My Lords, before the Minister moves that the first statutory instrument be considered, I remind noble Lords that, in the case of each statutory instrument, the Motion before the Committee will be that the Committee do consider the statutory instrument in question. I should perhaps make it clear that the Motion to approve the affirmative instrument will be moved in the Chamber in the usual way. If there is a Division in the House, the Committee will adjourn for 10 minutes.

That the Grand Committee do report to the House that it has considered the Saving Gateway Accounts Regulations 2009.

Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.

My Lords, it is a pleasure to open today’s debate on the Saving Gateway Accounts Regulations. These regulations follow from the Saving Gateway Accounts Act, which received Royal Assent in July. Alongside that Act and the Saving Gateway Accounts (No. 2) Regulations, which cover tax relief and so are being debated only in the other place, these regulations will set out the legislative framework for a national saving gateway scheme.

As noble Lords will know, the saving gateway will give around 8 million working people on lower incomes the chance to earn 50p from the Government for each pound that they save. It aims to kick-start a savings habit and to bring people into contact with mainstream financial services, some of them for the first time. I am pleased to say that those aims have had widespread support from all sides of this House, in the other place and beyond. I hope that noble Lords will also support these regulations, which will make the saving gateway a reality.

The regulations cover three main areas, which I will briefly outline. First, they provide further details on eligibility for the saving gateway. The saving gateway account sets out that eligibility will be passported from entitlement to certain benefits and tax credits. This is the simplest and most efficient method available for determining saving gateway eligibility. These passporting benefits and tax credits include both working tax credit and child tax credit. However, as these tax credits can be received at a range of different incomes, we have been clear that only claimants with incomes below a certain level should be eligible for the saving gateway. These regulations will align that level with the income threshold for child tax credit, which is currently £16,040. Also in relation to eligibility, the regulations set out the connection with the UK that people would need to have in order to be eligible for the saving gateway. This is that the person must be ordinarily resident in the UK, which broadly means that they must either live or work here.

The second major area that the regulations cover is the features of saving gateway accounts. Many of these will be familiar to noble Lords and are now as they were announced in December last year. They were contained in the draft regulations published in February and were discussed during the passage of the Bill earlier this year. Let me pick out the most significant of these features. Regulation 7 sets the maturity period—how long each saving gateway account will last—at 24 months. Regulation 11 sets out the monthly deposit limit for saving gateway accounts at £25. Regulation 9 sets the amount that the Government will contribute to each pound saved—the match rate, as it is sometimes called—at 50p. As noble Lords may know, we experimented with different match rates during the second pilot of the saving gateway and we believe that a rate of 50p for each pound provides better value for money than a higher match rate, while still providing a strong incentive to save. Together, these features of the saving gateway mean that account holders will be able to save up to £600 in their accounts and earn up to £300 from the Government.

Thirdly, the regulations set out the detailed requirements that will be placed on account providers. The noble Lord, Lord Newby, spoke on a number of occasions during the passage of the Bill about the importance of there being a range of providers. I have been working hard to ensure that this is the case and I am confident that there will be sufficient providers to support a national saving gateway scheme and to provide eligible people with a choice of where to open accounts. I am encouraging major retail banks and potential providers to recognise the importance of being involved with the saving gateway, which will benefit the wider community, particularly at this current time.

As I said, the regulations set out the requirements that will be placed on saving gateway accounts. The noble Lord, Lord Newby, stressed during the passage of the Bill the importance of these requirements being kept to a minimum and being as simple as possible. That is very much the approach that we have followed. We have, in fact, made a number of changes to our original proposals for the saving gateway in order to achieve that. For example, the regulations do not include any requirement for providers to pay interest to account holders and they require providers to issue statements only six-monthly, rather than quarterly as originally proposed.

During the passage of the Bill through this House, we also decided that account providers would not be required to offer account holders the opportunity to transfer their accounts between providers other than in a limited range of circumstances. That was a point raised by the noble Baroness, Lady Noakes, and it is the position taken in these regulations. The regulations also set out the detail of the returns that providers will make to HMRC. We have been careful to minimise the amount of information that will be required.

In conclusion, these regulations will form a vital part of the legislative framework for the national saving gateway scheme to be introduced next year; we will announce an exact start date for the saving gateway in due course. They reflect the lessons learnt from the two pilots of the saving gateway, the responses to the detailed consultation that we carried out in 2008 and the comments that we have received since they were first published in draft in February. We are very grateful for the input from many different groups, including many noble Lords during the passage of the Bill earlier this year. For example, the noble Baroness, Lady Noakes, argued in Grand Committee that the regulations should prevent account holders from selling their accounts or borrowing against them; Regulation 10(1)(g) now provides that the account must be in the “beneficial ownership” of the account holder.

I believe that the engagement and consultation that we have had over a number of years have contributed to the design of a scheme that will offer a real incentive to save, in the financial mainstream, to working-age people on lower incomes—a group with lower savings and higher levels of financial exclusion than the remainder of the population. This is a targeted initiative that could make a real difference to the lives of around 8 million people in this country and I am pleased that it has had such widespread support in this House. I hope that that will continue today.

My Lords, I thank the Minister for introducing these regulations and I congratulate the Treasury on heeding the report of the Joint Committee on Statutory Instruments in July and on tabling revised regulations to take account of that report. The Minister will be aware that I tabled a Motion in July to ensure that the report of the Joint Committee was taken into account and I am glad that the Treasury has done so with these revised regulations.

As the Minister said, we debated the content of the regulations in draft form fairly extensively throughout our deliberations on the Bill, so there is little that we find unexpected in the regulations that we have before us, which should cut down the time that we take today.

I have just one prior point for the Minister. In talking about the saving gateway scheme, he said that an account holder would get 50p from the Government. In fact, the 50p savings incentive will come from the taxpayer. We must never forget that the scheme has to provide value for money to the taxpayer; it must represent a good use of money in the effect that it has on savings in the target community. We look forward to the report that will be made on the saving gateway scheme, which the Government produced an amendment for in the final stages of the Bill. However, that is some way off, so I just confine my remarks to reminding the Minister that it is taxpayers’ money, not the Government’s.

There are two areas where I want to question the Minister, the first of which relates to timing. I want to press him to say when the Act will be commenced and, following on from that, when the scheme will be commenced. I think that he said something like “in due course”, which is one of those phrases that are designed to convey no information whatever. Therefore, I ask the Minister to be a little more precise if he possibly can be about when the Government expect to start the scheme and have it up and running and capable of receiving money by way of the relevant savings accounts.

The other area on which I want to press the Minister is account providers. I had hoped that he would give details of the account providers who would be likely to come forward. He will recall that during our deliberations on the Bill we had many discussions about the economics of saving gateway accounts and whether account providers would want to come forward. We knew that many wanted to take part, including the Post Office, but that the economics were a potential difficulty.

The Minister has said some warm words about good discussions and about banks potentially coming forward, but I heard no specifics whatever during the passage of the Bill. Several months have elapsed since then and I had hoped that we could get a better idea of whether there would indeed be a diversity of saving gateway account providers. As the Minister will be aware, the aim behind the Bill has all-party support and, therefore, we want to see this experiment take place and be judged properly. A proper experiment cannot take place unless there is proper diversity of account providers, so I hope that the Minister can go a little further than the rather careful words that he used in that respect.

My Lords, I thank the Minister for his introduction to this short debate. As he said, the draft instrument contains no surprises. In one respect, I am sorry that it does not, because one point that I made, no doubt at laborious length, as the Bill was going through was that, uniquely among all the areas where the Government are encouraging people to save through the tax system, in this case there is a very tight time limit of 24 months. That principle does not apply to pensions or child trust funds and it is a pity that it applies here. I think that the argument that if people have saved for up to 24 months they will carry on saving when the benefit is withdrawn is seriously flawed. However, I realise that this is not an issue on which we can make much progress today.

The only substantive point that I want to make beyond that is to pick up on what the noble Baroness said about providers. The Minister said that he was confident that there would be sufficient providers, including a number of the major retail banks. Like the noble Baroness, I should be grateful if he could say a bit more about that. When the Bill was going through, the only organisation that expressed any public willingness to participate in the scheme was the Post Office, and then only with very heavy qualifications in terms of the economics. Given everything else that is going on at the moment, it is unlikely that Mr Crozier is spending much time worrying about whether he can introduce saving gateway accounts.

At some point in our debate on credit unions last week, or possibly the previous week, there was a throwaway reference—and I apologise for not having it to hand—about credit unions possibly being able to offer this product. I found that rather surprising, because credit unions are very small and I should have thought that the bureaucracy involved for them in setting up the scheme might be too much of a burden. However, I should be grateful if the Minister could say whether credit unions form part of the discussions that he is having with potential providers.

My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, for their contributions to the discussion. I am pleased to note that, as I anticipated, we have continued to see broad support for the concept of the saving gateway, as evidenced during the passage of the Bill. The noble Lord, Lord Newby, is right to point to the timeliness of the proposal in the context of current economic circumstances.

I agree with the noble Baroness about the Joint Committee once again showing its effectiveness and directing us towards improvements, which we have welcomed. I also note the noble Baroness’s comments about the taxpayer as opposed to the Government. I have to say that I regularly struggle, when talking about our investments in the shares of a number of banks, in deciding whether I should say that these are in public ownership, owned by the taxpayer or owned by the Government, but I think that we all understand the noble Baroness’s point, which is that the state has no money of its own; it acts in that respect on behalf of the taxpayers and must be accountable for the Government’s decisions. I believe that that accountability has been evident in the thorough research that has taken place in support of this proposal.

On timing, we have announced that the scheme will be available nationwide from 2010. The precise starting date depends on a number of factors, including in particular the progress of our discussions with potential providers about when they would be ready to offer accounts. They need to make significant systems investment and we do not want the accounts to be launched until such time as there are sufficient account providers to ensure that we have national coverage and accessibility for the eligible community and that the account providers are able to operate the scheme effectively. It is with that in mind that I continue to have regular engagement with a number of banking institutions in connection with the provision of saving gateway accounts; indeed, I have been in such discussions in the past week or so. As has been noted in debate, the Post Office has indicated a wish to provide a saving gateway account, which would be entirely compatible with its ambition to improve the range and quality of its banking offer. My words on timing were, therefore, carefully chosen and are importantly predicated on reaching a point when we can be assured that the scheme will launch effectively without any administrative problems.

The noble Baroness, Lady Noakes, was also right to remind us that, for a bank, the question whether to offer such accounts is one in which the economics need to be carefully evaluated. However, we have always been very clear that we would not expect the decision to be made solely on the basis of economics. At a time when the banking industry has to face serious challenges around reputation and utility, there is clearly an opportunity for retail banks to evidence their commitment to provide something that has a social good to it and, importantly, reaches out to the large group of people who are not part of the financial system and could be welcomed into it through the saving gateway. However, I repeat that we shall not launch the saving gateway account until we believe that adequate provision will be accessible to the community at which it is targeted.

The noble Lord, Lord Newby, asked why the gateway should be time-limited to 24 months. It certainly needs to be time-limited, although whether 24 months is the right period is debatable. Research suggests that the combination of the amount of monthly deposit, the matching benefit and the time should be sufficient to establish the saving habit. This is a proposal to kick-start saving and initiate people into the formal financial sector, giving them the habit of saving. One hopes that, with the encouragement that the taxpayer’s support provides, people will then continue to save, through ISAs or some other mechanism. We have committed to review the effectiveness of the saving gateway account. One of the most critical questions that we will need to answer is whether it has led to the establishment of a saving culture for those who had previously not saved or who had not saved through the formal financial system.

We hope and expect that some of the larger credit unions will offer saving gateway accounts. Officials have been in detailed discussions with their representative bodies.

I think that I have answered most, if not all, of the questions raised in debate. As I said at the start, these regulations will be an important part of the legislative framework for the new national saving gateway accounts to be introduced next year. I am delighted that they have received support from all sides of the House and am grateful, once again, to noble Lords who contributed both to today’s debate and during the passage of the Bill. I express my thanks to the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, for their contributions. In a number of cases, as I have shown, we have taken on board their very helpful contributions, as a result of which we have a better Act and a better set of regulations.

That the Grand Committee do report to the House that is has considered the Financial Restrictions (Iran) Order 2009.

Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.

On 12 October, Her Majesty’s Treasury laid before Parliament the Financial Restrictions (Iran) Order 2009 under its powers in Schedule 7 to the Counter-Terrorism Act 2008. This order contained a direction to the financial sector requiring it to cease all business with two Iranian entities—Bank Mellat and the Islamic Republic of Iran Shipping Lines—and all their branches, wherever located.

In keeping with the undertakings given to Parliament during the passage of the Counter-Terrorism Act 2008, today I shall set out the reasons for this action, provide some details on the specifics of the direction and finally outline the work that we have done to ensure that these measures are well understood by the UK financial services industry. Due to the nature of the material that informed the decision to take this action, noble Lords will understand that there are limits on what can be shared. I will, of course, provide as much as is possible within these constraints.

The direction contained in this order was given on the basis of the Treasury’s belief that the activity of Iran that facilitates the development or production of nuclear weapons poses a significant risk to the national interests of the UK. As the Exchequer Secretary to the Treasury highlighted in her Written Statement to Parliament issued alongside the order on 12 October, Iran continues to fail to meet its international obligations. Most notably, its nuclear programme presents an immediate challenge to the global non-proliferation regime. Work being carried out as part of Iran’s nuclear programme would facilitate the development or production of nuclear weapons.

The International Atomic Energy Agency is being refused the access that it seeks by Iran, which also declines to answer questions put to it by the agency’s staff about alleged studies indicative of military aspects to Iran’s programme. As a result, the IAEA director-general has stated that he is unable to verify that Iran’s nuclear programme is for exclusively peaceful purposes. Iran’s ongoing improvement of its ballistic missile capabilities also continues to give rise to international concern. Its failure to answer questions from the IAEA about possible military dimensions to its nuclear programme increases concerns that its ballistic missile programme represents a potential nuclear delivery system.

The Government consider the requirement to cease business relationships and transactions with Bank Mellat and IRISL to be a proportionate response to the threat. This is because the direction focuses on two entities that we have evidence have been engaged in activities of concern. Bank Mellat has provided banking services to a UN-listed organisation connected to Iran’s proliferation-sensitive activities and was involved in transactions relating to financing Iran’s nuclear and ballistic missile programmes. IRISL has transported goods for both Iran’s ballistic missile and nuclear programmes. Both have links to the UK financial sector. As such, this is a targeted action against two Iranian entities that have been identified as facilitating proliferation-sensitive activity in Iran, rather than a sanction against Iran.

To protect the national interests of this country and the integrity of our financial sector, this direction prohibits any financial or credit institution from providing services that benefit these entities and thereby support the activities in which they are engaged. This action was taken under Schedule 7 to the Counter-Terrorism Act 2008, which provides the Treasury with powers to issue a range of directions to UK financial and credit institutions in response to certain risks to the UK’s national interests. The direction to cease business relationships and transactions is the most stringent direction that can be employed under these powers in relation to the two targeted entities. The direction to cease business relationships and transactions with Bank Mellat and IRISL therefore addresses the risk that UK financial firms are, inadvertently or otherwise, used to facilitate activities of concern.

Let me now provide further information on the operation of the restrictions. The requirement contained in the direction came into force on Monday 12 October 2009. Shortly after the restrictions came into effect, the Treasury published a series of documents on its public website to alert the financial sector to the restrictions and provide detailed guidance on their implementation. These documents were also e-mailed to over 8,000 subscribers to our e-mail alert system. In addition, we have asked various supervisors—for instance, the FSA and HMRC—and trade organisations, such as the British Bankers’ Association, to publicise the direction and provide information to firms on the requirements in the direction. The Treasury has also met with those firms most affected by the direction to ensure that they are in a position to comply with the requirements.

The documents published by the Treasury on 12 October included three general licences exempting specific acts from the restrictions, which were issued by the Treasury under powers in Schedule 7. These general licences enable financial and credit institutions with existing business relationships or transactions with the entities concerned to manage the cessation of business in an orderly and controlled way. Further licences, whether general or individual, may be granted by the Treasury to manage the impact of the requirements on third parties. This approach is similar to that used in asset freezing.

Bless you.

I hope that Hansard caught that: it might be the highlight of my parliamentary career as far as the noble Baroness is concerned.

All the Crown dependencies and overseas territories have recognised the importance of tackling these risks and have made progress in this regard. I am pleased to report that the Isle of Man has already put equivalent powers in place and that on 12 October it issued a direction mirroring that of the UK. We will continue to pursue this important work with the other Crown dependencies and overseas territories.

I conclude by emphasising that the order was issued by the Government to address risks to the UK’s national interests. We continue, of course, to ensure that any action taken by HM Treasury against Iranian entities is consistent with the wider foreign policy strategy towards Iran and we have worked closely with the Foreign and Commonwealth Office on the issuing of these directions. As such, I am sure that noble Lords will agree that we cannot and will not ignore specific activities undertaken by Iranian companies that we believe to be facilitating activity identified by the United Nations as being of concern and where such activities have the potential to affect the United Kingdom’s interests. It is right, indeed crucial, that we take such action. For these reasons, I commend the order to the Committee.

My Lords, I thank the Minister for introducing the order. I should state at the outset that we support the Government in their endeavour to impair the ability of Iran to pursue its dangerous nuclear and ballistic missile programmes.

I start with some of the background to the order. My honourable friend Mark Hoban asked the Minister in another place when the Government first became aware that IRISL vessels had transported goods for Iran’s ballistic weapons and nuclear programmes. He reminded the Minister that my right honourable friend William Hague wrote to the Foreign Secretary in September 2008 asking him to take action against IRISL. I fear that the Minister did not give a straight answer last week, so I am hoping that the Minister today will take the opportunity of our Grand Committee to set the record straight.

When were the Government first aware that IRISL was involved in transporting goods for Iran’s nuclear and ballistic weapons programmes? When were the Government first aware that Bank Mellat had provided banking services to UN-listed organisations connected to Iran’s proliferation-sensitive activities and involved in transactions related to the financing of Iran’s nuclear and ballistic missile programmes? The Written Ministerial Statement made on 12 October made categorical statements that these activities had taken place. The Minister was similarly clear today. When did those transactions take place and when were the Government aware of them? What, if any, delay was there between the Government’s knowledge of the transactions and their action by way of the order before us this afternoon? To put that another way, how can the Minister reassure this Committee that the Government have acted in the most expeditious way?

I ask these questions because my right honourable friend William Hague raised questions with the Government about IRISL more than a year before this order. Furthermore, the US acted in relation to IRISL last year. The Minister in another place tried to avoid answering these questions on security grounds, but I am asking not about the source or nature of the intelligence but about the timing and timeliness of action by the Government, given that the involvement of IRISL was clearly not a secret.

As to the impact of this order, the Explanatory Memorandum states that no specific information was available on the exposure of the UK’s financial sector to IRISL and Bank Mellat. That may well have been the case prior to the making of the order—and I imply no criticism by raising this today—but it is now over three weeks since the order was made and the Treasury must by now have gained some understanding of the transactions that are prohibited by the order and their impact on our financial services sector. The Minister in another place did not answer this question straightforwardly and I hope that our Minister will be more forthcoming. For example, can he tell us the volume and value of transactions with the two organisations that are now prohibited?

Last week, the Minister in another place said that the Treasury had received 17 applications for licences and that two had been granted on a temporary basis. Is that still the position? What is the value of transactions covered by the applications for licence? What sorts of transactions are now being conducted under temporary licence and what is their value? Are these for transactions with IRISL or with Bank Mellat? I hope that the Minister can give more information.

I wish to probe another area that the Minister did not answer very illuminatingly last week. My honourable friend Mark Hoban asked whether any subsidiaries or affiliates of IRISL or Bank Mellat should have been covered by the order and noted that the US Government included IRISL affiliates when they acted against IRISL last year. The Minister in another place said that there was no evidence in respect of other companies in the IRISL or Bank Mellat groups—I use that term colloquially. However, that seems to beg the question: what is the effectiveness of an order against one company if UK financial services firms can carry on similar transactions with affiliates or subsidiaries? It seems to me that that places the Government in a position of for ever playing catch-up. Is that indeed the effect of the powers created by the Counter-Terrorism Act 2008? Can the Minister explain the rationale of the approach to subsidiaries and similar bodies? Alternatively, he might wish to explain to the Committee if the Government’s powers to deal with threats to the UK are in some ways deficient. I would be surprised if that were the case given the zeal with which the Government have used the time of Parliament over the past decade to pass counterterrorism and similar legislation.

I would also like to ask the Minister about supervision and enforcement. The Explanatory Memorandum states that the impact on the FSA’s work is expected to be minimal. Does that imply that the FSA will do no more than ask questions? Will it take no specific action to assure itself that the transactions prohibited by this order are not taking place? On the other hand, HMRC estimates that it will spend upfront costs of £20,000 and ongoing costs of two officers costing around £65,000 in total. If we assume that that cost includes the full employment cost of those two individuals, we are probably not talking about very senior staff. What are these officers intended to do in relation to the programme? Will they carry out individual inspections? How and when will they do this? In what ways are they qualified to do such work?

The order will last for only one year and it is clearly important that Parliament should be given an opportunity to assess its impact, especially if the Government seek to extend it for a further period. The impact assessment notes that a report is made annually to Parliament on the use of the Counter-Terrorism Act powers generally. Will the Minister explain the way in which such a report will deal with this order? Will it be confined to the impact on UK financial services organisations or will it go more widely and assess its impact on Iran’s proliferation activities? I am aware that the order is but one in a series of actions taken globally in relation to Iran, which may make the ultimate impact difficult to identify. However, I hope that it will have the effect of prohibiting specific transactions and that the Minister will share with the Committee how Parliament can expect to receive information on what the order has stopped and the costs imposed in achieving that.

We do not oppose the aims of the order—far from it. If anything, our instincts are that action could and should have been taken earlier. However, while we stand shoulder to shoulder with the Government on the fight against Iran’s nuclear and missile ambitions, the Minister will not expect us to accept explanations of the Government’s actions and the impact of the order that are less than forthcoming. In that light, I hope that he can enlighten us further.

My Lords, I am grateful to the Minister for explaining the background to the order. We agree with the Government that sanctions of this kind are worth while in attempting to rein in Iran’s nuclear proliferation activities. Whether they have an impact on Iran’s nuclear ambitions more generally is rather moot, but it is clear that making it more difficult for Iran to carry them out must be in the national interest.

I have only two questions. One is about any other operations that the Islamic Republic of Iran Shipping Lines might be undertaking in the UK that are not covered by the order, as the order covers relations with the financial services body. Shipping lines are likely to be working with other bodies that are not covered within the remit of financial restrictions, such as other shipping lines and customs bodies. Is there anything to stop the IRISL carrying on relations with other, non-financial bodies in the UK?

The second question has to do with international action against the two organisations. The Minister spoke about efforts to ensure that overseas territories and Crown dependencies were taking similar action, and he mentioned some of them, but is he aware of any action being taken within the rest of the EU? The Explanatory Memorandum mentions other Iranian banks—for instance, Bank Saderat, Bank Sepah and Bank Melli—which are clearly covered by an EU prohibition. Nothing in the documentation explains whether that applies here, or whether, for some reason, this is a unilateral move by the EU. It is not clear to me without having read EU regulation 1110/2008—for which I apologise to the Committee—where this action fits in relation to it. Is there any reason to believe that the organisations are actively engaged in trade elsewhere in Europe and that equivalent action is being taken to stop such trade continuing? With those two minor caveats, however, we support the order and look forward to the Minister’s explanation.

My Lords, this has been an interesting and informative debate. I thank all noble Lords for their attendance and questions today. I hope that all noble Lords will agree that the decision to issue this direction is a proportionate and reasonable response to the threat of proliferation and that this action mitigates the risk of the UK financial system being used to facilitate proliferation-sensitive activities in Iran. It is vital that the UK takes action to ensure that its financial sector is not employed in this manner and the Government are committed to putting in place all necessary steps to ensure that that is the case. I welcome the support expressed by both the noble Baroness, Lady Noakes, on behalf of the Conservative Opposition, and the noble Lord, Lord Newby, for the actions that are being taken by the Government in connection with Iran. We are greatly encouraged by the fact that there is unanimity on the need to take a robust line.

The noble Baroness asked when we first became aware that there were problems with the involvement of Bank Mellat and IRISL in activities related to terrorism and nuclear proliferation. I am afraid that details of the sensitive information underlying the restriction cannot be provided since, in the Government’s view, disclosure would be contrary to the public interest. However, I can assure the Committee that we took action as quickly as was appropriate, given the young age of the legislation.

Members will be aware that the Counter-Terrorism Act came into force in November 2008. Immediately following its enactment, HM Treasury initiated discussions with the Foreign and Commonwealth Office to consider the most appropriate cases for this use. As noble Lords will appreciate, before we decided to issue this direction under the Act, it was crucial to follow a robust process to gather and analyse relevant intelligence and to ensure a sound legal basis for any action. Furthermore, it was important to ensure that Parliament had sufficient opportunity to consider the direction. I assure noble Lords that the Treasury laid this direction at the earliest appropriate opportunity.

The noble Baroness asked about the level of engagement between UK financial institutions and the two targeted entities. A small number of financial institutions had significant existing business relationships with the two targeted entities. We are working closely with the affected parties to ensure that they are implementing the restriction and that their previous relationship is wound down in an orderly fashion. The majority of UK financial sector companies voluntarily withdrew from business with Iran over the last two or three years.

In answer to a further question from the noble Baroness, since the announcement that 17 applications for licences had been granted, two further licences have been granted. The Treasury continues to work with affected parties to issue licences of exemption where appropriate. It is not possible at this point to place a value—

I think that the Minister said that 17 licences had been granted. Does that mean 17 applications or 17 licences granted? I believe that the Committee in another place was told last week that two temporary licences had been granted out of a total of 17 applications. It is interesting if 17 licences have now been granted.

Seventeen applications were received; two further applications have been received since. It is not possible, as I was saying, to place a value on these transactions.

The noble Baroness also asked about subsidiaries of Bank Mellat and IRISL. The powers under which the direction was made address specific risks to the UK national interest posed by activities carried out by the Government or persons resident or incorporated in a third country. Subsidiaries are separate legal entities, not subject to the requirements of the direction. We are confident that the direction, as far as it applies to Bank Mellat and IRISL, will be sufficient in itself to achieve the objective that we have in seeking these orders.

The noble Baroness asked about the impact on business volumes and values. As I said, the majority of British financial institutions have already terminated their business activities, that particularly being the case with any UK institution having substantial business activities in the United States of America. We therefore expect the aggregate impact on the UK financial services sector to be quite modest. However, some firms will be more affected than others, which is why we are working closely with those firms to ensure an orderly wind-down of their existing business. We will publish updated impact analysis to include estimated volumes and values when the position is clearer.

The noble Baroness also asked about enforcement. The indication that I have given of the quantum of activities likely to be covered by the order would be consistent with the relatively modest costs that the FSA and HMRC believe are necessary for supervision and enforcement. It is important to recognise that these are estimates. If, during the course of their work, the FSA and HMRC form the view that they are required to be more engaged and searching and the issues that surface are more complex, I have no doubt that they would devote more resources to the task—that is to say, they will not be resource-constrained in their ability to monitor and enforce these orders.

The order will last for one year. If the Government wish to come back to Parliament with a request for a renewal or a new order, that will no doubt be supported by a much fuller report to Parliament on the experience of the existing order. It is difficult to contemplate the precise form and content of that statement, as it will depend on the experience during the 12-month period. However, it will be entirely reasonable and proper for Parliament to expect as full as possible an explanation at that time of the experience to date, as would be consistent with national security interests.

The noble Lord, Lord Newby, asked about the engagement of UK bodies outside the financial services sector with Bank Mellat and IRISL. That is a perfectly reasonable question, but the scope of this legislation is very specific and focused on financial institutions. Noble Lords can rest assured that the appropriate bodies in the UK are monitoring closely our engagement with those two organisations. No doubt, the order as proposed will lead others to reflect on whether Bank Mellat and IRISL are organisations with which they would wish to continue to conduct business. Importantly, we need to continue to work hard to ensure that other jurisdictions are as determined as the UK is in this respect. I am thinking here of IRISL in the field of reinsurance and insurance, when clearly it would not achieve our ultimate purpose if the business currently transacted through P&I institutions in the UK simply rotated to P&I institutions or insurers elsewhere. Hence, there has to be an element of significant international co-operation.

That takes me to address the specific questions raised by the noble Lord, Lord Newby, in connection with the European Union. These orders are a specific response to a threat to the UK. We will discuss the issue with our EU partners and will support those member states that wish to take similar action. It is clear from the evidence that, inasmuch as we can argue that these two organisations represent a threat to UK national interests, they similarly represent a threat to the national interests of other EU states.

That the Grand Committee do report to the House that it has considered the Electoral Law Act (Northern Ireland) 1962 (Amendment) Order 2009.

Relevant Document: 21st Report from the Joint Committee on Statutory Instruments.

My Lords, the orders before us today relating to elections in Northern Ireland make small but important updates that are necessary to further assist the overall restructuring of local government in Northern Ireland. Noble Lords will be aware that the number of district councils in Northern Ireland is being reduced from 26 to 11. For this reason, this House agreed to the postponement of local elections in Northern Ireland until 2011 to allow time for the new local government wards and boundaries to be redrawn.

The draft Electoral Law Act (Northern Ireland) 1962 (Amendment) Order 2009 will postpone preparation of the next draft polling station scheme in Northern Ireland until 2010 to take account of the changes to wards and boundaries that I have referred to. Noble Lords may be aware that the purpose of a polling station scheme is to designate suitable buildings as polling stations in electoral wards. By virtue of Section 65 of the Electoral Law Act (Northern Ireland) 1962, the next draft scheme is due to be prepared and published in 2009. I am sure that noble Lords would agree that it would make sense for the next polling station scheme to be based on the new local government wards.

The legislation to implement the new ward boundaries has not yet been approved by the Northern Ireland Assembly. I understand that it is anticipated that this legislation will be in force by the end of 2009. However, this would provide little or no time for a draft polling station scheme to be prepared and published in 2009, as currently required by law. The draft order would therefore postpone publication of the next draft scheme until 2010 and for subsequent schemes to be published every four years thereafter.

I turn to the draft District Electoral Areas Commissioner (Northern Ireland) (Amendment) Order 2009. The Local Government Boundaries Commissioner recently submitted his final recommendations on proposed new wards and boundaries to the Minister for the Environment in the Northern Ireland Executive. The next step in the process requires the District Electoral Areas Commissioner, or DEAC, to submit recommendations to the Secretary of State on the grouping of wards within electoral areas for the purpose of holding local government elections under the proportional representation/single transferable vote system.

The conduct of the DEAC review is governed by the District Electoral Areas Commissioner (Northern Ireland) Order 1984. This legislation has not been substantially updated since 1984 and some minor amendments are required to bring the DEAC’s procedures into line with the current procedures for other such reviews. The first concerns the period for making representations. The DEAC is required to publish provisional recommendations, and to hold public inquiries in respect of them, if representations are received from either 100 electors or a district council. However, paragraph 1 of Schedule 2 to the 1984 order provides for representations to be made within one month of the publication of the recommendations. I am concerned that this would not allow sufficient time for the relevant parties to make objections, particularly given the widespread changes that will need to be made as part of the current review. The draft order, therefore, extends this period to eight weeks, which is in line with the procedure followed by the Local Government Boundaries Commissioner.

Secondly, the 1984 order requires the DEAC to publish a notice setting out his provisional recommendations in newspapers circulating in the district. However, because of the wide-ranging nature of the current review, it is likely that the recommendations will be very detailed and could involve the production of large-scale maps. It would therefore be both costly and unwieldy to publish them in full in local newspapers. The draft order therefore provides the commissioner with the option of either publishing a notice setting out his recommendations or simply providing details of when and where the recommendations may be inspected, or both. This is also in line with the procedure followed by the Local Government Boundaries Commissioner.

Finally, as the number and boundaries of councils are due to change, it is important to clarify that it is existing councils most affected by any changes that can compel an inquiry, not the new 11 district councils that will come into being after the next local election. The draft order therefore provides that the objection of any council that will, in whole or in part, be incorporated by or incorporate the successor council will be sufficient to secure a local inquiry.

I hope that noble Lords will agree that these orders make small but important changes that are essential to ensuring the successful restructuring of local government in Northern Ireland. I beg to move.

My Lords, I thank the noble Baroness for explaining these two statutory instruments, which are not as simple as would appear from the two or three pages on which they are written.

I supported strongly the change from 26 to 11—except that I would have preferred seven. I said that for the benefit of the noble Lord, Lord Kilclooney. However, we are in a time of change and I am not comfortable with the proposed dates. A great deal of change is going to take place. However, we are almost at the end of 2009 and it does not appear that the jobs that were supposed to have been completed by the end of 2009 are going to happen. We are into November, the parliamentary term ends within three weeks and I cannot see the expected changes taking place in 2009.

The order refers also to this taking place in 2010. Is it December 2010 or January 2010? It clearly probably is not January 2010, but the order does not give any indication within 12 months as to when it is expected. Paragraph 4.1 of the Explanatory Notes to the electoral law order states:

“This Order is needed to postpone the preparation of the draft polling station scheme that is due to take place in 2009 until 2010”.

That could cover 24 months or, as it now stands, two months. Perhaps the Minister can provide clarity on that.

As to the DEAC’s responsibilities for communication, the pragmatic approach of not forcing him to publish the preliminary offerings in the newspapers in order to save money seems very sensible, although the noble Lord opposite may not be terribly happy about that for other reasons. In principle, I agree with all that is being done and my comments are in no way a criticism of the DEAC, whom I have known for a number of years. However, I fear that the timescale lacks realism.

My Lords, I, too, thank the Minister for introducing these two orders. Regarding the first, although traditionally we on these Benches are sceptical about interfering with the usual practicalities that underpin the democratic process, in this case it is sensible to make an exception. It would be a waste of time, energy and resources to prepare a draft polling scheme for Northern Ireland before the review of boundaries for the 11 new local government districts has been finalised. Changes to boundaries could mean that previous arrangements are no longer suitable, or more appropriate polling stations could present themselves in a particular ward. We therefore support the first order.

I have slightly more points to make about the second order. We very much welcome the increase, from one month to eight weeks, of the period in which representations on the provisional recommendations can be made. However, we are a little concerned that the proposal will give the DEAC a choice of whether to publish the provisional recommendations or simply to make them available for inspection. As we know, Northern Ireland is undertaking a radical reorganisation of local government, moving from 26 borough councils to 11. There will naturally be a great deal of interest from the general public in how current wards will be organised and which new local council area they will find themselves living in. Given that this is such a radical change, and not simply a small shift in boundaries, it is important for the people of Northern Ireland to be able to assess and have access to this information as easily as possible.

Again, while we appreciate the costs involved in publishing the full provisional recommendations, we are concerned that simply making them available for inspection is not, by itself, sufficient. How will local people know that the recommendations are available for inspection? How will they know where and when to go to see them? It could be very difficult for some people in rural areas to travel to see the recommendations.

Finally, can the Minister at the very least assure the Committee that, if the DEAC decides just to make the recommendations available for inspection and not to publish locally, notification will be given in local newspapers so that local people will know that the recommendations are available to be looked at, and where and when they can do so? Can the Minister also assure the Committee that everything possible will be done to ensure that the recommendations are easily accessible for local people?

My Lords, I, too, thank the noble Baroness for her presentation of the orders. I found the comments of the noble Lords, Lord Glentoran and Lord Smith of Clifton, very interesting. It is interesting that the Conservative Party, together with the Ulster Unionist Party, now opposes the 11 new district councils and would have required fewer councils. I deplore that position because, having worked as a member of a district council for many years, and living in the west of Ulster, I know that the compromise of 11 is the correct answer. To have had only seven or eight would have made the councils far too large for rural people, as has been mentioned by the noble Lord, Lord Smith of Clifton.

I thank the noble Lord for giving way. I hope that I said, as I think I did, that when I referred to there being seven councils it was a personal view.

I am glad that the noble Lord, Lord Glentoran, has now dissociated himself from the Ulster Unionists and the Conservative Party on this matter.

I welcome the comments of the noble Lord, Lord Smith of Clifton, about advertising. I declare an interest, which is fully recorded in the Register. I know something about this subject. I think that the noble Lord would agree that people in Northern Ireland take a tremendous interest in elections and who has the right to vote. They want to know what is happening. Of course, on this occasion there is to be a major upheaval in local government in Northern Ireland and they will be keen to know what is being proposed. I am sorry to hear, yet again, that the noble Lord, Lord Glentoran, wants to limit their ability to know what is going on behind their backs. He wants to reduce the publicity about the changes in local government in Northern Ireland. Perhaps on this occasion he will, once again, dissociate himself from the Ulster Unionists and the Conservative Party.

Advertising on radio and in weekly papers for all kinds of elections in Northern Ireland is now a matter of great concern within the media industry, which is very disturbed by the policy of the Government and the public agencies. They seem to be creating further problems as we go down the line of trying to reduce costs in electoral activities. No longer are government agencies getting value for money; more and more, they are involving a decreasing number of the population in Northern Ireland.

The most recent example is the European election. Postal vote applications were advertised on Classic FM, which is not one of the most popular radio stations in the west of Ulster; it may perhaps be very popular in North Down, but it is certainly not throughout the rest of the Province. They were also advertised in the Belfast Telegraph, which mainly circulates among the half a million or so people living in greater Belfast, not among the other 1,250,000 people living outside the city, and in the News of the World, which is not popular among many Protestants and Roman Catholics in Northern Ireland. They were not advertised in the weekly papers that are read by the wider population in Northern Ireland. What was the net result? In the recent European election in Northern Ireland, there was a dramatic decrease in the number of people who applied for postal votes.

Paragraph 7 of the Explanatory Memorandum is entitled “Policy Background”. It refers to 100 electors. Is that 100 electors in the new district council areas or in the 26 district council areas?

It is in the original council areas.

That clears that up. The 26 district council areas vary greatly in size, from Moyle, which has about 10,000 people, to Belfast, which has maybe 250,000 people. That is why we are having a reorganisation of local government in Northern Ireland. It is essential that 100 people, or various groups of 100 people in each district council area, know what is being proposed. If there is just a little notice in the weekly paper stating that the information is available at some address, people will not follow it up. They have to see what is happening. There will be a lot of criticism if they do not know what is being recommended.

It is not often that I recommend something that applies in the Republic of Ireland, but I know what happens there, and it is quite sensible. Local weekly newspapers are contacted and asked to print a supplement at a special advertising rate. That works. I recommend that we apply that in Northern Ireland to involve as many of the population as possible in seeing what is happening and having the right to comment on it and to submit recommendations or alternatives.

It is important that these things go into local papers. For example, in Downpatrick, the local paper, the Down Recorder—in which I have no interest—sells more copies than the Belfast Telegraph, the News Letter and the Irish News combined. In Dungannon, more copies of the Tyrone Courier are sold than the Belfast Telegraph, the News Letter and the Irish News combined. Noble Lords can see the importance of weekly papers, as opposed to daily papers or papers such as the News of the World.

There is of course a suggestion—in fact, it was an allegation, which is about to be followed up—that there is a conflict of interest if an outside agency advises on advertising policy for elections in Northern Ireland. I know that a newspaper group, with which I have no association whatever, is concerned about current electoral advertising policy; it has now employed one of the universities to investigate present government advertising policy and to advise whether the Government are getting value for money. Its report will become available for debate here in Parliament and in the Northern Ireland Assembly at the beginning of next year.

I apologise to the noble Baroness but after a few seconds she may discover why I am being somewhat impudent in rising to speak. She referred to 1984 and I suspect that, if we look back to the relevant tome, she will find that I was in the position that she is in now without the knowledge that I gleaned during those years.

Many of the points that I had in mind concerning newspapers have been raised by the noble Lord, Lord Kilclooney. I seem to recall that when my department—the Department of Agriculture in Northern Ireland, as it then was—wished to promote various pieces of information, there was great panic in Belfast about the number of local organs of communication. The noble Lord mentioned the Belfast News Letter but, going even further west than Dungannon, he may be aware of the wide influence of the Mid Ulster Mail, not to mention the Tyrone Democrat. County Fermanagh has two newspapers: not just the Impartial Reporter but the Fermanagh Herald.

I believe that much of what the noble Lord suggested concerning special little supplements, with the co-operation of the local newspapers, will alleviate many of the problems that have been considered. What I have in mind, above all, are details concerning where and when one can vote. I wonder whether the Belfast News Letter, let alone the Financial Times or other great organs of world communication, is widely taken account of in Newtownstewart or elsewhere. The noble Lord should be careful: I am considered to be something of an intellectual in my home town because I take the Financial Times during the week. That may have something to do with the fact that I have time to read it here or on train journeys.

I hope that the noble Baroness will be able to take on board the excellent suggestion that local newspapers may be willing to help by producing a supplement. They are widely read and are very close to the polling stations and to what one might call the scene of the action. Therefore, they would probably be the best channel through which to promote exactly what she is trying to promote. I conclude by voicing my uncertainty about 2010, as my noble friend did so eloquently. Will it happen in December or the cold days of January?

I thank all noble Lords for their comments. I think that in general noble Lords welcomed the orders but they obviously also raised significant concerns about some aspects. I start with the noble Lord, Lord Glentoran, who asked whether the May 2011 election was still achievable and voiced his concerns about the reality of the timing. All those involved in the reorganisation of local government are working towards a May 2011 election. We are reassured by the fact that Edwin Poots, the Minister of the Environment in the Northern Ireland Executive, has indicated that he expects the Assembly to debate the legislation for which it is responsible by the end of the year. On 20 October 2009, he stated:

“I am confident that, by working together, we will achieve our goals of creating 11 strong and effective councils in May 2011”.

This will allow for the remaining stages of the review, including the DEAC review that we are discussing today, to be completed in time for a May 2011 election.

The noble Lord, Lord Glentoran, expressed his concerns about the timing of the publication of the 2010 polling station scheme. The Polling Station Scheme Regulations 1972 set out in further detail when exactly a draft polling station scheme should be prepared in the relevant year. These regulations will be updated shortly and, therefore, I cannot give the noble Lord a specific answer as to whether it will be January or December. However, the regulations that will decide that will be updated shortly. We will, of course, relay the noble Lord’s concerns over timing to the chief electoral officer.

The noble Lords, Lord Smith of Clifton and Lord Kilclooney, raised concerns about the removal of the requirement for DEAC to publish his recommendations in local newspapers. The noble Lords feel that this will make them less accessible to sections of the community. I emphasise that that is not the intention of the order. If anything, the intention is to increase accessibility. The DEAC must still give notice to newspapers circulating locally of where his provisional recommendations may be inspected and he may still, at his discretion, publish them in the newspapers. The suggestion of the noble Lords, Lord Kilclooney and Lord Smith, about providing an inset or a publication inside the newspaper will of course be passed on.

I am concerned by the comment that the intention is to increase access for the public to these proposals. I hope that the noble Baroness took note of my comments on what happened in the recent European elections, when the same new advertising policy was pursued and resulted in a dramatic decrease in the number of applications for postal votes.

I take note of that. As a former MEP, like the noble Lord, Lord Kilclooney, I find it concerning; I do not like the sound of it at all. However, I suggest that the methods by which people access information are changing all the time. While I accept that many people will go to their local newspaper to find out what is happening electorally—I accept also the high level and sophistication of electoral interest in Northern Ireland—many will gain access through the website. The DEAC intends to publish his provisional recommendations on his website. He will make them available for viewing in DEAC offices, in libraries, in council offices and in local area offices. That will be made clear when he publishes the notice. Copies will also be provided to, for instance, groups that represent those with disabilities, who would find access even more difficult.

The point about the newspaper supplement idea and publishing in newspapers generally is that they have a tremendous reinforcing effect. When we see something on screen, it is instantaneous—here today and gone tomorrow—but when you have a newspaper that lies around the house for a week it is a constant memo to you to do something about it.

I absolutely agree with noble Lords that it is important that we get this right and get the message to as many potential electors as possible. I shall certainly raise the concerns expressed today about public awareness with the Electoral Commission. As noble Lords will know, the Electoral Commission has responsibility for raising public awareness—it is one of the reasons for its existence—in relation to postal voting and so on. The noble Lord, Lord Kilclooney, referred to the recent European elections. Again, we come back to the role and responsibility of the Electoral Commission.

When the noble Baroness goes to bed, she can take her weekly newspaper with her, but not her computer.

Well, it depends. As they say, it is a matter of size—you can sometimes get a lot of information on BlackBerrys—but I take the noble Lord’s point. The DEAC must still publish a notice saying where those recommendations may be inspected. However, as I have said, the specific concerns that have been raised today will be passed on.

I have probably covered most points. The noble Lord, Lord Lyell, spoke about advertising and raising public awareness of elections. I repeat that that is a matter for the Electoral Commission, to which we shall happily relay his views—as well as his great experience from 1984, when he stood here.

The noble Baroness has been kind enough to refer to 1984. In fact, it was during my six summers in Northern Ireland that I became aware that one particular area may have more than just one newspaper. I mentioned County Fermanagh because when one—it might have been me or perhaps my noble friend Lord King—was putting out news in a communiqué from the Department of Agriculture to the Fermanagh Herald, which covered one particular but widely spread section of the community, and the Impartial Reporter, one had to transpose the photographs. Different communiqués over matters such as pigs, cattle or calves would have to be given to different newspapers covering one county. I am sure that the Minister and the department will take good care of that. She has been very kind to lay to rest my worry that people would not be totally aware at a local level of what might be relevant. Indeed, the noble Lord, Lord Smith, put it beautifully when he said that, when something is broadcast on screen, via Ulster Television, for example—or indeed on Downtown Radio—it might be just here and there, whereas when it is in a newspaper you know that it is all there. However, the Minister has reassured me fully and I thank her very much.

Motion agreed.

That the Grand Committee do report to the House that is has considered the District Electoral Areas Commissioner (Northern Ireland) (Amendment) Order 2009.

Relevant Document: 21st Report from the Joint Committee on Statutory Instruments.

That the Grand Committee do report to the House that is has considered the Private Security Industry Act 2001 (Amendment) (Northern Ireland) Order 2009.

Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.

My Lords, I beg to move that the draft Private Security Industry Act 2001 (Amendment) (Northern Ireland) Order 2009, which was laid before this House on 21 May 2009, be considered. I shall also speak to the draft Private Security Industry Act 2001 (Amendments to Schedule 2) Order 2009, a copy of which was laid before this House on 12 October 2009. I welcome this opportunity to put these proposals before the Committee today. I will deal with the detail of each order in turn but, before doing so, I will provide context for the proposed amendments.

The fifth report of the Independent Monitoring Commission stated that there was direct evidence of paramilitary involvement in the private security industry in Northern Ireland, resulting in many firms suffering from extortion. It stated that the current, temporary control regime in Northern Ireland was less stringent than the regime in England, Wales and Scotland and was insufficient in preventing paramilitary infiltration of the industry.

The Northern Ireland Affairs Committee identified the potential for exploitation of the industry by paramilitaries and organised criminals. It recommended that the regulation of the private security industry in Northern Ireland be dealt with as a matter of priority. It also identified the need for appropriate training and registration of door supervisors and noted the problems with the form of self-regulation that is encouraged by some, but not all, councils throughout Northern Ireland.

These reports led the Government to undertake a thorough review of the private security industry in Northern Ireland. A consultation document entitled Regulating the Private Security Industry in Northern Ireland was circulated to organisations representing the private security industry, political parties, relevant local authority organisations and a wide variety of other organisations that have an interest in or avail themselves of private security services. This document set out the options for regulation and highlighted the Government’s preference to extend the remit of the Security Industry Authority, the regulatory body in England, Wales and Scotland, to Northern Ireland.

The Government took into account all comments and views in relation to developing a new scheme of regulation for the industry in Northern Ireland. After carefully considering the options for regulation, the Government believe that, on balance, extending the remit of the SIA is the right way forward. The SIA is the organisation responsible for regulating the private security industry in Great Britain. It is an independent body reporting to the Home Secretary under the terms of the Private Security Industry Act 2001.

The aims of the SIA are to regulate the private security industry effectively and to reduce criminality, raise standards and recognise quality service. The SIA has two main duties. One is the compulsory licensing of individuals undertaking designated activities within the private security industry; the other is to manage the voluntary approved contractor scheme, which measures private security suppliers against independently assessed criteria.

SIA licensing covers manned guarding—including security guarding, door supervision, close protection, cash and valuables in transit, and public space surveillance using CCTV—key holding and vehicle immobilising. Licensing ensures that private security operatives are fit and proper persons who are suitably trained and qualified to do their job. The approved contractor scheme introduced a set of operational and performance standards for suppliers of private security services. Those organisations that meet these standards are awarded approved contractor status. This accreditation provides purchasers of private security services with independent proof of the contractor’s commitment to quality.

Using the SIA to regulate the private security industry in Northern Ireland will ensure that standards are equal throughout the UK and will increase the ability of Northern Ireland companies to operate and compete on a national basis. The SIA has the skills to support the regulatory system and offer the most cost-effective solution. The authority’s multi-agency approach to compliance and enforcement activity sits well with the methods currently used in Northern Ireland and can be successful in tackling the problems of organised crime within the industry.

New regulatory arrangements under the SIA will represent a major step forward, for both the industry and the people of Northern Ireland. Extending the remit of the SIA will achieve the regulation that the industry wants and enhance safeguards for those operating legitimately, while targeting those acting outside the law. The overarching aim is to reduce offending in the private security industry by protecting people from crime and giving the public greater confidence in the industry.

The aim of the Northern Ireland Office is that the majority of activities that are currently designated under the 2001 Act in relation to England, Wales and Scotland will be designated in Northern Ireland from December 2009 onwards. The effect of the designation will be that these activities can be carried out legally in Northern Ireland only with an SIA licence. One important exception to this will be the work of in-house door supervisors, which will not be designated in Northern Ireland until April 2010, although it is currently a designated activity in the rest of the United Kingdom.

As part of the legislative process for the draft Private Security Industry Act 2001 (Amendment) (Northern Ireland) Order 2009, which is made under Section 85 of the Northern Ireland Act 1998, the Minister gave evidence to the ad hoc committee of the Northern Ireland Assembly. Having listened to the committee’s concerns about the effective date for licensing of in-house door supervisors from 1 December 2009, he agreed that individuals in this sector will now be expected to have a licence by April 2010.

I turn briefly now to the detail of the provisions contained in the two draft orders. The technical amendments contained in the two draft orders are needed to ensure that the 2001 Act takes account of Northern Ireland legislation and operates in Northern Ireland as it does in the rest of the United Kingdom. I will deal first with the detail of the draft Private Security Industry Act 2001 (Amendment) (Northern Ireland) Order 2009. As I have previously advised, this order is made under Section 85 of the Northern Ireland Act 1998. An order making amendments thus has to be approved by the affirmative resolution procedure. It is to seek that approval that I have brought this measure before the Committee this afternoon.

As required under Section 85(4) of the Northern Ireland Act 1998, the draft order was considered by the Northern Ireland Assembly and its report was published on 29 June. The Government have welcomed proposals from all stakeholders, including the Northern Ireland Assembly, during implementation and have endeavoured to be adaptable while crucially not losing sight of the benefits of a consistent UK-wide approach. The Northern Ireland Assembly did not specifically recommend any modification of the content of the draft order and, as such, none has been made.

The first amendment of the draft order relates to an exemption in Section 4 of the 2001 Act for those working in certain sports grounds for any requirement to hold a licence under the Act. The exemption does not currently apply in Northern Ireland, as it is defined by reference to the Safety of Sports Grounds Act 1975 and the Fire Safety and Safety of Places of Sport Act 1987, neither of which extends to Northern Ireland. The amendment will extend the exemption to Northern Ireland by adding references to the equivalent Northern Ireland legislation, the Safety of Sports Grounds (Northern Ireland) Order 2006.

The second amendment relates to Schedule 2, which lists the various activities that can be designated under the 2001 Act. One of the activities listed in Schedule 2 is the work of door supervisors or other security personnel in licensed premises. The definition of “licensed premises” in the schedule currently refers only to licensed premises in England, Wales and Scotland. The amendment will add references to licensed premises in Northern Ireland, ensuring that door supervisors in Northern Ireland will be subject to the same licensing requirements as apply to door supervisors working in the rest of the United Kingdom.

A copy of the draft Private Security Industry Act 2001 (Amendments to Schedule 2) Order 2009 was laid before the House on 12 October 2009. The purpose of the instrument is to amend Schedule 2 of the 2001 Act. As I have explained, Schedule 2 lists the activities that may be designated under the 2001 Act. In addition, it sets out a number of exceptions to the licensing regime. The instrument covered by this memorandum will amend Schedule 2 to take account of Northern Ireland legislation by adding a number of new exceptions to the licensing regime and by amending the definition of roads, local authorities and licensed premises used in the schedule.

The 2001 Act makes provision for the Secretary of State to amend this schedule. Such amendments have to be approved by the affirmative resolution procedure. It is to seek that approval that I have brought this measure before the Committee today. The effect will be that the licensing regime under the Act will operate in Northern Ireland as it does in the rest of the United Kingdom. In particular, it will ensure that the requirement to hold a licence for manned guarding does not catch certain prison and police-related activities carried out in Northern Ireland; that the requirement to hold a licence for activities involving the immobilisation of vehicles does not capture certain police-related activities or activities carried out by those acting for the Northern Ireland Court Service; and that the requirement to hold a licence for activities involving the restriction and removal of vehicles does not capture certain police-related activities or activities carried out by those acting for local authorities, a Northern Ireland department or the Northern Ireland Court Service.

The order will limit the requirement that certain door supervisors working in licensed premises hold an SIA licence to cover times only when alcohol is being sold or entertainment is taking place. It will also ensure that those working as door supervisors in licensed premises that are being used for bingo or theatrical performances or for showing films are not required to hold a door supervisor licence. Finally, it will make a minor technical amendment to ensure that the definition of roads and local authorities in Schedule 2 are correct for Northern Ireland.

The private security sector is one on which many of us rely for our personal security and safety and for the security of our business, our property and our possessions. SIA regulation is tried and tested and robust. By introducing it in Northern Ireland in a way that is consistent with the rest of the United Kingdom, the Government believe that it will successfully discourage criminal activity within the industry and provide further opportunities for local companies. The minor and technical amendments proposed to the 2001 Act by these instruments will ensure appropriate and proportionate consistency. I commend the orders to the Committee.

My Lords, I thank the Minister for that lengthy and carefully thought through explanation of the orders that we are debating. I support them in principle. I declare an interest as a consultant to a security firm based in Whitehall. I took part in all the debates during the passage of the Bill in 2001, so I am familiar with and confident about the SIA procedure. We debated the Bill long and hard in lots of detail and got a number of concessions from and agreements with the Government. I felt that it was a good Bill by the time it was finished.

I made a nuisance of myself about guards and supervisors in relation to sport. I remember the argument about major golf tournaments, hockey tournaments or other tournaments having to have supervisors, superintendents or whatever one cares to call them. Clubs and people promoting these games would not have been able to afford the cost because in order to get an SIA licence you have to do a considerable amount of training, take exams and so on, and somebody has to pay for that. I would like to hear from the Minister that amateur sport, if using amateur, unpaid monitors or stewards, does not come under the SIA regime. I brought professional golf back to Northern Ireland in the 1990s for the first time post-IRA and ended up with the British PGA Senior Open being played at Portrush, where we had thousands of people. Every green and tee has to have stewards. If events have to pay for stewarding at the level required by the SIA, they will disappear. I would like to be encouraged to believe that they have been excepted.

Paragraph 4.4—

My Lords, I shall go back to my introduction and the latter part of my few words. Paragraph 4.4 of the Explanatory Memorandum to the Private Security Industry Act order says:

“The aim of the Home Office and the NIO is that the majority of activities that are currently designated under the 2001 Act in relation to England and Wales and Scotland will be designated in Northern Ireland”.

The word “majority” slightly puzzled me. I wondered what the exceptions were and what had been omitted. Apart from that, we should welcome the movement of the SIA into Northern Ireland and hope that it will be successful when operating there.

I, too, thank the Minister for introducing these orders. Policing the private security industry can be very problematic, particularly given the special circumstances of Northern Ireland. Indeed, in the murkier parts of the industry it is sometimes difficult to distinguish between protection rackets on the one hand and legitimate security activities on the other—hence the need for these orders.

I should like to ask the Minister about some of the recommendations of the report from the Northern Ireland Assembly. Although I recognise that none of the Assembly’s recommendations required a change to the orders, we hope that the Minister can say something about the Government’s response to those recommendations. In addition, is she satisfied that the SIA will be able to cope with the additional workload that will come as a result of the extension to Northern Ireland? Will there be any additional short-term funding to help the SIA as it expands its activities? Do the Government still intend to press ahead with implementation in December, as I think the Minister confirmed? As we know, the Assembly report recommended slowing down the process of extending to Northern Ireland the scheme that exists here. It would be helpful to know of any further discussions that have taken place in relation to this matter. Again, that is particularly important given the Assembly’s concern in relation to the costs of the scheme.

One major concern of the Assembly committee was the high cost—£245—of obtaining a licence for door staff compared with current local arrangements, which cost around £30. However, the report states:

“Time constraints do not allow the Committee to enter into an investigation into the differences. But differences there are and we feel that it is unwise to make decisions on the basis of such disputed information and that this argues further for a slow down in decision making until a fuller consideration of these issues has taken place. ‘Costs’ are an extremely important consideration for all of the stakeholders.

The Committee in the timescale available has not been able to make a judgment on whether the local schemes are comparable in terms of quality with the SIA delivered arrangements. More importantly we do not have reliable evidence on the comparable effectiveness and value-for-money of the main competing options and on which is of best value to the public purse”.

Given the concern expressed by the Assembly committee with regard to costs—an issue that is particularly important to businesses in the current economic situation—will the Government consider a delay in the implementation of the scheme to allow the Assembly to investigate this matter fully?

My final point relates to the Assembly’s concern that it did not have sufficient time to scrutinise the order in as much detail as it would have liked. Will the Minister give consideration to extending the length of time for orders to be scrutinised or, given that the Assembly’s recesses do not always coincide with those of Parliament, will she give a commitment to amend Section 85 of the Northern Ireland Act to qualify that the 60-day period does not include days when the Assembly is not sitting?

I thank noble Lords for their contributions. I start by responding to the noble Lord, Lord Glentoran, who wanted reassurance on aspects of an SIA licence regime regarding sports events. I hope that I shall be able to reassure him by saying that there will be no need for an SIA licence at a sporting event provided that any of the following conditions apply. The first is where the security staff are in-house and not contract staff and where the venue is not licensed to sell alcohol or provide regulated entertainment. The second is where the staff are volunteers. The noble Lord, Lord Glentoran, who takes an interest in sport in Northern Ireland, talked about volunteers at sporting events and so on. Within HMRC guidelines, such volunteers cannot receive payment or benefits in kind but they can be paid reasonable expenses. Thirdly, if a certain part of a sports ground or stand is already covered by a safety certificate, there is no requirement for any in-house staff to have a licence, even if they work in an area with a licence to sell alcohol or provide entertainment. I hope that those three points will give the noble Lord, Lord Glentoran, the reassurance that he seeks.

I turn now to the remarks of the noble Lord, Lord Smith of Clifton, who raised a number of issues on cost and timing. He referred to the importance of costs and to the ability of the SIA to cope with the expected applications. There is a cost to individuals associated with licensing, but there is no desire to impose unnecessary hardship. The cost of a licence application is reasonable and justifiable. It is also consistent with the charge levied in the rest of the United Kingdom. This needs to be viewed in context. Most licences cost £245 and last for three years; at slightly more than £1.50 a week for a licence, that is a comparatively small price to pay to provide a level of reassurance to the general public that those operating in the private security industry are vetted and trained professionally to a high standard.

The noble Lord, Lord Smith of Clifton, was also concerned about the SIA’s ability to cope with the expected applications. I hope that I reassure him when I say that the SIA is currently receiving and processing some 4,500 to 5,000 applications per week in Great Britain. The forecast for the total licensable population of Northern Ireland is some 9,500, which represents approximately 3 per cent of the total UK licensable population. The SIA has reassured us that it does not feel that that would cause any notable strain on the licensing processes. The SIA aims to process 80 per cent of all licence applications within 40 days. The most recent available statistic showed that, in September, it processed 98 per cent of all properly completed licence applications within that timeframe.

The noble Lord also raised the issue of the Assembly’s consideration of the order. The Minister considered the points raised by the Assembly committee and took on board concerns raised about the time given to consider the draft order. We met the statutory obligations in regard to this, but the point is taken that it was a matter of concern for the committee. The Minister listened to the concerns raised by the ad hoc committee about the timing of the legislation and has decided that in-house door supervisors will now be expected to have a licence by April 2010, not December 2009.

With that, I hope that I have answered noble Lords’ questions.

That the Grand Committee do report to the House that is has considered the Private Security Industry Act 2001 (Amendments to Schedule 2) Order 2009.

Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.

That the Grand Committee do report to the House that is has considered the Community Legal Service (Funding) (Counsel in Family Proceedings) (Amendment) Order 2009.

Relevant Document: 25th Report from the Merits Committee.

My Lords, I congratulate the Government on the excellent family and child-based legislation that they have introduced over the past few years. However, the order to which I speak, regrettably, is not in that group. The purpose of my Motion is to bring to the attention of the House criticisms of the Ministry of Justice and of the Legal Services Commission in relation to their process of consultation over decisions on the legally funded fees of family barristers and the impact their decisions will have upon vulnerable families going through the family courts and on the family Bar, particularly on women barristers and especially on BME women who appear for these families under public funding. These criticisms have been supported by the Justice Committee of the House of Commons in its 8th report of July 2009, and by the Merits Committee, of which I am a member, in its 25th report of Session 2008-09.

Very shortly, the background is given in paragraph 9 of the Justice Committee’s report, which states:

“Much of the debate about family legal aid reform inevitably revolves around fees and payments, which give the impression that the issues are solely about how much to pay lawyers. It is all too easy to lose sight of the overall purpose of family legal aid which is the provision of a service to families, and particularly to children, to enable them to gain access to justice and to help them navigate effectively through an increasingly complex system. The families, and particularly the children, involved are often confused, emotionally damaged and vulnerable. As Lord Laming stated in his progress report on child protection in the wake of the Baby Peter case: ‘Children are our future. We depend on them growing up to become fulfilled citizens well able to contribute successfully to family life and to the wider society. It is of fundamental importance that the life and future development of each child is given equal importance. Every child needs to be nurtured and protected from harm’. Family legal aid is part of this nurturing and protection and provides a vital service for vulnerable families and children. Their need for this service is as basic as their need for health, education and social services”.

In 2008 the Minister said that,

“were it not for the quality of children lawyers that we have at work in this country, then the vital job [they] do would not be done, children and families would not be represented, miscarriages of justice would be the norm, the children themselves would suffer, and the state would end up footing a far greater bill, socially as well as financially, in consequence”.

Most of the family Bar belong to the Family Law Bar Association, which has something like 2,300 members, 61 per cent of whom are women. They are at the sharp end of the family justice system. A large percentage of the family Bar does publicly funded work, paid by the family graduated fees scheme since 2001. It is usually called the FGFS, and I shall call it that, although I notice in the Minister’s latest report it has now been changed to the FGF.

The Ministry of Justice and the Legal Services Commission produced a consultation paper in June 2008, Reforming the Legal Aid Family Barrister Fee Scheme, which proposed cuts of £13 million to family fees over two years—that is, the FGFS. In December 2008 there was a further consultation paper from the Ministry of Justice and the Legal Services Commission which made various proposals for fixed fees and further average cuts of 20 to 30 per cent and, in more complex cases, up to 50 per cent. The system, according to the Family Law Bar Association, would over-reward simple hearings and under-reward complex cases.

There has been great concern among the Bar Council and the FLBA about the reliability and misclassification of underlying data. In February this year, the Minister made a decision on the June 2008 consultation paper that there would be cuts of £13 million over two years to effect public law and private law children cases and financial relief cases, which are called ancillary relief. These cuts are in the statutory instrument about which I ask your Lordships to take note.

There had been discussions between the FLBA and the LSC, which accepted that the evidence was based upon anecdotes and not upon research. Therefore, in March 2009, at a late stage, Ernst & Young were instructed by the LSC to investigate and report.

My Lords, I am sure that the noble and learned Baroness, Lady Butler-Sloss, does not need to apologise for the detailed way in which she introduced her Motion and gave us a chance to have this debate. We should all be grateful for it because she has raised extremely important points. It will not surprise anyone to know that I am not a shop steward speaking on behalf of the family law Bar because I am not a family law practitioner. My interest in the subject, as the Minister’s advisers will know, is in the work that I did with them on the Forced Marriage (Civil Protection) Bill, which, thanks to them and Ministers, became fit for legislation and is now part of the law.

The points that I want to raise are ones for which I am indebted to a very eminent and well qualified family law practitioner—namely, Khatun Sapnara, who helped very much in preparing the Forced Marriage (Civil Protection) Bill and has enormous experience dealing with domestic violence and forced marriage issues. I have skimmed the 106-page impact assessment, the 71-page consultation document and the statistics to support the Government’s analysis, so I think that I understand what I am about to say. However, I shall no doubt be proved wrong if I say something that is wrong.

As I understand it, forced marriage cases are outside the graduated fees scheme, and so are effectively protected. That is excellent. Forced marriages are closely related to cases of abduction and those, too, remain outside the graduated fee scheme. That is also excellent. In the consultation, the Government asked whether forced marriage cases should brought within the scheme. The response from the Family Law Bar Association and the Family Justice Council was that it is far too early, following implementation of the Forced Marriage (Civil Protection) Act, to introduce this, coupled with the fact that the Government had committed themselves to proper legal funding of cases of that kind. All of what I have just said is most welcome.

There is a problem that I do not think is dealt with in the detailed analysis that I have skimmed. As a result of the complex nature of forced marriage and the issues it raises, such as shame, honour, underreporting and so on, cases frequently arise in the context of private law proceedings and cases involving domestic violence. Those private law proceedings and cases involving domestic violence fall within the scheme. The problem is that the rates will not attract the experienced practitioner who is able to deal with the matter effectively. An experienced practitioner would be able to understand the interface with public law proceedings and abduction proceedings, where the facts of forced marriage—to put it broadly—may intersect.

I shall give a couple of examples. Suppose a British Asian mother applies for a domestic violence injunction to protect herself and discloses that the father is also assaulting the daughter and planning to take her abroad for a forced marriage or that allegations of that kind are raised in the context of private law contact and residence proceedings. An experienced family law practitioner would be able to elicit the necessary disclosures and instructions in the first place and then go to the High Court seeking protection in the context of abduction proceedings or would know how to invite the court to initiate public law proceedings by directing the involvement of social services. The real problem—which is not addressed in the analysis that I have read, where statistics are incapable of being sufficiently refined to home in on this important problem—is that in all probability only very junior and inexperienced barristers would handle such work under this scheme, which simply does not pay enough for the kind of experienced practitioners who are needed.

Private law cases, as the noble and learned Baroness, Lady Butler-Sloss, has just illustrated, can be very complex and lengthy, requiring witnesses, interpreters, findings of fact and skilled handling of an often very distressed lay client. That is the problem which I know concerns many in the Family Law Bar Association and the Family Justice Council and comes out of the practical experience of someone such as Khatun Sapnara. If that is the case, it is a serious problem for the small minority of very vulnerable people who need to be properly protected by a skilled and senior branch of the legal profession.

My Lords, I am speaking in this afternoon’s debate not because I am a shop steward for the family law Bar, but for two particular reasons. The first is the seriousness of the work. This was brought home to me over 20 years ago, when I had completed what turned out to be my last case in family law. I achieved what I thought was a satisfactory settlement for access to children for my male client, a father of two. Within a very short time, he murdered both children out of revenge against his wife for what had happened in court. If ever a situation could bring home to a lawyer how serious and responsible this kind of work was—for it appeared to be a perfectly ordinary case in a small Welsh town—that was it.

My second reason for being here is that last week I happened to be at a social gathering that involved the retirement of a judge who specialises in family work, including, in particular, public law children’s work. I conversed with a lot of judges—circuit judges, a couple of High Court judges and district judges—and their staff at that social gathering, and every single one of them said that the whole process was becoming grindingly more difficult. There were far more litigants in person, which meant that cases were taking longer. The family law Bar appeared to the judges to be demoralised as a result of the very matters that we are debating this afternoon, and the whole picture seemed to those judges to be a very unhappy one.

Of course, I accept that both the matters that I have mentioned are merely anecdotal evidence, but I do not believe that there is much better evidence on these issues than anecdotal evidence. We can debate reports by economists until we are blue in the face; we can argue about the basis for their inquiries; we can quarrel about the methodology of their research; and we can certainly, as we have already done, discuss the meaning of their figures. We can also take some very misleading international comparisons, too, but I urge the Minister not even to enter into those because we are dealing with very different types of systems.

However, essentially, we are dealing with a practical question here, and I applaud the noble and learned Baroness, Lady Butler-Sloss, for raising it here today. The core of that question is where the welfare of children lies in relation to the provision of fees for legal aid lawyers. Are we here to pay lip service to the welfare of children or to do real service to it? The Government—whose motivation is good—repeatedly pay lip service to the welfare of children, but this order will mean that children will suffer. The Minister is shaking his head but he does so, I am afraid, against the overwhelming body of evidence from those—and I say this with great respect to him—who are possibly rather better informed than he is about what happens in family courts every day of the week.

We must bear in mind that we are not talking simply about a few whinging barristers or solicitors who are complaining about the fees; we have heard in this debate from the immediate past president of the Family Division of the High Court, and, remarkably, in connection with this debate, we and the Justice Committee have heard from the current president of the Family Division of the High Court. In my recollection, it is unprecedented for heads of division to enter into a debate of this kind with such energy. I remind the Committee what Sir Mark Potter, the president of the Family Division, said on 2 July this year in his Hershman/Levy Memorial Lecture to the Association of Lawyers for Children. He reported serious delays in cases, partly because of the reduction in CAFCASS and the delay in obtaining reports for courts. He went on to warn Ministers—this was his word—“forcibly” over their plans to reform legal aid funding in children’s cases, and he referred to the cuts as a threat to both efficiency and delay. The use of the word “threat” by the current president of the Family Division is remarkably bold. It would be a remarkably bold statement from any judge but particularly from one—I am sure the noble and learned Baroness will agree with me—who is not naturally given to delving in politics if he can possibly avoid it; he is not a government scientist. He said that if lawyers left this area of work, there would be a rise in the number of people representing themselves and further delays caused by, as he put it,

“inexperienced advocates undertaking more complex work”.

He said hearings would be less focused and appeals more likely, and he attacked the Legal Services Commission over what he called a discouraging lack of realism in its apparent determination to disregard the warnings that he and others were giving.

I do not want to repeat what has already been said so skilfully and forcefully by the noble and learned Baroness. She has drawn your Lordships’ attention to the reports of the Merits of Statutory Instruments Committee and the Justice Committee. She has already drawn attention to the argument—and it will remain an argument because we are not going to solve it here—about the nature of the figures that have been produced. Ultimately, if this order remains in force in its present form, we will have discriminatory legislation. It will discriminate against women litigants—because many of the litigants in this area are women—and it will discriminate, particularly, against children, as I have already said. It will discriminate strongly against women and children from black minority ethnic groups because some of the least skilled litigants and litigants in person in this area are women who do not have the social skills to be able to represent themselves in court because their customs do not give them social skills. As anyone who has ever tried a case with litigants in person will know, there is nothing worse in a court than a frightened litigant in person appearing before a judge.

As the noble and learned Baroness said, it will also discriminate against female barristers because women form the greater proportion of barristers doing this kind of work. They do it far better than most men possibly can because they have an understanding—I hope this is not a sexist expression; if it is, I make no apology for it—of issues that sometimes male lawyers find it difficult to get their heads around. The effectiveness of what the Bar and female advocates have done in this area has amply justified the view that the money has been well spent; compared with many other areas of the law, there have not been galloping increases in legal aid funding.

The Baby P case and the greater intervention of local authorities in the welfare of children are not going to result in fewer cases but in far more, as Sir Mark Potter has said. There is nothing in this order that promises that those cases will be dealt with fairly and efficiently; it will be absolutely the contrary.

My Lords, following my noble friend Lord Carlile, a good starting point to understanding why these cases have become more complex is the evidence given by the Association of Lawyers for Children to the judicial committee in the House of Commons.

The Justice Committee.

The Justice Committee. It set out a list of issues; there may be many more, but this is what it assumes. There is a vast area of new jurisprudence and obligations arising out of the European Convention on Human Rights; there is an ever-increasing volume of papers in children’s proceedings arising from the ECHR; there are new forms of documentary evidence and greater judicial expectations; the use of e-mail includes the expectations of clients for contact and explanation; there is an ever-increasing amount of case law, practice directions, and legislative and other initiatives; and there is an increased focus on the care plan in public law proceedings, rather than on the issue as to whether or not to make a care order.

Then there are advances and ongoing research in medical science, especially related to injuries, and in the understanding of child abuse. I had some experience of that in a case in July. I was dealing with the criminal end of it but the whole of the family proceedings were before me. The case had lasted about six days, with a vast amount of documentation, exhibits and medical evidence, with experts disagreeing on either side, and with the judge having to come to a conclusion and counsel on both sides doing their best to cope with difficult medical issues. Then there are diversity issues and a matter to which my noble friend Lord Carlile referred—the problems that many litigants have with English, it being their second language. There are also litigants with learning difficulties and so on. All these problems have added up to cause great difficulty in the family courts.

My Lords, first, I declare my interest as a practising solicitor and partner in the national commercial law firm, Beachcroft LLP. I have benefited greatly by the debate initiated by the noble and learned Baroness in laying her Motion to take note of the order that came into force as long ago as 4 August. As she pointed out, the order makes changes to the legal aid family barrister fee scheme—the family graduated fee scheme, or FGFS.

The justification that the Government have given for these changes, on the surface at least, sounds reasonable. They have increased the basic rate paid to counsel for public law children cases by approximately 17 per cent and reduced and abolished some of the special issue payments made to barristers, making a large saving for the legal aid budget. At least, I might have thought that they sounded reasonable until I heard the speech of the noble and learned Baroness, as well as those of the noble Lords, Lord Lester of Herne Hill and Lord Carlile, and a very persuasive and rather worrying speech from the noble Lord, Lord Thomas of Gresford. I know that on occasions in the past the Minister has had to defend the indefensible and explain the inexplicable, but I think that that will be a test of all those abilities on his part.

One effect of the order will be to allow the harmonised fee scheme to take effect from next October, putting in place the same remuneration for barristers and solicitors and, we are told, rewarding case complexity. Currently, solicitors are paid on a different remuneration basis, focused around an hourly rate. We know from correspondence with the Law Society that it is broadly supportive of these proposals, which it sees as a first step towards a harmonised advocacy scheme, levelling out the rates payable to barristers and solicitors for the same work.

It is hard to deny the fairness of that, although there is more than one outcome as a result of the changes wrought by this order. It will not surprise the noble Lord—particularly having heard these very telling speeches—that the Bar Council has been somewhat less enthusiastic in its response. The noble Lord may say that it is not possible to please all of the people all of the time, especially when budgets are under strain. However, the Bar Council has raised a number of very salient concerns, which ought to be considered carefully. As the noble and learned Baroness and the noble Lords, Lord Lester of Herne Hill, Lord Carlile and Lord Thomas of Gresford, have now raised some compelling arguments, I can hardly wait to hear the Minister’s response.

Of course, we start with the premise of the need to make savings. The noble and learned Baroness stressed that throughout her speech; she acknowledged the importance of making savings, but the figures that she used were fascinating. Can the Minister confirm that the existing payment regime—the FGFS, which came into being in 2001—has resulted in the savings of 5 per cent that it was expected to make, resulting in the Government agreeing to put money back into the scheme in 2005? Can the Minister please tell the Grand Committee in very clear terms what the financial implications of the order are? Does it mean that £2 million per annum is being removed from fees paid to barristers in public law cases?

I note, as has the noble and learned Baroness, that the consultation paper published in June 2008 relied on data which had to be revised in a letter from the MoJ in May this year. It showed that the FGFS had largely succeeded in controlling costs. Can the Minister explain why the Government continued with the cuts proposed in the order, even though the underlying rationale had been shown to be mistaken? There are, of course, quite legitimate reasons to seek to trim government expenditure, but it is also useful, particularly for noble Lords, to have them properly justified. The noble and learned Baroness has asked the Government to consider the effect of these cuts in the real world. I found very compelling some of the cases which have been instanced in this, sadly all too short, debate.

Family legal aid is, as I think all noble Lords would agree, a very sensitive area. The service is indispensable for families and crucial in the role that it plays in protecting children from circumstances of sometimes appalling abuse. Sadly, the role of the state in intervening in the care of children has had very high-profile coverage in recent months, and not for the happiest of reasons. Does the Minister accept that the changes to the funding of public law cases to be brought about by the order increase the risk that effective representation may suffer? I am now very concerned that the number of family barristers willing to undertake difficult and complex cases may fall because taking on such cases may simply be uneconomical. I was persuaded that it is not just a case of excess demand or supply; it is a case of looking at what the effect of the order will be in the real world. Can the Minister tell noble Lords what work the Government are now doing with the Bar Council, the Family Law Bar Association and the other interested parties that have been mentioned to ameliorate this concern?

I was very impressed by the arguments adduced by the noble and learned Baroness in referring to the Merits Committee, on which the noble and learned Baroness sits. Its 25th report quotes the Justice Committee, as the noble Lord, Lord Thomas of Gresford, rightly said. I quote it now because it is a very worrying message:

“The consistent message from evidence received on legal aid reform is that the Commission is proceeding at speed with inconsistent data, a weak evidence-base and a poor understanding of the shape, the cost drivers, other motivating factors, and the structure of its supplier market. In addition, as Lord Carter himself emphasised strongly, this fundamental reform of legal aid provision—for 60 years the pride of the justice system in this country—requires the cooperation of those who deliver the services”.

Finally, will the Minister explain how he hopes to implement successful reforms if he does not have the good will of the profession which must put those reforms into practice and live by their results? Of course, there is pressure on all budgets all around government—all departments are, or ought to be, looking for savings where possible—but we look forward to hearing what the Minister has to say in defence of the order and the changes to funding that it makes, and exactly what his department is doing to work with the legal professions to effect changes in the smoothest manner possible.

My Lords, I thank all noble Lords for today’s lively and interesting debate and, in particular, the noble and learned Baroness, Lady Butler-Sloss, for bringing the Committee’s attention to the important issue of legal aid. We should debate it as a House more often than we do. No one who has listened to the debate could fail to be impressed by the expertise not only of the noble and learned Baroness but also of all those who have spoken so far.

Legal aid funds help all kinds of people in all kinds of situations: the young man suspected of burglary, the elderly woman threatened with eviction, the looked-after child being offered a new life through adoption and the overburdened mother struggling with debts. Too often, legal aid is seen as being just about courts; it is not. It is also about getting the advice that you need at as early a stage as possible, so that your case does not necessarily end up in court. It is about making sure that court is the last resort—this is particularly true in family law—and not the first port of call.

At the risk of incurring the wrath of the noble Lord, Lord Carlile, early on in my speech, I draw to the Committee’s attention a recent independent report, hot off the press, on international comparisons of legal aid spend in England and Wales. It is a proper academic report and does not all go one way. While it is not something that I intend to boast about, particularly before this group of noble Lords gathered today, it shows something that is undoubtedly true: that England and Wales has one of the highest per capita legal aid spends in the world. The report confirms that, as a result of higher case volumes and higher average costs per case, legal aid expenditure per head of population in England and Wales is infinitely higher than in other countries, including France, the Netherlands, Germany, Sweden—which all have different systems from ours—and Australia and Canada.

Perhaps I may ask the Minister a fundamental question about that report, of which I am well aware. Where does he find in it a measurement of the activity in other countries that takes place out of courts through, for example, their social services systems? The report seems not to make any comparison of like with like, just as, by way of analogy, reports with foreign comparisons of terrorism custody periods do not compare like with like. It is a totally misleading picture.

One has to compare common law legal systems, not common law with civil law. They are entirely different. If one, for example, deals with costs in Strasbourg and cost orders, it is always the case that English practitioners’ costs are much higher than those in continental countries, but if one compares the costs with Canada, Australia, South Africa, the United States or any common law countries, one sees that it is a totally different picture. One is comparing apples with cement.

Of course, and I started this part of my speech by saying that comparisons are very difficult to do. It is undoubtedly true that the cost of courts in this country is much lower than in other countries, but the cost of legal aid in this country is much higher than in other countries. We have an adversarial system, so any comparison with civil legal systems is bound to be particularly difficult. However, you can make better comparisons with other common law countries than you can with civil systems. It would be hard to argue that, for various reasons, some good and some bad, we do not spend much more than other countries per head on legal aid across the field.

We, as a Government, think that that is an excellent thing. We continue to provide a vital link to justice for many people, particularly the most vulnerable in our communities. I remind the Committee that every year legal aid provides around 2.5 million acts of assistance to people with their legal problems. With regard to the social welfare element of the budget, which is much too small and has been the poor relation of legal aid for 60 years, we are committed to helping people with the problems that can bedevil their lives. Our commitment to that is evident, with an increase in funding of £80 million for legal services delivered by the not-for-profit sector on civil matters, compared with around £24 million in 2000-01. At a time of recession, it is particularly important that we do not slow down our spend at all in that field, and that is why we have provided more money for debt, housing and employment cases. I particularly mention the housing possession court duty scheme, which helped nearly 34,000 people last year.

Under our reform programme, which has been mentioned, steps are being taken to sustain that commitment but also to prioritise the legal aid budget effectively to ensure that it goes as far as possible in favour of civil help for those who need it most. Surely any Government would have to try to remove duplication or inefficiency and secure value for money. Doing so would mean that as many people as possible would continue to benefit by getting the legal help that they need, and we are committed to ensuring that that happens.

The challenge today and in the future is to help as many people as possible with a large but limited budget. We spend around £2.1 billion on legal aid. Spending on legal aid in the past 20 years has increased from £835 million in today’s prices, which is an average annual real-terms growth of about 5 per cent and one of the fastest growing areas of public expenditure.

Of our budget of £2.1 billion, about £1.2 billion goes on crime—that is far too much; the balance is wrong—and only about £900 million on civil, which includes family, asylum and immigration, and social welfare law. In 1983-84, the total spend on legal aid in real terms was about £572 million, which, interestingly, is just less than what we have spent on family legal aid alone this year.

Last month, my department announced a review to be conducted by Sir Ian Magee into the delivery of legal aid to ensure that the £2.1 billion budget is delivering best value for money, that it provides a healthy and sustainable future for social welfare law and that it effectively integrates the criminal defence service within the criminal justice system. The review, whose importance it is difficult to exaggerate, will assess the delivery and governance arrangements of the legal aid system and make recommendations to explore the separation of the criminal defence service and the Community Legal Service—which has been argued for for a long time by people across the political spectrum—and options for doing so effectively and efficiently, should that be the recommended way forward. It will also provide for effective and transparent financial management of both funds and their administration.

In the 10 years since the Legal Services Commission was established, there have been considerable changes in the type of legal advice services that the public need, and we believe now is the right time seriously to review the channels through which legal aid is delivered, together with our wider reform programme, to ensure that we are getting the best value for taxpayers’ money. That is even more important at a time of economic difficulty.

I shall not move into the criminal legal aid debate at the moment, but will go straight to family. We are keen to ensure that we support the provision of help to people with the housing, debt and employment problems that so often trigger not only family breakdowns but the descent into crime. However, the need to secure value for money and to prioritise our resources in everything we do means that we must look at reform on the civil and family side too.

In this debate, there is a danger of confusing two orders. There is the order that has been in force since 3 August and prompted the noble and learned Baroness’s debate. There is also a pending order to do with the new contracts to be signed to come into operation from 1 October 2010. One cannot look at one proposal without looking at the other. The second order is the now-published harmonised family advocacy scheme. The family graduated fees scheme order that came into operation in August is before us this evening.

Spending across all levels of family legal aid has increased fairly dramatically in the past seven years from £399 million in 2001-02 to £582 million in 2007-08, which is an increase in real terms of 24 per cent. The new harmonised schemes—and who could be against harmonised schemes?—will direct more money into public law cases to ensure that children and adults at risk of abuse take the highest priority for legal services. The fee schemes do not represent cuts to the family legal aid budget or to the services received by children and families. They have been designed to be cost-neutral against 2007-08 average case costs and for the first time—not before time—the fees will fairly reward barristers and solicitors with the same fees for the same work. I trust that there is no opposition to that principle.

We have closely involved family lawyers in developing our policy on these changes and, as a result, we made substantive changes to our original proposals to ensure that the new structure would better reflect the variety of cases that advocates deal with and, particularly, their complexity. It has been generally accepted, whether grudgingly or less grudgingly, that the new scheme, which was published last month, does a great deal more service to the complexity argument than the original consultation.

The Minister looked questioningly when he said, “I trust there will be no dissent from the same fee for barristers and solicitors for the same work”. What I am about to say is sensitive. The justification for having an independent Bar and barristers is their special skill in advocacy. Some solicitors are perfectly capable of achieving the same level of skill in advocacy, but the problem I have tried to address is of very skilled barristers dealing with complicated cases for private law work being deterred. Does the Minister agree that the whole justification for the side of the profession to which he and I belong is the very special skilled advocacy provided by the senior practitioners at the Bar, with some solicitors being able to do so as well?

There will always be a place for an independent Bar with highly specialist, skilled barristers. However, I do not agree with the noble Lord in making this distinction between solicitors and barristers. In serious family law work now, in public law and in private law—the most serious, in my view, is always public law—solicitors play a much greater and important role in these difficult and sensitive cases. It is absurd that they should be paid less than barristers for the same work. There is not much between the noble Lord and me, but it is an important principle that should have been brought in many years ago. I hope the noble Lord, Lord Hunt of Wirral, agrees with me on this matter at least. The changes were welcomed by the Association of Lawyers for Children, about which we heard earlier.

We are acutely aware that legal aid lawyers will be feeling the effects of the recession in the same way as everyone else, but the final scheme that we published in October will allow us to achieve a reasonable balance between complexity and value for money which will help sustain access to quality legal services for the most vulnerable in our society.

On family matters, we dispute strongly that vulnerable children will not get the representation they need and that people will go unrepresented. The fee scheme proposals do not involve cuts to the services received by children and families. Clients will of course continue to receive legal assistance through the legal aid scheme as they do now. The majority of this work is conducted by solicitors, who will see significantly increased fees. Under the new scheme, we would expect more solicitors to start doing their own advocacy or to increase the amount of advocacy they already do so well. We are confident that the fees we are offering are fair and will ensure that people will be able to receive the legal advice and assistance they need.

The new fee scheme moves directly more money into public law cases to ensure that children and adults at risk of abuse take the highest priority for legal services. The fee schemes do not represent cuts to the family legal budget or to the services received by children and families.

As I say, spending across all levels of family legal aid has increased dramatically. During that same period, the number of funding certificates issued in family proceedings decreased. Of course I accept the argument about complexity; there may be fewer cases but some of them are certainly more complex than the ones that went before. The cost increases were unsustainable within a limited budget and our fee scheme will help to control future increases. Pressure on the legal aid budget is severe and is likely to increase in the current economic climate as more people require advice on housing, debt, welfare benefit and family breakdown. If we do not control family advocacy costs then we will be forced to cut services to clients, either through cutting the scope of the services that are funded or by reducing the financial eligibility for services.

The phase 2 family fees consultation proposals represent the next phase of the reform programme to bring family advocacy costs under better control and offer a fair payment structure to advocates. We aim to contain inflationary costs on family advocacy and maintain legal aid expenditure at 2007-08 levels. This will be done through the introduction of two standard fee schemes and changes to the scope of funding. We spend more than £120 million a year on family advocacy and we will continue to spend this under the new scheme. Our proposed family advocacy scheme is about paying the same fee for the same work. We have not reduced barristers’ rates to solicitors’ rates but have set an intermediate rate which is fair to all advocates. I repeat: we are making no cuts to services for children and families. Clients will receive legal assistance through the legal aid scheme, as they do now. There are more than 3,000 family legal aid barristers and we are confident that access to their services will not be significantly affected by these necessary changes. We shall see whether there is a successful and lively family Bar in the years to come. My guess is that there clearly will be.

What happens if there is not? What plans does the Minister have for reviewing the position over the next year or two?

I remind the noble Lord that there are 3,000 family law barristers at present and many highly skilled solicitor practitioners, too. Of course, if the system was falling apart, any Government would have to act, but there is absolutely no evidence that that is so. That there are difficult cases, particularly in the public law field—more difficult now than there have been over the past 50 years—is undoubtedly true, but there is absolutely no reason to believe that the family Bar will disintegrate as a consequence of these reforms.

As to the effect that these reforms will have on BME providers, the Legal Services Commission has discussed the possible impacts of the family legal aid reforms on female and BME barristers with a number of different stakeholders, such as the Equality and Diversity Committee of the Bar Council. As a result of this and the detailed advice and suggestions that we received throughout the consultation, our original proposals have been substantially revisited, primarily to recognise complexity in cases. We were told that what was needed to assist female and BME barristers was to ensure that the scheme allowed for complexity to be properly rewarded. So the final fee scheme has more gradation to reward advocates who take on the more complex cases, who still are most likely to be barristers. We believe that will mitigate any adverse impact on female and BME barristers and is likely to result in a significant increase in the number of barristers who will benefit under the new scheme, rather than lose.

I was asked by the noble Lords, Lord Carlile and Lord Thomas, about discrimination against women and children and litigants with English as a second language. We do not think that our schemes lead to discrimination against those classes of persons. If clients cannot give instructions well, for example, there will be a bolt-on to the fee to be paid to the advocate.

As to the point about discrimination and that BME women at the Bar are reliant on legal aid, I am not sure whether the Government and the LSC should be the ones held responsible for the fact that a large section of BME and female barristers do legal aid work. It is to some extent a responsibility of the Bar itself and of clerks in chambers, who have traditionally pushed legal aid work in that direction. I would like to see figures for how much private family work is given to BME female barristers, to see whether it explains the issue to some extent.

The noble Lord, Lord Lester, has a particular interest in the issue of forced marriages. He is quite right: forced marriage legislation is outside the scheme. The rates for domestic violence are based on historical costs. However, there are higher fees for such cases in the High Court. There is a bolt-on payment if the client has difficulty giving instructions and another where expert evidence is required. Finding-of-fact hearings, which are an important part of family proceedings, are to be paid as final hearings.

The Government very much value the commitment of all lawyers who work in the interests of the most vulnerable members of society involved in family legal proceedings. That work, which is paid for from the public purse, is never likely to be as financially rewarding as work for private clients, but it is a vital public service. We are using the limited money and best resources that we have to meet pressures created by the recession. It is not an easy matter at the moment to try to balance the legal aid budget. Criminal legal aid is demand-led. We are obliged, under the ECHR, to spend money on representing defendants who are charged with serious cases. That is as it should be.

What is not right is that extra money spent on criminal legal aid should come out of a civil legal aid budget. That is behind our policy all the way. We want to make sure that criminal legal aid does not eat up the civil legal aid budget. That is what has been happening over many years. That is why we asked Sir Ian Magee to look very carefully at whether it is necessary to have two quite separate funds to make sure that if the criminal legal aid budget is much more than is anticipated for various reasons, the balance should be paid from the criminal justice system, rather than the civil legal aid system. I hope that is a philosophy that might find some support among noble Lords present tonight.

As far as the orders and the changes we have made to them are concerned, I can do no better than to quote again from the Association of Lawyers for Children, a much respected organisation. It makes these points:

“The Government’s original proposals were heavily criticised by family lawyers and judges who warned that they would lead to parents and children in complex cases being badly represented, or not even being represented at all … But the scheme has been radically restructured and revised following input from the leading practitioner groups and an intervention by the President of the Family Division”.

The Government’s announcement was,

“broadly welcomed by the Association of Lawyers for Children, one of the practitioner groups involved in improving the scheme”.

The co-chair of the ALC commented:

“The priority for family legal aid must be child protection. These are complex, demanding cases, involving the highest of stakes and requiring a high level of expertise to conduct properly. We welcome the Government’s recognition of that priority and reality, together with the significant improvements to the scheme that have now been made. While we still have concerns about some elements of it, the scheme now proposed is immeasurably better, fairer and more practice-reflective than that originally devised. That shows the benefits of working within the family justice system”.

There has undoubtedly been a lot of collaborative working within the family justice system since the consultation period ended and that work has borne considerable fruits. The result, although not entirely popular among some commentators and groups, is now generally accepted as being much better than the papers on which the matter was consulted. We now have the possibility of a system for family legal aid fees, starting on 1 October next year, which will be fairer—it will be fair to solicitors as well as to barristers—and takes account of the fact that some family law cases are much more complicated than others. One example of the way in which we have tried to ensure that those who do the most difficult cases get the bigger rewards is that we have agreed to an extra payment depending on the court in which the family hearing is to take place.

I understand how strongly the noble and learned Baroness feels about this issue and about the order that came into force in August. I hope she agrees that the new order, which it is hoped will come into force in due course and which sets the fees and conditions to run from 1 October 2010, is an improvement and that it is being introduced because of the considerable help and assistance that we have had from the FLBA and other groups of solicitors.

I think that everyone who has taken part in this debate has a passion for legal aid and believes that it has a vital part to play in our legal system. The Government have no less a passion for it and we hope to improve it in the years to come.

My Lords, first, I thank noble Lords for taking the trouble to attend today and for their support. It is important to have an airing of this very important subject. I should like to make certain that it is understood that I accept the need to make savings and to secure value for money. I have absolutely no objection to the harmonisation of fees for the Bar and solicitors for doing the same job, but not for doing different jobs—that is an important distinction.

I accept, as I think I said, that there were improvements in public law payments. These will not take effect until October next year, so we have to go through with the current statutory instrument until then. However, there are not going to be improvements in the private law sector, either in children cases, domestic violence or ancillary relief—that is to say, financial payments. These cases can be as complex, difficult and time consuming as public law cases and, if not well done, some private law cases can become public law cases. There is a long way to go still. I would like the Minister—and particularly those behind him—to reflect on what has been said by noble Lords during the debate.

What the Minister has said has not taken us all the way. I particularly have in mind that the warning of the president, Sir Mark Potter, applies now as much as it did before, save in so far as there are some, but not sufficient, improvements to public law. His warning and the point made by the noble Lord, Lord Thomas of Gresford, is that we need to keep in mind what the family Bar is saying. The Government underappreciate the value of the family Bar—particularly where its ability and experience enables it to obtain settlements which allow people to go away relatively satisfied—when compared to an inexperienced Bar which cannot understand how to settle, and where cases drag on and cost more legal aid money. The longer the case takes, the more it costs, whereas a senior man or woman can get the case over, sometimes on the first day. There is a balance between the costs of cases running on and the extra payment to the more experienced Bar.

I am glad there is to be a review; I hope it will involve all stakeholders. The philosophy of separate budgets is excellent; it will be a real step forward for criminal legal aid not to take from the rest of the budget.

The noble Baroness, Lady Afshar, who wanted to be here but is teaching today, told me in relation to BME women lawyers—barristers and solicitors—that a family lawyer is thought to be a suitable profession for Muslim women. That may be one reason why there are more of them at the family Bar than elsewhere. It is an interesting point that the noble Baroness would have made if she had been here.