To ask Her Majesty’s Government whether they will introduce legislation to require pension funds to report on how social, environmental and governance considerations are being managed.

My Lords, the Government fully support the highest standards of corporate governance and ethical behaviour and believe they should contribute to better company performance by helping a board discharge its duties in the best interests of shareholders. Nonetheless, we believe that a non-prescriptive approach to developing policies in this area is the way forward.

The current legislation already requires a scheme’s statement of investment principles to include a declaration of the extent to which social, environmental and ethical considerations are taken into account in its investments.

My Lords, research from FairPensions shows that only one in three of our top 20 UK pension funds publishes the positive actions that they take to manage financial risk associated with social, environmental and corporate governance assets. Will my noble friend help shareholders in the vital role that they perform in protecting those assets—and, ultimately, our financial risk as a nation—by obliging pension funds and their investment intermediaries to publish openly these positive actions that are taken alongside the stated policy of investment?

My Lords, this is a very important issue. We know, in particular, that research indicates that companies perform better when their activities are monitored by shareholders. The Government have put in place the investment governance group to encourage best practice in investment-related governance. One of the six main principles that it promotes relates to responsible ownership. This is aimed at requiring trustees to adopt the Institutional Shareholders’ Committee’s statement of principles on the responsibilities of shareholders and agents. It also requires that trustees should report periodically to members on the discharge of such responsibilities.

My Lords, where do the Government see the members of the pension funds, and the pensioners, in this? This reference is to the middle men. What about the responsibility to the members of the pension fund in these important matters?

My Lords, it is the role of the trustees, under their fiduciary duty, to take account of members’ interests. It is the trustees’ role in particular, as guardians of that interest, to take account not only of strict and short-term financial returns on investments, but the wider context. That is the right connection with members.

My Lords, among the social considerations must surely be the fate of elderly people. What can the Government do to make sure that the benefits arising from these schemes are sufficient to provide the elderly people who will look to benefit from them with a sufficient standard of living?

My Lords, that is a little removed from the original Question, but it is a very important issue. As we have discussed extensively, the Government’s strategy in relation to pensions is to put in place a clear underpin through state provision while recognising that, because of demographics, people will need to be responsible for topping that up through private sector provision. Therefore, with regard to the whole framework of pension provision, the deregulatory review and the protection from the Pensions Regulator and the Pension Protection Fund are all components of encouraging private sector provision to sit alongside the state pension.

My Lords, the Minister will remember very well our discussions on last year’s Pensions Bill, which, inter alia, investigated and made lawful the activities of the Personal Accounts Delivery Authority. The subject of ethical investment came up on several occasions during our discussions. Is his expectation that PADA will have an ethical investment fund now being worked upon?

My Lords, the noble Lord may have attended the seminar in January set up by PADA to focus on this very issue of socially responsible investment. Following on from that, PADA issued in May a broad consultation document seeking views on the advice that it should give to its trustees on the approach to investment. I think that the cut-off date for the consultation is August so it is still very much work in progress.

My Lords, bearing in mind that pension funds and institutional funds are influential owners of most of the companies soon to be subject to Defra emissions guidelines, does the Minister agree that those guidelines should be extended to their investment portfolios, which has been done very successfully by a major pension company in Australia?

My Lords, the noble Lord is right: the Defra emissions reporting guidelines are out for public consultation. They are expected to be published by October. These guidelines explain how an organisation should measure its corporate footprint as a first step in helping it to improve its emissions management. Those are very important data that one would expect would influence shareholders, be they trustees or others, in their engagement with companies. The purpose of the consultation is to seek views on the guidance. As with all consultations, the views of those who respond will be given full and careful consideration by the Government before any final decisions are made. Therefore, it would not be appropriate for the Government to pre-empt where that consultation may lead.

My Lords, I declare an interest as a National Health Service pensioner. As regards people with public service pensions who have received letters to say that we have all been overpaid for years and that our pensions will be adjusted—as I understand it, that has not worked too badly—what would be the position if an elderly person was in a difficult position through having something changed retrospectively? What is the general policy on this issue?

My Lords, I do not have the details of the issue that the noble Baroness raises. I imagine this would principally be an issue for the trustees. However, I am happy to look into the specifics of that and write to the noble Baroness.

To ask Her Majesty’s Government what is their latest assessment of the timetables for and costs of replacing Trident nuclear weapons and commissioning new aircraft carriers.

My Lords, I am sure that the whole House will wish to join me in offering our sincerest condolences to the family and friends of Lieutenant Colonel Rupert Thorneloe, Trooper Joshua Hammond, Private Robert Laws, Lance Corporal David Dennis, Lance Corporal Dane Elson, Captain Benjamin Babington-Browne and the soldier from the Light Dragoons killed in Helmand province on Tuesday 7 July. All were killed on operations this week in Afghanistan. We also offer our condolences to the family and friends of Flight Lieutenant Kenneth Thompson and Flight Lieutenant Nigel Morton, who were killed when their Tornado F3 crashed on Thursday 2 July in Scotland while on a routine training flight.

This Government are committed to the current nuclear deterrent and to the development of the replacement system, as set out in the 2006 White Paper. We estimate that this replacement will cost between £15 billion and £20 billion at 2006-07 prices and we expect the first successor submarine to enter service in 2024. As part of the 2008 equipment examination, we decided to delay the carriers by one to two years, recognising that this would add cost. Our latest, yet-to-be-approved, estimated cost is £4.6 billion. We expect the in-service dates to be towards the end of 2015 and 2018 respectively.

My Lords, I am sure that the whole House will endorse without reservation the tribute to the fallen in Iraq and Afghanistan. With our forces as stretched as they are, in operations that are likely to be the pattern for the future, is not the top priority to ensure that they have the very best equipment for the tasks that they are undertaking and are likely to be undertaking? Is it not, therefore, essential to reassess the replacement of Trident because of the vast expenditure involved? Should we not look at alternatives and is it not essential that the House should have an opportunity to debate this issue before initial gate decisions are made? If aircraft carriers are essential for flexibility in deployment around the world—and I, for one, believe that they are—do we really need the kind of, arguably, oversophisticated vessels that are currently planned? Would not more simple vessels do the task very well? Indeed, will the aircraft be available to make the expensive, sophisticated carriers fully operational?

My Lords, we put absolutely as our first priority the support to our troops on operations. We have shown that by providing through the UOR process more than £2.2 billion to operations. But we need to do both. It is our primary responsibility to provide for the security of this nation and we cannot do that without a nuclear deterrent. We have said that the nuclear deterrent will not come at a cost to investment in our conventional forces and, no, there is no alternative to the provision of the capability that the carriers will provide. As my colleague on these Benches said when he was First Sea Lord, this is four acres of British sovereign territory that can move 500 miles in a day without the by your leave of any other nation.

My Lords, can the Minister repeat the assurance given to your Lordships’ House the last time that this subject was raised in Oral Questions, to the effect that the two new aircraft carriers will not be diluted into any European defence force?

I am happy to give that assurance, my Lords.

My Lords, in the private sector, if one trades when one knows that one’s operation is insolvent, that is a criminal offence. At the present time, the Ministry of Defence, frankly, is bust. There is a yawning gap between resources and commitments. We have a belated defence review that should have come two or three years ago, as many of us were asking for. What are a Government who place a Secretary of State for Defence 21st out of 23 in the Cabinet’s pecking order going to do about the desperate financial situation of the MoD?

My Lords, I am afraid that I do not recognise at all the characterisation that the noble Lord has just set out. On returning to the Ministry of Defence recently, I have been struck by the way in which it has been able to respond to the pressures of operations and by the success that our forces have achieved in Iraq, for example. We recognise the pressures that they are under, but we are supporting them and seeing progress in the way in which they are making their contribution to the international effort in Afghanistan. We obviously have to manage our finances adequately and we are committed to doing that, which is why we announced earlier this week the Strategic Defence Review.

My Lords, in the light of recent reports in the press about a £1 billion overrun on the two carriers, to which the Minister referred in his original Answer, what steps are the Government taking to ensure that this undesirable trend does not occur year on year?

My Lords, this increase in costs is due to the decision that we took last year to put back the delivery date of the carriers. The project itself is not leading to increased costs; the primary cost increase caused by the delay is due to the inflationary effect on working capital because of the length of the project.

My Lords, from these Benches we, too, send our condolences to the families of the soldiers and the two flight lieutenants whom the Minister mentioned. I very much welcome the noble Lord back to the Dispatch Box with his defence brief. Last month in the other place, the Prime Minister claimed that,

“it is important for us to remember that we have funded defence services for the next two years”.—[Official Report, Commons, 29/6/09; col. 31.]

Is that really the case?

Yes, it is, my Lords. The Prime Minister is absolutely right.

My Lords, the very sad list that the Minister read out at the start of his Answer, on which I am sure the whole House expresses its condolences, draws attention yet again to the fact that the operations that we are conducting require people. The Minister has confirmed that the equipments mentioned in the Question are covered in the budget. Can he confirm or deny reports that three infantry battalions are likely to be cut from the budget, while these equipments are to be retained?

My Lords, I am not aware of those reports at all, so I cannot comment on them.

My Lords, is it the view of Her Majesty’s Government that Russia, in particular, still presents a risk sufficient to warrant our acquiring the defensive assets referred to in the Question of the noble Lord, Lord Judd, as a prudent insurance policy?

My Lords, this is not about Russia or any other country. We need to recognise that the replacement of our deterrent will come into service from 2024 and will stay in service until the late 2050s. It is very difficult for us to predict what the world will be like at that time, which is why we are committed to maintaining our deterrent and replacing the Vanguard submarines.

To ask Her Majesty’s Government what is the current self-sufficiency rate of United Kingdom food production; and how consumers can identify food produced in the United Kingdom.

My Lords, UK self-sufficiency in all food currently stands at 60 per cent and was 59 per cent in 2007. UK self-sufficiency in indigenous food—food which can be produced domestically on a large scale which is economically viable—stood at 73 per cent in 2008. Under European legislation, there are specific requirements to label certain food groups with their country of origin. For other foods, the food labelling regulations require the labelling of origin if failure to do so might mislead.

My Lords, the more eagle-eyed among your Lordships will recognise that I have had to pull my Question on set-aside because the Secretary of State is making a statement at the Royal Show today—the last-but-one day of the Royal Show. Next year, I urge people to come to the Royal Welsh Show, the most successful show in the United Kingdom.

Will the noble Lord acknowledge that self-sufficiency of UK agriculture production has fallen disastrously, by 10 per cent, over the past decade? Will he confirm that the cost of temperate food production imports into the UK now stands at approximately £23 billion? Will he seek to reverse this trend, including urgent action to stop the food-labelling scam of imported food being labelled as British just because it has been packed and processed here in the UK?

My Lords, we are certainly concerned about scams where food is misleadingly labelled, and we have powers to deal with that. However, the noble Lord will know that food labelling is mainly a European issue. He, together with the House, will take delight in the fact that the Commission is currently consulting on strengthening European legislation on food labelling regulations, and we expect that work to bear fruit in the not-too-distant future.

My Lords, I declare an interest as a farmer and grower. Does the Minister agree that the days of assuming that there is plenty of food in the world for British consumers to access are over? What measures are the Government taking to give support and encouragement to British growers and farmers to increase production in this country?

My Lords, I agree somewhat with the noble Lord’s original contention. It is, of course, the case that British self-sufficiency in food has increased very significantly over the past two or three decades. That is a reflection of the productive work of British farmers and their international competitiveness. We should take delight in the progress being made. Of course, the Government are very concerned to ensure that British farming is competitive and is supported in all possible ways so that it can play its part in international markets. The noble Lord will also appreciate that the strongest position for British agriculture is that it should be internationally competitive as, in so many areas, it is.

My Lords, I declare an interest as a small farmer. As oil is a finite resource and as agri-industry is so dependent on oil, not only for fuelling tractors and machinery but also for pesticides and fertilisers, will the Minister say what forward planning is being done to ensure that we retain our ability to produce food in the event of oil running out?

My Lords, of course the noble Countess is right to say that we have to have regard to changes in demand for oil products, the importance of oil as regards carbon emissions and the limitation on world oil supplies. At this stage, it would not be right to suggest that the very significant problems faced by many small farmers, which need consideration by the Government, such as the question of oil supplies running out, should not be a significant priority for the Government.

My Lords, is the Minister aware of the 2009 farmers’ intention survey which highlights a fall in dairy farmers’ confidence and records the lowest numbers intending to expand since the survey began in 2004? It seems almost certain that there will be a fall in GB milk production over the next year or two of the order of some 5 per cent. From my own experience in Devon, I know that few new entrants to farming intend to enter the dairy sector. If dairy farming is not in crisis, as the noble Lord firmly averred in this House last week, does he agree that we seem to be at a tipping point, especially in the context of increasing pressures on world food markets, and that that ought to be a matter for real concern?

My Lords, we are concerned, as the right reverend Prelate has suggested, about dairy farmers in Britain. Of course last week I was commenting on the collapse of a significant dairy and its consequences. Last week, I wanted to emphasise, and this week I wish to reiterate, that the medium-term perspective for the dairy industry, far from being depressing, is encouraging. The right reverend Prelate is absolutely right to say that we have a difficult 18 months to two years to go through. That is why we are taking what measures we can to give support during this interim period. We were pleased, and the House will have rejoiced in the fact, that all farmers affected by the collapse of the dairy to which we referred last week had been offered new contracts and, therefore, are able to stay in production. The vast majority have accepted those contracts. That is not to deny that we will have difficulties over the next 18 months.

My Lords, I should declare that I own and am landlord of farmland. The right reverend Prelate, who is a friend of mine, is quite right in what he says about farming, particularly dairy farming. We should be self-sufficient in liquid milk, but UK dairy farmers and co-operatives have to compete within the UK with overseas suppliers with a huge home market share, sometimes as high as 90 per cent. Competition is very important. Nevertheless, will the Government ask the Competition Commission to investigate the market share allowed to UK suppliers? They should be able to achieve greater economies of scale and be enabled to compete more fairly with their overseas competitors.

My Lords, of course it is right that the Competition Commission should ensure that British farmers compete on a fair basis but, as I indicated last week, we export considerable amounts of milk. That is not to say that we do not import considerable amounts too, but we are exporters of milk and find a market for it. The noble Lord is suggesting that there is unfair competition. I shall certainly draw that to the attention of the competition authorities, but I imagine that the House will appreciate that the issues are somewhat more fundamental than the aspect of unfair competition.

To ask Her Majesty's Government what considerations they took into account in refusing parole to Ronald Biggs.

My Lords, the Justice Secretary considered all the material that was before the Parole Board panel. This included details of Mr Biggs’s index offence; his previous offending history; his escape from Her Majesty’s Prison Wandsworth in 1965; the many years which he subsequently spent evading extradition and recapture; his progress in custody after he returned to the United Kingdom in 2001; the reports prepared by staff in NOMS; the written representations of his legal representative; and the Parole Board’s recommendation. After careful consideration, the Justice Secretary determined that the risk of harm presented by Mr Biggs was such that it might not be safely managed in the community.

My Lords, while not for a moment condoning the crime that Mr Biggs originally committed, would my noble friend confirm that Mr Biggs is old, very ill, most unlikely to do any harm to anybody and no danger to society and that the public would not protest at his early release, particularly if under supervision? What is the purpose of keeping people like him in our overcrowded jails?

My Lords, of course I can confirm that Mr Biggs is elderly and not in good health. However, I should remind my noble friend that the Parole Board said:

“What has quite plainly reduced enormously is his capacity to reoffend; the medical evidence indicates overwhelmingly that his own ability to commit further acts of violence has reduced to an extremely low level. The Panel is not persuaded that risk arising from association with criminal peers and consequent indirect involvement in offending is necessarily equally low”.

Forgive the pun, my Lords. More seriously, the significance the Parole Board made of that risk is a matter of judgment. It decided to make its recommendation. My right honourable friend the Justice Secretary considered the significance of the last part of the passage I read out to be of considerable importance when coming to his decision.

My Lords, I am sure that the Minister will recall that the European Court of Human Rights in the case of Stafford said that the Parole Board should have the power to direct release if continued detention was not necessary. The Government carried the effect of that decision in the Criminal Justice Act 2003. Is it not extremely unfortunate that the Justice Secretary should now bring back into the political arena a decision that should have been made by the Parole Board, and would have been made by the Parole Board, to release Mr Biggs, regardless of what he has done? Is it not simply a populist move that we should deplore?

My Lords, it is not a populist move. I reject that utterly. As I think the noble Lord will know, the law as far as this is concerned is in rather a particular position at the moment. Under existing legislation, it is for the Secretary of State for Justice to determine whether an offender sentenced to 15 years or more and whose release is subject to the provisions of the Criminal Justice Act 1991 might be released early on parole. For all other types of prisoners—for example, those with indeterminate sentences—it is a matter for the Parole Board. I am glad to be able to say that the noble Lord will able to support the Government when we come to Clause 129 of the Coroners and Justice Bill, which will change the law in this regard.

My Lords, the Minister has very properly listed a number of aggravating features of Biggs’s case, but is it not also perfectly correct to say that he did, after all, return voluntarily to the jurisdiction?

My Lords, it is right to say that he returned voluntarily—some 36 years after he committed the offence of escaping from Her Majesty’s Prison Wandsworth. Why he returned voluntarily has been a matter of some comment in the media, and I will not repeat it. The noble Lord is strictly right that Mr Biggs returned voluntarily, but if he had not escaped he would have finished his sentence a long time ago.

My Lords, how many prisoners are over the age of 75, and what consideration is given to the overcrowding in our prisons when reviewing their cases for parole?

My Lords, I do not know the number of prisoners over 75, but I will find out and write to the noble Lord. Of course it is important that the right people are in prison at the right time; prisoners can be released if their health is in such a state and they can apply to the Justice Secretary for release on those grounds. We are talking about a decision which my right honourable friend took in a quasi-judicial role, having considered all the evidence before him.

My Lords, my right honourable friend the Chancellor of the Exchequer made a Statement in the other place yesterday on reforming financial markets. The usual channels agreed to the Statement being repeated immediately after Oral Questions today. My noble friend Lord Myners will now repeat this Statement.

With the leave of the House, at a convenient point around 6.30 pm, my noble friend Lord West of Spithead will repeat as a Statement an urgent Question, which was allowed in the other place, asking the Secretary of State for the Home Department to make a Statement on the steps that he is taking to look into the actions of the police, the prosecutors and the Information Commissioner in respect of the use by newspapers of illegal surveillance methods.

My Lords, with the leave of the House, I will now repeat a Statement made in another place yesterday by my right honourable friend the Chancellor of the Exchequer on government proposals for reforming financial markets. The Statement is as follows:

“With permission, I shall make a Statement on the Government’s proposals for reforming financial markets. Copies of our proposals are contained in a document that is available in the Vote Office.

The world economy has been hit by a severe financial crisis which has resulted in the worst economic downturn for well over 60 years. Its origins lie in failures in the banking system around the world. Financial institutions in many countries simply took on too much risk. They became over-reliant on wholesale funding and too exposed to particular products, and irresponsible pay practices made banks take unnecessary risks.

It is also clear that some financial institutions appeared to have little appreciation of what was going on inside their own businesses. However, regulators and Governments, too, must learn from the events of the past two years and understand better the risks that come from rapid globalisation in the financial system.

Our economy has a clear need for well managed, well functioning banks and financial institutions to perform a vital set of functions: channelling investment and helping people to save and plan for the future.

The financial services industry is also a major employer in this country of more than 1 million people, and it will continue to generate wealth for our country in the future.

Our central objective must be to ensure that, as we come through the downturn, we reform and strengthen our financial system and rebuild it for the future with consumers who are better informed, financial institutions that are better managed, and markets that are better regulated. The proposals I will set out today build on our previous reforms to provide a new settlement that is open, competitive and effective, is able to meet the needs of business and families, inspires trust and confidence on the part of businesses and consumers, ensures robust regulation that reduces the likelihood of failures without preventing innovation, and provides effective mechanisms for dealing with the failure of financial institutions should they occur.

I want to take steps to help consumers make better informed choices and to ensure that they are given access to free and impartial financial advice. We will legislate to introduce a national money guidance service and impose a levy on the financial sector to help fund it. We will also legislate to consolidate existing FSA resources to provide separate independent consumer education, setting up a lead provider of consumer information and personal finance education. Consumers will get more protection, along with a greater right of redress and access to compensation if things go wrong. We will also improve arrangements for depositor protection, including legislation to pre-fund and expand the role of the Financial Services Compensation Scheme.

Because of the events of the past two years, there are fewer firms in the market providing financial services. It is essential that we retain competitive markets as they play a key role in providing consumers with value and choice. We want to see greater competition and greater choice for consumers as well as a bigger role for mutuals and building societies. So the OFT and the FSA will ensure that we maintain competition in the market for financial services. As we come out of this downturn we need to promote a competitive market than enables new entrants, which may include non-banking institutions, and innovation to benefit consumers and businesses. In that way, we will see better informed consumers who have greater choices in a more competitive market.

We also need banks and financial institutions that are better managed. We need a change of culture in the banks and their boardrooms, with pay practices that are focused on long-term stability and not short-term profit. The FSA now has powers to penalise banks if their pay policies create unnecessary risk and are not focused on the long-term strength of their institutions. From now on, I will require the FSA to report every year on how financial institutions are complying with their new code of practice for remuneration, and how it will deal with firms that do not comply.

Bank boards and institutional investors must also become better equipped to do the job and understand their businesses, with more effective risk management and greater independence of non-executives who must not be afraid to ask searching questions. Next week, Sir David Walker will report on measures that will deliver improved corporate governance at financial institutions ahead of his final report in the autumn.

Building on reforms already made, my proposals today will strengthen regulation of the financial system. They will cover three areas: first, new regulatory powers to allow tougher regulation of individual firms; secondly, measures to deal with the potential failure of institutions that could have a significant impact on the economy; and thirdly, a strengthened framework for financial stability to deal with system-wide risks in today’s more complex and global markets. We will continue to work with other countries to deal with what is, at heart, a global problem.

I asked Lord Turner to make recommendations, which the FSA is now implementing, to strengthen the regulatory regime and increase the intensity of supervision. They will strengthen the rules to ensure that banks hold enough capital as a buffer against losses, introduce a backstop power ensuring that banks do not overextend themselves by lending too much when they do not have the strength to do so, and increase the focus on bank liquidity so that they are able to carry out their business at all times. These measures will help ensure that financial firms are stronger, more resilient, and better able to serve the needs of our economy.

I will also introduce legislation in the autumn to give the FSA a new statutory objective for financial stability, and extend its powers to ensure that it has the appropriate rules to deal with different risks in individual banks and tougher powers and penalties against misconduct, and that it can take account of new developments in the financial sector, including expanding regulation where necessary—for example, for systemically important hedge funds.

We need to ensure that our resolution regime can deal with financial institutions of all sizes, including banks that are very large or complex. As these banks are often global, we also need an international mechanism for resolving large multinational banks, and we will bring forward proposals to the G20 Finance Ministers when they meet in London in the autumn.

At home, we can better deal with risk by ensuring that safeguards are in place—for example, by making banks hold capital at a higher level that reflects not only the possibility of failure, but its cost. By introducing higher standards and transparency, the FSA can also improve the functioning of key markets, such as the derivatives markets, so that problems in one institution are less likely to spread through the entire system. The FSA and the Bank of England will make institutions put in place practical resolution plans that can be deployed in the event that they get into difficulties.

There is, of course, a debate to be had about whether Governments should restrict the size of banks or separate different types of banking, as happened in the United States in the 1930s. I believe that this is a simplistic solution which fails to take account of the complexity of today's financial system. Small banks as well as large banks can threaten financial stability, as in the case of Northern Rock. Equally, both retail and investment banks in different parts of the world have failed in the past year. And it is not only banks that can affect stability, as we saw in the example of the American insurance company AIG.

In addition, the approach of one regulator for one category of institution deemed to be systemically important and another regulator for the rest seems to me to miss the point, because what is systemically important can change rapidly, as we have seen in the past two years. Instead, the new regulatory system has to recognise and respond to the complexities of individual institutions, and that is what we are doing.

We also need to strengthen the framework for financial stability. That is a question not only of institutional powers and responsibilities but of better understanding what is happening in the markets. No simple fixes, no institutional reform, could have prevented these problems occurring. There are different institutional frameworks in countries across the world, but no one model has been successful in insulating a country from the current crisis. Although regulatory arrangements were not the cause of the current problems, we need the right institutions to maintain financial stability, and we must ensure that they have the right tools to do the job.

The move in this country to a single regulator 12 years ago addressed problems with the previous regime of multiple self-regulators which did not reflect the changing nature of financial markets, and our approach has been adopted by many other countries. However, 10 years on, the world has moved on again. Some of the global problems of the past two years went beyond the scope of existing regulation, while others were simply not given sufficient attention by regulators and central banks. In this country, the authorities have been able over the past year to deal quickly and effectively with a number of financial stability issues, such as those relating to the Dunfermline Building Society and Bradford & Bingley. But further reform is now needed. We will therefore legislate to set up a council for financial stability which will bring together the Bank of England, the FSA and the Treasury. It will not only deal with immediate issues but will monitor system-wide financial stability and respond to long-term risks as they emerge. That needs to be done on a formal statutory basis.

The council will draw on the expertise of the FSA and the Bank, which are and will remain independent of government, by looking at their regular reports—the financial stability report and the financial risk outlook—and formally responding to their recommendations. In that way, when risks or threats to stability are identified they will be addressed. This body will do that in a way that is transparent and accountable so that people can see how and why decisions are made, with the regular publication of minutes. The council’s responsibilities will be set out in law, with published terms of reference. In discussion with the Treasury Committee and the House, we will consider how to increase accountability through greater parliamentary scrutiny.

We have already taken significant steps to improve the way in which we monitor and manage risks to the financial system as a whole—through more systemic use of stress testing of financial institutions, for example. The proposals that I am making today will further strengthen our ability to identify and deal with systemic risks and will ensure that the authorities can be held accountable for their actions.

We also need to consider what further countercyclical measures are needed in order to allow us to lean against the credit cycle and prevent the build-up of risks that could threaten the stability of the financial system. The principle of leaning against the cycle is easy to agree, but deciding what action to take and when to take it is far more complex. At the moment there is no clear consensus here or abroad, but I believe that central banks will have an important role to play in this area.

Today’s global markets for finance mean that new measures can be effective only if they are implemented on a broad international basis. So, under our presidency of the G20, we will continue to press for measures to strengthen the international regulatory architecture, building on the proposals agreed in April. In Europe, too, we will argue for enhanced monitoring of system-wide risks, while retaining the crucial link between national regulators and Governments. By working internationally, our efforts can help us deliver more effective supervision of global banks, stronger international standards and a more responsible global financial services sector.

We intervened to stabilise the banking system while retaining a clear view that banks are best managed and owned commercially and not by the Government. We intend to return our stakes in the banks to the private sector in a way that brings best value to the taxpayer, promotes competition and maintains stability, and we will use the proceeds to cut government debt.

We are empowering consumers, supporting better corporate governance and strengthening regulation so that our financial sector can continue to be an engine of prosperity. I commend this Statement to the House”.

That concludes my right honourable friend’s Statement.

My Lords, I thank the Minister for repeating the Statement made yesterday in another place. We have had the overnight benefit of reading the reviews of those outside Parliament. I do not suppose that the Chancellor will be thrilled with the reception that his proposals have received, but he should not be surprised; the Statement is yet another sign of a Government who are running out of steam.

The Statement does not come close to acknowledging one central fact about the banking crisis: namely, that the regulatory arrangements that the Government set up failed. The Government put banking supervision into the vast experiment of the FSA. The Government believed that a memorandum of understanding would create effective tripartite working. All this failed.

Of course there were many other factors at work in the banking crisis; it was not just a story of regulatory failure, nor was such failure confined to the UK. The inescapable truth, though, is that before 1997 we had a system of banking regulation that by and large worked, and the Government created one that, when put to the test, by and large did not. The Government cannot escape blame for that.

If we had a Prime Minister who could take responsibility for his failings, we might have had a different set of proposals this week, but the Prime Minister cannot admit fault so his Chancellor is equally unable to do so on the Government’s behalf. If my party is elected at the next general election, we will not have that inhibition. As my honourable friend George Osborne announced yesterday in another place, we will restore the responsibility for microprudential supervision of banks to the Bank of England, together with other systemically important businesses and activities.

In doing so, the other responsibilities of the FSA will be more focused. There are crucial tasks of consumer protection and oversight of markets, and we need an organisation which is built around the cultures that are needed for those tasks. Leaving the very different microprudential supervision to fight for attention alongside these issues in a large and unwieldy organisation is not the right answer, and we reject the Government’s defence of the status quo.

By locating microprudential supervision within the Bank, we can reunite macro and microprudential supervision, which were torn asunder by the Prime Minister in 1997. It is theoretically possible that the 1997 ideas on tripartite authorities could have worked, but the Prime Minister’s design simply did not fly.

This set of proposals from the Government pretends that, by renaming an imperfect arrangement and adding a tiny bit of transparency, it will fly. The proposed council for financial stability is just the tripartite arrangements in fancy dress. It may be less harmful than the existing tripartite arrangements, but it does not address the need for macroprudential supervision to have proper tools and linkages to microprudential supervision to work effectively.

The Government are rather late converts to the notion that the FSA has to have a defined role in financial stability if the current structure is maintained. The Government rejected this during the passage of the Banking Act earlier this year. But we now need to move beyond sticking plasters to hold together arrangements which are broken. We do not need the FSA involved in financial stability; we need a fresh start. The Conservatives’ proposals would provide this.

There are of course some aspects of the Government’s proposals which we can support, even though much in the documentation is still very vague. We have called for a long time for countercyclical regulatory capital and for effective liquidity supervision and regulation. We support increasing the regulatory focus on high-risk firms and activities. We look forward to seeing Sir David Walker’s proposals on governance. We support the elimination of unacceptable remuneration practices. We have also long argued for industry-financed support for financial capability. We also support greater powers to deal with market abuse and the conduct of individuals.

However, we must sound a note of caution in all these areas. Financial services are global businesses and there is little natural loyalty to any country. If the UK runs ahead of the international community, as these proposals seem to suggest in some areas, we could be cutting off our nose to spite our face.

Of course, we all feel let down by the banks and want to impose tighter controls over them, but if the result is that the international competitiveness of the UK is harmed or if firms feel driven to leave the UK, then government action will be counted a failure, possibly of massive proportions. Whether we like it or not, financial services are a major part of the UK’s GDP and we must act proportionately and carefully.

I do not know whether the paper that came out yesterday is a White Paper or a Green Paper. The Statement is studiously vague. Is this is a statement of intent from the Government which will result in action, or it is merely a statement of views which might result in action? The annexes to the document are much more tentative than the front part, and even where a firm intention is signalled, there is little on the timetable.

I hope that the Minister can today set out exactly what the Government intend to do over the next nine months or so. Will he set out for the House what the Government intend to include in legislation and when? The White/Green Paper states that a Bill will be brought forward in the next legislative Session. Precisely what will it cover? Do the Government intend to give it priority in the next Session, because, without priority, it has little or no chance of reaching the statute book? I am sure I do not have to say that, unlike the case of the last Banking Act, the Government cannot rely on these Benches to smooth the passage of the next Bill if its content diverges from our own policies. In the mean time, there are more urgent things for the Government to deal with. These are barely touched on in yesterday's proposals, though referred to tangentially in the Statement.

In Europe, our negotiating position is at best weak. The protections achieved in the proposed European regulatory arrangements do not go anything like far enough to protect our financial services industry from those parts of Europe which have long resented the success of the City of London. We may not even have the protection of qualified majority voting if the Government do not get their act together fairly soon. The Minister has been forthright in this country on the appalling alternative investment funds management draft directive, but how in practice are the Government going to stop this particular juggernaut given that it is being powered and steered by France and Germany?

The Government need to ensure that there is effective co-operation and decisive working at international level, not just within Europe. We cannot go it alone on regulatory changes and the Government in particular need to ensure that the United States is bound into international action. The history of the United States, which did not even implement Basel 2, is not encouraging here. How will the Government ensure that the G8 and G20 move beyond mere words? These are issues that should be pre-occupying the Government, not rearranging the deckchairs of the tripartite authorities.

My Lords, after the 1992 general election, my noble friend Lord Ashdown, who was then leader of the Liberal Democrats, made a speech in the small town in his constituency called Chard. The late Lord Russell-Johnston did not like it, saying that the Chard speech sounded more like a burnt offering. Whether this is a burnt offering or a damp squib, or whatever the most appropriate analogy, in our view this White Paper fails completely to offer a decisive response to the extraordinary banking crisis through which we have come.

I shall deal with some of the issues in the order that the Minister dealt with them. We agree that there needs to be better consumer advice, but the model that the Government have adopted is fatally flawed. To give the FSA, even before the crisis, responsibility for managing consumer advice rather than going to people like the citizens advice bureau, was nonsense. Now to enshrine that in legislation makes it worse. Secondly, why, if the Government are so keen that consumers should be protected from unnecessary risk, have they instructed RBS to give a proportion of its mortgages at at least 90 per cent loan to value during a period of continuing falling house prices? Is that not just supporting unnecessary risk?

The Government want to see greater competition in the banking sector and we agree, but these proposals will do nothing to bring that about. Why do they not forestall a decision that is likely to be made by the EU, and break up RBS or the Lloyds Banking Group? The Government want to promote mutuals and so do we, but the White Paper suggests that they will set up a working group to look at it. That is just pathetic. Why not, if they are going to break up some of the banking groups, turn parts of them into a mutual? Halifax has a nice ring to it, and so does Northern Rock, but the White Paper contains nothing of any substance in that respect.

We agree with proposals that capital adequacy rules should be tightened up, but the whole question, which the noble Baroness concentrated on, of the management of macroprudential risk and financial stability as a whole is made a greater muddle by the White Paper. We thought when the Banking Bill was going through that the establishment of a financial stability committee in the Bank of England meant that it would be responsible for overall financial stability. We argued that it should in fact be a joint committee with the FSA, but the Government propose that the FSA has its own committee looking at financial stability. In addition to that, they want the Treasury to have its own committee looking at financial stability, called the council for financial stability, chaired by the Chancellor—in effect, a third financial stability committee. That is a greater recipe for disaster than the existing tripartite arrangements.

We on these Benches do not agree with the noble Baroness that simply ripping the heart out of the FSA in terms of its supervision of major financial institutions and returning that to the Bank of England makes best sense. The Bank of England's reputation and track record in dealing with financial and banking crises is not unblemished. But while we do not agree with that, we believe that these proposals setting up three financial stability bodies will lead to greater rather than less muddle.

The Government have turned their face against even a modified version of the Glass-Steagall Act and hope that they can avoid the problems that that Act sought to deal with by better capital adequacy rules. Given that the major banks are, in effect, underwritten in all their activities at present by the Government, will the Minister give the House a convincing reason why the Government should underwrite the casino banking activities of the major banks, and why a firewall cannot be established between them and the deposit-taking activities, which one can see, at the end of the day, will always require government underwriting? The Statement says that the House, by which no doubt the Chancellor means the House of Commons, would consider how to increase accountability through greater parliamentary scrutiny. Will that include consideration of your Lordships’ Economic Affairs Committee having a greater role in this area?

We agree that we need greater international co-operation and we are glad that the Government promote it. We agree that the Minister should take the kind of tough stance he is taking in the EU in respect of the proposed legislation on hedge funds. But when one talks to anyone in the City or any financial institution about the Treasury's activities in Europe, we are always told that they are woefully understaffed and come to the issue late. Despite impressive speeches by the Minister, what is required is a bigger, long-term, intensive staff input at European level to ensure that we do not get into the mess we are now in, with badly prepared proposals coming forward, and that, if we do, we have the resources to lobby effectively. Will he assure the House that those resources will be forthcoming, as they appear not to be in place now?

Finally, we agree that the Government should return our stake in the banks to the private sector in a way that brings best value to the taxpayer, promotes competition and maintains stability, but will he assure the House that the Government will not rush to get these banks back into the private sector? Does he accept that in most places where banks have been brought under public ownership such as Sweden, the States and elsewhere, it has tended to be 10 years before they returned to the private sector? Will he assure us that they will not be sold on the cheap in order to deal with any short-term financial problems of the Government instead of ensuring that the taxpayer gets a long-term benefit rather than a disbenefit from their period in public ownership?

My Lords, I welcome the contributions from the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby. The framework set out by my right honourable friend the Chancellor of the Exchequer yesterday in his speech in the other place and in the document that we published yesterday afternoon is a strong one, which draws on the competencies and strengths of the Bank of England, the Financial Services Authority and the Treasury. In its development, we consulted extensively over a long period of time with a broad group of stakeholders, including practitioners, trade associations, the Bank of England and the Financial Services Authority.

The noble Baroness refers us back to the structure before 1997. Let me respond to that, and let me also respond in a moment on the structure before 1986. Before 1997, we had a proliferation of largely self-regulating entities. I was in the financial services sector myself at the time. The company which I led was a member of or regulated by more than four separate bodies in the United Kingdom: the SIB, the FSA, the PIA, IMRO, the DTI, the Bank of England and many others. That surely cannot be an appropriate model to which we should aspire to return. Indeed, it is clear that the world is moving towards increased consolidation of financial supervision into a single body, reflective of the fact that businesses are increasingly organising themselves across multiple business lines.

The noble Lord, Lord Newby, reminds us that the history of banking supervision prior to 1997 was not without its blemishes. One remembers BCCI and Barings. The noble Lord, Lord Lawson, whom I see in his place today, reminded us earlier this week about Johnson Matthey. Before that, in the early 1970s, when I first came to work in the City, we had the secondary banking crisis. There is no evidence that we should, as the noble Baroness suggests, go back to a system that was somehow perfect and which would address current failures in supervision, which are not isolated to the United Kingdom. We have seen significant banking failures in the United States of America, Switzerland and Germany and many other jurisdictions where there are radically different structures.

At the heart of my right honourable friend's proposal yesterday is a clear message about judgments and behaviours. The solution to severely reducing any possibility of a repeat of the experience of the past two years must lie in behaviours, judgments and social factors, rather than architecture. The noble Baroness has failed to appreciate the importance of the council for financial stability. The heart of this radical and powerful proposal will be in transparency and accountability. This will bring together the complementary skills of the Bank of England, in macroeconomic analysis, and the Financial Services Authority, in its familiarity with the institutions that it supervises—a familiarity which, as we know, will now be tested against far higher standards as a consequence of the enhanced supervisory programme introduced by the noble Lord, Lord Turner, and the board of the Financial Services Authority.

At the heart of that will be clear and open reporting of the views expressed. The governor has talked about giving sermons to an empty church. His sermons, his encyclicals, will now be widely reported. In particular, to address comments from some observers, the Bank of England will in future make it very clear what actions it believes should be taken in the light of its analysis of the macroeconomic situation. So that will be not only a sermon that tells us about sins, failings, and shortcomings, but one which gives us hope and guidance, by pointing out the actions that should be taken. In the event that the FSA does not respond constructively and positively, that will be a matter of record. That is of considerable importance.

I wrestle with the noble Baroness's comment—I believe that I cite her correctly—that we do not need the FSA involved in financial stability. That is an extraordinary statement, if that reflects the view of the party opposite. I said that I would take us back to 1986. I do so in part because of the debate about Glass-Steagall, which I fully anticipate that the noble Lord, Lord Lawson, will speak to shortly. Prior to 1986, we had a form of Glass-Steagall in this country, but we brought that to an end with what is colloquially known as big bang. Big bang removed the barriers that existed, separating much of the activity that takes place under the heading of investment banking from retail and commercial banking. From recollection, the party opposite was in power at that time.

I welcome the noble Baroness’s strong endorsements for the proposals made in connection with capital, liquidity, strengthening governance and addressing issues about remuneration, and her support—support reiterated by the noble Lord, Lord Newby—for education and steps to improve consumer information. She said that there would be dangers if we ran ahead of other countries in the steps that we were taking. My right honourable friend was clear that we are working at the heart of the G20 and EU to ensure that we take other countries with us. We will run ahead of other countries if that is defined as leading the debate, setting the standards and insisting on change, but we will not become detached from other countries to a point where it would disadvantage British businesses and British retail customers of our banks.

The noble Baroness asked what we would do over the next nine months. We will consult, engage, lead the debate and take forward programmes to set higher standards around issues such as accounting, derivatives and central clearing parties, and to participate fully in the debate about macroprudential supervision. The legislation we propose to bring forward is detailed clearly in annexe A of the paper; it will focus on the establishment of the council, and we will give it priority in our legislative programme. In parallel, we will work hard to help our partners in Europe understand the flaws and misunderstandings in the current draft directive on the alternative investment management industry. We are already working to make progress on that. I assure the noble Lord, Lord Newby, that in my judgment the FSA has appropriate support and resource in place here.

I welcome the strong statements of the noble Lord, Lord Newby, in support of consumer empowerment. I assure him that we have not given any instruction to the RBS about making loans in respect of 90 per cent of loan to value. We leave that matter in the hands of those at the Royal Bank of Scotland. They are the competent people, under Sir Philip Hampton and Mr Stephen Hester, to make those decisions.

I have already spoken about Glass-Steagall. The noble Lord, Lord Newby, said that it was assumed that reference to “the House” was to the other place; in that, he is of course correct because I was reading my right honourable friend’s Statement. However, I certainly expect the appropriate committees of this House to take an active interest in the reports and minutes of the council for financial stability.

I assure the noble Lord, Lord Newby, that it is not the Government’s intention to rush to sell shares in the Lloyds Banking Group and the royal bank. We are clear that the taxpayer has taken significant risk, made a large investment and expects to be appropriately rewarded for that. I have no doubt that it will be. At the time that we made those investments, I said that I was confident that the taxpayer would make a large profit. My confidence in that is greater now than when I made that statement. We will make the sales when we think it is appropriate to do so; when we get a fair reward; and when it contributes to competition and sustaining the significant improvement in financial stability, which my right honourable friend has already achieved with his strong and confident actions.

My Lords, the Chancellor’s Statement, which the Minister kindly repeated, represents an inadequate, complacent and muddled response to what is undoubtedly a very complex, but also very important, problem. I do not want to dwell on the past, but since this has come up I have to say that the Minister inadvertently misled the House. Conduct of business regulation and prudential supervision of the banking system are two quite separate activities. Both have their place and both are very important. It was the conduct of business regulation of the financial sector that was divided pre-1997. Prudential supervision of the banking system, which is at the heart of the matter, was greatly strengthened by the Banking Act 1987, which I put through. It was not divided at all. It was weakened by the present Prime Minister in 1997, and that is one of the reasons for all the subsequent problems.

The noble Lord expected me to say something about Glass-Steagall and I will not disappoint him. Does he recall that on 24 June the Governor of the Bank of England, giving evidence to the Treasury Committee in another place, revealed that, culpably, the Government had not consulted him on the proposals that they were working on? He also explicitly drew the committee’s attention to, and agreed with, the remarks of Paul Volcker, the former chairman of the United States Federal Reserve system and now an adviser to President Obama, who said that commercial banks,

“funded in substantial part by taxpayer-protected deposits”

should not

“be engaged in substantial risk-prone proprietary trading and speculative activities that may also raise questions of virtually unmanageable conflicts of interest”.

In the Statement repeated by the noble Lord, he described this separation as “simplistic”. Is he really saying that the views of the highly experienced Mr Volcker and the Governor of the Bank of England are simplistic?

My Lords, whether I inadvertently misled the House is a matter of judgment. For the avoidance of doubt, I make my view clear that legislation taken through Parliament when the noble Lord, Lord Lawson, was Chancellor of the Exchequer delivered a significant improvement in the prudential supervision of a more broadly defined banking sector than had previously been the case. The views of the governor are best expressed by the governor himself. I can assure the House that both the FSA and the Bank of England were consulted and actively involved in framing the thinking behind the paper that we produced yesterday. Whether the FSA and the Bank of England would agree with each and every aspect of the paper is not necessarily assured, but we absolutely took their views into consideration.

We strongly believe that an artificial division between simple and complex banks is simply unworkable. There is no sign anywhere in the world of any Government or regulator moving in that direction. Where there is scale and complexity, we need to ensure that there is competent management, effective regulation, adequate capital and high-quality liquidity. As a consequence of that, our large and complex banks such as HSBC and Standard Chartered will continue to be a source of great national pride and economic contribution.

My Lords, I would like to ask a couple of questions that arise from the Statement, which I welcome. First, does my noble friend agree that it is quite extraordinary to hear the representative on earth in this House of the financial services industry—namely, the Front-Bench spokesman for the Conservative Party—say that everything that has happened was the Government’s fault and that nothing was the fault of the accountants or of anybody in the financial services industry? Given the Conservatives’ approach to this matter, some of us conclude that they are all living on a different planet. Only a year ago, the accountancy profession signed off the accounts of all the major banks and said that they were fine—in other words, “It’s nothing to do with me, guv”—yet there are serious questions about the cosy relationship with the banks and all the fat fees that the accountants sitting over there get from them. I was very pleased to hear my noble friend say that the accountancy profession would be looked at. Secondly, even if it were not the case that the financial services industry—

Oh!

My Lords, we are now in the sixth minute. I am emulating the speech of the noble Lord, Lord Lawson. Secondly, the question arises of the relationship between this country and the rest of the European Union. Does my noble friend also agree that, far from France and Germany stitching things up against our interests, as the noble Baroness, Lady Noakes, said, and far from their resenting the City of London, the truth is that this country has been very reluctant to accept what has now been accepted for the first time, which is that Britain needs to stand alongside France and Germany as regards European regulation? We now have a body chaired by the European Central Bank to do that. Does my noble friend further agree that the different planet that is being lived on by noble Lords in other parts of this House cannot last?

My Lords, I read with interest the Oral Question on auditors. I am sorry that I could not be in the House then, as I was being cross-examined by the Treasury Select Committee. During that cross- examination I came to the conclusion that I should have voted in favour of the amendment on assisted suicide that was proposed in your Lordships’ House.

The clear and primary culpability for the problems that the banking industry faces lies with the boards of directors, management and shareholders of banks; of that I have no doubt. Regulatory deficiencies across the world and shortcomings in supervision will need to be addressed and will lead to improvement, as will enhanced macroprudential supervision, but the core of the problem lies with the management and boards of directors of the banks. I think that we will find that Sir David Walker has some very interesting proposals in that respect.

Like my noble friend, I found myself believing that the party opposite was living on a different planet as regards some of the comments that were made. I find it quite extraordinary that it appears to want to foist on the Bank of England responsibilities and a role that the Bank is not seeking. The governor has at no point indicated that he wants to have microsupervisory responsibility for banks, building societies and systemic institutions.

Finally, I endorse many of the comments that were made in this House yesterday on the responsibility that the accounting profession, in its accounting principles, must accept and respond to in respect of its part in this global financial crisis. The accounting system, through mark to market, contributed in part to the crisis.

My Lords, will the Government ensure that as much emphasis is given to looking at the problems in supervision as to looking at those in regulation? In the Chancellor’s Statement, there was barely a passing reference to supervision, yet that, from an authority’s point of view, is where the trouble started. We do not yet have any account of how things developed so badly and the whole arrangement for supervision seems to have gone off the rails in this area. Can it seriously be the case that, when banks and others were stuffing their balance sheets with high-risk assets, the supervisors simply failed to notice? I find that difficult to accept, yet it happened across the board. Before you can put things right, you need to know how they went wrong. I hope that some investigation of the specific failings of the supervisory system can be carried out as a matter of priority.

My Lords, the noble Lord, Lord Stewartby, brings a considerable degree of relevant experience to this subject and the House always listens to his views with great interest. I draw his attention to the Turner report, which, coming after the audit of the FSA’s supervision of Northern Rock, built up a strong case for strengthening supervision. That, in particular, is captured by the FSA’s enhanced supervision programme. Shortcomings in supervision were apparent here, as in other countries, but there has been a step change. The FSA is talking about being more intrusive and about close and continuous supervision. It is talking about a more strategic engagement with supervised bodies than was previously the case. We have seen that issue being addressed.

My Lords, does my noble friend welcome the fact that the noble Baroness, Lady Noakes, on the opposite side, did not on this occasion commit the Conservatives to splitting up major banks into investment and retail banks? Such actions could only be a threat to the position of London and the importance of the major institutions. Does he agree that, up to March, there had been 46 bail-outs of banks—I am sure that since then there has been an increase—across the European Union in 16 countries, with central banks and financial regulators in charge? It is absolutely bogus to make the case that this is an issue of the central bank versus other methods of supervision. Finally, does my noble friend agree that the Bank of England and those advocating the involvement of the Bank in detailed microfinancial supervision of a very complex and ever changing financial system will eventually come to regret that course of action?

My Lords, I agree with much that has been said by my noble friend. I repeat that I have seen nothing to suggest that the Bank of England believes that it is the right body to carry out microsupervision of building societies, banks and systemically important institutions. What the governor has been very clear about is that, to deliver the Bank’s responsibilities for systemic financial stability, he needs access to information and the ability to influence outcomes. The council for financial stability and the proposals that we are making for improving the capture and delivery of information to the supervisory and regulatory bodies will address those concerns.

My Lords, may I press the Minister on one thing that he said in the Statement, which is that the Government will retain,

“the crucial link between national regulators and Governments”?

I ask him about that against the background of the letter written to me and placed in the Library on 1 July by the Leader of the House. She said that,

“measures are needed to ensure that rules are enforced, and therefore that the new authorities should review supervisors”—

that is, national supervisors—

“to ensure rules are implemented”.

She also said that,

“there cannot be binding powers or EU supervision where a fiscal consequence for national governments could result”.

That seems very similar to the remarks made in the Statement. Can the noble Lord explain those two things? Who will be in charge at the end of all this—Her Majesty’s Government or the powers of Brussels?

My Lords, the letter from the Leader of the House to which the noble Lord, Lord Pearson, refers is entirely consistent with the views expressed by my right honourable friend. Responsibility for the supervision of UK banks will remain vested with the Financial Services Authority. However, we cannot be isolated on an island. We need to acknowledge the reality of a global financial system and a global financial market, in which we have a strong interest in improved regulation and supervision of banks worldwide, because our banks and our companies transact business with them. We must work with our partners in Europe and elsewhere in the world to make mutual progress. The proposals set out by Mr de Larosière, as endorsed by ECOFIN and the European Council, on the creation of a European systemic risk committee, in particular, will be very helpful in that respect. I see no inconsistency.

My Lords, how can we have any confidence whatever in grandiose statements about regulatory authorities being held to account in the future when the Government, and the Treasury in particular, over the years have resisted attempts to make them responsible for their failure of regulation with regard to Equitable Life, despite the recommendations of various committees and the ombudsman? While that remains a blot on the record of the Government, how can we expect that they will act responsibly in the future?

My Lords, the Government made a clear statement of apology for certain actions taken in connection with Equitable Life by various Governments, including those before 1997. We have established a facility under a judge to take forward necessary payments consequent on the ombudsman’s report. Actions are being taken to address this issue and that will continue to inspire confidence in the Government’s commitment to good regulation.

My Lords, is there any connection between the capital requirements provision and the ability of the institutions to lend?

My Lords, the noble and learned Lord asks a very interesting question. First, capital is a core component of banking strategy because it absorbs loss and protects the interests of depositors. A feature of my right honourable friend’s Statement yesterday, which was not raised earlier either in this House or in the other place, is the intention that in future capital requirements should be much more sensitive to the risks of individual banking institutions. To put it simply, we will not have a one-size-fits-all approach, and banks with substantial investment banking proprietary trading and casino-like activities will need to carry more capital against those risks. That capital will provide support and confidence for depositors and, as a result of that, funding. Strongly capitalised banks will be able to support the borrowing requirements of their customers. Therefore, I believe that a strongly capitalised banking system is entirely consistent with the proper and correct extension of credit at a sensible price to meet the needs of customers.

My Lords, government Amendment 1 has been tabled in response to concerns expressed by the Electoral Commission that commissioners with recent political experience should be selected by open competition. Although the Government fully subscribe to the principles of open competition, we believe that it is important to retain a role for leaders of political parties in the appointments process for these commissioners. Party leaders are well placed to judge those who have the relevant skills and experience to contribute positively to the Electoral Commission’s work.

Having said that, I believe that there is now cross-party consensus that there should be some element of competition in the appointments process for nominated commissioners. In view of this, Amendment 1 seeks to amend Clause 5 on the selection process for nominated commissioners. The amendment would require the leaders of the three largest qualifying parties in Westminster each to nominate three candidates for consideration for appointment as a nominated commissioner, rather than to put forward at least a single candidate each, as the Bill currently requires.

The amendment is intended to introduce a degree of competition into the process for appointing nominated commissioners. The Political Parties and Elections Bill provides that four persons with recent political experience can be appointed as electoral commissioners. The persons must be nominated by the leader of a qualifying political party—that is, a party with two or more Members of Parliament belonging to it. Of these four nominated commissioners, the Bill provides that there will be one from each of the three largest nominating parties and one from another qualifying party. The Speaker’s Committee, which appoints all commissioners, will be responsible for running the process and making the appointments, which will first be approved by all the main party leaders and will finally be approved by Parliament.

The nomination of three persons each by the leaders of the three largest qualifying parties and one person from the qualifying smaller parties will ensure that there is a pool of candidates from which the Speaker’s Committee can select four successful people on merit—one from each of the three largest nominating parties and one from a smaller party.

Amendments 2 and 3 are consequential to Amendment 1. I beg to move.

My Lords, I welcome the amendment but I have one or two questions for clarification. The Minister referred to the conversations that he had had with the Electoral Commission but I wondered whether he had had any conversations with the Speaker’s Committee or whether he can say what view the committee has expressed on this. Clearly, the amendment will impose an additional responsibility on the Speaker’s Committee, in that the committee will adjudicate on which of the three candidates put forward is the most suitable. Given that some of the candidates put forward will, by their very nature, be senior people in public life or former senior members of political parties—and perhaps even Members of your Lordships’ House—what degree of transparency will there be in the deliberations and the process? It is important that some reassurance is given to senior members that, if they are put forward and rejected, their dignity will to some degree be protected. Other than that, the amendments are to be broadly welcomed.

My Lords, I welcome these amendments to Clause 5, which seem to be pragmatic and sensible. It is quite some time since some of us argued that there was a need for a minority of the commission members to have hands-on political experience to facilitate the effective working of the commission, and of course we now feel somewhat vindicated on this issue.

At earlier stages, my noble friend Lord Tyler and I argued that party leaders making nominations should have regard to the need for diversity in the appointment of commissioners. However, I must admit that when we looked at our own amendment, we thought that it would be somewhat difficult if the party leaders were not themselves willing to consider jointly how to address this issue of diverse representation when they made only one nomination each for membership of the commission. Therefore, the suggestion that each of the leaders of the three main parties should make three nominations is very sensible. It will help to ensure that the commission continues to have a diverse membership, and I hope that the Speaker’s Committee will ensure that there is a proper and professional process for appointing political candidates from among those nominated. They should have regard to the need for the composition of the commission to be balanced and effective. I hope that in the first instance the party leaders will refrain from considering nominations simply on the basis of seeking to reward long-standing supporters in the belief that they must have some sort of grandee status. Under the process, commissioners should be found with real hands-on experience of winning election campaigns, the nominations process and the election expense rules, and a good working knowledge of election law should be required to add significant value to the commission’s work.

Finally, I hope that all those concerned will recognise that there cannot be two levels of commissioner. Appointments may be made by different processes but there should be no question of a different status at different meetings for existing members and politically appointed members of the commission. I believe that the amendment will strengthen the valuable work of the commission and fulfil more of the hopes of those who feel that the body is very necessary in the attempt to modernise and clean up our electoral processes.

My Lords, before the Minister replies, perhaps I may say how grateful we are that he clearly paid much attention in bringing forward these last-minute amendments. We congratulate the Government on that.

To pursue the point made by my noble friend Lord Rennard, given that the commission will now have more political representatives, we hope that they will pay a little more attention to what was said in this House on 17 June and in the Moses Room yesterday in the debate on the Scottish order about the difficult question of descriptions of parties appearing on the ballot paper. It is clear that the word “description” is being misused and we are seeing slogans on the ballot paper from the British National Party and others. When the Minister replied to our debate on 17 June, he said that this matter would be kept under review. I hope that it will be taken seriously and that, with the new commission, there will be discussion about how to stop the ballot paper being abused and turned from the neutral document that it should be into a propaganda document, which it should not be.

My Lords, I am very grateful for the support from around the House, and particularly from the Front Benches, for these amendments. I have very little to add. The Speaker’s Committee is content, and the new Speaker in another place has written confirming the committee’s agreement to the amendment.

I take on board the noble Lord’s point about protecting the dignity of those who may not be successful. As I understand it, the position concerning transparency—which I think is what his question was about to some extent—will be up to the Speaker’s Committee. The names will be put forward to the committee and will not necessarily be made public unless the committee determines that nominations should be made publicly transparent. I think that we can remain fairly confident that those who make up the Speaker’s Committee, from the Speaker himself onwards, are experienced and skilful enough to ensure that embarrassment is not caused.

I am grateful to the noble Lord, Lord Rennard, and thank him for his comments. I certainly praise him for his consistency on this issue over what is now almost a decade—a long time in politics indeed. I think that the position we have reached today is one that is generally accepted. I also thank the noble Lord, Lord Steel. I had not forgotten what he said in the debate we had. We will very much keep under review and treat seriously the matters that he raises.

My Lords, this amendment makes a minor technical change to Clause 9 by clarifying that the reference to “that section” at the end of new Section 54(1)(aa), which is inserted by Clause 9(1) of the Bill, actually means Section 54A. In doing so, it corrects a minor error in the drafting of the current print of the Bill. I emphasise that this amendment does not in any way alter the policy on which the House is in broad agreement; it merely ensures that the drafting is correct. I beg to move.

My Lords, Amendments 5 and 6 are minor technical amendments which make sure that the transitional provision in Clause 38 works for offences created both in the Bill itself and by amendments made by the Bill to other Acts, in particular PPERA. The effect is to ensure that any offence committed before Section 154(1) of the Criminal Justice Act 2003 came into force—which increased the maximum term of imprisonment that could be handed down by magistrates’ courts from six months to 12 months—should remain subject to the six months’ maximum. I beg to move.

My Lords, just to clarify, are we taking government Amendment 6 in this group?

My Lords, it is indeed marshalled as a complete group.

My Lords, the noble Lord moved Amendment 5.

I am so sorry, my Lords; it is my fault. This group includes Amendments 5 and 6, both of which I hope I have spoken to. Perhaps I may now speak to Amendments 7 to 11 and then invite the noble Lord to speak. I am grateful to him for the way in which he has dealt with this.

I turn to Amendments 7 to 11. I am delighted to see the noble Lord, Lord Marlesford, in his place. These amendments take forward the substance of an amendment successfully moved on Report by the noble Lord, Lord Marlesford, which required that the commission obtain a warrant from a magistrate before entering premises to inspect documents. In addition, it ensures that the amendment is workable in practice by making clear the matters on which a magistrate would have to be satisfied before granting a warrant. We have also taken this opportunity to clarify the scope of the entry power.

Government Amendment 6 seeks to amend paragraph 2(2) of new Schedule 19B, which sets out the commission's powers of entry and inspection in relation to regulated individuals and organisations listed in paragraph 2(1). This supervisory power allows the commission to enter premises, at reasonable times, to inspect documents relating to the income and expenditure of those to whom the power applies. This is not a power for use in connection with investigations; rather, it is for use where the commission needs access to the financial and related documentation of political parties and other regulated entities in connection with its regulatory role.

The effect of our amendment is to place a requirement on the Electoral Commission to obtain a warrant from a magistrate before it can enter the premises of a supervised individual or organisation to inspect documents relating to their income and expenditure. A warrant will not be issued automatically. Before a justice of the peace may issue an inspection warrant in relation to premises occupied by any organisation or individual listed in paragraph 2(1), he or she must be satisfied, following information provided on oath by the commission, of three things: first, that there are reasonable grounds for believing that on those premises there are documents relating to the income and expenditure of the organisation or individual; secondly, that the commission needs to inspect the documents for the purposes of carrying out functions of the commission other than investigatory functions; and, thirdly, that permission to inspect the documents on the premises has been requested by the commission and has been unreasonably refused.

An inspection warrant will be valid for one month from the date of issue and will authorise a member of staff of the commission to enter the premises specified in the warrant to inspect documents relating to their income and expenditure. The person executing the warrant will be required to produce the warrant and documentary evidence that they are a member of the commission staff.

The amendment also retains the existing safeguards on the use of this power. So the power must be exercised at reasonable times and cannot be used to enter premises and inspect documents in connection with an investigation by the commission of a suspected offence or contravention. Additionally, the power is confined to financial and related documents. In practice, the power generally underpins the commission's ability to visit parties co-operatively to verify information provided by them, such as claims for policy development grants.

Amendments 8 to 11 are consequential amendments to Amendment 7. I hope noble Lords, particularly the noble Lord, Lord Marlesford, will be content with this amendment, which takes forward the principles of his amendment on Report. I beg to move Amendment 5.

My Lords, Amendment 5 having been formally proposed, I assume the House would now like to debate Amendment 5 and, indeed, the other amendments in the group.

My Lords, I am most grateful to the Minister and to the Government for the way in which they have carried forward the intention behind my amendment. I am very happy with what they have done. I very much hope that this is the beginning of a series of much closer restrictions on powers of entry in all matters in new legislation. I also hope that we shall be able in due course to have proper restrictions on powers of entry in some older legislation on the statute book. I thank the Government and the noble Lord.

My Lords, I ought to declare an indirect interest in that my wife is not only a magistrate but currently chairman of the Bench and therefore has a very considerable interest in what is laid down as the responsibilities of justices of the peace.

Schedule 1, dealing with the investigatory powers of the commission which is now substantially improved by these amendments, has to be seen in the context of the full discussion on the Bill. Before I turn to the amendments, I want to put on the record, as it is probably the final opportunity to do so, our gratitude on these Benches to the Minister and his team for the exemplary management of the Bill and for the very considerable trouble which they have taken to consult us at all stages, not just on this issue but on all issues, inside and outside this Chamber and throughout the Grand Committee proceedings. In particular, I thank the Minister for the assurances that he was able to give us on Report on 17 June. I will not go into any detail as that would be inappropriate but, in col. 1101 of the Official Report, he made some very helpful suggestions about ways in which further considerations could be given to eligible expenditure.

We are coming to the end of a very interesting and useful exercise but I detect, on many sides of the House and perhaps also from the Minister, a recognition of something of a damp squib in the Bill. It is certainly not fulfilling the hopes of a thorough clean-up with a full implementation of the Hayden Phillips agreement. The Minister has been quite frank that that was never on the cards as far as the Government were concerned. We are certainly not taking big money out of politics. The Minister and Labour colleagues in the other place may share my disappointment that it would appear that Mr Straw will ask them to restore the rights of tax exiles and tax millionaires, who live abroad and who do not pay UK taxes, to fund Conservative candidates—a curious situation. Therefore, the context of Schedule 1, which is now before us, is still unsatisfactory. This is unfinished business, and I hope that we will see more substantial change in due course because, if the context is not appropriate, the sanctions and the enforcement procedures with which this group of amendments is concerned are clearly of only secondary value.

The inspection warrants and the process that the Minister has now set out are a considerable improvement. I pay tribute to the noble Lord, Lord Marlesford, for his amendment, which we supported successfully, but we are all indebted not just to him but to the Minister for responding so effectively. I am sure that justices of the peace will be much more encouraged by the clarity with which this issue is now approached. The seriousness of the potential offences is better dealt with in the way that it is now set out. I believe that the solution that the Minister has come up with is more accessible, more intelligible, much tidier and comes together in one section, which is a great improvement on what was there before, and therefore, on behalf of my noble friends, I warmly welcome this improvement to the Bill.

My Lords, I thank the Minister for the amendments he has brought forward and, in doing so, pay tribute to my noble friend Lord Marlesford for bringing forward these important checks and balances on the potential for an overzealous application of the powers of investigation granted to the commission under the Bill.

As this will be my final opportunity to speak on the Bill, I also extend to the Ministers my thanks and the thanks of my noble friend Lord Henley for their courtesy in the way that they have dealt with us. We also thank the members of the Bill team for engaging in correspondence with us in a timely and thoughtful way. We appreciate that.

My Lords, I thank the noble Lords, Lord Tyler and Lord Bates, for what they have just said. This has been an interesting Bill—there were moments of great interest—which may not yet be finally resolved, as the noble Lord, Lord Tyler, hinted. However, in its own modest way, the Bill advances the cause of making our way of doing politics that little bit better. No greater claims have been made for it. I thank the noble Lord, Lord Bates, very much on behalf of the members the Bill team. In my opinion, having experienced a few Bills, they have been quite outstanding. In addition, I also thank noble Lords from the Back Benches and the Cross Benches who have taken part in the Bill. During the Committee stage, I was sometimes surprised, and sometimes just a little concerned, to see so many noble Lords in the Moses Room at the start of an afternoon session, but everyone contributed very helpfully to the Bill and, in all but one regard, I think it leaves this place in a better form than it came in, which is the test for us.

Amendment 5 agreed

Amendment 6

That the Bill do now pass.

My Lords, to save time, I have agreed not to table an amendment but to speak for two minutes on the Question that the Bill do now pass. I had thought of tabling at Third Reading an amendment to Clause 5 of the PPER Act to require the Electoral Commission to report on elections within a set period of time; say, four months. That seems generally sensible, but it would have specifically ensured that the commission reported in a timely fashion on the problem of badly folded ballot papers, which resulted in the UK Independence Party losing many thousands of votes in the European elections on 4 June. I propose instead to report that I have since spoken to the commission’s chief executive, who has assured me that the commission will indeed report in October on the European elections and particularly on UKIP’s ballot paper problem. Since 17 June, I have become aware that the problem was even worse than I thought then, particularly in Yorkshire and north Lincolnshire. I sincerely trust that the commission will report what happened in depth and make some estimate, however inexact, of the votes lost to my party.

Finally, I know that it may now be against our modern bureaucratic school rules, but I, too, would like to place on the record my gratitude to the noble Lord, Lord Bach, and to his team, for his endless clarity, patience and courtesy throughout the progress of the Bill. How he managed it while also taking through the Coroners and Justice Bill and answering a good share of Oral Questions, I simply do not know.

Before I come to Clause 61, there are one or two general points I should make. The issue is not whether there should be protection for gays against those minded to stir up hatred against them or whether there should be a new offence of stirring up hatred on the grounds of sexual orientation. Last year, the House decided that there should be such an offence, and there was no disagreement about the matter. The issues today are, first, whether there should be a provision to protect free speech, similar to that in the offence of stirring up religious hatred, and, secondly, a quasi-constitutional point about whether it is right that the Government should be using this Bill to repeal a provision they put on the statute book less than a year ago.

As a result of the Government’s actions, we are in an interesting position. When I spoke a year ago, my job was to satisfy the House that we should attach to the new offence a provision safeguarding free speech. Now the boot is on the other foot, and it is for the Government to try to show what conceivable public benefit will flow from the repeal of that provision. It is up to the Government to show why there is this urgency to scrap the free speech safeguard without waiting to see whether in practice it causes prosecutors or anyone else the slightest difficulty.

I find it impossible to understand the Government’s position. Do they say that the words they seek to repeal have no effect and are unnecessary? If so, the words are doing no harm either, and by putting Clause 61 in the Bill, the Government are just wasting our time. Or are they saying that the words would cause mischief? If so, they had better tell us how. As the words are clear enough, and by no stretch of the imagination can be read as licensing threats—a proposition advanced by the Liberal Democrats in the other place, but which, according to all the legal advice we have taken, has not the slightest substance—are we not bound to assume that the Government want to prevent, in the words of the safeguard,

“discussion or criticism of sexual conduct or practices”,

even when such discussion or criticism is not threatening or intended to stir up hatred? Surely that is what the police are going to assume, for if the free speech clause is unacceptable to the Government, what possible reason can there be for that opposition, other than that the Government feel that discussion or criticism of sexual conduct is of itself threatening and likely to stir up hatred and had better be stopped?

After that, the Government have a plain duty to tell us why it is right to have a free speech safeguard in the religious hatred offence but no free speech safeguard here. Some have argued that there is a greater need for protecting freedom of expression in the religious hatred offence than in this offence, but how on earth can that be right when none of the cases of the police overstepping the mark has occurred in the area of religion and all have occurred in the area of sex? There can be no substance in that argument.

Some have gone on to argue that this offence is more like that of race hatred than the offence of religious hatred. Religion, they say, is a matter of choice, but sexual orientation, like race, is wished on one. Many Muslims who talk of punishment for apostasy would deny that religion is a matter of choice, but even if it were, the assertion would get us precisely nowhere. What possible relevance does the alleged immutability of sexual orientation have to the question of whether the discussion of sexual behaviour should be allowed under the law or banned on pain of seven years’ imprisonment? The answer, of course, is none.

Free speech is a precious commodity—part of the very essence of a civilised society. It demands, says Matthew Parris,

“rough-and-tumble and give-and-take”.

It is so precious, says Peter Tatchell, that:

“It should be limited only in exceptional circumstances—when it slips into inciting violence and murder”.

Rowan Atkinson told us of his worry that, without the safeguard, people would be unsure of what they were allowed to say and fearful of expressing a viewpoint on many matters. He helps us to remember that not only the churches and religious believers fear that revoking the safeguard will be taken as a signal that criticising homosexual behaviour could be a criminal offence. You do not have to be religious to be interested in, and wish to debate freely, whether children from stable heterosexual family backgrounds do better than others, and the merits and demerits of gay adoption.

Many might say that that is absolutely obvious and that such discussion cannot be seen as evidence of hatred any more than jokes with a sexual content can be. It may seem obvious to you and me, but it certainly was not obvious to the police who, after Lynette Burrows had doubted the wisdom of gay adoption on the radio, gave her a lecture on homophobia and noted her behaviour in police records. Nor was it obvious to the police who, after a city councillor had made a tame joke about transgenderism at a police public liaison meeting, interrogated him for two hours before letting him off with a caution.

That brings me to the question of guidance. Some may say that the whole matter can be dealt with by guidance, but I remind your Lordships that these abuses have happened while the police have been furnished with guidance—in particular, the 2007 CPS guidance on prosecuting cases of homophobic crime. Unfortunately, that guidance is so erroneous that one is tempted to conclude that the police acted not in spite of it but because of it. The guidance does not suggest that there may be legitimate comment on sexual practices; instead, it makes the bold assertion that homophobia does not necessarily mean hatred of gays but includes mere dislike of a person’s behaviour. After going on to stress that a homophobic incident is any incident that is perceived to be such by any member of the public, not necessarily by anyone who feels victimised, it as good as encourages the police to investigate incidents that amount to no more than a member of the public complaining that someone else has had the temerity to criticise homosexual practices. There is no mystery as to why the Fleetwood couple came to be persecuted; the police followed the guidance—so the last thing on earth we want is more guidance like that.

I hope that my noble friend on the Front Bench will not agree with the noble Lord, Lord Waddington, and his colleagues that Clause 61 should not stand part of the Bill.

As we have heard, last year Parliament passed a new and important offence of incitement to hatred on the grounds of sexual orientation. That appears in the Criminal Justice and Immigration Act, although it has not yet become operable. It is very important because there has been some evidence of an increase in violent offences against gay and lesbian people. I believe that the police have reported a rise in the number of such offences, including a number of murders of gay men. Statistics for Greater Manchester in particular are extremely worrying.

There is also much homophobic material in circulation that is intended to inflame hatred against people because of their sexual orientation. It may be argued that some songs, for example, do not really mean very much—they are simply songs—but they emerge from a culture, mostly in the Caribbean, that is deeply homophobic and where violence and murders on such grounds are commonplace.

We have made considerable advances in recent years in our tolerance of sexual differences in orientation—with improvements in the law, civil partnerships and so on—but violent minorities still exist in our society. We do not want anything in legislation—any sort of loophole—that would encourage this. Last year, as the noble Lord, Lord Waddington, explained, an amendment was added to our legislation, in Section 29JA of the Public Order Act, which could provide such a loophole even though the movers of the amendment may not have intended this—and I am sure they did not. However, it could have a detrimental effect on gay people and it certainly stigmatises them. Moreover, it is quite unnecessary as the law we already have is meant to deal with incitement to violence. It does not prohibit the genuine expression of religious opinions or freedom of expression, to which the noble Lord, Lord Waddington, referred.

Clause 61, which had a substantial majority across all political parties in the other place, is meant to remove this because it is felt to stigmatise gay people and thereby provide incitement for some of the more extreme elements in our society. We do not want a society in which gay and lesbian people fear for their lives, as unfortunately occurs in some societies in other countries. In Iraq, for example, which now has a democracy, a leading cleric has called on his supporters to kill homosexuals, and to do so in the most cruel and degrading way possible. In this country, we have moved beyond that; we are humane and compassionate, and we do not want that kind of activity. We should not put forward anything that could give encouragement to the nastiest in our society who want that kind of extremism here. Therefore we should support Clause 61 and resist efforts to delete it from the Bill.

Even the most ardent proponent of freedom of expression will admit to the need for some restrictions under particular circumstances. What is always sought is a balance between competing rights. In this case the balance is between the fundamental and vital right to free speech and the right to remain free from discrimination and, indeed, insult. Even the international instruments themselves reveal contradictions. Thus, for example, Article 19 of the International Covenant on Civil and Political Rights allows for the widest possible interpretation of freedom of expression, while Article 4 of the International Convention on the Elimination of all Forms of Racial Discrimination in fact contradicts this. To answer this conundrum one needs to go into rather legalistic arguments, but perhaps the important question to ask here is this: does censorship in any form actually contribute to the reduction of so-called hate speech, or does the limit on free speech condemn hatred to the dangerous underground and perhaps lead to actual violence? This view is based on the belief inherent in democratic societies that ideas, views, perceptions, and indeed insult and hatred, are better dealt with by more, not fewer, words. Inevitable clashes in society can and must be discussed as the first step towards resolution.

Is censorship justified in the interests of equality and dignity of the individual? The answer here must be yes, but I would argue strongly that such restrictions must be very carefully weighed as to their effect on the values underlying free speech. First of all, speech must almost never be restricted on the basis of content alone, but on context. This I think is where the clause as it stands risks infringing legitimate expression. There are already on the statute book several laws that criminalise incitement to religious or gender-based hatred; and encouraging the commission of an offence is in itself an offence. The clause, however, is so worded as to create confusion not only for victims, but for perpetrators and importantly for those who police the law, and it is sufficiently broad to allow only guidance, but, I stress, not a guarantee—that is, a binding obligation—of free speech.

Some distinguished lawyers of first amendment rights have pointed out in landmark judgments that anything which might have a chilling effect on free speech is to be disallowed. Uncertainty as to what the law does or does not allow to be spoken—in this case, legitimate views on homosexuality—because of the fear of false allegations of homophobia undoubtedly exerts what, to my mind, is a chilling effect. To argue that the law should not interfere with anti-social speech or insult does not mean that free speech adherents are indifferent to the rights of minorities. To the contrary, they believe that freedom of expression is a vital right in the struggle to defeat discrimination, bigotry and intolerance.

We impose restrictions on free speech at our peril. We in this evolved democracy must be aware that individual rights are fragile and need constant vigilance for their protection. We would not be doing our duty in this House if we do not continue to insist on a free speech clause on the face of this Bill.

Last year, we were told that the Waddington amendment was unnecessary, and we are now told that its removal will not affect the threshold required for the offence to be made. In other words, it does not make much difference either way. That may be true, although I think it is arguable. However, the making and unmaking of laws has a symbolic significance going far beyond the strict letter of the law itself. This, after all, was the real justification for the necessary and welcome introduction of a specific criminalisation of incitement to hatred on the ground of sexual orientation. After all, the new offence was not strictly a new offence and it is unlikely to lead to the conviction of anyone who could not perfectly satisfactorily be convicted on the grounds of other laws already in force. The main point of what we did in this House and the other place last year was, importantly, symbolic rather than strictly necessary. However, it was important to send a clear and specific signal, and that is what the amendment to the Public Order Act did.

So, too, the Government’s ill judged attempt today to omit the section inserted by your Lordships’ House last year is primarily symbolic. Whatever the strictly logical position, and regardless of whether last year’s amendment was strictly necessary, its removal now would be of huge symbolic significance. It would correctly be seen as lowering the level of protection afforded for legitimate debate about matters of profound social as well as personal importance. This is especially so when we see it alongside the continuing protection offered by the law in respect of freedom of discussion about religion. The parallel is bound to be drawn and people will ask why there is a difference.

Noble Lords will have their own take on the strictly legal case to be made for or against this amendment, but I do not think that we should be in any doubt but that its defeat would cause a shudder of fear in everyone who values freedom of speech and open discussion. It is not always easy to balance freedoms—or indeed rights, as the noble Baroness, Lady D’Souza, said—but that is what is really at stake in the debate.

First, may I say how heartened I am that the Leader of the Conservative Party has apologised on behalf of his party for Clause 28 and the symbolic and other damage it did? It is very encouraging that the main Opposition party has taken that position. Secondly, I do not suppose any of us has to make claims about their commitment to anything in particular, but like the noble Baroness, Lady D’Souza, I can say that I have spent the whole of my professional life fighting for two main values: first, freedom of speech and, secondly, equality, including human dignity. I am in perfect agreement with the right reverend Prelate that whatever we do today will have symbolic significance. Whether it is huge and generates a shudder of fear is perhaps hyperbole, but I agree that symbols matter.

I speak as a member of the Joint Committee on Human Rights, which has looked at this issue not once, but twice, and is composed of members of all parties as well as none. On each occasion it decided that the free speech protection of the law, as it will be if we pass this clause and reject the Motion, is perfectly adequate. Since no one else has yet done so, perhaps I may try to explain the relevant background and why I believe that we should firmly reject the Motion of the noble Lord, Lord Waddington. The law we have now distinguishes between incitement to racial hatred on the one hand and incitement to religious or homophobic hatred on the other. Where race is concerned, it is an offence to use insulting, abusive or threatening language—there is no requirement of specific intent to stir up hatred—if,

“having regard to all the circumstances, racial hatred is likely to be stirred up”.

That is wrong. I do not like speech offences of any kind. Indeed, my old boss Roy Jenkins and I erred when we allowed the race hate offence to be as wide as that, but it is too late to reverse it these days. So that is incitement to race hate, a broadly drawn criminal offence which does not even require specific intent.

The offence is much narrower in relation to religious and homophobic hatred. The language used has to be threatening, not merely insulting or abusive, and there has to be an intention to stir up religious or homophobic hatred. In addition, both religious and homophobic hatred have, at the moment, a savings clause, which I shall come to. The reason why this House and the other place made a distinction between race and religion in the Racial and Religious Hatred Act—with the support of the Bishops, as I recall, for which we were most grateful—is that a verbal attack on members of a racial group is an attack on their common humanity, their inheritance and their birthright, which are fixed and immutable. But a verbal attack on a member of a religious group—not because of their group identity but expressing intemperate criticism of, or hostility to, the beliefs, teachings or practices of their religion—is not an attack on their common humanity unless in reality it involves an attack on their ethnicity, their origin and their biology, as so often happens with British Muslims, who are really being attacked for ethnic reasons in disguise.

Religion and belief are concepts that defy precise legal definition. They concern matters of faith and philosophy and are strongly influenced by history and politics and by tradition and culture. The line separating religious beliefs from political beliefs is often blurred, not least because religion is often used and misused for political purposes. The distinction between stirring up hatred of someone because of his religious beliefs and expressing hatred of those beliefs or practices in the abstract is quite subtle. So this House has decided, as has the other House, that the law protects religious believers against deliberate intimidation, threats of violence and intimidation, but it does not protect the actual beliefs and practices from abusive and insulting criticism.

The need for writers and artists to be able to criticise and ridicule religious beliefs and practices is the reason why I drafted what is referred to as the “English PEN clause”, which prevents thin-skinned people from trying to use the criminal law to stop an attack on religious beliefs and practices which does not amount to the use of threatening language against individuals. I was responsible for that and the House overwhelmingly supported it.

The question is: where should homophobic hatred be placed on this scale? Should it be more like race or more like religion? Even though, in my view, sexual orientation, being an immutable characteristic, is more like race, I am pleased that the Government chose to put homophobic hatred in the same place as religion, leaving a large space for free speech. They chose to criminalise only that which deliberately stirs up hate and only that which uses threatening language—not insulting or abusive language—leaving a person completely free, however unpleasant and evil it may be, to insult someone because they disapprove of homosexuality. Because the offence is crafted so narrowly and already leaves fully adequate protection for free speech, there is no need for any additional savings clause. Discussion of sexual orientation, however unpleasant and offensive, does not entail the same controversy as religion where, as I have said, there is a need for an express free speech clause.

There have been some controversial police actions in relation to the other harassment provisions of the Public Order Act in which the police, trying to shake off their old homophobic image perhaps, have been overzealous in investigating claims of homophobia—for example, in relation to comments by Sir Iqbal Sacranie, the former secretary-general of the Muslim Council of Britain, or the evangelical Christian literature distributed by a retired Lancashire couple. However, it is clear that the specific homophobic hate speech offence does not criminalise such words, behaviour or writing unless they are threatening and intended to stir up hate.

The unanimous view—a unanimous view taken not once but twice—of the Select Committee, with its legal advisers and including, for example, the noble Earl, Lord Onslow, and two Conservative Members of Parliament, so it is not a party matter, is that there are adequate free speech safeguards. I fully agree with the principles referred to by the noble Baroness, Lady D’Souza; the question is how they are to be applied in practice. The removal of Section 29JA would not result in jokes involving gay people being outlawed or prevent the expression of opposition to same-sex relationships where the discussion does not amount to threatening language with intent to stir up hate. It would categorically not impede genuine freedom of expression.

However, there is real concern among the vulnerable gay and lesbian community that Section 29JA creates a legal loophole which could enable extremists to stir up hatred and attempt to avoid prosecution for words or actions that were deliberately meant to foment hatred. That concern is at least as great as the fear referred to by the right reverend Prelate.

I hope that the Committee will accept the view of the Joint Committee. For what it is worth, my own view is that if the speech crime were to be interpreted over-broadly, I have no doubt whatever that the courts, looking at the Human Rights Act which requires them to interpret every statute, including this one, in accordance with Article 10 of the European Convention on Human Rights, would again ensure that a case was not brought.

The problem I have about the specific language we are being asked to keep is that it seems entirely superfluous. Section 29JA states that,

“for the avoidance of doubt, the discussion or criticism of sexual conduct or practices or the urging of persons to refrain from or modify such conduct or practices shall not be taken of itself to be threatening or intended to stir up hatred”.

I ask rhetorically: how could any reasonable person possibly believe that the discussion or criticism of sexual conduct or practices, or urging people to refrain from or modify their conduct or practices, could be regarded as threatening or as intended to stir up hatred? Of course they could not. Therefore, this is an otiose provision.

I am grateful to the noble Lord, but he has already explained that perfectly reasonable police officers have interpreted it in exactly that way and have arrested and detained people for behaving and speaking in a way which the noble Lord says no one could possibly misunderstand. But they did and it has happened.

Of course the noble Lord, Lord Tebbit, is right. There are idiots in all quarters. If police officers abuse their discretion in a particular way and interpret the law unlawfully, they will be vulnerable to disciplinary action, legal action and so on. But we cannot legislate on the basis of what some people have done in misunderstanding the law. The law is perfectly clear, as I have said, and there is no need for us to put in something which I regard as an oxymoron, or otiose, or both.

When the noble Lord read out the passage with which we are all concerned, he should have emphasised the words “of itself”. Section 29JA states that,

“such conduct or practices shall not be taken of itself”.

That surely is the protection that we need. It means that if you say something which is offensive to someone, it is not of itself threatening unless you do it in a manner or under circumstances which make it so. That is all that this is intended to achieve. It is exactly what my noble friend intends it to do and I hope your Lordships will support him.

I am grateful to the noble Lord, Lord Elton. It is precisely the words “of itself” that create something completely unnecessary. No sensible person could possibly believe that, of itself, discussion or criticism of sexual conduct or practices could be regarded as threatening. That is why, unlike the English PEN clause in the religious context, neither I nor the Joint Committee regard this as being in any way necessary. On the contrary, it creates confusion rather than certainty.

The noble Lord has made some rather interesting—

May I just finish the point? The noble Lord, Lord Lester, said that no reasonable people could interpret it that way. Does he think that the people who wrote the guidance to the police that my noble friend read out were reasonable?

I have no idea. I dare say that the guidance can be improved in all kinds of ways. We are concerned not with guidance but with the law of the land.

As always, the noble Lord has made some interesting distinctions, but in my judgment he has not dealt with the powerful point made by the noble Baroness, Lady D’Souza, about the chilling effect of the removal of the section on the protection of freedom of speech, nor the right reverend Prelate’s point about the symbolic effect of removing the section. I, too, am rather puzzled by the response of the Government; it is as if there were some urgency to remove the section. I wonder where the pressure is coming from for Clause 61 to repeal the free-speech protection. I detect no sense of burning public anger in favour of this. Certainly, many are concerned about the effect on freedom of speech, many of whom admire the Government’s record on freedom of speech in other spheres.

Gay rights supporters are divided. Matthew Parris has already been cited by the noble Lord, Lord Waddington. The only major pressure appears to come from Stonewall. That organisation has done some significant work to enhance the dignity of gay people, but surely the Government are not bound to accept its entire agenda. In fact, there must be little of that agenda left now. It is but a lobby, and the Government should have a wider perspective. In passing, I consider the malign effects of accepting Stonewall’s view on Christian adoption agencies. It was predictable, and it was predicted, that it would have those malign effects on some of the most caring adoption agencies in the country. The effect of the Equality Act (Sexual Orientation) Regulations 2007 has been that most of the 14 agencies, mostly Roman Catholic, have been forced either to withdraw from adoption services entirely or to abandon their religious ethos to continue. The result has been a victory for political correctness and defeat for vulnerable children and common sense.

The Waddington amendment, in my judgment, is moderately drafted, avoids doubt and in no way raises the threshold. The real problem of the repeal of this protection is that it will stifle honest expression of opinion—the so-called “chilling effect”. Official guidance will not solve the problem; it does not have the force of law. The protection should be in the Bill. Guidance can be modified or withdrawn, and the current guidance is extremely weak. The noble Lord, Lord Waddington, has already cited paragraph 3.10 of the CPS guidance on prosecution, dated July 2007.

Some will say that there is no real problem; after all, there is a longstop in the fiat of the Attorney-General, who must sanction any prosecution. It is said that that is a powerful protection. The certainty, though, is that it will take time for any investigation to reach the Attorney-General, from the complaint to the police investigation to consideration by the Crown Prosecution Service. In the mean time—there are many examples of this—decent, law-abiding citizens will be in fear and dread as a result of that perhaps quite protracted investigation.

As one of the four Members of the Committee opposing the Question that Clause 61 stand part of the Bill, I accordingly support the continuation of what is now generally referred to as the Waddington amendment, which was agreed by your Lordships about 12 months ago. I need to make a number of points immediately.

Like probably everyone in your Lordships’ House, I do not hold anti-homosexual views, nor do I advance them; in fact, I abhor homophobia. I fervently believe in a tolerant society but I also agree with freedom of expression within the law, and it is that phrase “within the law” that concerns much of what we are dealing with today.

There is no direct case law to help us. Yet if one examines the long line of cases that start with Beatty v Gilbanks in 1882—I will give the Hansard writers the references later—which was the Salvation Army case, all the way through to the great review of the law in this area, Redmond-Bate v DPP in 1999, one sees a consistent guide that where the right of public expression of view has been challenged in the courts, the issue of reasonableness has been at the forefront of the minds of the judges.

If I may be allowed a reminiscence just for a moment to make a point, I recall a time in the late 1970s—perhaps it was the late 1980s—when, as a fairly senior police officer, I was often involved with the policing of large demonstrations and marches, some of them in those days very large indeed. I remember sitting at home watching the evening television news which showed yet another march wending its way slowly through some street or other in yet another city, the marchers flanked intermittently by uniformed police officers. My young daughter, watching this, turned to me and asked, “Daddy, why are policemen always demonstrating?”. I had then to explain in simple terms, as we shall explore later on, what concerns us today—that there is a right within the law to demonstrate beliefs and views within reasonable bounds, and that it is the duty of the police to allow that to happen.

As I said previously, we are dealing with finely balanced judgments of what might or might not cause offence. The circumstances of Redmond-Bate in 1999 are particularly interesting and bear closely on the circumstances at which we are looking today. In 1997, three women were preaching from the steps of Wakefield Cathedral. They were described as fundamentalist Christians. They attracted a crowd of around 100, some of whom took exception to the views being expressed and became hostile. A police constable asked the women to stop preaching and, when they refused, he arrested them for breach of the peace and subsequently charged one of them further with police obstruction. The appellant, one of the three women arrested, was convicted by the magistrates and her appeal to the Crown Court was dismissed.

But in 1999, two years later, at the Queen’s Bench Division, Lord Justice Sedley and his fellow judge took a very different view and allowed the appeal, holding that the women had not acted unlawfully. The judgment in that case is interesting because it reviewed the whole scope of the law at that time and not much has changed since.

Lord Justice Sedley made a number of particularly relevant points in his judgment. He cited Articles 9 and 10 of the European Convention on Human Rights, especially Article 9.2, which states:

“Freedom to manifest one’s religion or beliefs shall be subject only to such limitations as are prescribed by law”—

I ask noble Lords to note what comes next—

“and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedoms of others”.

In other words, mere annoyance or disagreement with those views is not enough.

Article 10.1 states:

“Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority”.

Continuing to review the case law in that case, and the arguments adduced by counsel, the judge said this—and it is particularly telling:

“Free speech includes not only the inoffensive but the irritating, the contentious, the eccentric, the heretical, the unwelcome and the provocative provided it does not tend to provoke violence. Freedom only to speak inoffensively is not worth having. What Speakers' Corner … demonstrates is the tolerance … extended by the law to opinion of every kind and expected by the law in the conduct of those who disagree, even strongly, with what they hear. From the condemnation of Socrates to the persecution of modem writers and journalists, our world has seen too many examples of state control of unofficial ideas. A central purpose of the European Convention on Human Rights has been to set close limits to any such assumed power”.

What a long way we seem to have come since those words were spoken 10 years ago.

Many Members of your Lordships’ House are better experienced and better qualified than me to develop an argument from case law, and I fully appreciate that nothing that I have said can ignore the fact the Parliament can legislate pretty much as it likes and that the material that I have quoted is only persuasive—

I wonder whether the noble Lord appreciates that the whole of what Sir Stephen Sedley said is something which I, certainly, and, I am sure, others like me completely endorse. That, I think, is common ground.

I am grateful to the noble Lord.

As my young daughter noticed all those years ago, the police are always likely to be present in those circumstances and to be drawn willy-nilly into the arguments. I brought in that reminiscence to ask where the police stand in this.

Prior to your Lordships' House approving the Waddington amendment a year ago, the police and the prosecuting authorities were, frankly, between a rock and a hard place. There was never any question then, nor is there now or will be in the future, that behaviour would be tolerated if it was offensive, aggressive, threatening or demeaning, and that the police would, should and will act accordingly to uphold the law. However, prior to the Waddington amendment, the police regularly received complaints from homosexual groups that exception was taken to remarks that homosexuality was deplored on religious grounds. The police were forced to act. They operated, as we have already heard alluded to, against a background of the Home Office’s guidance notes on how to handle hate crime under the Public Order Act 1986, to which the issue of sexual orientation was added by the Criminal Justice and Immigration Act 2008. The so-called guidance notes in fact required rigid adherence. Any complaint of hate crime, by whomsoever made, even a bystander, had to be recorded as such and fully investigated. No exercise of discretion was countenanced. Accordingly, the police, and later the CPS, when faced with a complaint concerning remarks about sexual orientation, would follow the Home Office’s guidance notes, go through the whole procedure of interview, sometimes following arrest—fingerprinting, taking DNA samples, police bail, sometimes charge—even though pretty well everyone in the official process knew that there was little or no chance of a prosecution, much less a conviction, following.

What a waste of time, what a waste of money and resources, and what a terrible burden to place on the person being arrested or interviewed, often waiting months for an outcome that was obvious to everyone except them. In many cases, the tactics were obvious: a complaint from a pressure group, police pressured into action with an implied threat of a complaint against them for neglect if a full investigation was not carried out and the inevitable chilling effect, about which we have heard already, on others who might be tempted to protest similarly in the future. In short, it was a very successful tactic to limit freedom of speech and freedom of expression.

Perhaps the most important question of all is what has happened since the Waddington amendment a year ago. Despite intensive research, I cannot trace a single instance of police intervention during that time in these circumstances. So what is the official response from the Association of Chief Police Officers? Well, there is no official response, a stance that I applaud because noble Lords will remember, as I do, ACPO a few years ago having its fingers burned when it intervened publicly in two separate debates concerning proposed legislation. Since then it has sensibly kept its head below the legislative parapet. However, my recent discussions privately with senior ACPO figures, including those most closely involved with issues of this nature, reveal two facts critical to our debate today: first, not only has ACPO not declared an official stance but it has not given an unofficial view in any quarter; secondly, it would much prefer to see the defeat of Clause 61 and the continuation of the Waddington amendment. The reasons given to me for this are simple and perhaps obvious. With the Waddington amendment in place, the police are released from the virtual straitjacket imposed on them previously; they can exercise common sense and good judgment on the day; and they can police with the light touch which is so often sought and required by society.

I have said enough perhaps. This clause denies any exercise of common sense, balance or discretion; it seeks to prevent reasonable expression; it is legally and jurisprudentially stifling; and it will serve no purpose but to return us to the wholly unsatisfactory state of affairs that existed a little over 12 months ago.

I have been somewhat intimidated by the Bill. It has tremendous scope, covering many emotive issues. I am not a policeman or a lawyer; I am not interested in political correctness; but I am interested in the welfare of society at large. The amendment to remove Clause 61 seems so fraught with unintended consequences that I feel moved to speak. Some have talked of symbolic significance; I want to talk about unintended consequences. I cannot believe that the movers of the amendment would wish to see unintended consequences or any section of society punished by anything that they may support.

Let me set out very briefly what I think the dangers are. The proposal opens the door to the possibility of discrimination, bullying and mistreatment of lesbians and gay men. That may not be the intention, but that is what it may do. We need to retain Clause 61. The issue is not the protection of free speech; this is not in jeopardy, nor is the issue of the rights and wrongs of an offence of incitement to hatred on the grounds of sexual orientation, which was agreed by both Houses last year. The question is whether the retention of the exemption brought forward last year is appropriate. I suggest that it is not.

Two arguments have been put forward—first, that the section is necessary to protect religious expression and, secondly, that the section has no real effect but cannot do any harm. The first argument is just not so. No person of faith, in a temperate expression of their beliefs, could be deemed to be intentionally stirring up hatred. The Crown Prosecution Service or a magistrates’ court would simply not accept this. The second argument is very odd. It is suggested that the section which was added to the law simply sends a reassuring message to certain people that something never caught by this law and that they have never been prevented from doing may continue.

The exemption would have an effect. It would have a stigmatising effect on lesbian and gay people in this country. It offers extremists who would stir up hatred against lesbian and gay people a defence for their actions. This is what I mean by unintended consequences, and I hope that noble Lords proposing the amendment will consider this effect. Lesbians and gay men are also law-abiding citizens, and they say that legal niceties can be twisted to harm them. I have read and know of excruciating stories from young men and women who are homosexual. Some have been driven to suicide by taunts; many have suffered depression; and many are afraid to go to school because of homophobic bullying. Many are living in fear and dread.

I am a patron of an organisation called Families and Friends of Lesbians and Gays, founded by and for parents of children who are lesbian or gay. Many of these parents have openly said that they had never thought about sexual orientation or had actually been prejudiced against homosexuality until their son or daughter declared that they were lesbian or gay. These parents are now aware of the difficulties that their sons or daughters face, and of how brave they, as families, have to be to combat hatred and discrimination.

People do suffer; there are unintended consequences of what we do. Clause 61 provides some defence for people. It must not be removed. Any unintended consequences of an amendment about sexual conduct and practices that could result in threat and misery must be resisted. This House should not send out this kind of message. I support Clause 61 and will vote against attempts to remove it. I beg those who oppose the clause standing part of the Bill to consider what I have said about unintended consequences, and I beg the House to reject the proposal and support the retention of Clause 61.

I support the proposal of the noble Lord, Lord Waddington. I shall be very brief in view of the hour, but I shall make three points. First, we are not discussing the basic protection that the law rightly provides for our citizens against harassment, danger or stirring up hatred on grounds of race, religion or sexual preference. That is right and is unchanged. We are discussing the Government’s proposal to remove one article—the free speech clause—from the Public Order Act, which states that certain actions are not to be taken as threatening or intended to stir up hatred.

I am surprised to find this proposal in this Bill. Parliament decided very recently, after a full discussion in this House and with the agreement of the House of Commons to put this article in the law. The Government can always propose to amend legislation, but in my view very strong reasons are needed to propose the selective change of legislation of such recent date. I do not see those reasons; on the contrary, it is clear that some of our citizens, particularly those who are Christians and in Christian groups, believe that the article offers them some protection against harassment. The public, the police and the courts are entitled to look for some stability in legislation.

Over the past week, the Minister has frequently criticised amendments as inappropriate to the Bill or to its twin brother, the Policing and Crime Bill. That argument goes both ways; the Clause 61 proposal is simply slipped in among clauses on the coroner’s services and issues such as assisted suicide, the law of murder, the defence of provocation, infanticide, pornography, prostitution, conspiracy and terrorist offences. There it is, all by itself. We do not deal with finance in this House, so I know nothing about stealth taxes, but this looks a little like stealth legislation.

Even with no account taken of Brussels, we are none the less bombarded with home-baked legislation—some of it half-baked, of course—that is difficult enough to understand. It really is surprising that in these circumstances the Government have decided to seek to remove this one article on free speech. Clause 61 is not necessary and should be dropped. Yesterday, we discussed the Independent Parliamentary Standards Authority. The Government proposed Clause 10, which would have restricted free speech in the other House; the other House voted against it and struck it out. This seems to be the week of the Government against free speech and, in those circumstances, we should maintain the free speech provision in the law. I support the proposal of the noble Lord, Lord Waddington.

I, too, support the amendment moved by the noble Lord, Lord Waddington. My name is the fourth name to it. I apologise to your Lordships that I was not here for the first few speeches; the time that I was away was the only time that the noble Lord, Lord West, could give me to pursue questions arising from one that I asked in your Lordships' House a few weeks ago. I was unsuccessful in being in two places at once.

The proposal of the noble Lord, Lord Waddington, and the clause that it seems to hold within the law are necessary and proportionate. I must tell the noble Baroness that I have heard nobody responsible for this amendment say either that it will have no real effect or that it cannot do any harm. I am sure that we would not be troubling your Lordships if we held either of those views. I believe that it will have effect if the clause stays and will do some good for precisely the reasons that the noble Lord, Lord Dear, so magisterially laid out. The chilling effect on the way to a decision by the Attorney-General is potentially, and in some cases actually, very substantial.

The clause is modest in its content; yes, it is declaratory, but we have heard from other speeches why it needs to be so. It needs to make it crystal clear that it does not defend any language or behaviour that is intended to stir up hatred or may result in doing so. I believe that it has potentially and, already actually, good effects, and that it does good.

The question that we are facing in this debate is accurately described as one of free speech. What is at stake is whether your Lordships' House and this Parliament intend to outlaw open discussion and teaching, not just among Christians but among others, of views that differ from the currently dominant political orthodoxy, and therefore privilege, in the face of others, that currently dominant orthodoxy. To be explicit, I mean the orthodoxy that sexual preference is as innate and fixed as ethnicity, and that sexual preference or orientation is more akin to ethnicity than to religious belief. That is the current political orthodoxy that lies behind the Government’s Clause 61. People of all sorts in this country need to be assured, peaceably and quietly, whether on street corners, in churches, mosques, synagogues or wherever, that they are free to express views that others may strongly disagree with but which question the current dominant political orthodoxy.

The right reverend Prelate had the good fortune not to hear what I had to say. I first reassure him that I believe everything he just said to be amply protected by the law. Secondly, although he refers to what he calls “current political orthodoxy”, surely even a Lord Spiritual would accept that there is scientific evidence to show that the reason why people are gay is innate and not to do with some kind of personal choice.

No. My own studies, which I suspect are comparable to that of the noble Lord in these matters, suggest that that is the case for some of those who understand themselves to be gay but for others it may not be. Substantial scientific, psychological and medical research points to the statement that I made a moment ago. That is why I say that this question is by no means settled. To pass law on the assumption that we can use the language of sexual orientation and believe that we are talking about something that is absolutely fixed and clear, as ethnicity might be thought to be, is a mistaken political orthodoxy.

I can draw only one conclusion from the insertion of Clause 61—a conclusion that for me is sadly reinforced by the behaviour of your Lordships' House and the Government over sexual orientation regulations, as the noble Lord, Lord Anderson, graphically described. I will not go into that except to say that Parliament was unnecessarily and aggressively pursuing Roman Catholic adoption agencies. That kind of experience leads me to read Clause 61 with considerable anxiety. That is all the more so when I read the Equality Bill now before the other place. It seems that the Government believe that others’ rights trump those of people of faith when there appears to be some tension between the two.

If that is the case, it would be curious in the present day that a range of individuals and groups in this country, Christians among them, rather than the Government and the lobby groups, are seeking to defend a free market in religious and other ideas and the publishing of a range of scientific research. Again, as the noble Lord, Lord Anderson, suggested, it begins to look as if, curiously, at the beginning of the 21st century, Stonewall is being permitted to become the Archbishop Laud of our time. I hope that the House will recognise the implications of Clause 61 and vote with the noble Lord, Lord Waddington, for its removal.

It was not my intention to speak, but I have been encouraged by my two noble friends Lady Turner and Lady Massey. I shall be going through the Lobby with the noble Lord, Lord Waddington, because I believe that his approach is to reinforce freedom of speech and not to encourage murder and the incitement of hatred. The cornerstone of our democracy is freedom of speech. I am reminded of what an eminent politician said years and years ago. I paraphrase: “I may be bitterly opposed to what someone says, but I will fight ferociously for him to have the right to say it”. I believe that to be true today.

I do not have a carefully constructed speech as I was not sure that I would speak at all today. The one group which will find this debate chilling is the gay community. Let us just take our arguments one at a time. I had not intended to speak so I take them steadily.

We are not talking about anything that would result in jokes involving gay people or that a gay person might consider offensive being outlawed. This would certainly not impede genuine freedom of religious expression. As a woman of faith, I would gladly engage in a theological discussion with the Church about the basis of the present discussion on the background of homosexuality. If we took that theological discussion to its extreme, we would stone adulterers in the streets and carry on all the practices in the Old Testament. Christ said, “You may say in law an eye and a tooth for a tooth, but I say unto you love the Lord your God and your neighbour as yourself”. We are talking about some of our neighbours.

I am a great advocate of free speech. I believe in free speech and I stand up for free speech. That is why it is good that we have this debate on record, because the police have to be absolutely clear that gay people may be upset by what is said. They may challenge what is said, and the police have to get it right. I know that professionals do not get it right all the time—after all, I am a social worker and we get it wrong, as we see in the press, most of the time. Social workers, lawyers and the police will get it wrong from time to time and we should understand that. It is then up to the Crown Prosecution Service and other services to oversee us, and we know that they do that substantially in other areas. We heard that in the debate about assisted dying this week. We know that considerations are made all along the road, so we have to make sure that we get that right. We have it now in Hansard that we do not expect jokes and bits of free speech to result in prosecution.

However, this is about something quite different. It is about the incitement to do damage to people who are gay or lesbian. During the past few days, there have been a number of debates on the Floor of this House reflecting our thinking about public behaviour. I agree absolutely with the Bishops’ Bench that this will send a message to the community. It will send a message to the gay community that it is not valued, because we are prepared to have, on the face of the Bill, something that it finds deeply offensive and which would not stop free speech.

Would noble Lords include in the Bill something that said it was all right to use threatening language intended to stir up hatred against black people? That would be called racism, but it is exactly what noble Lords are suggesting happens here. On the face of this Bill you have something that is called free speech, but is in fact prepared to allow incitement to hatred.

I say all this because it is not really understood how deeply gay people feel this in terms of the offensiveness involved and the way it demeans their lives. They may well not be acceptable to many people in this House: you may not believe that people who feel that they are gay or lesbian are real human beings—are men and women; you may believe that they may have some sort of disease that could be cured and that research may show that. That is a deeply offensive position to take against gay and lesbian people, just as this clause stands on the statute book. I therefore stand with the Government and reject the Waddington amendment.

Is the noble Baroness aware that Peter Tatchell, Matthew Parris and other prominent homosexuals oppose Clause 61?

I am speaking not for them but for myself and the people I know.

I apologise to my noble friend Lord Dear; I did not intend to come between your Lordships and the extremely authoritative speech that he treated us to.

I do not intend, particularly at this late hour, to intervene at any length, but I have a question and I wonder whether the noble Lord, Lord Lester, might be able to help me with it. It seems clear to me that all of us in this Committee share a presumption in favour of free speech. The noble Lord, Lord Lester of Herne Hill, made it clear that he shared that presumption and in particular that he endorsed entirely the remarks of Sir Stephen Sedley, which were cited. In his exceptionally helpful speech, the noble Lord sought to show us that the present law struck the right balance between the rights of free speech and the protection of gay people, because the offence was sufficiently narrowly targeted to leave space for people to express even disagreeable opinions about gay and lesbian people. The noble Baroness, Lady Howarth, failed to appreciate that distinction when she said that remarks that would be regarded as incitement to racial hatred should be treated in exactly the same way with respect to—

That is exactly the distinction that I made. I clearly said that many people may find it offensive to hear some of the issues, but that does not necessarily make it an offence.

I apologise if I did not hear the noble Baroness correctly. I shall proceed with my question. The noble Lord, Lord Lester, helpfully tried to show us how the law struck the right balance. He was a little undercut by the noble Baroness, Lady Massey, who supported his position, but who I thought showed fairly convincingly that the law was not actually protecting gay people in the way that the noble Lord, Lord Lester, sought to show us it was perfectly adequate to do.

I wish to deal with the characterisation of the current legal position given by the noble Lord, Lord Lester. The noble Lord sought to assure us that the present law was perfectly adequate to protect gay and lesbian people and that the problem with the Waddington amendment was that it would leave lesbian and gay people feeling fearful for their position because people would use the Waddington amendment to conduct all sorts of scurrilous and abusive attacks on lesbian and gay people, such as were calculated to incite hatred, and they would do that under the cover of the Waddington amendment.

I have two questions that I should like the noble Lord to help me with in relation to that, if I have characterised his presentation of the situation correctly. My first question is whether there is any evidence that the Waddington amendment—I know that we have not had a great length of time—has had that effect in the past year. Does it appear to have given rise to a rash of the kind of attacks that the noble Lord told us lesbian and gay people might be fearful of? My more fundamental question is: if it is the case that the present law gives lesbian and gay people perfectly adequate protection, what can they possibly have to fear from the Waddington amendment? If the present law is adequate, how can their fear that the amendment will act as a cloak and cover for scurrilous attacks that have a tendency to incite hatred possibly be justified?

The noble Lord, Lord Low, asks extremely difficult questions and I am not able to give an answer that he would find satisfactory. Before I try to answer them, I must say that I am a liberal with a small “l”, and therefore I fully understand that the spirit of liberty is one which respects the views of everybody else and I only interfere with free speech where it is absolutely necessary and in very narrow circumstances. I believe that to be true of almost everybody who has spoken today. We are then talking entirely about the balance to be struck and the symbols that will be sent out by whichever way the vote goes this afternoon.

The noble Lord asks me whether there is evidence to show that what is called the Waddington amendment has done harm. I cannot answer that question, but the question I can answer is whether there have been many homophobic physical and other attacks in recent years and months, and the answer is yes there have, but whether they are causally related to the Waddington amendment I would not dare to try to guess, because I do not know how one would be able to prove that one way or the other. The second question is whether gay people have adequate protection under the law as it now stands. They do. They have protection under the civil law against discrimination and harassment, just as people have protection under the law against religious harassment and discrimination. They have protection under the criminal law against threatening words. They have less protection under criminal law than black people do, because black people are protected on a very broad basis; gay people are protected on a much narrower basis, but it is enough. I am not suggesting that any greater protection be given.

The real debate is about symbols. What message will be given if we go one way or the other? The message that will be given by those in favour of the Waddington amendment—we are dealing with irrational matters on both sides—will be that the House has reverted to a position it took 15 years ago and is somewhat homophobic. That may be quite unfair, but that will be the message. The message the other way, equally unfair, may be that the House is taking a different view.

We are dealing with symbols. It is very unsatisfactory that that is so, but it has been symbolised by the right reverend Prelate’s speech, with which I respectfully do not agree—but I respect his position utterly, as I respect freedom of religion. I have not really answered the question because I do not think that there is a clear answer.

I should like to make two very short points. First, thinking about unexpected outcomes, I was interested to hear from the noble Lord, Lord Waddington, that he had discussed the original proposal which became the Waddington amendment with Ben Summerskill of Stonewall.

I would not like to give that impression. I was quoting from what Ben Summerskill said when giving evidence before the committee on the Bill in 2007. During that hearing, he said that he would not object to something being in the Bill that made clear the importance of freedom of expression.

I apologise to the Committee for my inaccurate understanding of what was said by the noble Lord, Lord Waddington, but his point seems equally valid. So is the recent comment that Matthew Parris and someone else, I think, saw no outcome for homosexuals from the proposed keeping in law—not making new law—of what was the Waddington amendment. Consequently, it does not appear that there is strong opposition from well known gay people to this modest freedom of speech.

The second point seems terribly important. I endorse what the noble Lord, Lord Dear, said about the police being in difficulties. What would be the message to the police from this House if they were in difficulties from the guidance, and from their obligation to take seriously and deal with each possibly malicious or possibly genuine but unneeded application to them to do something? I mean the sort of referral to the police that would not get to the courts, that would not be given the Attorney-General’s fiat, and that the courts would knock down. But it is not at the courts that it matters. It matters at the point of reference to the police—the need of the police to deal with it. Because the law was changed and accepted by the House of Commons, in the last year the police have known where they stood. What are they to understand if we then get rid of the Waddington amendment and keep the guidance? Are they then to act, possibly arrest and certainly interview perfectly respectable people who do not agree with what most of us in this Committee agree, I hope—that gay and lesbian people, among whom we all have friends, have equal rights to absolutely everything? The police will have to deal with the issue.

That is the symbolic message that will go beyond symbolism and into a difficult position both for the police and for Christians, Muslims and Jews who follow the Old Testament and speak out about what they feel. It is important that the Committee reflects on that. For that reason, I will support the noble Lord, Lord Waddington.

I shall vote with the Government today. I have the greatest respect for the noble Lord, Lord Waddington, and those who have spoken in favour of his amendment. However, my professional experience has led me to realise the dangers of homophobia. I recall many years ago a spate of homophobic attacks in Chester; I was involved in the prosecution of a person who had stabbed a young man simply because he believed that he was homosexual. I have never forgotten what he said to the police about it. He said, “I heard him giggling, so I knew he was a queer”, and he killed him. Very much more recently I was involved, on the other side, in a case in which a young man perfectly innocently walking on Clapham Common was attacked by two men and killed.

What lay behind both those incidents was the way people talked among themselves and worked themselves up. When I hear that the opposition to the clause is put forward on the basis of free speech, so that people can criticise such behaviour, I think that it is far removed from the defence of homosexual people that this country needs. I fear that the removal of the section is necessary. Opposing the clause would give a signal; it would be not about enabling people to talk in terms of, “I don’t like homosexuals”, but about them talking together and working themselves up into attacking and killing people. That is why I shall vote with the Government. However, we are not whipped on this vote, and my colleagues can disagree with me if they wish.

Almost all that was necessary to be said today was said by the noble and learned Baroness, Lady Butler-Sloss. In my own way, I will turn from the generality of what she said to a more specific case. In his original speech, the noble Lord, Lord Lester, made some perhaps less than kind remarks about the intellectual capacity of certain police officers in relation to one incident that had been cited. We have now heard, of course, that a lady has complained—in general, and not to the police—about the words spoken by the right reverend Prelate the Bishop of Rochester. As the law stands at the moment, if that lady were to go to the police, any sensible police officer could say, “Well, yes, my dear, I hear what you say, but it is clear that no offence was committed”. However, if the Government succeed and the Waddington amendment is removed, the police officer would be left in a difficult position. He might believe that no offence had been committed; the noble Lord, Lord Lester, would say that no offence had been committed. But suppose that the police officer just told the lady, “No offence was committed. I shall take no action”. He might feel that he would come under attack—that he would be accused of homophobic behaviour for not following the matter up.

We would be creating a most awful pressure on the police, and they would react, naturally enough. They would have to go and interview the right reverend Prelate and discuss the matter with him. As has been said, he is robust enough a man to take care of himself, but that might not be the case with many other people, who would lack the resources to fight the thing through—perhaps even to fight a conviction and take it to appeal. There is no evidence whatever that the amendment has caused any outbreak of homophobic attacks or any of the other nonsenses. The noble Baroness, Lady Turner of Camden, listed all the dreadful offences, which are against the law and which the Waddington amendment did nothing to bring within the law. That serves nothing at all. It is simply an outbreak of emotionalism which obscures the facts. We should stick to the facts and stick to the Waddington amendment.

If, in another year or five years, we find that there has been an outburst—that masses of bishops are making incendiary remarks—of course we might reconsider the matter. For my part, I must say that there are moments when I wish that more bishops made more incendiary remarks rather than less.

We on this side of the Committee have a free vote on this matter; so it would be inappropriate for me to wind up on behalf of the Opposition. I shall say only that I shall be supporting my noble friend Lord Waddington in voting that Clause 61 should not stand part of the Bill.

There is one other observation that I want to make about the circumstances in which we find ourselves this afternoon. The Government did not choose to oppose the decision taken in your Lordships’ House last year to support my noble friend Lord Waddington’s amendment, which subsequently became Section 29JA of the Public Order Act 1986.

It is, in my view, an abuse of parliamentary procedure to bring this matter back to Parliament without any evidence that Parliament had made bad law, especially when the same Government are in power. Indeed, the Government say, in terms, that Section 29JA is not bad law. Their case is that it is unnecessary law because the definition of the offence of incitement implies, in terms, the contents of my noble friend Lord Waddington’s amendment.

In these circumstances, it cannot be good constitutional practice for a Government to compel Parliament—the law-maker—to spend further time on this matter. Indeed, I would describe it as an abuse of legislative procedure.

Whatever its failings, the Bill has resulted in some passionate and important debates, particularly in the course of the past week’s hearings in your Lordships’ House. Today’s debate has been no exception. Clause 61 will remove from Part 3A of the Public Order Act 1986, which includes offences of stirring up hatred on the grounds of sexual orientation, Section 29JA, which deals with freedom of expression. I say for the avoidance of doubt that that section was agreed by this House in the passage of last Session’s Criminal Justice and Immigration Bill.

The Government have always said that there is no doubt about the threshold of this offence; I will come to that in a moment. I will first do my best to answer the criticism that it is somehow constitutionally improper for the Government to come back to the issue at this stage. I do not accept that argument for one moment. As has been indicated and as, I think, noble Lords know, we needed to secure Royal Assent for the Criminal Justice and Immigration Bill by 8 May 2008, so we were unable to ping-pong on the Bill beyond the initial rounds. If we had said nothing about it at that time, I could understand the criticism, but at the time we made it perfectly clear that we would return to this issue.

I am most grateful to the noble Lord for giving way. The fact that the Government had certain constraints at the time was entirely their decision; there was no obligation on Parliament to pass the Bill by early May. The Government had other priorities; that was why they wanted to move quickly. It is quite clear that, by not opposing this matter, the Government accepted the decision of Parliament. For the noble Lord to suggest that it was otherwise is, I say with great respect, not an accurate record of what occurred.

I would be grateful if the noble Lord would listen to what I have to say before coming back to me.

If the noble Lord is going to move on to other matters, I must take him to task—

I am not moving on to other matters, but I wonder whether I could make my point. Then the noble Lord can respond to me.

I want to return to the point of whether the Government made it perfectly clear that they were going to return to this matter, because, of course, they did nothing of the sort. I have here what the Minister said in the House of Commons on 7 May. What she said was the opposite of what the noble Lord has just suggested. She said that,

“between now and commencement we will prepare guidance … explaining the operation of the new offences … Of course there will be an opportunity—doubtless there will be frequent opportunities—to revisit this issue in due course, if it is the will of this House or the other House to do so. On that basis, I would like to propose that we do not disagree with the Lords in their said amendment”.—[Official Report, Commons, 7/5/08; col. 808.]

How on earth can the noble Lord have the cheek to say that that was an indication that the Government would return to the matter in the very next Session?

The Minister did not say that we would return to it in this Session, but she said that we would return to it. Let me carry on with the quotation that the noble Lord, Lord Waddington, mentions in part. My honourable friend the then Parliamentary Under-Secretary of State for Justice said:

“We remain of the view that the amendment is undesirable and unnecessary; it does not add anything to the law as it would stand without its inclusion. However, as … my right hon. Friend … has explained, there is an urgent need for the Bill to receive Royal Assent”.

She went on to say—and this is what the noble Lord has just quoted—that,

“there will be an opportunity—doubtless there will be frequent opportunities—to revisit this issue in due course, if it is the will of this House or the other House to do so”.—[Official Report, Commons, 7/5/08; col. 808.]

It was the will of the House to do so and that is what happened by the very large majority of 154 when the Bill was debated in the other House in March. This trumped-up charge of constitutional impropriety is really not worthy of argument. The debate is about something else altogether. It is not about this.

Let us look at what this debate is really about. First, we should look at the threshold for the offence itself. It is a very high threshold indeed. No freedom of expression proviso is needed to clarify the ambit of the offence. It covers only words or behaviour that are threatening and intended to stir up hatred—a very high benchmark indeed. Those terms—“threatening” and “intending to stir up hatred”—have their normal English meaning. If we start to gloss that meaning or explain in more detail what is and is not covered, we perhaps risk making the offence less clear. We do not want to imply that there is ever any justification for threatening behaviour that is intended to stir up hatred, as there is not. The provision purports to be for the avoidance of doubt, but it probably creates doubt where there is none anyway. That is an argument for not accepting the amendment.

When the House discussed this offence during the passage of the Criminal Justice and Immigration Bill, there were legitimate concerns about the possibility of the offence being used in a disproportionate way against people who are merely expressing a dislike of, or distaste for, certain sexual practices. In particular, there was concern about people who are explaining religious doctrine that is against certain sexual activities. There were also concerns that the offence, without a freedom of expression proviso, could stifle comedy or artistic portrayals of homosexual characters. The Government have taken careful note of those concerns, which we know are particularly strongly felt by some noble Lords. We have listened carefully to noble Lords and fully share their concerns about free speech.

Let me be absolutely emphatic: in formulating the offence, we had no intention of stifling debate about sexual orientation, of interfering with the preaching of religious doctrine or of making it more difficult to portray homosexual characters in comedy or drama. On the other hand, we have always intended that the offence should be an effective way of dealing with threatening behaviour intended to stir up hatred on the grounds of sexual orientation. Is there anyone among us who has not seen evidence of that sort of material? It includes rap lyrics that are part of music that sells in huge numbers. We have seen pamphlets from extremist political groups. Also, as we have heard, there are extreme people about who have caused huge concern and upset to the homosexual community, whether gay or lesbian.

Are there any sections of the Koran that would fall foul of the law?

I am so sorry. I did not hear what the noble Lord said.

Are there any sections of the Koran that, if read out in a public place, would cause an offence under the law?

Not for the first time I cannot answer the noble Lord’s question. I am not talking about the Koran; I am talking about this legislation. I dare say that some people would be offended by the Koran being read out.

With respect, I asked the noble Lord not whether it would be offensive to read it but whether reading it might constitute an offence under the law, particularly the law without the Waddington amendment.

Is not the answer to this strange query that it could be if it was read out in a way that intended to threaten violence against the people to whom it was read?

The noble Lord has his answer.

I hope that I may continue with my remarks, because I think that noble Lords are probably keen to come to a view on this. Noble Lords who oppose the Government’s view on this have made many speeches, but I do not think that it will harm the Committee to hear the arguments for a little longer.

The question before us is whether we need the freedom of speech provision. We have always maintained that we do not. I remind the Committee that the other place discussed the section last year and concluded that we did not need it. The other place voted against it twice, on the last occasion by a majority of 202. Eventually, due to pressure to complete the passage of the Criminal Justice and Immigration Bill, the other place agreed to the amendment which had been originally tabled in this House by the noble Lord, Lord Waddington. Since then, the other place has considered the issue again—in March of this year—and agreed by a pretty wide margin of 154 to support the clause. Of course, we do not have to follow what the elected House of Commons, which is supposed to represent the people of this country, does, but three votes in a comparatively short period, all by large majorities and all to the same effect, is something that the House takes notice of in certain areas and perhaps the Committee ought to, to some extent, here.

But the matter does not end with what the House of Commons has said very clearly on a number of occasions. The Joint Committee on Human Rights has repeated its view that the freedom of expression proviso is unnecessary. It agreed that the balance of the offence was right without any specific provision of this kind. We often take great note of what that Joint Committee says. It represents this House and the other House and contains distinguished Peers and Members of Parliament from all sides of both Houses. What it has to say on this is at least worthy of note.

The Equality and Human Rights Commission has reached the same conclusion. We are even more confident of our view given that we have that body’s support. The noble Lord, Lord Lester of Herne Hill, has been a supporter of the concept of freedom throughout his career, whether in the courts, this House or elsewhere. If he is convinced that this amendment is not necessary for freedom of speech, I venture to think that the Committee should take note of that.

Having been somewhat concerned with the origins of this religious hatred, perhaps I may say that the Committee is not concerned with what the noble Lord has said about the intentions of government or what the noble Lord, Lord Lester, thinks; we are concerned with the way in which these intentions have been operated by the police.

I understand that point and I shall come to it shortly.

Apart from the high threshold of the offence, procedural safeguards exist that ensure that the right balance is achieved. I absolutely take on board the point that the noble and learned Baroness, Lady Butler-Sloss, and the noble Lord, Lord Tebbit, made about this being related to where the police come in. However, the Attorney-General must consent to any prosecution. The Crown Prosecution Service will prosecute only where it is satisfied that a prosecution would be in the public interest. The Human Rights Act ensures that the police, the CPS and the courts must act in a way that is compatible with the convention rights. Therefore, we are satisfied that there are multiple safeguards against this offence being used inappropriately.

I wish to put a point to the noble Lord that I hope he finds helpful. One thing that has been made clear to us in the debate is that the Attorney-General’s fiat comes much too late and is not a sufficient safeguard, as a lot of the damage to people who wish to practise the right of free speech is done long before the matter comes to the prosecuting authorities or the courts or anything of that kind. The point that has been made is that the guidance is not sufficiently helpful in emphasising to the police the imperatives of free speech and that more weight should be given to that in the guidance. Does the noble Lord agree that it could be helpful to this whole issue if the Government would revisit the guidance on these questions?

The Government have said that they intend to issue guidance on the new offence, so by its nature that guidance would be new. I am trying to answer the noble Lord’s direct question.

Would it not be simpler to leave this clause in and to revise the guidance? Would that not be simpler, clearer and more direct?

I shall come on to the Waddington amendment and what its effect might be in a moment. I shall try to deal head on with the issue of the police.

I am so sorry to interrupt, but I simply make the point that this is not an amendment by the noble Lord, Lord Waddington. It is about whether or not Clause 61 should stand part of the Bill. That is a not unimportant point when—if the noble Lord, Lord Waddington, so wishes—your Lordships vote.

I am most grateful to the noble Lord for telling me something that I already knew. I did not hear him comment when others described this as the Waddington amendment, but there we are. He is quite right: when it comes to the vote, it is a matter of the clause standing part. I thank him for telling the Committee that.

Let me deal with the police. Some of the concerns we heard last year and this year involved examples which were regarded, perhaps not surprisingly, as inappropriate and overzealous action. As I understand it, those examples concerned public order offences in Sections 4A and 5 of the 1986 Act, which relate to harassment, alarm or distress. The crucial point is that those offences have a substantially lower threshold than the offence we are discussing, cover a wider range of behaviour and carry a lesser maximum penalty.

There may indeed be a considerable case for giving the police more detailed guidance about those particular public order offences. But I have to say that I am not aware of similar concerns in respect of the offence of inciting religious hatred, which has a similarly high threshold.

I—

Order!

On a matter of order, I remind the Committee that frequent and lengthy interruptions are not appropriate and that it may be sensible for the Minister to get to the end of his speech. I also remind the Committee that we are in Committee, and anybody who has a need to answer points raised in the Minister’s speech may speak as many times as they choose to.

I thank the Minister for giving way. I referred in my speech to the fact that ACPO had not given an official view—which is, I think, true. I am assured by those who are closely in contact with this issue that ACPO had not given an unofficial view—by which I was trying to say in code—within government as well. But ACPO has said in clear terms to me that it would prefer the Waddington amendment to stay, because it has made life easier. I make that point in shorthand, but I make it nevertheless.

The Waddington amendment and the Bill to which it was attached are not in force at present. They are not there. That is not the law of the land as it stands. I must move on.

In response to the noble Lord, Lord Low, the Government have said that we intend to issue guidance on the new offence. The Ministry of Justice intends to issue short explanatory guidance about the offence. The Crown Prosecution Service, in its turn, will issue guidance to prosecutors. We understand that the Association of Chief Police Officers is currently revising its hate crime manual, which will offer operational advice about the offences of stirring up hatred. This will be in addition to current guidance, covering topics such as the Human Rights Act. The Government’s case is that that, coupled with the high threshold of the offence, makes us believe that the safeguards are adequate—indeed, more than adequate—without the freedom of expression clause.

What I describe as a lawyer’s point has been made about whether the Government are saying, on the one hand, that this is unnecessary, or on the other, that it will do harm. Life is not quite as simple as that. It is correct, of course, on a literal interpretation, that this section is unnecessary, because it states a proposition that any court would be able to deduce for itself. It does not, of course, in any way alter the range of behaviour or material which is caught by the offence. But it does not follow that it is thus, necessarily, harmless. Unnecessary material in legislation has a potential to go septic.

If he will forgive me, I should like to remind the Committee that my noble friend Lord Smith of Finsbury said on the Report stage of the 2008 Bill that the section brings a danger that those who do wish to incite hatred may seek to take refuge in this amendment to justify their behaviour. That was true then. It is as true today. That is the real point behind the Government’s opposition to what the noble Lord, Lord Waddington, is suggesting. The section is unnecessary, of course, but there will be those outside—no one in this House or this Committee—who will take advantage and thus do their best to make the lives of those who this offence is supposed to protect more difficult.

It is for those reasons that the Government invite the Committee to say that Clause 61 should stand, and that noble Lords should vote Content.

I am quite sure that a long speech from me would not be welcomed for one moment. I thank all those who have taken part in what has been a very important exchange. I wish to make only two or three simple points. We are not talking about the terrible threat that is faced by many gays, because that threat can be dealt with—and often is dealt with—under the present law. Nobody is suggesting today that this free speech clause opens the gates to incitement to violence against gays. I am sorry, but I am inaccurate in that remark, because that seemed to be suggested by the noble Baroness, Lady Howarth of Breckland; but of course it is simply not the case. The Government themselves, in their notes on clauses, say that this free speech clause does not raise the threshold for the offence or make prosecutions more difficult.

I also remind your Lordships that those who declaim rap lyrics can be prosecuted now. They can be convicted and sent to prison for a very long time under the 2007 Act, which makes it a specific offence to encourage violence against people. Therefore, rap lyrics have nothing whatever to do with what we are discussing today.

The Minister said that we should not be too worried about all the cases of abuse that have been referred to in which the police have gone hopelessly over the top, because they were only trying to apply the old law, which had a lower threshold. I have to tell the noble Lord that he is wrong on that. I have read very carefully, as I am sure have many noble Lords, about the Roberts case in Fleetwood; they eventually obtained substantial compensation. Although this new law was not in force when they were interviewed by the police, they were told by the police that they were very close to the serious offence of homophobia, punishable by seven years’ imprisonment. Therefore, there is not the slightest doubt that at that time the police thought that this law was already in force. I also remind the noble Lord that in my opening speech I referred to the case of the city councillor who made a joke at a police community liaison meeting. That took place after this new law reached the statute book, so I am afraid that the noble Lord is being hopelessly complacent.

There are real abuses that have to be dealt with. I thank the noble Lord, Lord Dear, in particular, for explaining the difficulties with which the police are faced and how they will be helped enormously if this free speech clause remains on the statute book. It will give them proper guidance, which has certainly not been provided in guidance from the CPS. How, in the light of the wording of the existing CPS guidance, the Minister can think that he is giving us comfort when he says that similar guidance will be produced in the near future, I really do not know.

I thank all noble Lords from the bottom of my heart for their contributions to the debate, and I invite them to join me in the Not-Content Lobby.

That this House regrets that the Merchant Shipping (Light Dues) (Amendment) Regulations 2009 (SI 2009/1371) do not prevent Her Majesty’s Government subsidising Irish Lights and thereby increasing light dues payable by ships entering United Kingdom ports.

Relevant Document: 21st Report from the Merits Committee.

My Lords, first, I must declare an interest as a harbour commissioner for the port of Fowey in Cornwall, which operates its own lights and receives revenue from ships entering the port. I am also president of the United Kingdom Maritime Pilots’ Association, but I should tell the House that both interests are unpaid and there is no financial arrangement of any kind binding me to a particular point of view on behalf of a body outside Parliament.

It is worth pointing out that this is not a fatal Motion. It is designed to express regret, and I hope that the debate will flag up the urgent need for the Government to resolve the question of the lights and the funding for lights going to the Irish Republic, which I shall explain. The light dues system works on ships entering UK ports. They pay light dues set by the Government, and this statutory instrument is the latest increase, which I shall come on to. The light dues are used to fund the main navigation aids around the UK coast. They are paid into the General Lighthouse Fund, which in turn funds the three general lighthouse authorities—Trinity House, the Northern Lighthouse Board and the Commissioners of Irish Lights, which provide services to Northern Ireland and the Irish Republic.

The issue that I want to raise this afternoon is that dues paid by ships entering UK ports contribute some £15 million a year to the maintenance of lights in the Republic, which is rather unfair on ships coming into UK ports.

It is not surprising that the Irish lights question goes back some 100 years and that there has been much parliamentary scrutiny of it. I have found some interesting historical comments in the debate on the Merchant Shipping (Mercantile Marine Fund) Bill on 17 March 1898, in which Sir Charles Dilke, MP for Gloucester and the Forest of Dean, criticised both the Northern Lights Commissioners and the Commissioners of Irish Lights. He said:

“I can remember in this House frequent occasions on which the conduct of the Northern Lights Commissioners has been brought before the House and overhauled by it; but I am bound to say that a more disgraceful exhibition than that presented by these accounts I have never heard in the course of my membership. The Irish Board is admittedly even worse than the Scotch … The administration of the Irish Board is a disgrace to the United Kingdom”.—[Official Report, Commons, 17/3/1898; col. 171.]

In the same debate, Mr J Bryce, MP for Aberdeen, South, reserved his criticisms for the Commissioners of Irish Lights. He said:

“I am bound to say that”—

the Irish Lights Board—

“has given much less satisfaction than the other two Boards, and I do not think anybody can come forward here and defend the constitution of the Irish Board”.—[Official Report, Commons, 17/3/1898; col. 167.]

Little has changed in 100 years because, 85 years after independence for the Republic, the UK Government in effect control and fund the Irish lights, and no shipping interests that provide funding have any say in how that funding is spent.

More recently, other noble Lords and I have been raising this issue in this House for six or seven years. When my noble friend Lady Crawley was the Minister responsible for this, I tabled a Question asking why the British Government had not made more progress in their negotiations with the Irish Government. Her reply was, “They’re not very keen to negotiate”. My response was, “Well, they wouldn’t be, would they?”.

On 10 June, the Shipping Minister, my honourable friend Paul Clark MP, announced that for 2009-10, with effect from 1 July this year, UK light dues would rise by 11 per cent for all ships and 43 per cent for ferries and short sea operators. The increase in light dues in 2010-11 is pretty horrifying. For a typical 4,000 TEU container vessel on the North Atlantic trade routes making 10 trips to the US and back a year, the increase works out at 80 per cent. The proposal to increase light dues in this way, apart from being the highest for two decades, is unacceptable given the current economic downturn and the very serious financial trouble that the shipping industry is in. The shipping industry tries to reduce its costs all the time and remain competitive, and there is a real threat that many companies will try as much as possible to avoid calling at UK ports and to divert ships to the continent or elsewhere, which will have a serious effect on our economy in the long term.

The key issue is that the increases are being proposed to make good a £20 million forecast deficit in the general lighthouse fund, but the bulk of the deficit would be removed if the Republic of Ireland was asked to meet the full cost of the provision of its aids to navigation, which is about £15 million. If the Government of Ireland took responsibility for financing the maintenance of lights around their coast, the increase in light dues to ships coming into UK ports would be virtually zero.

More than five years ago, in January 2004, Alistair Darling, who was then the Secretary of State for Transport, committed the Government in their response to the Transport Committee’s report on ports to stop this subsidy to the Republic. This was reinforced on 26 March this year when the Parliamentary Under-Secretary of State acknowledged his department’s failure to deliver and made it his personal and departmental obligation to find a solution. Sadly, that personal obligation disappeared three months later in a reshuffle. Interestingly, my noble friend Lord Adonis, who is now the Secretary of State for Transport, confirmed in a Written Answer on 12 January that there was no legal obligation on the UK to fund the maintenance of Irish Lights. Indeed, a good precedent can be found in the Department of Health which without consultation ceased funding to provide healthcare for Irish pensioners through a similar arrangement made between the two Governments in 1971, to the tune of about €600 million.

I am not suggesting that navigation aids are not vital to shipping. Of course they are, and no one would want to see any problem about that. But I believe that the subsidy from the British Government to the Irish Government should cease and the Irish Government should be responsible for the maintenance of their own lights, just like the French, German, Dutch and all other Governments. I was in Dublin last week and I talked to a number of port operators and shipping line representatives. I mentioned the issue of the subsidy of Irish Lights and the general response was, “We’ve had it good for 85 years, so why should we stop now?”, and they were rubbing their hands. I have some sympathy with that.

The Government recently commissioned yet more studies to consider efficiency, management and so on from the general lighthouse authorities, but the fact remains that a cut in what I call the Irish subsidy would mean that efficiency could be looked at taking a bit more time and with a bit more vigour than has been the case up to now. The increase is a disaster for UK shipping and it is unnecessary. I would also say that it is anti-competitive in that ships going into Irish ports pay lower dues because of the subsidy they gain from ships coming into UK ports.

In conclusion, when my noble friend responds, can he give me an assurance that at the end of this financial year the subsidy for Irish Lights will be finished completely? It is quite possible to do and it would make all the shipping lines happy. They could then turn to the important things in life—ensuring that everything is done in the most cost-effective way so that they can deliver what their customers want. I beg to move.

My Lords, I thank the noble Lord, Lord Berkeley, for initiating this debate on a Motion of regret. I listened carefully to his words and I wish to intervene only briefly to support him. This is a most extraordinary state of affairs. As the noble Lord explained, it is a unique situation where a solemn promise was first given some years ago by Alistair Darling that this would be put right, and then subsequently by the Parliamentary Under-Secretary of State. I am glad that the noble Lord not only has a reputation as an expert on transport matters in general, particularly rail and rail freight, but also because he will frequently have a go at following things up. It is easy for Members of this House to be beset by too many matters and therefore to let things lie when there is no response. But this is a glaring anomaly and surely it must be put right. The Minister has an opportunity to begin to do so by making a few putative announcements of a change in these financial arrangements.

I have not had time to do a 100 per cent, thorough research into this, but my own trawl—if that is the appropriate word in this context—of other EU member states with coastal areas shows that no other EU member state pays these dues on behalf of a neighbouring country. While we all understand the historical background for the arrangement, that is no excuse for it to continue in the future. Like many others, I warmly welcomed Ireland as a republic joining the EU in 1973, at the same time as we did, along with Denmark. Ireland was saved from deep poverty by becoming a member of the European Community as it then was because its income and capital were very low in those days. Shortly before joining, Ireland had taken the step of detaching itself from sterling and floating the Irish punt separately. That marked the first stage of its economic development. As a low income country, it received quite large amounts of European Community money. Ireland was extremely successful and became known as a tiger economy with a strong entrepreneurial reputation until, like the rest of us, it was beset by the economic and financial difficulties brought about by the global financial crisis of the last two years.

None the less, despite that, Ireland is a prosperous country on any measurements. I am sure that, despite the fact that the Government in Dublin are being attacked severely for their budget deficit, which everyone says is too high, they will find what are modest resources in comparison with other demands on the Irish national exchequer and pay that which they owe. It is, as I say, a modest amount, and yet it would save the United Kingdom Exchequer much in terms of the various urgent necessities to put this matter right and to return to a zero deficit if at all possible. It is therefore very important for the Minister to respond properly to this brief debate and put the matter right.

My Lords, before my noble friend Lord Glentoran comes steaming in from the opposite direction, which I am sure he is about to do, I support the noble Lord, Lord Berkeley, most strongly. I, too, have raised this question in this House on more than one occasion—by dint of an Oral Question, I seem to recall, on the last occasion. Other than for historic reasons—which are now long gone, as the noble Lord, Lord Berkeley, said—there is no rationale whatever to continue to support the Irish Lights for shipping coming into the United Kingdom; it simply does not make any sense. I hope the Minister will not say, as his predecessors have, “We will try to persuade the Irish to come round to our way of thinking”. That time has long since gone.

My Lords, the noble Lord, Lord Geddes, is clearly so worried about what I am about to say that he wanted to jump in first.

I was interested in the rather distorted and imaginative comments of the noble Lord, Lord Berkeley. I know that he has been chasing Ireland for a small amount of money for a very long time, but an integrated collection system for light dues is in place in which revenue collected from shipping goes to the central fund, irrespective of the country in which the vessel actually pays its light dues. That is an important issue. It is a user pays system and no Government are going to pay; so, no pay by the user, no lights.

I should point out to my noble friend that no funding is provided by the British Exchequer but, importantly, the Irish Government do pay an agreed portion of the costs of Irish Lights within the country of Ireland. To get matters into perspective, the total costs this year for the General Lighthouse Fund is £90 million. The GLAs have achieved a 50 per cent reduction in light dues in the past 10 years. I wonder how many shipping companies can own up to that. I doubt if any. The latest cut was a 10 per cent reduction in 2006. This has been achieved through a mix of automation, redundancies, massive rationalisation, sale of surplus property and constant use of technology.

However, only so many dynamic economies can be made without compromising safety standards. Three years ago, the GLAs warned the shipping Minister that by 2009 the DfT would need to sanction a rise in the levy as revenues could no longer match the necessary costs in providing navigation safety—and this is all about safety. In January, the DfT warned the shipping industry that light dues would need to rise in the region of 24 per cent to meet the real cost of navigation safety. There has been a predictable outcry from ship owners—we have heard it from the noble Lord, Lord Berkeley—who have threatened to alter their trading patterns to avoid the new charges, and from port operators, who would feel the effect of such a move.

The GLAs dispute these claims as light dues are a minor element of costs—1 per cent to 15 per cent depending on size and frequency after this rise. In total costs, it represents one penny in every £100 of any goods imported into this country by sea. Gosh, it is a big, big deal, is it not? The role of the GLAs is to provide such aids to navigation as the volume of traffic justifies and the degree of risk requires and, in so doing, discharge the UK and Irish Governments’ obligation for aids to navigation provision under the SOLAS convention. The aids to navigation provided include lighthouses, light vessels, buoys and beacons including an AIS—automatic identification system—as an aid to navigation, together with an integrated differential GPS service. In total, the GLAs provide some 1,200 aids to navigation and inspect more than 12,000 of them.

Some light due payers have called for the amalgamation of the GLAs, implying that bureaucratic overmanning and duplication are in place and that amalgamation would make significant savings. It would not. The major savings have largely already been realised, but it would generate considerable additional cost with a very long payback period. The GLAs cover 20,000 miles of coast, covering some of the most complex waters in the world. This demands local knowledge and experience.

All GLA activities are focusing on one common goal: the maintenance of marine safety as cost-effectively as possible. Everything from ship management to stock purchase is co-ordinated between the three services to meet this goal. A report on inter-GLA co-operation efficiencies is reviewed and accepted by the ship owners annually. Where appropriate, functions are combined. There would be significant costs to setting up a single GLA or separate UK and Ireland GLAs, particularly in relation to pensions, redundancy, relocation, retraining and new infrastructure. Those costs are estimated to be between £25 million and £70 million, or 12.5p to 35p on light dues, which I am sure the ship owners would love but would have to bear. There would also be a significant risk to navigational safety and the environment in replacing the current cost-effective system with a new untested arrangement. I do not think we want that either.

The GLAs co-operate closely to minimise overlap in the provision of aids to navigation and to ensure that there is a consistent level of service. The tried GLA model is based on giving the mariner a seamless and integrated safety service around the British Isles, ensuring that all the coastline dangers are covered. This integrated service brings significant cost and efficiency benefits. Light dues are raised at ports, thus Trinity House raises 87 per cent of all revenue because of the large ports in the UK area, but the revenue must go towards supporting NLB and CIL in protecting the less frequented areas of Scotland. Ship owners can choose, if they call into various ports, which port they wish to pay their dues in.

A complaint by some elements within the shipping industry is that light dues raised in England support Ireland—we have heard this from the noble Lord, Lord Berkeley—to the amount of £16 million, out of a budget of £90 million. They say that this is a subsidy from their dues to a foreign country and that cutting that subsidy would solve the funding gap, as we have heard from the noble Lord, which is also rubbish. There is an international agreement between the UK and Irish Governments that the Irish Government make a direct exchequer contribution into the GLF amounting to a proportion of CIL costs incurred in the Republic. This contribution from the Republic of Ireland and the light dues collected at Irish ports comprises about 50 per cent of the costs in Ireland.

The Government, together with the Irish Minister for Transport, have indicated their commitment to consider this further—I have been involved with this—and discussions are ongoing between the respective Ministers. Many vessels use the aids to navigation in Ireland but actually pay their light dues in the UK. This was always the case and it is a firm argument for an integrated system. The position of the GLAs is that the size of the Irish contribution is a matter for the UK and Irish Governments while the GLAs focus on their statutory duty to protect the safety of the mariner.

In a recent announcement, the respective Ministers for Transport in the UK and Ireland have indicated that an overall assessment of the provision of the integrated aids-to-navigation service to all regions of the UK and Ireland will be carried out and it is understood that terms of reference for this review are being written. Light due charges are raised by a formula that includes tonnage, voyage frequency and a flat rate. The statutory instrument raises all three elements.

Follow that, my Lords. The noble Lord, Lord Glentoran, has covered the whole matter from the GLAs’ point of view in great detail. Like him, I must declare an interest as a non-pecuniary Elder Brother of Trinity House.

This takes me back some 20 years to the days when the noble Earl, Lord Caithness, and others were Shipping Ministers in this House and when light dues regularly came up for debate when a relevant statutory instrument came forward. Ship owners were just as vociferous then in disliking what was put before them, because, in those days, light dues were still rising.

As we have heard, they have not risen since 1993 and have been reduced five times since then, culminating in the previous 10 per cent reduction three years ago. With hindsight, I think that we could agree that it was possibly a poor decision to reduce light dues then. As was put forward by the general lighthouse authorities, if they were increased slightly then, we would not be faced with this problem today, where ship owners are greatly affronted by what they see as exorbitant rises. The fact remains that the General Lighthouse Fund would run out of money in the next year if this statutory instrument was not agreed. Safety would begin to suffer because certain lights would have to be put out. That is completely unacceptable. We are talking about maintaining the safety of navigation for all ships, which is of vital importance.

I shall pick up a few points that the noble Lord, Lord Glentoran, made, and elaborate on them. It has to be remembered about the General Lighthouse Fund that the general lighthouse authorities also lease their ships out for commercial work. In the course of the year, that brings in something like £3 million to the lighthouse fund. It was agreed in this House to allow the lighthouse authorities to do that outside commercial work, in the days when the noble Viscount, Lord Goschen, was Shipping Minister. That was a move forward, which has enabled the lighthouse authorities to generate extra income for the fund.

Since the late 1970s, I have had an association with Trinity House, and I speak for Trinity House specifically now. I have seen for myself the enormous changes that have taken place since then; in those days, we had manned lighthouses and light vessels and a reasonable sized fleet. That has been cut drastically and we now have a very efficient, slimmed-down organisation; all the lights and buoys are controlled by one person sitting in a control room at Harwich. It is all automated and great use is made of solar power. In the old days, there were gas cylinders involved. I remember one particular lighthouse that generated its own gas in large cylinders. During an annual inspection, the inspecting Elder Brother used to flick the mantle off with his pen and the wonderful Emmet-like machinery clicked into action, clicked round and a new mantle dropped down and lit with a plop. That was the old days; we are now a very different, modern, outward-thinking organisation.

There is another aspect to what Trinity House and the lighthouse authorities do that has not been mentioned. Ships generally use global positioning satellites for their navigation these days; the system is supplied by the Americans, who are quite at liberty to cut it off at will at any time. It has had its glitches from time to time and the EU, mindful of this, has set in motion its own alternative system, called Galileo, which is several years behind schedule and grossly over budget. I think that only two satellites have been put up so far. Also, there is the underlying intention, as I understand, that it will be used more for charging us to drive on our roads in Europe than by mariners. The cost at the moment is £3 billion. The lighthouse authorities have been working on another system—a much cheaper, alternative system—which is eLoran. It is a low-frequency, long-range, terrestrial navigation system; trials have been going on for three years, and it seems to produce 10 metres of accuracy, which is very good. That has cost £1 million a year, which we can place against £3 billion, with no result out of Galileo as yet.

Another worrying thing about the present level-position satellite system is that a test was done last year using a very simple portable handheld device like a mobile phone, which can be bought on the internet and run by a couple of torch batteries. It could be used to jam the GPS signal for 20 miles out to sea. So there are all sorts of worries with the present system, and the lighthouse authorities are trying to set up this alternative, which must be supported.

As has been said, we are talking about very small figures for this increase. A large modern container ship costs in the order of $150 million, and we are talking about a few thousand pounds. Seen overall, it is a very small sum, although I understand in these straitened times that ship owners are upset. They are trying to cut their costs. However, the downturn has followed three or four exceptional years in shipping where a lot of people have made an extraordinary amount of money—although not all. Some, in order to maintain their market share, have either absorbed other companies or, as often happens in good times—it has happened throughout history in shipping—they have rushed to order new and bigger ships. A lot of large companies have a large number of very expensive ships on order, so one can understand that they are in difficulties. The sums are astronomical compared with this comparatively small rise in light dues. Ship owners say, “We don't need lights”. They may say that, but any navigator or mariner worth his salt would disagree entirely. A fixed navigational source is worth its weight in gold. Technology is wonderful, but it goes wrong more frequently than one likes to admit.

Our light dues are transparent, as has been said. We are not the only ones to have them: roughly a third of countries charge a levy like us, including Belgium, Greece, Malaysia, South Africa, Panama, Australia, Sudan and others, so we are not alone in having our charges up front. The “user pays” principle is supported by the EU, the present Government and the previous Administration. Another third of countries have a mix—a levy and part Exchequer paid—and in the remaining third, payment is from the Exchequer.

The ship owners have had a holiday on light dues over the past three years and the time has come when they must pay more. I know that they do not like it. I understand that the Irish question is still under discussion between the Governments. It would be nice to think that something will come out of that, although the agreement is under an international treaty and one does not walk away from international treaties. I am sure that an answer can be found. In summing up, I return to the fact that we cannot compromise safety at sea. The General Lighthouse Fund must be sufficient to meet the needs of our navigation aids. I support the order.

My Lords, it is a pleasure to follow the noble Lord, Lord Greenway, particularly given his association with Trinity House. It is many years since I became a member of the Institute of Chartered Shipbrokers, but strangely enough the reference to the Irish question in this debate reminded me of when I took its exam. There was a particular question saying, “list the slow Irish ports”, which I understood at the time was a technical expression. Alas, I was quite unable to list the slow Irish ports. Fortunately, there were other questions which apparently I succeeded in answering correctly.

None the less, it is important for us to have this opportunity and I congratulate the noble Lord, Lord Berkeley, on obtaining time for it. I also congratulate the noble Lord, Lord Faulkner, who I understand is to reply to this debate, on the first occasion that I have seen him in action on the Front Bench, together with what one of his new colleagues described yesterday as the “wacky world of the Whips’ Office”—a description I presume applies only to the present Government. Be that as it may, this is important. We have a helpful attachment to the order itself, consisting of an Evidence Base (for summary sheets). I will not quote from it at length, but some paragraphs are totally incomprehensible. The evidence base states:

“Government intervention is necessary given the market failure that results from the public good aspects of aids to navigation, i.e. the provision of aids to navigation such as lighthouses are ‘non-rival’ in consumption as use by a given ship does not detract from that of other vessels”.

Perhaps the Minister should go back to his department, find out who is producing this gobbledegook and see if something can be done to improve it.

My Lords, I start by declaring my interest. The noble Lords, Lord Sterling and Lord Greenway, the noble and learned Lord, Lord Mackay of Clashfern, and I are all distinguished Elder Brethren of Trinity House—unpaid, of course, but proud and pleased to be part of an organisation that has saved the taxpayer very considerable amounts of money, has been efficient and effective and goes back to the days of King Henry VIII. I am probably the only Member of the House who has a lighthouse on his coat of arms. I was born in the police station in Port Ellen on the Isle of Islay, which was about six feet away from the Atlantic Ocean. That gave me a unique qualification to be Secretary-General of the North Atlantic Treaty Organisation, and also a keen appreciation of the dangers, problems and difficulties of those who live and work around the coasts of the British Isles. The 20,000 miles that the three general lighthouse authorities have to look after—the Northern Lighthouse Authority where I was born, Trinity House and the Irish authority—are extremely dangerous, highly unpredictable and in considerable need of the maritime aids that are provided.

I commend my noble friend for securing the debate. Although I disagree with what he is arguing for, the debate has allowed us to highlight a subject with which not many people are conversant. It also highlights the importance of the issue both to the shipping industry and to those who use the coasts of our country.

The problem with the debate is that my noble friend is using it to highlight a problem between Governments which can only be addressed by the Governments of the United Kingdom and the Republic of Ireland. He is applying a method to object to what is a justifiable increase in the light dues, which would have a direct and considerable impact on the operations of the lighthouse authorities as well. I hope that we can try to put a division between those two objectives.

My noble friend may or may not be right about the Irish subsidy but that is a matter that can only be resolved between the two Governments. I dare say that the Minister and those in charge at the new omnibus business department which has been created will pay careful attention to the points that have been made. However, the issue cannot be resolved through this statutory instrument. This instrument is essential given the shortfall in funding for the GLAs. It must therefore be passed so that we can continue the major benefits that come from the lighthouses and navigation aids.

It is interesting that the ship owners are now making the case that with modern shipping, modern techniques and satellite aids, there is not the same necessity for the navigation aids that exist at present. However, I think that the management of Trinity House would say that the current number of collisions with buoys and navigation aids amply illustrates and gives evidence to the fact that they are still required. Although the ship owners appear to have a very strong view about the impact of the light dues, it appears that the captains and masters are unanimous in their view that the physical navigation aids should remain.

The noble Lord, Lord Greenway, made a point about GPS—the global positioning system—and its European successor, as yet untested, Galileo. I have a little knowledge about both those systems. The global positional system, organised by the United States of America, is a military system that is lent on a free basis to the rest of the world. However, it is obviously commanded by the American authorities, which at any point can turn it off. All these systems are vulnerable to what the Government pointed out in last week’s national security strategy is a substantial threat of cyber attack. This week alone three departments of state in the United States of America came under a sustained and very considerable attack on their computer capabilities. So this is not something that we can easily dismiss. As the noble Lord, Lord Greenway, said, tests done with very simple over-the-counter pieces of equipment have shown that today’s high-technology, high-cost ships can be rendered into relying on some of the oldest means of navigation aid available.

Of course any organisation involved in supplying services to industry must clearly give a good and efficient service. However, no one can doubt that the general lighthouse authorities have made a huge contribution to efficiency savings. I simply underline what the noble Lord, Lord Glentoran, and others have said: there has been no increase in light dues since 1993, but there has been a 50 per cent reduction in light dues over 10 years. My noble friend was able to say that this was the biggest increase in 10 years. That is thanks to the efficiencies of the GLAs over that decade and a three-year holiday in the past three years. Inevitably that £21 million gap has to be made up. You can go so far with efficiencies, and we have probably now reached the limit. These navigation aids are still required. This mechanism gives relief to the taxpayer, who pays absolutely nothing to the maintenance of these aids. It imposes a small and proportionate burden on those who conduct international trade by sea. This statutory instrument should be given a fair wind.

My Lords, like other colleagues, I have been an Elder Brother of Trinity House for some 20 years. I am rather split because I have also owned ships, run P&O and Stena, and been heavily involved with ships at sea. I want to reiterate what others have already said, having seen it from the sharp end. I almost led the charge against increases in light dues in the early 1990s but, having been part of Trinity House, I can say that the changes on that front have been extraordinary. The conscientiousness of the executives of Trinity House has been quite amazing. From a management point of view, I could not find a more professional organisation. The idea that, somehow or other, another organisation should possibly take over the running of things would be totally wrong.

I am speaking because, as far as I am concerned, safety at sea is paramount. That is the key. I am not going to get involved in the cost factor. Although there has been talk of ships now leaving our shores and going to Rotterdam or Le Havre, we must remember that those countries include light dues in their port charges. Most of our debate arises because we are much more transparent.

Finally, I make the point that we have an enormous number of private marinas around our shores. Our shores are quite beautiful, but also quite inhospitable. You could say that the Government should consider that private yachtsmen—who are probably more reliant on many of these navigational aids—should in a small way contribute to some of these costs in the years to come, as in any other field of endeavour. I suggest this purely as something for the Minister to consider. I also have to say that I support the view that Ireland could perhaps pick up more of the tab. I wanted to make those observations, having been involved at the sharp end myself.

My Lords, I feel very much like the junior today. I declare that I have no financial interest as a Younger Brother of Trinity House. Going back a long time, I should, I suppose, also declare that for around 10 years, ending in the late 1960s, I was a master mariner. I was a navigator and therefore made use of the lighthouses and the lights emanating from them. We did not have GPS then, of course; we had not even heard of it. We had, however, heard of LORAN, which was an initial form of GPS.

Much has been said today but I would like to expand slightly on one aspect that was touched on by the noble Lord, Lord Glentoran. Of the 54 major maritime nations, 18 pay for navigational safety out of general taxation; they include the USA, France and Holland. Eighteen do it through light dues, including the UK, Greece and Australia; and 18 do it through a mix of both, including Spain, Japan and Finland. All are having to raise their prices. However, we are unique in having been able to reduce the charges over the past 16 years, as noble Lords have mentioned. That is something that no other country can match. It should be noted not only that, after the second increase in dues that is coming into force, the rate will still be 32 per cent lower in real terms, but that ship owners agreed in 2006, without proviso, to support a future rise in light dues in exchange for a 10 per cent reduction.

The tri-general lighthouse authority is based on giving the mariner a seamless and integrated safety service around the British Isles, ensuring that all the coastline dangers are covered. The majority of the dues for ship owners are not taxed; they come from the ship owners and cover the large number of ports in the area covered by Trinity House. Support must go to protecting the less frequented areas of Scotland and Ireland. We know about the agreement between the UK and the Irish Government, and the talks that are currently taking place. We must enable these talks to come to a satisfactory conclusion for everybody. The current system has worked well for many years, and the organisations in England, Wales, Scotland and Ireland have a very long history of bringing benefits to mariners and of operating efficiently. Safety is paramount at all times, and to change the arrangement to one that would potentially present all kinds of problems cannot go past.

My Lords, I declare an interest as a non-voting Elder Brother of Trinity House. Some considerable time before that I was a commissioner of Northern Lights. However, that was not as long ago as 1898, so I have no responsibility for the defective nature of the accounts which were apparently then produced. When I was a commissioner of Northern Lights the Irish Troubles were very much at their height and it was a great comfort to us that the arrangements for the lights between Ireland and the north of Ireland worked completely satisfactorily and harmoniously over that period when other arrangements between north and south were very difficult indeed.

As has been said, this is now a matter for negotiation on the part of the two Governments. I have no doubt that we will hear about progress in that regard in a moment. Subject to that, it seems to me that the record in relation to lighthouse dues and the economies effected by the general lighthouse authorities is exemplary. Therefore, these increases are eminently justified. I welcome the Minister to the Dispatch Box. I believe this is the first time that he has responded to this provision. We look forward to hearing his response.

My Lords, when I first received a note from the noble Lord, Lord Berkeley, I was quite cross as, having been a woman at sea—not a brother, younger or older—and having had a fishing fleet of my own, I too queried why we should pay somebody else’s dues. However, if you sit in this House long enough and listen for long enough, you hear all sorts of explanations that make things seem much clearer. I thank the noble Lord, Lord Berkeley, for bringing forward this Motion of Regret as it has enabled me to refresh my memory about why safety at sea matters so much.

As a good, free-born English woman, I hate the idea of having to subsidise the Irish for something they should be paying for themselves. That is the way one feels when one does not hear all the facts. The truth of the matter is that it is not a great deal of money but whether it is a penny, a pound or a million pounds I am still not sure that I like the idea of having this continue to happen to us. I read that in 2004 Alistair Darling said that he would do something about it. That was reinforced by the Permanent Under-Secretary of State saying that he would do something about it. All I can assume is that the two Governments are still nattering and talking to each other and we shall not find out today how far they have got. I thank everyone who has clarified this matter for me. I also thank the noble Lord, Lord Berkeley, for making this debate possible. I wish the Minister great happiness on the Front Bench. He could not start his Front-Bench career with a better subject than this.

My Lords, I am grateful to the noble Lord, Lord Berkeley, for raising this issue today because it is a matter of considerable concern to all noble Lords who have taken part, and what a galaxy of experience they have.

Despite recent improvements many are still worried about the efficiency of the GLAs, especially at the centre rather than at the “front line”. What is not in doubt is the skill, dedication, and indeed courage, of the men and women who do the physical work of installing, maintaining and repairing our navigational aids, not just the lights and beacons on land but the navigational buoys which have to be put in place or moved using the modern fleet of specialist ships. Another operation is the marking of wrecks. These tasks might be relatively easy to perform today on the south coast but I suggest that it is a rather different matter off the north-west coast of Scotland in the middle of winter. We and all the seafarers who rely on their efforts owe them a debt of gratitude. They need have nothing to fear from our deliberations today.

My noble friend Lord Glentoran has made his contribution from the Back Benches and is a commissioner of Irish Lights. Noble Lords should note that he and others do this commendable work unpaid. Our debate will be much more balanced as a result of his contributions and other noble Lords close to the GLAs.

The noble Lord, Lord Berkeley, has two main concerns. The secondary one is the efficiency of the GLAs and the need for the increase in light dues. There may well have been significant efficiency savings in recent years and we know that all the lighthouses have been automatic since 1998. However, this does not mean that all GLAs are 100 per cent efficient. I confess that I have no idea how they measure up, and I accept that I need to do further research. I easily found the Northern Lighthouse Board’s annual report on the internet, but I did not manage to find the Trinity House report—but I will find it in due course.

Some have argued that light dues are a trifling amount compared to other shipping costs; but they are not trifling in absolute terms. After April next year, the cost will be 41 pence per net registered tonne. The capping of the chargeable tonnage will be increased to 50,000 tonnes, and the number of chargeable voyages increased from seven to nine. Fortunately, the charges will be capped at £17,200. Unless my sums are wrong, this means that a 10,000-tonne ship regularly coming to UK ports will pay just under £37,000 a year, which is not insignificant. The noble Lord, Lord Berkeley, warned of the dangers of reducing port business due to increases in light dues.

My noble friend Lord Glentoran and others skilfully sought to explain why no more major efficiencies are possible in the GLAs. He has suggested that it would cost between £25 million and £70 million to set up a single GLA. I do not find my noble friend’s arguments persuasive, and he has increased my desire for knowledge of the organisation of the GLAs. I am sure that Trinity House will be very keen to help in educating me.

Noble Lords who claim that no further efficiency savings are possible will have to explain why we need two corporate centres. Why in the UK do we need two chief executives, two finance directors, two HR departments and two procurement departments? The list goes on. Perhaps the Minister can explain why we need two GLAs in the United Kingdom.

I have another question for the Minister which I hope he can answer. What is the total head count of Trinity House and what is the split between the corporate headquarters and the operational side? I can find very little information about that on the Trinity House website.

The primary concern of the noble Lord, Lord Berkeley, and the substantive point of his Motion, is the subsidy of the Irish Lights. I will not repeat his arguments, because he put them so well. However, I suspect that there is a lot of history involved. For a long time, it may have been desirable to subsidise the Irish Lights, but nowadays most of the UK’s general public would be surprised to hear that we, through our light dues, are subsidising the transport infrastructure of another successful and important EU state. After all, we do not subsidise the French navigational aids in the same way, even though we make extensive use of them—a point well made by the noble Lord, Lord Dykes.

The noble Lord, Lord Greenway, made several important points, but perhaps one of the most important was about the dangers of relying on the US-operated GPS system and the slow progress of Galileo. We must keep the terrestrial aids supplied by the GLAs. The noble Lord said that they are worth their weight in gold; he is right. The noble Lord, Lord Robertson, amplified those points, and he also mentioned the dangers of a cyber-attack on a GPS-type system. He is absolutely right.

My noble friend Lord Sterling made his important contribution from the interesting position of having an interest in both the shipping industry and Trinity House. His most important assertion is that the operations of the GLAs are already very efficient. However, the concern is not the front-line operations, but the corporate centre. My noble friend also suggested that private yachts should pay dues. He will recognise that there are some practical difficulties in collecting what might be relatively small amounts of money. On the other hand, private yachts are just as dependent on navigational aids as commercial shipping.

It is important to understand the effect of the Motion of the noble Lord, Lord Berkeley. It does not stop the order, not least because, quite properly, the order is going through under the negative procedure, and of course the Motion does not oppose the order’s contents. There is no question of the GLAs running out of money, so the noble Lords, Lord Greenway and Lord Robertson, need have no worries on that point. The light dues will increase no matter what your Lordships decide this afternoon.

There is concern about the efficiency of the GLAs but the Motion does not make a judgment on that. If it did, I would not be able to support it due to insufficient evidence. The noble Lord is asking your Lordships to take a view on whether the light dues raised in the UK should be used to subsidise the operation of the Irish Lights. If he is minded to test the opinion of the House, I shall support him.

My Lords, this has been a remarkable and interesting debate and I am grateful to my noble friend Lord Berkeley for initiating it. I suspect that he was not aware that he would draw into your Lordships’ Chamber such an extraordinary galaxy of talent as is arrayed on all Benches this afternoon—a collection of Elder Brothers, Younger Brothers, ship owners and people with astonishing experience in this field, many of whom, I am delighted to say, have been supporting the Government’s position and, I am afraid, opposing my noble friend’s Motion.

I start by thanking those of your Lordships who were kind enough to welcome me to the Dispatch Box for my first substantive debate. I thank the noble Baroness, Lady Wilcox, the noble and learned Lord, Lord Mackay of Clashfern, and the noble Lord, Lord Higgins, in particular.

It seems that three strands have run through the debate. The first is the efficiency of the general lighthouse authorities, or GLAs. I shall try to avoid unnecessary and confusing use of initials and the incomprehensible jargon to which the noble Lord, Lord Higgins, objected. The second subject is the impact of the increases in light dues and the third is the difficulties in finding a satisfactory way of funding the Irish Lights.

I start with the General Lighthouse Fund. This was created by statute in 1898 to pay for the work of the GLAs in the United Kingdom and Ireland. The fund is maintained by a combination of light dues paid by ships that use ports in the UK and Ireland, the income from investments, a contribution from the Irish taxpayer and other funds generated by the use of the GLAs’ assets.

I understand the concerns that exist about the costs of the lighthouse service but I cannot accept some of the more exaggerated claims that have been made about them. The GLAs have made substantial efficiencies over recent years, all without compromising the safety and navigational service that they provide. For example, Trinity House has closed half its depots and cut a third of its staff and a quarter of its fleet; the Northern Lighthouse Board has cut its waterfront bases from three to one, reduced its vessel crews and disposed of properties; and the Commissioners of Irish Lights have reduced staffing levels at sea and on land by around 30 per cent. Indeed, taken as a whole, the GLAs reduced their total headcount by more than 50 per cent between 1991 and 2007 without in any way compromising the safety of seafarers or the quality of the navigational service that they provide.

The noble Earl, Lord Attlee, asked about manning numbers. The numbers employed are as follows: Trinity House, 321; the Northern Lighthouse Board, 261; and the Commissioners of Irish Lights, 272. I do not have a precise figure for the number employed at the corporate centre but it is less than 20 per cent. The noble Earl also raised a question about the merging of the three GLAs. That would be a very difficult undertaking. It might be possible to encourage what one could call the back-office functions to work more closely together to save costs. Certainly the Department for Transport will do what it can to persuade them to make savings where it is practical to do so. With regard to the front-end services, the GLAs operate in differing and complex coastlines where regional knowledge and experience are required. It is unlikely that further savings in terms of depots and so on can be rationalised but, where possible, the Department for Transport will press for further action.

My Lords, I hope that I will be allowed to correct an omission regarding a registrable interest that I did not declare. I am a non-executive director of Western Ferries (Clyde) Ltd, which operates ferries on the Clyde. Like the noble Lord, Lord Sterling, but at a much lower level, I am on both sides of the argument.

My Lords, I am deeply honoured by the number of colleagues who have spoken in the debate. They represent an enormous range of experience and we have had a very wide-ranging debate, possibly more wide-ranging than I thought that it would be when I put down the Motion. It has been useful to expose the various issues surrounding light dues.

I do not think that anyone was suggesting that navigational safety should be compromised—I certainly did not—but I believe that there is still room for further cost savings. In that connection, we have four board members at Trinity House who are paid more than 70 grand, three commissioners of the Northern Lighthouse Board who are paid more than 70 grand and, of the Commissioners of Irish Lights, two board members are paid more than 70 grand while three earn more than 100 grand. Some savings could be made by amalgamation and, since Trinity House collects most of the light dues, perhaps it should take the lead. I think that lots of savings could be made.

I am grateful to my noble friend the Minister for his response and I congratulate him on undertaking his first duty on the Front Bench in a debate. It is good that the department and the Irish Government are looking at an overall assessment of lighthouses and safety aspects and it is very good that they intend to renegotiate what I call the Irish subsidy. The key point is that ships going into Irish ports will pay for Irish Lights because the user pays, while ships going into British ports will pay for the maintenance of British lights. I am sure that both the Government and the industry will strive hard to continue to make cost savings, but given the time and the excellent debate that we have had, I beg leave to withdraw the Motion.