royal Mail.

Royal Mail will remain publicly owned; that is on the face of the Bill. The partnership is a commercial partnership, and the Post Office will continue to offer Royal Mail services through its network. Income from Royal Mail is very important to the Post Office and to sub-postmasters; vital business derives from it, from consumers and small businesses.

The noble Lord asked about the post office network. The proposed regulatory regime allows Ofcom to oblige access to POL for other mail providers in certain circumstances. These changes being proposed provide new opportunities for the Post Office to focus on its own challenges and create a better and more vibrant future for its network. As noble Lords will be aware, we provide a subsidy of approximately £150 million a year to the Post Office. In this context, it is absolutely vital that we protect the taxpayers’ interests as well, in particular to ensure that there are no leakages of that subsidy to Royal Mail—and even more so when there is a strategic partner.

The noble Lord asked about further details of the contractual relationship between the two businesses, which are commercially confidential. It covers the pricing of about 30 products, the details of which would be of great interest to the competitors of both the Post Office and Royal Mail alike and which it would be inappropriate to provide.

We hope that, in addition to the opportunities for further revenue that this Bill will provide the Post Office, we will strengthen the Post Office through creating a new board and its own non-executive chair, which will provide greater support to the Post Office’s management team. There has been some concern in the past that the Post Office should have the commercial freedom to provide services to other postal companies; as I have said, Clauses 34 and 44, which will be debated after the Easter Recess, will provide the regulator with the powers to compel access to the post office network for other postal companies in certain circumstances.

I hope that noble Lords have found helpful the chart that was circulated to them. I am very happy to discuss it and to put it on the record, if there are any questions about the organisation of the chart.

Just to clarify what my noble friend said in reply to my question, am I right in thinking that the partnership would be with Royal Mail Group Limited? It is not Royal Mail Holdings but the Royal Mail Group. If that is the case, my fears are not abated; in fact, they are intensified, because that would mean that the profitable side—the parcel business—is within that. Therefore, we could be in the position I described of taking over the profitable side of Royal Mail.

I am a little unclear whether my noble friend is suggesting that the partnership should be with Royal Mail Holdings, which would then mean that the partner would own shares in Post Office Limited. I am sure that is not his intention.

I am sorry. I am sure that we are saying the same thing—I am not trying to be awkward. The partnership is coming in to help Royal Mail, and it will be the efficiency of the Royal Mail Group Limited that it will be looking at, which is on the chart. But the Royal Mail Group Limited contains not only letters, as it says on the chart, but the parcel division. I am very concerned that that is the growth area for the future and that it could be put in jeopardy if it is taken over by the partner.

Perhaps we could clarify this separately. I would be very happy to have a meeting to discuss this, because it is clearly a confusing issue.

I am very concerned about all this. I thought that it was much clearer than I now think it is. When the opposition Benches put forward the idea that a report should be laid before Parliament by the Secretary of State so that we could clarify these things—in particular, the impact that any reorganisation under this part will have on the relationship—we were only asking for Parliament to be kept in touch with what was happening, so that we could discuss this and look at it again. So I would like to test the opinion of the Committee.

House resumed. Committee to begin again not before 8.37 pm.

Data Retention (EC Directive) Regulations 2009

Motion to Approve

Moved By

That the draft regulations laid before the House on 11 February be approved.

Relevant Document: 7th report from the Joint Committee on Statutory Instruments.

My Lords, these regulations are made under Section 2(2) of the European Communities Act 1972. They will complete the transposition of the European data retention directive or, to give it its full name, the directive on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending directive 2002/58/EC. I hope noble Lords will allow me to refer to it simply as “the directive”.

The European directive was formally adopted on 15 March 2006, three years ago, and related to fixed-line, mobile and internet communications. It requires the retention of data about the communication, covering details such as who contacted whom and where and when the communication took place. It does not relate to the content of a communication, nor to what was said or written.

The directive was adopted after discussions at a European level involving the communications industry, law enforcement and member states. The need for this measure was demonstrated by the shared experiences across many jurisdictions detailing how important communications data have been to law enforcement.

Let me outline some examples of where these data have played an important part. In the Soham murders, they placed Ian Huntley at the scene of his most grievous crime; in the desecration of Gladys Hammond's grave by animal rights extremists in 2004, communications data helped lead detectives to make those important arrests; and Levi Bellfield, who was found guilty of the murder of two women in south-west London, was caught thanks in part to historic communications data.

I could continue with example after example. In the United Kingdom, communications data form an important part of prosecution evidence in 95 per cent of serious crime cases. The directive rightly refers to the experiences already gained in this country and elsewhere in Europe in exploiting communications. The police, security and intelligence agencies in the UK have been utilising communications data for some time. It is unfortunate that they have had to do so, but the role of communications data in the reducing crime is undeniable. On this point I have the agreement of the important human rights campaigners of Liberty, who agree that communications data records can prove a valuable crime detection and prevention tool.

The benefits that law enforcement derives from retained communications data are clear. The directive as implemented in the UK has already saved many innocent lives—that is not an exaggeration. The regulations relating to telephony have regularly been used to place murderers at the scenes of their crimes, to prevent murders and kidnaps taking place and to identify serious sexual offenders who may not have been caught, and who would certainly not otherwise have been caught as quickly. Internet-related communications data are just as vital. Other member states offered similar examples of how they used communications data to deal with national security and crime problems. Communications data provide one part of the solution, one important tool that law enforcement has relied upon to help protect us. This is why the directive on retaining data was passed across Europe.

Many of our European partners are ahead of us in transposing this directive. France, Germany, Italy and Denmark are just four of the 17 member states that have transposed this directive so far. This directive represents a positive step forward—European member states taking the lead on these important matters. Other countries outside Europe are looking at this directive and are seeking to implement similar legislation.

The directive reflects the international nature of crime, particularly organised crime. It is all too common for crime perpetrated in one country to have been commissioned in another. This directive aims to assist law enforcement by ensuring that wherever in Europe national or cross-border crimes are commissioned, communications data are retained to enable law enforcement to help prevent and detect crime and increase public safety.

Already, as a result of this directive, the communications industry is making changes. The European Telecommunications Standards Institute has produced a technical specification to help the communications industry in its dealings with law enforcement. This European standard has already reduced the cost and complexity of implementing the directive. I commend to the House this excellent example of co-operation.

I now draw attention to the confusion that occurred in the debate in the other place. The published impact assessment that accompanies these regulations states that it is not the Government’s intention to change how communications data are accessed. This is indeed the case, because we believe that the framework in which communications data are accessed is appropriate. The framework is set out in RIPA. However, separate from these regulations, as the Home Secretary announced in December, we are shortly going to hold a consultation exercise on the public authorities able to access communications data under RIPA. The consultation will list the public authorities and set out the rank at which they can authorise the acquisition of communications data and the statutory purposes for which they can use communications data. In due course, this consultation will result in a statutory instrument subject to the affirmative resolution procedure. There will therefore be an opportunity to revise the list of public authorities able to access communications data which is currently contained in the Regulation of Investigatory Powers (Communications Data) Order 2003 and other places.

However, let us be clear, as I am afraid that the other place got very confused about this. The subject of today’s debate is retention of communications data and not access to it. There will be other good opportunities to debate access to communications data under RIPA, both in the affirmative resolution referred to previously and in the ongoing IMP work. So, before turning to the regulations themselves, I pause briefly to mention the interception modernisation programme. There has been a good deal of interest in this programme from those within this House. I know; I have given many briefings to noble Lords and I stand ready to give more if asked for. In addition, I have bent over backwards to ensure that the Opposition get briefings from Ministers and officials. There has been a great deal of media speculation about the Government’s plans. There will shortly be a full consultation exercise on options relating to maintaining our communications data capability in the longer term as methods of transferring data change. But that is not today’s issue. For now, we are considering a very specific set of proposals relating to retention, contained in the draft regulations before the House.

The directive and the regulations apply only to communications data. As I have said, this is best described as the who, where and when of communications. It may include, for example, the time at which a communication is made or the location of a piece of mobile communications equipment. To explain this in old-fashioned terms, it is effectively the information on the outside of an envelope, which includes the name, address and postmark. It is not the content. The specific data covered by the directive is information that is generated or processed by communications providers for their own business purposes, such as billing, network management and prevention of fraud. Neither the directive nor the regulations apply to any of the contents of a communication. The key effect of the directive and these regulations is to make the retention of communications data by communications service providers mandatory. Note, however, that it does not apply to social networking sites.

Before turning to the details of the regulations, it may assist noble Lords if I explain a little about the history of data retention in the UK in the past few years. The voluntary basis for retaining communications data started in 2003 with the introduction of the voluntary code. This was replaced when the first part of the data retention directive made traditional fixed-line and mobile telephony retention mandatory in October 2007. We have worked with those fixed-line and mobile companies and they have a good understanding of their responsibilities and perform them well. The Government remain grateful for the industry’s continued co-operation.

That was when the first part of the transposition of the directive, relating to traditional telephony, was completed. Since then, law enforcement agencies have been working closely with industry to develop expertise in using internet-related data and to understand which types of internet-related data should be retained by which service providers to provide most help to the law enforcement and intelligence agencies. A great deal of work has also been done on how internet-related data should be stored in order to ensure that they can be accessed efficiently when necessary. We are now in a position to complete the transposition of the directive and make the retention of data relating to internet communications mandatory. Those business data contain information about the subscriber to the services, details of the bills the subscriber receives and information about how those services are used—in other words, traffic data.

In line with the requirements of the directive and with comments made by communications service providers during our consultation exercise, we are determined to minimise any possible duplication of data retention. To do this, we have decided to introduce a notice system so that service providers can be absolutely confident about what they are required to do under the regulations. The Government will issue notices to those providers required to retain data. They will also explain precisely which data sets they would like the service providers to retain. The Government will use the notice system to minimise the burdens imposed upon industry while ensuring that relevant communications data are retained.

The consultation exercise highlighted the complexity of this area. We have therefore undertaken to establish an implementation group which will oversee the implementation of the directive and regulations. It will include experts drawn from industry and from the law enforcement and intelligence agencies. It will provide guidance to communications service providers so that they understand precisely what is required of them. We will also continue to ensure that service providers are not penalised financially as a result of complying with the regulations. This is compatible with previous practice and is a fair way of ensuring both that data are retained effectively and that there is no distortion of the communications market. In light of the approach that I have outlined, I hope that noble Lords will agree that the regulations will provide a suitable basis for the transposition of the directive.

Before I conclude, I remind your Lordships of the importance of communications data. I suggested at the beginning of this speech that the co-operation of industry in respect of communications data has saved lives. This is correct. This final transposition of the directive, as agreed across Europe, will ensure that communications data from all major types of communications, most of which are already held by the communication service providers from billing, are retained consistently and made available efficiently if required. The laws and safeguards covering access to that material are the subject of another, maybe more than one, debate. For these reasons, I commend the draft regulations to the House.

Amendment to the Motion

Moved by

At end insert “but notes with regret the intrusions into privacy that would result from their implementation, in that the regulations substantially extend the range of communications data that must be collected to include information on personal e-mails and internet activity, and that the regulations allow hundreds of different public bodies access to information on personal e-mails and internet activity; and therefore calls upon the Government to withdraw the regulations, and to introduce primary legislation on the retention of communications data that will enable detailed parliamentary scrutiny of such proposals”

My Lords, I thank the Minister for introducing this statutory instrument. He outlined how it implements a requirement under EU law for service providers to collect and retain communications data relating to our internet access, e-mail and telephony. He also made the argument for the importance of these data in tackling the threats we face from terrorism and organised crime. I say straightaway that these Benches understand the need for communications data to be made available to the police, the security services and certain other agencies in the fight against serious crime and to protect our national security. There is nothing between us on this issue. Indeed, it is not that matter but other issues that lie between us. Despite what he has just said about the intention to amend RIPA, that remains a problem. We are not able to support an instrument where there is such uncertainty over what it will do, how it will work in practice and how it relates to the evolving set of policies and technical solutions under the interception modernisation programme. I shall explain why I have these reservations. It is for these reasons that we are calling on the Government to withdraw the instrument and bring forward primary legislation on communications data.

I want to look at three matters, each of which has significance. First, on the specifics of the statutory instrument before us, the instrument could very well be extended to cover a much wider range of communications than those outlined by the Minister. While it is claimed that the content of the internet communications will not be retained—the Minister underlined this—the truth is that it is very difficult with internet communications to separate the content from the who, what, where, when and how; that is to say, the transmission of data. Secondly, on the instrument’s relationship with RIPA, as it stands that Act has abusively wide scope which will certainly extend the use of communications data of this kind to many other different bodies for many reasons, some of them very trivial. Thirdly, setting all this in the context of the interception modernisation programme that the Minister mentioned, it is not at all clear to this side of the House how this regulation fits into this programme. We fear that we are moving on auto pilot to a stage where there is no longer a meaningful distinction between content and communications data, and one which may well involve a huge centralisation of data by the Government. Let me look at these specifics.

Reading the statutory instrument makes me very uneasy. The definitions that it uses are very broad, perhaps deliberately so. We are told that the service providers will retain only the data they “own”; in other words, data which they generate in the process of supplying their services to a customer, and not data generated by third parties or instant messaging. But “communications data” are defined as data generated and processed by service providers. And “internet e-mail” is defined as,

“any text, voice, sound or image message”.

Therefore, the problem does not end with the Minister telling us that social networking is to be excluded. Other categories of instant messaging would not necessarily be excluded in that way. These categories and definitions are very broad and they make me very uneasy.

It is not inconceivable that this definition of “internet e-mail” could cover third parties. Is it also not the case that service providers could be required to retain data relating to this third-party layer because they would process their communications? There is a real difficulty about what we are to understand by “process” and how far it really extends. We are very uneasy that that word could be interpreted as meaning a range of internet communications much wider than those discussed by the Minister. Will he clarify that?

We are also told that the guidance will specify what these definitions mean in practice. But this guidance will be written only after the regulations come into force. This is pretty strange. Does the Minister think this is good practice because it puts the horse before the cart and your Lordships' House is not in a position to be sure what it is being asked to agree to. Quite apart from the broad scope of the instrument, there are other practical and technical questions that need to be answered. Will service providers have to record every attempt to access an e-mail server, even if no e-mail is sent or received, and will they have to retain data in respect of spam e-mail? Some estimates say that 90 to 95 per cent of all e-mail traffic transmitted is spam. If so, what are the cost implications? If it is not to be included, how are ISPs to distinguish between proper e-mails and spam? Most importantly, it is claimed that the content of internet communications will not be collected. I come back to the point that the Minister made.

Regulation 4(5) states:

“No data revealing the content of a communication is to be retained in pursuance of these Regulations”.

But—and here is the problem—collecting “communications data” for phone calls is relatively straightforward. Technically, the details on who called whom, when and for how long are completely distinct from the content of that call. But for internet communications there is only one data stream, and this data stream includes both the fact of the communication and its content. How do you separate the two? Where do you draw the line? Can the Minister please clarify the Government's understanding of this? Take an e-mail as an example. The body of an e-mail is obviously content, but what about the subject? The subject is included in the e-mail header, which says when the e-mail was sent, to whom it was sent and who received it. Is this subject classed as communications data because it clearly gives content?

The Explanatory Memorandum says that an implementation group will be set up to examine practical issues of this kind. That is a very good thing, but what is the composition of the implementation group, when will it report, and when will its work be published? Again we feel that this is putting the cart before the horse. We need to have this report before we are asked to agree to this legislation.

We must know how these regulations are going to work in practice. The regulations themselves are, of course, only one half of the issue. Their significance is heightened when you examine who will potentially have access to the information proposed to be retained. The Minister mentioned the promise by the Home Secretary made relatively recently to review RIPA. Under the Act the number of people and bodies who have access to sensitive information is very extensive. It is not just the security and intelligence services and the police but all 474 local councils in England, every NHS trust and fire service, 139 prisons, the Environment Agency and even Royal Mail, and those are only some. In the view of these Benches, it will require an extraordinary narrowing of the number of bodies entitled to have access under RIPA for it to be a fit instrument for an authorisation process for access to information and data communications of this degree of sensitivity. We would wish to see the narrowing of the authorisation process before we were happy to agree that that could be the Act that enabled that authorisation to take place. We would like to see the amendment of RIPA taking place before we get to the processing of any Bill relating to data communications.

There is no guidance on how these regulations relate to the interception modernisation programme. I have already outlined how broad the definitions in this instrument are, that they could potentially cover third parties—that is a very important point—and how the distinction between communications data and content is difficult, if not impossible, to make in the internet protocols such as e-mail, web browsing and instant messaging. Is it the intention, in fact, to move to a stage where we will not be able to separate the two? Does this mean in practice that everything will be collected and held in a centralised database? Does this indeed open the door for data mining and deep packet inspection?

It is hard to avoid the suspicion that this instrument could very well establish a legal construct around which the IMP could be allowed to proceed without further primary legislation. It is telling that in another recent speech the Home Secretary said:

“The changes we need to make may require legislation. The safeguards we will want to put in place certainly will. And we may need legislation to test what a solution will look like”.

We on these Benches are not clear whether further primary legislation is intended by the Government and regarded as needed by the Government to achieve the aims of the interception modernisation programme. Therefore, we are not clear whether this provision would enable the extension of the collection of data for the purposes outlined to take place without any further legislation. Which are we facing? Are we faced by this provision, or are we going to be able to have primary legislation in due course? If so, it seems a good idea to put the whole of this into the primary legislation.

At the time of the Queen’s Speech, the Government said that they were going to bring forward primary legislation and at the same time the incorporation of the statutory instrument. Indeed, the Joint Committee on Human Rights has recommended that the Government’s powers should be set out in primary legislation. Now, we are asked instead to adopt the SI by itself, without knowing or understanding the relationship that this may have to primary legislation, whether there will be any primary legislation, and how much RIPA—the authorising access legislation—will be narrowed.

This is a very unsatisfactory state of affairs. I beg the Government to withdraw the regulations, which are not necessary, and to introduce at the earliest opportunity primary legislation on communications data, from which we will have clarity about what constitutes data and what constitutes content. The Government cannot expect us to support an instrument where there is such uncertainty over what it will do and how it will work in practice. The Government promised—I am sure it was a promise that was seriously meant—a well informed debate, characterised by openness, reason and reasonableness. The Home Secretary wants us to achieve consensus, and we would like to be able to join that. I hope that the Government will withdraw the regulations today and enable us to have a proper debate on primary legislation.

My Lords, I rise to support my noble friend’s amendment. In so doing, I declare my various interests in this field, as an unpaid adviser to the Enterprise Privacy Group, Privacy International and 80/20 Thinking.

I do not have all that much to add to my noble friend’s excellent and devastating critique, but I should like to reinforce one or two of the issues to which she referred and probe the Minister on a few more.

First, it is a source of regret to me that the Government’s justifications for their data retention policy—and, it has to be said, various other IT fields—seem to be riddled with intellectual and technological vacuity. I am sure that none of us disputes that traffic and communications data and their retention can be of immense help in the fight against terrorism and crime, as the Minister intimated in his introduction. Indeed, I and my party have been utterly consistent in stating that case; albeit I would add the mild caveat that it is all too easy to overstate their potential utility. As the Explanatory Memorandum says:

“Lawful access to communications data allows investigators to identify suspects and their ‘hidden’ means of communication, trace their criminal contacts, establish hierarchical relationships between conspirators, place them in specific locations at specific times, identify their banks and those engaged in laundering their criminal finances and assets both in the UK and abroad, and can confirm or disprove suspects’ alibis”.

In sum, a regime of data retention allows our law enforcement agencies and intelligence services to generate detailed whole-of-life profiles on individuals who may be engaged in terrorist or criminal activity. Indeed, as the Government have frequently and correctly argued, it is this aspect of data retention that gives it its critical significance as part of their investigative and preventive armoury. I have no difficulty with this whatever. However, if we apply this to a mandatory whole-of-population scheme, the corollary to this must be equally true; namely, that detailed whole-of-life profiles of every single citizen in a member state are made available to their respective Governments. In effect, the oft-repeated mantra that lies at the heart of the Government’s insistence that these proposals are proportionate and compliant with the ECHR—namely, that definitions of communications data,

“do not include the contents of communications”,—

is little more than a fig leaf. The stark reality is that, on the Government’s own admission, the communications data on their own are more than adequate to define the individual and the minutiae of his or her life. To all intents and purposes, the content of communications can, in a vast majority of cases, be inferred by resort to analysis.

In this context, it is worth noting a significant ruling earlier this month by the Administrative Court of Wiesbaden. Its opinion states that,

“data retention violates the fundamental right to privacy. It is not necessary in a democratic society. The individual does not provoke the interference but can be intimidated by the risks of abuse and the feeling of being under surveillance ... The directive [on data retention] does not respect the principle of proportionality guaranteed in Article 8 ECHR, which is why it is invalid”.

I accept that this probably does not have immediate relevance per se to our proceedings today. Nevertheless, and given that the German Working Group on Data Retention is awaiting a ruling from the European Court of Justice in respect of its suit against the German version of this directive, I wonder how sanguine the Government, and indeed the European Commission, are that these proposals are properly ECHR-compliant. After all, there is a very real possibility that the judgment, as and when it is made, will be consistent with that made in respect of the UK’s DNA database in December of last year.

My noble friend has referred to the wooliness and imprecision of the drafting, particularly in the context of properly articulating what classes of communications data are to be retained. For example, in Part 3 of the schedule dealing with,

“Internet Access, Internet E-Mail or Internet Telephony”,

there is no indication of which internet protocols and/or data fields may or may not have to be specifically logged by service providers. This is a crucially important point because, without clarity in this area, communications service providers will not have certainty as to the parameters of their retention obligation. This in turn will give rise to a number of serious issues with respect to their contractual obligations to their customers, particularly with respect to data protection policies, as well as leaving the individual citizen utterly in the dark as to how to mitigate any compromise of his private and personal communications that could be engendered by implementation of the mandatory scheme.

At a potentially much more sinister level, to which my noble friend referred, the regulations are silent on whether it is the Government’s intention that the directive should authorise the use of deep packet inspection technology to facilitate their data retention policies. I apologise for the techno-speak, but this, too, is critical, particularly in respect of the security and privacy of data, because DPI allows for interrogation and analysis of layers 2 to 7 of the OSI seven-layer model. Put simply, DPI devices can classify traffic and communications data on the basis of information extracted from the data part of the packet, thereby blurring the boundaries as to whether message content is being retained or not, rather than being confined to the header information alone.

It may be that I have too suspicious and cynical a mindset, but I am tempted to suppose that a principal reason for the Home Office being so lackadaisical in responding adequately to recent concerns about behavioural advertising and DPI may be based in its unstated ambition to make use of the technology itself for its IMP ambitions. Be that as it may, the point at issue today is whether there is also an aspiration that the technology should be available in the context of these regulations. I hope that the Minister will clarify that for me. In this context, he may be tempted to suggest that we should not worry about these issues of technical detail on the basis that they will be attended to and resolved by the implementation group. That may or may not be the case, but, to put it bluntly, neither Parliament nor this House should accept this sort of pig in a poke. I support my noble friend and I look forward to the Minister’s response.

My Lords, I support the amendment. The noble Baroness, Lady Neville-Jones, has asked all the right questions that needed to be asked. Before the Minister is tempted to say, “If we do not implement or transpose the directive now, we will face infraction proceedings”, I should remind the House where it came from. The directive was pushed through by the UK under the then Home Secretary, Charles Clarke. Its scope was regarded at the time as far too wide, with insufficient safeguards. My colleagues in the European Parliament voted against it in 2005 but, sadly, they were not supported.

The Home Office imagined the directive and has now, I must tell the Minister, brought it back in an unbelievably unsatisfactory form. Many questions about it were raised even before his jaw-dropping statement. I think I heard him say that access will not be as described in last Monday’s debate in the Commons on this very statutory instrument. I should be most surprised if that is what he said, and he will correct me if it is not. If the substance of last Monday’s debate or the Government’s interpretation of it have changed, the other place would be justified in having another look at the matter.

There are fundamental questions here and the noble Earl, Lord Northesk, has raised one of the most critical: whether the Government’s interpretation of RIPA is sufficient. As the House will recall, when I asked the Minister whether British Telecom’s illegal trials of Phorm to intercept web traffic to trial targeted advertising were within the law, he said it was not possible to say—neither the Home Office nor BERR could come to a decision on it and it would have to be tested in the courts. That is just one case. We cannot move ahead on this sort of statutory instrument when it is still so unclear whether RIPA is fit for purpose in the interception of web traffic to this extent.

The other difficulty is that, although the Minister said that content is not looked at, the Explanatory Notes give several examples of interception being used when the content is prayed in aid. A film clip is mentioned in one case. That clearly is content. The Minister has reassured us that data on Facebook, Bebo, MySpace and similar sites will not be retained, but that seems to fly in the face of what was said by the Minister’s honourable friend, Mr Coaker, when he addressed the point in Committee in the other place.

A large number of issues need to be answered in a far more satisfactory way. We agree with the noble Baroness, Lady Neville-Jones, that the force of primary legislation is needed to clear this up. That is not surprising given that RIPA was conceived before data-mining technology had become anything like as sophisticated as it is now. What needs to be delved into far more deeply in both Houses is whether the measure is fit for purpose. If it is, are those responsible for regulating it—the Home Office, Ofcom and so on—doing so sufficiently, and is the misuse of it adequately understood?

The Minister said that we are talking only about retention. We on these Benches understand the importance of retaining these data, for all the reasons that he gave, including tackling serious crime and terrorism. However, unless the public at large can be entirely confident that retention is one thing and that access is another, and unless they can be entirely confident about the exact definition of “data”, which is becoming less clear with each contribution this evening, then I think that Members of both Houses would be completely correct in having very serious doubts.

My Lords, I congratulate the noble Baroness, Lady Neville-Jones, on introducing her amendment, which has been supported by all speakers so far. I do not intend to mention the detail; that has already been dealt with extremely effectively by the three previous speakers. I want to go rather broader. The final sentence of the amendment calls upon the Government to,

“withdraw the Regulations, and to introduce primary legislation on the retention of communications”,

and so on. Does that mean amending the regulations or withdrawing them, and would that be acceptable to the real Government in this case—the unelected and unsackable Government in Brussels? As I understand it and as the Explanatory Memorandum makes pitifully clear, we would suffer infraction proceedings if we did not implement the requirements of the directive. Therefore, I am not absolutely certain how this amendment is going to play. However, we have been here many times before with the waste electrical and electronic equipment directive, the curd cheese regulations, the horse passports directive, the working time directive and so on. Noble Lords will remember that we debated and opposed many of those but in the end there was nothing that we could do because it was a requirement of membership of the European Union that we pass those directives into British law.

It is slightly depressing that the real truth is that this House and the other place are turning more and more into rather sad rubber stamps for the increasing torrent of EU legislation that is coming our way. This is just another example of it, is it not? None the less, I think that this evening’s debate has been very worth while, if only to tease out of the Minister whether this House is able to amend these regulations or whether it has the right to reject them. If it does not have the right to do that, is this whole thing not just an exercise in futility?

My Lords, like the noble Lord, Lord Willoughby de Broke, I welcome the amendment and the way in which it was moved, together with the detail given by the noble Baroness, the noble Earl, Lord Northesk, and the noble Baroness, Lady Miller. However, like the noble Lord, Lord Willoughby de Broke, I am concerned not so much with the technical aspects, which have been adequately explained, but with exactly what these regulations mean in straight, plain English. Are they the thin end of the wedge? What will come next? What is intended to be brought forward in the future? I have no doubt that we will be reassured that content will not apply in relation to these regulations, but of course a further order may very well bring in content.

People in this country are getting very concerned about the surveillance that they are under day in and day out, minute by minute and hour by hour. Indeed, in many respects they are getting very frightened about the amount of data that the Government hold about them. This is supposed to be a free society. Unfortunately, it no longer is a free society, and the powers that be—the Government in this country and the Governments in other countries—appear to believe that human beings are not individuals but the property of the state. That thinking has no place in a democratic society.

Therefore, I am worried, as are many other people, that piece by piece, order by order and Bill by Bill the people of this country are being robbed of their freedom, their independence and their privacy. That is why I am particularly concerned about these regulations. They give us the opportunity to examine exactly how the people of this country are being treated.

As I understand it, and no doubt the noble Lord will correct me if I am wrong, these regulations apply to individual countries. Presumably, the data collected will be used within this country, but I am not sure. Will they be accessible by the other 26 nations of the European Union without going through our Government? How many pieces of information will have to be stored during the course of a year? Is he satisfied that there is sufficient technical ability to be able to correctly access the information stored? We know that many mistakes are made. Indeed, details are lost and people's privacy is invaded even though that may not have been intended. How many other countries so far have enacted the legislation? Are we the last, the first or what?

Finally—I do not want to detain the House too long—I must say that the Minister would be well advised to take note of what has been said tonight and take back these regulations to have another look at them because of the serious reservations that have been voiced from all sides of the House this evening. That is the only hope, quite frankly, that we will get some proper legislation because, as the noble Lord, Lord Willoughby de Broke, said, once this goes through that is the end of the matter. It is only the Government, not this House or another place, who can push this aside. At least the Government have the opportunity to go back to the Commission and the Council and say, “We're having a lot of trouble with this in Parliament. Can we have another look at it and renegotiate it to make it more satisfactory and acceptable to both Houses of Parliament?”.

My Lords, it is significant that there is no dispute among us that there is a proper place for the retention of relevant data for the serious investigation of crime and the prevention of terrorism. The difficulty is that that is not dealt with as a separate area but potentially spreads into many other areas as well. We have to recognise that the well publicised loss of data by the Ministry of Defence, the Driver and Vehicle Licensing Authority and Her Majesty's Revenue and Customs has created a difficult background for general permissions for access to data. Therefore, there is a strong case for the whole issue of access to data to be enshrined in primary legislation and quite possibly that the use by the police and security forces should be dealt with as a separate issue from wider questions. The difficulty is that we are trying to deal with them all in the same set of propositions, potentially.

It would be good to have a commitment from the Minister to revisit the promise of primary legislation that was given in May 2008, although no Bill was announced in the Queen’s Speech. The regulations may have to be approved today for legal reasons, as has been explained, but there should be a commitment to primary legislation in the whole sphere and to the potential separation of the serious crime and terrorism aspects from other aspects.