House of Lords
Tuesday, 1 December 2009.
Prayers—read by the Lord Bishop of Liverpool.
Introduction: The Lord Bishop of Gloucester
Michael Francis, Lord Bishop of Gloucester, was introduced and took the oath, supported by the Bishop of London and the Bishop of Liverpool.
To ask Her Majesty’s Government whether they will respond to the recommendation by English PEN and Index on Censorship that restrictions should be imposed on libel claims that do not have substantial connections to the jurisdiction of the United Kingdom.
The Government will consider very carefully all the recommendations in the report published by English PEN and Index on Censorship alongside those of the Culture, Media and Sport Select Committee, the report of whose inquiry into press standards, privacy and libel is expected shortly.
I am grateful to the Minister. Does he accept that for the courts of this country to entertain libel proceedings that are brought by people who have no connection to this country against publishers who are based abroad, such proceedings being founded on the incidental publication in this country of a few copies of a newspaper, book or magazine published abroad, is very damaging to free speech worldwide and to the reputation of this country? Will the Government consider introducing reforms to prevent such libel tourism?
My Lords, the Government are indeed concerned about libel tourism. Part of it is geographic extent, which is touched on in the Question. However, there are three other issues: the arguably penal cost system in London; the multiple publication rule; and the balance between reputation and freedom of speech, which at least the US Supreme Court believes is unreasonably weighted in favour of reputation. The report covers all these issues. The Government hope to respond to it, alongside the Select Committee’s report, within two months of the latter’s publication.
My Lords, does my noble friend the Minister agree that scientists, other scholars and medical experts are becoming increasingly wary of challenging dubious claims—about health products, for example—because of the chilling effect of the various aspects of libel law, one of which has been usefully touched on by the noble Lord, Lord Pannick? There are other aspects as well, such as the weighting of libel law generally against freedom of speech and the “availability of contingency fee” system, which encourages actions that may be undeserved.
My Lords, without committing the Government too much, I generally take those points. The Government take this issue very seriously, in about five areas. The Master of the Rolls asked Lord Justice Jackson to look at all aspects of the cost of civil litigation, including libel law; he will report by the end of the year and that report will be published on 14 January. The Government consulted on 24 February with the document Controlling Costs in Defamation Proceedings. That was responded to on 24 September and new measures were introduced on 1 October. The Government also started a consultation on 16 September, with Defamation and the Internet: The Multiple Publication Rule, which ends on 16 December. As I said, the report will be considered in two months. The Justice Secretary is setting up a working group to examine a range of issues around libel, including libel tourism. It will consist of media lawyers and government experts. The aim will be to make recommendations on reform.
Being a Whip, I have had to learn all about this in the past two days. I do not accept that any one of these issues is quite as heavy as the noble Lord suggests. There would be no magnet to London if our balance were the same as that in the US. These libels will be prosecuted at the appropriate place. There is no question, though, but that cost is a serious issue. The costs are accentuated by the conditional fee agreement with the 100 per cent uplift and the after-the-event insurance, which could be 65 per cent of the cost, meaning that the defendant can end up with 165 per cent more costs than were actually incurred. It is undoubtedly true that the costs are a substantial part of the chilling effect.
Would the Minister spend another day in considering the Irish Defamation Act 2009, which provides for defences of honest opinion in matters of public interest in respect of the author and for innocent publication where the person or publisher who publishes the alleged libel is not the originator? Those are bang-up-to-the-minute revisions designed to protect press freedom and freedom of speech. Or would the Minister not start from there?
My Lords, while I accept that there is much to be said for the comprehensive study or series of studies referred to by the Minister, is there not a danger that the study may be so comprehensive and wholesome that it will not lead to anything in the short term? In the mean time, our courts will be cluttered by litigants who are often utterly ruthless in seeking to stifle the truth, particularly in the field of medical science, where systems and situations that are at best bogus are often revealed.
Regulation of Investigatory Powers Act 2000
My Lords, the Regulation of Investigatory Powers Act 2000 provides a number of safeguards. Proportionality is explained in statutory guidance in the form of codes of practice and is subject to inspection by independent commissioners whose annual reports to the Prime Minister are laid before Parliament. In addition, anyone who believes that they have been subject to any unlawful action under RIPA may complain to the Investigatory Powers Tribunal.
My Lords, how can more than 500,000 such requests be proportionate? One of them was the keeping of petrol without a licence. Secondly, is it really proportionate for the Government to announce on 9 November that the provisions are to be extended to every single e-mail, telephone call, text or website posting? If the threat is so great to require that, surely it should be done only with legal sanction and not just by some council official, senior policeman or senior government manager?
My Lords, there are a number of issues there that need to be unpacked. It is important to note that RIPA is not anti-terrorist legislation: it regulates covert techniques. Before the 2000 Act, none of these things was regulated at all and no check was kept on how local councils might have carried out intrusive investigations that now, post RIPA, they are not allowed to do at all. To be absolutely clear, the Government accept that minor offences such as dog fouling or littering were never intended to be subject to these techniques, and RIPA was not what put them in place. That is using powers incorrectly and that is why we have now had a long period of consultation through the summer looking at these issues and will come out with a number of proposals in January that I hope will make this even clearer than it is at the moment.
My Lords, does the Minister agree that some of the local issues for which RIPA has been used, such as rogue traders selling knives to children, are serious matters and that it is right that local authorities should use the powers available to crack down on them? Does he also agree that what is really important is that the orders are made at a sufficiently senior level; that there is a framework within which the powers are used; and that they are used accountably and transparently?
My Lords, the noble Baroness is absolutely right. Following our consultation we will certainly raise the level of authorisation. We will also make sure that elected councillors are involved, so that they are privy and party to all of this. We will put this in statutory instruments in January.
My Lords, yes, they will be able to use them, as they have always been able to use them. There are restrictions because of RIPA. Before the Act local authorities were not so restricted. For example, in communications data, because of RIPA, they are not allowed to use traffic data because that is the most intrusive. They are not allowed to use intrusive surveillance. However, there are a number of powers that they have always been able to use, and they use them. Some of these are rather important.
I have many examples but a good one is that of North Yorkshire council’s trading standards people. They prosecuted three roofers who had ripped off 11 elderly victims, two of whom had lost their entire life’s savings. It was quite appropriate that there should have been some form of covert investigation of that. It came out with a very good result. Those people ended up in prison, one of them for six years, one for five and one for three. It is appropriate that that should be done. Equally, it is totally inappropriate that a council should use this for matters that are not proportionate. That is what the consultation has come out with and that is what we are now trying to make even more certain. It would be wrong to use these powers over matters such as dog fouling, littering and so on. It is not proportionate.
My Lords, given that there was no oversight of the use of investigatory powers by local government until RIPA in 2000 and that there is now a complaints system and scrutiny of what happens, is it not the case that it is this Government who have protected citizens from improper intrusion by local authorities into their lives and are now increasing the level of protection by the new regulations which are being consulted on?
My Lords, my noble friend is absolutely right. I have to admit that I had not realised that, until 2000, none of these things was regulated at all. It is very interesting that the Chief Surveillance Commissioner said in his report for 2008-09:
“I am satisfied in general that the use made”—
“is proper and of a good standard. This applies to all types of public authority. Error is usually due”—
and this is talking about the minor things—
“to inexperience resulting from lack of use. The lack of use is because most public authorities use the power as the last resort. This is what the law requires”.
Would the Minister mind correcting the point that there was no authorisation for these methods before RIPA? There was not for local authorities but, of course, the Interception of Communications Act 1985 and the Intelligence Services Act 1994 authorised the most intrusive methods. Secondly, would the Minister agree that the way to approach this sensitive and difficult issue is to regard the powers authorised by RIPA as a hierarchy; that the most intrusive powers should be used only in the most serious cases, when all other approaches to investigation have failed; and that the least intrusive should also be used infrequently and with great care and caution? There should be a hierarchy of both authorisation and intrusion.
My Lords, the noble Baroness touches on two points. The first is to do with interception. Interception was different and that is why I did not specifically mention communications data. Interception was covered by a specific Act before 2000. Of course, that is still not allowed to be used by local authorities. It is restricted to a small number of law enforcement and intelligence agencies. It is right that none of these powers should be used unless it is used proportionately. What they need to take into account is the severity of the offence and how useful these powers will be to the investigation. I gave a good example of where I thought it was proportionate to use them. However, we must not get this out of context. For example, the number of requests to use communications data of the type that local councils can use—they cannot use all of them—was only 0.3 per cent of all the demands for communications data. The bulk of them came from the intelligence agencies and the police. That is the way it should be, but that does not mean we should not do even better. That is why we have had the consultation and will bring in statutory instruments in January next year.
My Lords, we recently legislated to increase the state pension age to 68 by 2046 as part of a package of pension reforms. The timetable set out in the Pensions Act 2007 is based on the projected increases in average life expectancy available at that time. However, we have always made it clear that the changes to state pension age should be kept under review in the light of new evidence about life expectancy.
My Lords, I am grateful to my noble friend for saying that there could be changes, which I certainly would expect given that over many years the retirement age of 65 for men has not changed while life expectancy has increased very considerably. Should there not be a greater formal relationship between the pension age and life expectancy? I note that the pension age is set to increase to 68 for men and women in 2044, so far ahead are we making these assumptions. Is this not quite unacceptable, given the increase in life expectancy, which will increase very considerably over the next 30 years?
My Lords, it is undeniably the case that there has been a difference of more than a year in average life expectancy between 2004 and 2008. However, increasing the state pension age is an integral part of our package of state pension reforms that are designed to make it fairer, more generous and more widely available. We have responded proportionately to the demographic challenge, which will ensure that linking the basic state pension to average earnings is affordable in the longer term and ensures that the costs of rising longevity are shared fairly between those contributing to and those receiving the state pension. Unlike the party opposite, we have no intention of bringing forward the change from 65 to 66, which is due to take effect between 2024 and 2026.
No, my Lords, I do not. As I said a moment ago, we have no intention of disturbing the 2024 change; it would be quite wrong to do that, particularly for people in their fifties who are getting close to retirement. If we were to bring forward the state pension age to 70 by 2030, as the noble Lord, Lord Turner, suggested, that would increase the change far in excess of projected life expectancy. We need to bear in mind the impact of this on lower-than-average life expectancy because it would mean fewer people reaching state pension age. Around 79 per cent of men are projected to reach 70 in 2030, compared to nearly 84 per cent who are expected to reach 66 in that year.
My Lords, while it must be right to keep the rapidly increasing life expectancy under review, does the Minister agree that surely the priority is not to make it harder for people who are looking forward to the very mean basic state pension but to get a grip on the totally unaffordable cost of public sector pensions going forward? At a time when an average police officer or fireman is retiring in his early fifties with a £1 million pension pot, and many civil servants will be retiring under the age of 60 for 30 years to come, is it not important to close this very dangerous public/private sector divide?
My Lords, I am sorry that we have heard yet another attack on public sector pensions. The noble Lord cites a particular example, but the average public sector pension is of the order of £4,000 or £5,000. In the test of whether public sector pensions are affordable, you have to look at the cash-flow effect over the long term. Long-term financial projections make it clear that they are affordable.
My Lords, does the Minister not agree that the speedy—and I emphasise, speedy—abolition of the default retirement age would help many older people who want to continue to work to do so, and enable our economy to benefit, as evidence has clearly demonstrated, from what their skills, loyalty and willingness to work can give to our country as we emerge from the current recession?
My Lords, the noble Baroness makes an important point. Changing the state pension age is one thing; if you do not facilitate the opportunity for people to work longer, the savings that might be generated by that change would be negated by increased claims for benefits. We have already announced that we will bring forward to 2010 the review of the default retirement age, rather than having it in 2011 as originally promulgated. Since 1997, the number of people in employment aged between 50 and state pension age has increased from 64.8 per cent to 71.7 per cent in 2009. There are now 1.4 million people working past state pension age.
My Lords, there is no such thing as an official retirement age. We have been talking about the age at which people can access the state pension. I reject the assertion that there has been a degradation of pensions under this Government. Everyone knows that the consequence of the changes to defined benefit schemes in particular is generated by changes in longevity and assumed market returns that were wildly optimistic.
My Lords, I declare an interest, because my wife recently stood down as a member of the Care Standards Tribunal on reaching the age of 70. When the Government review the default retirement age in 2010, will they include compulsory retirement ages provided for in legislation, such as those that apply to tribunals, which would seem to be in conflict with other equality legislation?
Independent Parliamentary Standards Authority
My Lords, as I stated on 20 July during the passage of the Parliamentary Standards Bill, the remit of the Independent Parliamentary Standards Authority does not extend to this House, and the Government accept that it should not be extended to your Lordships’ House as it is presently constituted.
My Lords, I am grateful, but does the noble Baroness accept that on these Benches we expressed some doubt as to whether it was right flatly to deny that some of these issues need independent and authoritative assessment from outside the House? Is she dismissing recommendation 26 of last week’s report by the Senior Salaries Review Body without a debate in your Lordships’ House? Or does she anticipate a change in the composition of the House before the next review?
My Lords, I have absolutely no doubt about the flat denial that I made during the passage of the Bill. I acknowledge that the SSRB has provided its advice in recommendation 26, but, as I stated earlier, it is this Government’s clear intention that IPSA should not be extended to your Lordships’ House as presently constituted.
My Lords, on these Benches we agree with the noble Baroness. This House and another place are very different. Does the noble Baroness agree—as I think she will—that it would, therefore, be inappropriate to impose the same regulatory system on both Houses, as is faintly proposed in recommendation 26?
Yes, my Lords, I agree that at present the two Houses are constituted differently and are very different Chambers. Therefore, it would not be appropriate for both Houses to be under the same authority. If this House were constituted differently, that would be a different issue.
My Lords, the Minister will recall that Members’ expenses for the House of Lords in 2007-08 totalled £18.4 million. Mr Jack Straw has announced that IPSA’s budget, simply for running the authority for the coming year, is £8.5 million. Does she expect that any savings from the SSRB proposals for the House of Lords will be more than £8.5 million?
My Lords, I am glad that the noble Lord has given me an opportunity to say what excellent value this House provides for Parliament and for the people of this country. I do not expect that the SSRB will have provided many savings to the Exchequer.
EU Trade Policy: EUC Report
Motion to Take Note
My Lords, this is a peculiarly apposite day on which to introduce a debate on trade in this House. Today, the Lisbon treaty, which gives the European Parliament powers of co-decision with the Council on matters of trade, comes into force and, today and tomorrow, a World Trade Organisation ministerial meeting is taking place in Geneva to discuss the method of resuming the stalled Doha round in the hope that it can be concluded by the end of next year.
We began this report in spring 2008 and it was published in early December 2008. Simon Blackburn was the clerk for the inquiry, Petros Fassoulas was the committee specialist and Professor Jim Rollo of the University of Sussex was specialist adviser to the committee. Our thanks are due to them and to our many distinguished witnesses, who included my noble friend Lord Mandelson not once but twice—once in Brussels in his capacity as Commissioner for Trade and once here as Minister with responsibility for trade—and Pascal Lamy, who has worked tirelessly in the cause of expanding world trade, as well as several senior ambassadors involved in the negotiations, whom we saw in Geneva just before the WTO ministerial meeting at the end of June 2008.
The report was published after the July 2008 ministerial meeting was unable to conclude the negotiations but it was emphasised to us that the inability to conclude should not be seen as a failure: progress had been made, work would continue and the talks would resume. International trade has been reviewed as part of the response to the financial crisis. G20 meetings have emphasised the need for a conclusion to the Doha round and, at the G20 meeting in late 2008, leaders agreed not to introduce any measures or tariffs that were not compatible with WTO rules.
Our report focused on four main areas: the Commission’s external trade policy, the Doha round, the future of the World Trade Organisation and the assistance—aid for trade—necessary to help developing countries to take advantage of trade liberalisation. At the time, the Commission was solely charged with the responsibility for developing trade policy and negotiating for all members of the European Union. Unsurprisingly, it started from the premise that liberalisation benefited the global economy, with which my committee agreed and had agreed in several previous reports. The EU benefits particularly from removing tariffs on industrial goods and from increasing access for service businesses but, historically, has also wished to improve access for poorer countries to the European Union markets.
The Doha round of trade negotiations started in 2001 with the aim of unanimous agreement by all members to a document setting out reductions in tariff and non-tariff barriers. We were really hopeful that the Doha round would conclude soon after publication of the report in December last year, because it offered the possibility of great steps forward in trade liberalisation. However, we acknowledged that even agreement not to raise tariffs above the rates currently applied, as opposed to the rates formerly agreed, would be a useful step.
Under current agreements, many countries would have been able significantly to increase generally applied tariffs without breaching their WTO commitments. Even this step was not achieved, but in practice no significant tariff increases have taken place due no doubt to worldwide recession rather than to countries not feeling able to do so. We called in the report for the Government to ensure that the positive rhetoric surrounding the G20 meeting in the summer of 2008 is translated into the conclusion of the round. We also expressed concern over the pace of service negotiations, as the UK has a lot to gain in this area. Services make up 77 per cent of the EU gross domestic product but only 28 per cent of EU external trade. We encouraged the business community to be more vigorous in advocating completion of the round.
Alongside the WTO multilateral negotiations, liberalisation can occur through unilateral, bilateral or regional agreements. The number of bilateral agreements has increased in recent years and we were told that the disadvantages of bilateral agreements included the possible political motivations behind a deal and the complex “spaghetti bowl” of agreements if you did not have a multilateral agreement. Despite these disadvantages, we noted that bilateral deals are now a fixture of the trade landscape and could usefully contribute to economic growth. The EU moratorium on bilateral deals, concluded in the interest of encouraging multilateral deals, ended in 2006 and many more member states are expected to support a move to bilateral deals in the absence of the conclusion of a multilateral deal.
We did manage to conclude that the Commission’s work on bilateral agreements had not undermined its commitment to multilateral agreement. However, we recommended that the Government and the Commission look at ways of helping developing countries to deal with the complexity of bilateral agreements.
We also considered the impact that the inability to conclude the round and the increasing prevalence of bilateral deals would have on the WTO itself. There was a danger, we felt, that the organisation might be rendered increasingly irrelevant in the face of a proliferation of bilateral deals. We thought that, if this occurred, there would be a real risk that the WTO would lose its authority in other areas, including the settlement of trade disputes, where the organisation commands universal respect. The risks to the WTO add further weight to the need for a swift conclusion of the Doha round and we recommended that the WTO should for the future play an enhanced role in monitoring bilateral deals and encouraging good practice.
We also considered the WTO itself—its history, its efficacy and whether the structure of “one country, one vote” had contributed to the difficulty of completing the Doha round. We supported the Minister’s praise for Pascal Lamy and welcomed the Government’s support for his decision to seek a second term as director-general of the WTO. We also looked at ways of speeding up the organisation’s decision-making process. We concluded in the end that the consensual approach was its key strength and must not be undermined, but we encouraged increased use of plurilateral deals, which would allow progress between willing parties without the consent of every last WTO member, subject to agreement by a critical mass of the membership. This could end the practice of moving towards agreement at the pace of the slowest.
The committee also invited the Government to provide detail on the emerging conclusions of their work on the role and structure of the WTO in their response to the report. The Government replied in their response that they would share their conclusions with the committee “as they emerge”. I hope that my noble friend Lord Mandelson will be able to tell us what progress the Government have been able to make in bringing forward any conclusions reached since last year.
We also considered the position of the less developed countries in trade negotiations and their problems in accessing the benefit of trade agreements. There is not much point in a poorer society being legally able to export produce free of tariff to richer countries if the port facilities, including any necessary health certification facilities, simply do not exist in the poorer country. In the words of one of our witnesses, it is like putting a beginner on to the centre court of Wimbledon and expecting him to be able to play. We therefore took some time to consider aid for trade, an initiative whose importance was also emphasised by Pascal Lamy in his recent article, which involves supporting poor countries in developing their trade capacity. We welcomed the Government’s leadership role but expressed concerns that aid for trade might in many cases be nothing more than a rebranding of existing or pre-planned development aid. We urged more support to be given to infrastructure projects in developing countries in order to increase trade capacity. In their response, the Government pointed to DfID’s 2008 aid for trade strategy, which focuses particularly on sub-Saharan Africa, where better infrastructure and border crossing procedures are crucial in unlocking Africa’s trading potential.
We also took evidence on economic partnership agreements, which are replacing previous trade agreements made between the European Union and the ACP countries. The European Union will have greater access to the ACP countries, the ACP countries will work more closely together and the European Union will provide better access to its markets. It all sounds very good, but there have been difficulties in concluding these agreements and some of our witnesses were very critical of the Commission’s approach, suggesting that countries had essentially been hustled into concluding them before they had time to consider all the implications. The committee has kept an eye on this and many of these agreements have come before Sub-Committee A for scrutiny since the publication of the report. While we support the regional approach to the negotiations, we are concerned about some practical effects. The report therefore cautiously accepts the principle of economic partnership agreements, but we were critical of the Commission’s handling of the negotiations.
The report also considers two issues that are important for international trade. The first is the rules of origin, which are the tests applied to an import to determine where it was produced for tariff purposes. With global production, something can be partly manufactured in several countries. It is a difficult issue but one of major interest to less developed countries, which very often do not undertake the final production of any artefact. We supported a more flexible approach to the rules of origin, in order specifically to help less developed countries.
We also considered dumping, which is the practice of exporting below cost to gain a market share. The European Union can apply anti-dumping measures equal to the difference between the export price of the goods and their production cost. Proposals for the reform of anti-dumping have not progressed since the Commission Green Paper of 2006. We expressed our disappointment in the report and there the matter rests, obviously squarely in the Commission’s “too difficult” box.
An underlying theme of the report is the difference between rhetoric and action. Independent witnesses warned us of increased protectionism, while Ministers and officials were always optimistic about the imminent conclusion of the round. Promises of aid support have not always materialised. The disconnection between word and deed appears to be in the nature of the subject. The fact that the Doha round has still not concluded speaks volumes on this point.
Several of our witnesses, including my noble friend Lord Mandelson, were keen to emphasise last autumn that the Doha round did not fail. Yes, but it did not succeed either and various explanations were offered for its lack of success. The proximate cause for failure of these particular negotiations rests, oddly enough, with the least developed countries and their anxieties about agricultural preference and with the developing countries’ disappointment that further concessions on access for their agricultural products could not be achieved. In this context, while it was hoped that the European Union would have been able to make more concessions on agriculture, it was on the whole felt that it had done enough and that the problems probably lay with the United States.
Other less concrete reasons were adduced in evidence: that larger nations, such as China, had got most of what they urgently needed from the Uruguay round and, indeed, that most of the low-hanging fruit, in trade terms, had been garnered in that round, so that the further tariff reductions being sought in the Doha round were just not important enough. It was also rightly suggested that 2008 was a difficult time politically. Two major participants, India and the United States of America, were already in an election period and the European Union was in the last year of the Parliament and the Commission. The Lisbon treaty was being disputed by some member states and, of course, there is a recession, which was particularly worrying in the summer of 2008. Negotiations were hampered by WTO members’ anxieties about their economies, which made them reluctant to concede any further opening of their markets.
All these factors must have played a part but, as Pascal Lamy so eloquently urges, we can do better, and this time we must, so as to meet the objective of concluding Doha by 2010. The US presidency is resolved, as is the Indian presidency. The Lisbon treaty comes into force today, a new Parliament was elected this summer and a new Commission is being put rapidly into place. Major players such as the US and most of the EU are emerging from recession and it is to be hoped that any industrialist who was not convinced of the need for further trade expansion knows better now and will want to engage with the process. We in the European Union understand and accept the necessity of continuing to reduce direct subsidies for our agricultural products in order to facilitate negotiations further.
That concludes my description of our report and I beg to move.
My Lords, I congratulate the noble Baroness, Lady Cohen, on securing this debate on a very important matter. Like her, I thank those who gave evidence to the committee, and its staff and advisers. It has helped us enormously through a very difficult area.
As the noble Baroness has said, the Doha round started in 2001. Last year, there were hopes that that might have been concluded but it has still not been concluded. It has gone on for a long time and, while one would like to be optimistic that it will be concluded, for various reasons which the noble Baroness gave there cannot be a great deal of optimism that it will. It may not be a bad idea to reflect on the structural problems of the WTO.
One of the things that we enjoyed most on our visit to the headquarters of the WTO was discovering a diagram that Pascal Lamy has to guide him through the various groupings. All the countries count as one, but there are others, and if noble Lords have not done this before, I urge them to pick up the report and turn to page 13, which they can get a glimpse of from here as I hold it up. It has lots of lovely coloured circles around the various groupings in the WTO. There are about 13 of them. We have a G1, a G10, a G20 and a G90. There are others as well.
We welcome the fact that this organisation includes so many countries, but by doing so it creates difficulties in reaching unanimity. In the past, this was not a huge problem because the United States and the European Union dominated world trade and the WTO, but that is in the past and quite different structures have now arisen. People refer in this context to the BRICs: Brazil, India, China and Russia. I am not quite sure why Russia has been included because I am not sure that it carries as much significance as the others, but it helps to round out the acronym.
My Lords, I thank the noble Earl for that advice, and will content myself simply by urging people to read the report. They will get a much better view of the matter by doing that than by my holding up the relevant page.
As I was saying, the numbers and the different interests in the WTO militate against it being easy to get an agreement. We may not get rounds in which everyone agrees—indeed, trying to get everyone to the same position at one time may not be the best way of proceeding—so perhaps we should be open to looking at different ways of doing this. If the current Doha round is not going to be concluded, even an agreement that bound in existing tariffs would be worth while because that would provide a bulwark against protectionism—a significant thing in the present economic activity.
As the noble Baroness mentioned in her speech, most of the recent liberalisation has occurred not through comprehensive rounds but through unilateral action or through bilateral, multilateral or plurilateral agreements. Since 1980, between 65 per cent and 70 per cent of the reduction in tariffs has been through unilateral actions, a significant proportion of which have been as a result of IMF pressure. That in itself is not to be regretted because that pressure will encourage countries to move their economy into a position where they are more successful, as we think liberalising world trade will be in itself.
A higher proportion of actions take place through unilateral and plurilateral agreements because it is easier for the country concerned to justify the changes that they are making. If they are making changes to their tariffs as a result of a round, that round will largely have been negotiated by the major players in the WTO. It will be a compromise. The country may not be one of the major players that go back from the round to justify to its electorate and its people the changes that are being made. As with any compromise, some areas would be available to criticism. It would be difficult for the trade Minister or the Government of that country to justify the changes that have been made, other than on the grounds of, “Well we had to accept it because all the major players had agreed this”. That is not a comfortable position to be in. If a Government decide that liberalisation is a good idea, it is much better for them to do it by themselves. They would have a simpler task in terms of convincing their electorate and their people that these are the right things to do because they can say that they have decided that the best way to develop their economy is by opening it up. A further factor with regard to bilateral agreements is that the developing country can choose those other countries to which it is prepared to open up its economy. Again, more choice is put in the hands of the countries which would not carry a great deal of weight within the WTO.
Our committee’s locus in terms of looking at the Doha round was that it is a report on developments and EU trade policy. Our function is that of scrutinising the trade policy of the EU. I am pleased to say that in this context, as part of the Doha round and the effort to achieve a successful conclusion of it, quite significant offers were made by the European Union. Paragraph 40 of the report states:
“On agriculture the EU has offered: to cut its agricultural tariffs by an average of 54%; to use a ‘banded’ system for tariff cuts that will cut the highest tariffs … by at least 66%; to reduce trade distorting subsidies by at least 75%; to eliminate export subsidies completely by the end of 2013 so long as partners who operate their own export support programmes do the same”.
Those measures being offered are significant. It results in a situation whereby in the past some of us were critical of the European Union through its policies, particularly that the agricultural policy had negative effects on other countries and that it would be a good idea to change that. It was good to see that those offers were made by the European Union.
Previously, some people tended to blame the European Union for the failure to make progress within Doha, but those offers moved the Union into a position where it no longer was going to be blamed for failure. As the noble Baroness pointed out, the finger of blame was pointing in another direction. I have to say that the noble Lord, Lord Mandelson, shares some of the credit for moving the European Union to a place where it was no longer blamed.
I notice that in that context, in paragraph 44, the noble Lord used the curious phrase that,
“he was ‘not ashamed’ of the offers that the Union”,
had made, which is a rather interesting way of expressing it. Whereas he is to be congratulated on moving it so far, if his stance in regard to that is of not being ashamed, the implication is that he would have liked to see it move even further. If that was the implication, he was right, and if it was not what he intended, it ought to have been because I think that that should be the approach of the European Union in this context with regard to the future. Rather than seeing ourselves as just one party within the WTO trying to achieve these universal comprehensive agreements, as some have suggested, it is probably better to work towards achieving progress where it is possible, dealing with groupings of countries and letting other nations that perhaps are not ready to move at this rate come along later when they can do so. It is almost as if we were trying to apply a form of variable geometry to the WTO decision-making process.
I learned from an article in today’s Financial Times—although I gather that the proposal was made last year by a gentleman from the Peterson Institute in Washington and another gentleman from the World Bank—that the WTO should address currency undervaluation and look at the effects of climate change. But it was the reference to currency undervaluation that caught my eye. It would be an excellent thing if the WTO were to find a way of addressing it because among the underlying causes of the recession that has gripped so many parts of the world are the global imbalances that have built up, particularly as a result of the undervaluation by the Chinese of their currency. While it is not the sole reason for these global imbalances, it is a very significant contributor. It should also be noted that global imbalances produced the asset price bubbles in Europe and North America, the bursting of which have given us this recession. Moreover, as the Governor of the Bank of England warned only last week, it looks as though nothing has been done to address global imbalances and that they will return as nations come out of recession and probably be there to cause problems in the future. Something needs to be done about them.
The WTO should not be seen as an institution that exists purely to bring about successful rounds of tariff reduction. That is a good thing if it can be done, but the WTO does a lot of other good work in terms of dispute resolution. Indeed, that might well be the best future contribution the organisation can make. Indeed, if that focus on the problems of dispute resolution procedure could somehow also get around to tackling currency undervaluations and the way in which countries may be tempted to manipulate their currency for a short-term benefit, that would be another good development. Indeed, it could be something that the European Union might like to take on board.
My Lords, I join in the thanks given by the noble Lord, Lord Trimble, and the noble Baroness, Lady Cohen, for the help we were given by officials in producing this report. I also thank the noble Baroness for her leadership. How much the world has changed since we embarked on this report; indeed, it has been a somewhat long 12 months since we published it, and I am gently reminded of the expression of an author whose name I cannot remember, although others will: “The past is another country. They speak a different language there”, because so much has changed since we were in Geneva in July 2008. Then, people were still hoping to complete a Doha round when, remarkably and for the first time, the European Union was not the villain of the piece thanks to the then Trade Commissioner being prepared to take on the French and Irish farmers, never mind the French President. I heard some very uncomplimentary remarks about him in Mullingar one time in the middle of last summer.
The global economy was still steadily moving forward. Yes, there were a few small dips on the horizon such as Bear Stearns and Northern Rock, but in general people felt that they were a little local difficulty that we would ride over. Even in November the same EU Trade Commissioner, now translated into a member of the British Cabinet, said that, like the rest of us, he was still hoping for a deal of some sort. In fact a deal nearly happened, but the Americans and especially the Indians could not settle their differences. Today, Doha is a low priority for the world’s leaders. The discussions taking place right at this time in Geneva are mentioned in only one national newspaper today. Even the anti-capitalists are a shadow of their former selves when compared with the excitements of Seattle 10 or 12 years ago—a bonfire in Geneva on Sunday did not make the headlines.
Alan Beattie’s brilliant article in today’s FT, to which the noble Lord, Lord Trimble, referred, is deeply depressing. The banking crisis has brought Doha to a shuddering halt and events today make a settlement even harder to achieve than when we wrote the report. This is self-evident. First, there is widespread illiquidity, both corporate and national. Secondly, protectionist rhetoric has arisen from the banking crisis, both inside and outside the EU—the US, China, France, Germany, Russia—and even the British Prime Minister referred to British jobs for British workers. Thirdly, there has been a substantial decline in global trade volumes as a result of the crisis, which is inevitable as countries look more inwardly towards the way they do business and less outwardly than they did. Fifthly, there are continued severe trade imbalances, as the noble Lord, Lord Trimble, mentioned, with the US and Britain in huge deficits and China and Germany in huge surpluses. Sixthly, there has been severe exchange rate volatility over the past 12 months with the dollar and the euro; the Chinese position is volatile and the pound and the euro have become difficult to do serious business with. All of these factors seriously distort trade.
However, it is encouraging to note that, despite all these pressures, the rules of the WTO and of the European single market have been largely respected, although there have been a few hiccups within the EU and between China and the rest. Furthermore, there is a general recognition of the need for international co-operation in dealing with the banking crisis—unlike the 1930s—and this is the most crucial element. The IMF is better resourced and is having a relatively good war; the G20 is having some effect. I read somewhere that Russia is now seriously pursuing membership of the WTO. If that is the case, it is welcome news.
So why does getting a Doha agreement still matter? The world must trade itself out of recession—that is the only way it is going to do it—and Doha is the focal point in enabling that process to continue and to develop. The worst thing that could happen to the world would be a 1930s-type resort to protectionism. We must press on.
What are the obstacles to making progress? The banking crisis is far from over, as witnessed by what happened in Dubai this weekend. Doha is, unfortunately, low on the radar compared with that banking crisis and with Copenhagen. The new US Congress is much more protectionist than the old one. The distorting trade imbalances remain. Agricultural commodities are again unstable and farmers, not only Irish and French farmers, are demanding more state support, especially the dairy farmers. Agriculture has always been a stumbling block in WTO negotiations. Cross-border banking failures have undermined trust and confidence between countries. The regulation of financial markets remains a national responsibility, which is a large problem. Business support, which was critical in getting a settlement in the last WTO Uruguay agreement, seemed non-existent at the time of the report, which is fairly worrying.
It may be more difficult to get the EU 27 to agree a single position in 2010 as the noble Lord, Lord Mandelson, did in 2008 despite the French and Irish farmers. The EU, incidentally, has always been at a disadvantage in these negotiations because, unlike the other countries, it has to have two negotiations: one within the EU 27 to agree a position, and then with the WTO itself. Of course, during the process of the internal negotiation within the EU 27, it reveals its hand and enables other people to take a position.
I urge the G20 to intensify its pursuit of greater international co-operation in the following areas in order to lead the world out of the crisis: first, a more effective IMF with adequate financial resources, much of which is already in place; secondly, greater co-ordination and harmonisation in the regulation of global financial markets, especially between the US and the EU; thirdly, greater co-operation to tackle climate change; and, fourthly, greater co-operation to tackle tax scams. We need to make sure that the bilateral agreements which are still being made complement but do not undermine the WTO.
Where does this leave the WTO? Have international capitalism, world trade and the WTO itself been mortally wounded by these events? No, of course they have not. However, realistically, because of all these factors there is little prospect of meaningful progress in the short term in Geneva. The dust must be allowed to settle but, before that happens, I fear that there will be more banking shockwaves and even new earthquakes.
The priority, therefore, must be defensive: to ensure that countries abide by the existing rules of the WTO and, for Europeans, the rules of the single market, which are as critical. Pascal Lamy and Neelie Kroes have both done an excellent job so far in holding the line and resisting rises in existing tariffs, but they need to keep a close eye on President Obama, Premier Wen, President Sarkozy and even our own Prime Minister, and resist their protectionist rhetoric. At present, the world’s leaders are caught like rabbits in the headlights, but normality will return to the global economy only when, once again, the WTO can return to its grand objective of promoting more fair but free trade across the globe. I hope that the Minister will dissipate my pessimism.
My Lords, I begin by congratulating the noble Baroness, Lady Cohen, and her sub-committee on having produced such an excellent report for our discussion today. It has taken some time to get this debate but it is a report of great importance and I believe that, as we have already heard, it is a debate that we need to have here.
I thank the Lord President for his work as Trade Commissioner and for the evidence that he gave to the committee, as well as for coming to reply to the debate today. It is probably unprecedented for a non-ministerial witness to a Select Committee to reply to a debate on the committee’s report in this House. However, that has occurred on this occasion. As the Lisbon treaty has come into effect today, I also send my good wishes to our colleague, the noble Baroness, Lady Ashton, who today takes up her responsibilities as high representative and will in due course be a vice-president of the Commission.
I do not usually speak in debates on reports prepared by one of the European Union sub-committees. However, given that the Lisbon treaty comes into force today, I thought that it might be appropriate for me to say a few words. The coming into force of the treaty marks the end of a long period of institutional discussions and negotiations. I hope that this means that the European Union will now be able to concentrate on policy issues that are crucial to this country and to the world. The EU’s trade policy, which we are considering today, is an important example, and it is perhaps worth noting that the Lisbon treaty today extends the competences of the European Union in trade matters to include international negotiations on trade in services, intellectual property and foreign direct investment.
As the Lisbon treaty has today come into effect and this has implications for the work of your Lordships’ House and for the committee which I chair, I hope that I may be permitted to say a few words about that. For the first time, the treaty recognises a specific role for national parliaments. From today, either Chamber of Parliament is able to submit to the Commission a reasoned opinion drawing attention to any proposal that it believes is inconsistent with the principle of subsidiarity. If enough chambers of national parliaments across the European Union submit reasoned opinions, the so-called yellow or orange card procedure will apply. This will put negotiations on the proposal concerned on hold and require the Commission to respond to the concerns of national parliaments. Your Lordships may be interested to know how the EU Select Committee has prepared for this new power. We already pay particular attention to subsidiarity in the scrutiny of proposals but will in future work to try to identify subsidiarity issues at the earliest possible stage. This will be perhaps as a result of an alert from another parliament, through our own examination of one of the Commission’s strategy documents or when proposals are deposited in Parliament.
If a concern is raised, the committee will have the option to fast track its scrutiny of a proposal to ensure that its work is completed within the eight-week scrutiny period allowed for in the treaty. As soon as concern is identified, our committee staff will alert the devolved Assemblies in this nation and other national parliaments. If a sub-committee agrees that there is a breach of subsidiarity, it will produce a reasoned-opinion report for consideration by your Lordships’ House.
The treaty also enhances the House's scrutiny of government decisions to opt in to justice and home affairs measures. That goes beyond the topics of today’s debate, but I will return to it on another occasion.
These are potentially significant new powers, but I remind the House of one of the conclusions of the 2008 report on the Lisbon treaty prepared by the committee under the chairmanship of my colleague the noble Lord, Lord Grenfell:
“The novelty of the card procedures, and their prominence in the Treaty, should not give rise to overestimation of their importance … National parliaments will no doubt take the new procedures seriously, but they should not distract attention from scrutiny of policy”.
The committee will make full use of these new powers, but it will continue its vital scrutiny work of which this report of the committee of the noble Baroness, Lady Cohen, is such an excellent example.
My Lords, like other speakers, I congratulate my noble friend Lady Cohen on securing the debate and on so ably chairing the committee that produced the report before your Lordships today. As the noble Lords, Lord Haskins and Lord Trimble, said, the report was produced in 2008 and published almost 11 months ago. Since then, the financial crisis and the collapse in demand in north America and Europe has caused global recession, reducing the volume of merchandise trade by over 10 per cent this year alone, and taking the level of global trade back to where it was in 2005.
We know the recessionary consequences here, but the severe falls in global trade caused even bigger problems in low-income countries that do not have the market flexibility or social and economic safety nets to withstand such a shock. Our committee was concerned that global recession and price volatility in commodities might increase the pressure for protectionist measures. I refer noble Lords to paragraphs 18 to 21 and 54 of our report.
However, no WTO member has retreated into widespread trade restriction or protectionism, nor has there been any significant instance of trade retaliation. According to the WTO, any such measures that have occurred—and some have—covered collectively at a maximum more than 1 per cent of world merchandise trade, concentrated in particular on agricultural and iron and steel products. Evidence from WTO trade policy reviews this year confirms that most developing countries have kept to their existing trade policy course, including autonomous steps to liberalise imports in many cases, even in the middle of this global recession. Very few have reacted with trade restrictions. Zambia is one of several African countries assisted by Aid for Trade, for example, that has continued with major reforms to open up its economy despite the global recession.
The robustness of the world trade scene in the face of the worst recession in both my lifetime and that of the WTO speaks of the determination of world leaders—the G20 and others—of the massive financial and fiscal stimulus programmes that have been injected into economies, and of the robustness of the WTO itself. It speaks well of the WTO system that it has been able to withstand this massive shock to world trade.
I turn to trade in services, considered in paragraphs 23 to 25 of the report. Services make up around 77 per cent of GDP and employment in the European Union, but represent only 28 per cent of EU external trade. Services make up 64 per cent of the US economy, 80 per cent of the Australian economy, 55 per cent of the Indian economy, 54 per cent of the Brazilian economy and 40 per cent of the Chinese economy. They are therefore very important across the world, not just in Europe. Despite restrictions, international trade in services is several times that in agricultural products, yet liberalisation of trade in services has, in the words of paragraph 23 of the committee’s report,
“been curiously neglected: left until last in the negotiations and of less interest to most witnesses”.
It may be worth reminding ourselves of the wide diversity of services—there is a splendid list on the WTO services gateway page; I shall not bore your Lordships by reading it all out. An enormous range of services, not just financial, exists, in very many of which this country and the rest of the world have enormous interest.
Part of the problem in making faster progress on reducing barriers to trade in services is that the barriers are not those of negotiable tariffs, or export/import duties. More typical is the huge variety of different laws, regulations and administrative restrictions that applies to service industries. In most poor or developing countries, these are labour-intensive industries, with deep cultural and political resistance to perceived threats of competition. Often, when one barrier to a service or trade is overcome, another barrier pops up. Many government departments, agencies and interests are involved. We know how difficult it has been in some parts of service industries in the European Union to ensure free movement of trade in services. This still applies in some cases of public services in the EU. Recent banking experience in cross-border problems of consumer protection and government bail-outs in Europe alone demonstrates that liberalising trade in services, harmonising standards and agreeing regulatory frameworks are not easy matters. Nevertheless, services are an integral part of development and of prospering economies. It is the lack of many services that holds back development in some developing countries.
What is the Secretary of State’s judgment of the current status of negotiations on services within the ongoing discussions around the Doha report? Are services a matter to be dealt with after progress has been made in agriculture and industry? Or is there a desire at the European level to make progress alongside?
Due to the variety of services, there are very different interests in different countries. The lack of relatively simple targets such as bound and applied tariff levels and non-tariff duties make it difficult to go forward. Does the Secretary of State think that any significant progress can be made on services in the Doha round? If he does, what are the objectives of Her Majesty's Government as far as services go in those negotiations, bearing in mind that this country ranks second in the world as an exporter of commercial services and third in the world as an importer of services? We have an enormous interest in this.
As those figures show, the United Kingdom is a very open economy for trading in services and buying and selling abroad. What are Her Majesty’s Government doing to ensure that international market opportunities for United Kingdom service businesses are opened up more widely and quickly, whether through the Doha round or through other European Union bilateral negotiations?
The Lisbon treaty entered into force this morning. Previous speakers have made that point in tones of great gravity, but I think a little levity is in order; even a touch of enthusiasm might be allowed to creep in.
I propose three cheers. Cheer one, and here I join the noble Lord, Lord Roper, is for the noble Baroness, Lady Ashton of Upholland, who guided our exhausting and exhaustive scrutiny of the ratification Bill on the treaty with such skill. Today she starts making history as the first double-hatted vice-president of the Commission who is also president of the Council of Ministers, meeting as the Foreign Affairs Council, and high representative for common foreign and security policy. That is a very big portfolio. She carries, I am sure, the good wishes of the whole House.
Secondly, I cheer the Opposition because they decided after all that it would be best to “let the matter rest”. It was a wise decision. To campaign against a treaty already in force would be a little quixotic. But I am not sure whether it is wise, or good politics, to signal to potential European Council partners that one intends a five-year campaign to reopen matters settled in three previous treaties—the Amsterdam treaty, the Maastricht treaty and the Single European Act. It is an odd way to win friends and influence policy. Still, I have no doubt that there will be active discussion on that with the party’s new friends in the European Parliament; unfortunately, none of them is in the European Council.
The third cheer is for the press, for the wonderful skill with which they changed gear. Having spent six years denouncing the proposal for a full-time fixed-term president of the European Council—a new Napoleon, a Charlemagne, a Colossus who would dominate Europe and destroy our island liberties—within 24 hours they were denouncing the modest, consensual, collegiate prime minister given the job as quite unsuited to the tasks in hand, as if the tasks in hand were indeed the tasks of a Charlemagne rather than those described in the treaty. The switch was done with skill, and one has to applaud the effrontery.
Our task today is more mundane. We are considering the excellent report produced by the committee chaired by the noble Baroness, Lady Cohen, and completed exactly one year ago, on the Doha round and other trade matters. Alas, it is out of date in no respects. The Doha round remains virtually exactly where it was when the EU Select Committee stopped looking at it, and I do not think it is even on the agenda of the trade ministers’ meeting in Geneva today. So multilateral trade liberalisation has not moved forward, though one should applaud the efforts that Commissioners Mandelson and Ashton have made; I think Commissioner Mandelson did all that he possibly could have done but was defeated by events. One should also note that there have been advances bilaterally. If the EU-Korea free trade area negotiation is successfully completed, a lot of congratulation is owed to Commissioner Mandelson and Commissioner Ashton.
The noble Baroness, Lady Cohen, conducted the inquiry with great skill. One of her greatest skills was in controlling the recalcitrant members of the committee. We disagreed on almost everything en route. In that spirit, I would like to disagree with what the noble Lord, Lord Trimble, said today about adding financial stability to the remit of the WTO. One of the reasons why WTO negotiation has become progressively less successful is that too many issues not directly related to trade are thrown into the pot. Although I believe in development, it was not a good idea to make it a “development round”. Free trade is a better generator of economic development than aid, and to throw in an aid dossier was not a good idea.
Some would now throw in an environment dossier, but the argument that those who emit a lot of carbon should pay a trade price for it, such as a tariff or tax on their imports into other countries, is extraordinarily self-defeating. Some say that labour standards should be thrown into the WTO. I do not agree: that is for the ILO. It is often a disguised form of protectionism to demand a trade price if you consider somebody else's labour standards inadequate. I would try to keep things simple if possible. If we are ever to see this round completed, that will happen because extraneous issues are pushed to one side.
I have three questions for the Minister. First, as has been mentioned, it is exactly a year since the heads of Government of the G20 promised to,
“refrain from raising new barriers to investment or to trade in goods and services, imposing new import restrictions, or implementing WTO inconsistent measures to stimulate exports”.
That is a key pledge, because it was not the Wall Street crash that caused the great depression but the Smoot-Hawley tariffs subsequently introduced by the Americans, and the round of trade restrictions that they touched off.
Cynics last autumn pointed out that within 36 hours the Russians broke the pledge with tariffs on imports of motor cars. But I do not feel cynical about it. I cannot sense a protectionist spiral yet, either in the world trading system as a whole, or in the EU’s internal market where the Commission seems to be enforcing competition policy with sensitivity and skill, as a more recent example also involving cars, with which the Minister will be very familiar, perhaps shows.
We have a rather liberal single market. Think of the contrast with the United States. How would the American Congress have reacted had an American car manufacturer been told that it could not close a Mexican or Canadian factory and subsidise a US plant unless the US plant was the more efficient one? There would have been uproar in Congress. We have to hang on to that liberal core of the single market. In a recession it is under pressure, but I think we are doing so. Therefore, my question to the Minister is how are we doing? How is the G20 performing against its pledge; and am I right in thinking that the European Union's record has so far been pretty good?
Secondly, despite all that the Minister did from Brussels and all that Pascal Lamy did in Geneva, the round is stuck. The Select Committee’s call for further work on how best to breathe life into the process is getting more and more pertinent. As the noble Baroness, Lady Cohen, reminded us, the committee said that 10 countries represent 80 per cent of world trade, and 50 countries represent in excess of 90 per cent of world trade, which raises the question of why the other 100 WTO members have a veto, jointly or severally. The committee said:
“The consensual approach to agreement should remain a fundamental tenet of the WTO, but it is no longer appropriate however that the Organisation should move at the speed of the slowest … We therefore support an extension of the plurilateral approach to negotiations. If groups of WTO members wish to negotiate agreements on particular subjects, within the consensual approach and on terms which they then make open to all WTO members, they should be allowed to do so”.
The Government’s reaction to this recommendation has so far been slightly “Sir Humphrey” in character. They responded:
“The Government would also support consideration of increased use of plurilateral negotiations in the WTO, to allow groups of members who wish to negotiate agreements on particular subjects … on terms which they then make open to all WTO members. However, it is important to give further consideration to how this would work in practice and how to mitigate potential risks, including the capacity of the WTO to negotiate plurilateral agreements”.
I would like to know from the Minister how that consideration is getting on. I would also like to know whether he thinks, as I do, that the emergence of the trade G7—the new group made up of Australia, Brazil, China, India, Japan, the EU and the US—is a positive development, and one which might provide the key to unlock the round.
Finally, and much more speculatively, has the Minister been struck, as I have, by some of the new thinking coming from the new Government in Japan on the issues that we are talking about, particularly on how best Japan should handle its trade and economic relations with China? Mr Hatoyama has issued a number of calls for regional, rules-based economic co-operation. He has talked about the possibility of establishing in the longer term a common east Asian currency, and has pointed out more than once that,
“the experience of the European Union shows us how regional integration can defuse territorial disputes”.
Does the Minister share my view that such thinking makes a refreshing contrast to the more negative views of China that one hears in the United States and parts of the European Union; and that the right response to the recession, as Mr Hatoyama seems to be saying, is more, not less economic, interdependence and more, not less, trade?
My Lords, I am glad that the noble Lord, Lord Kerr, concluded with his remarks on Japan. It has been a feature of the recession and its effects in the West and other parts of the world that we have not paid so much attention to Japan on a number of different issues, which are all related to world economic development and progress and the resumption of growth. Japan also experienced a serious prolonged period of extraordinary recession and semi-depression, when it searched for solutions without finding them, and tried all sorts of things, including zero interest rates and so on. Japan took a long time to begin, at long last, to come out of that period. It therefore went off the radar screen in the sense of providing much intellectual thinking for the West; people had previously paid the closest attention to everything that was going on in Japan, because it was such a wonderful success story.
I mention the noble Lord, Lord Kerr, again because of his initial remarks, when he reminded us about the Lisbon treaty, as did the noble Lord, Lord Roper. We thank him for his stewardship of the Select Committee. The work that is being done in this new regime is a matter of great celebration here. Even the comics that masquerade as newspapers in Britain had to admit that Lisbon would be a good thing.
As the noble Lord, Lord Kerr, said, the extraordinary change that took place vis-à-vis various personalities was astonishing. Yet there is always strong nationalism in the British press about these matters. Pascal Lamy was regarded with great suspicion, but now the FT says that he is a much respected head of the WTO who has done well, and thank goodness his term has been renewed. Michel Barnier was not much noticed by the British press when he was Minister for Europe. More recently, however, the press has said, “This man will report straight back to President Sarkozy as a Commissioner. How disgraceful. Thank goodness we have Jonathan Faull, who is British, as his second-in-command, so it won’t be too bad, but really it is very nasty indeed”.
I remind everybody that Commissioners take an oath to represent the development and interests of the Community as a whole. The press is now saying how good it is that the noble Baroness, Lady Ashton, is now the High Representative and the vice-president of the Community because she can report back directly to the British Prime Minister on British interests and the maintenance thereof.
This is all nonsense and phantasmagorical rubbish in the British press, which has never become used to Britain being in the European Community. It even applies occasionally to the FT, which has used similar phrases in the past few days. The Financial Times would never have done that a few years ago. Given the declining circulation of all these “comics”, they are grasping at attention-seeking headlines and getting more and more desperate about the future as we see the ominous threat of the internet arresting the development of newspapers.
I also live in France, where there are real newspapers—that is a very old-fashioned thing to say—as there are in Germany. I suppose that they are slightly dull, but they are actually newspapers rather than the comics that we have in this country. The fact that the Doha round has got stuck—it has not failed but has not succeeded either, to use the able expression of the noble Baroness, Lady Cohen—will mean that we have to attend to a lot of these questions in the future. The European Union has already played a leading role in these matters and will continue to do so.
I repeat that it is sad that the United Kingdom is not a member of the eurozone because the euro has become probably the most successful currency in the world. It has some effect at the margin on global imbalances, to which the noble Lord, Lord Trimble, referred, but it is none the less an outstandingly successful international currency as well as an intra-EU currency. Britain should have had the courage to join the euro. There is still time to do so. The rest of the Union might agree, probably reluctantly, to allow us a reasonably rapid period of adjustment before we join, if any Government in Britain had the courage to say, “That is a good idea”.
We have recently informally devalued in the marketplace—not formally, this time—for the sixth or seventh time since the war. That is the easy way out; whenever there is trouble in Britain and internal economic pressure, we devalue rather than join a strong currency. The French authorities, on the other hand—not the Front National and the Communist Party, but all other parties—educated the French public for 10 years about the virtues of the strong currency system that Germany had enjoyed for so long, building up a huge rate of investment in new assets and therefore becoming the world’s strongest exporter. Germany is derided in this country. It is regarded by the British press as an unsuccessful country because its internal rate of growth was so low—until recently, when it started to pick up—as all the growth was going into exports, which used to be regarded as a very good thing in Britain.
None the less, the United Kingdom has been the subject of legitimate praise, because it has always strongly advocated free trade all over the world, as well as in the European Union with a single market, although we traditionally have always had a deficit with other advanced countries in the world. That pattern persists. We cannot seemingly get out of it. We rely therefore on the invisible earnings from the City of London to provide the difference. But here again it is very important for the City of London not to go back into a sectoral nationalism in saying, “We do not want the Commissioner in charge and the European Union regulation system to interfere too much with the City of London”. That would be very short-sighted. The City of London will benefit enormously from a Union-wide regulation system—that is supported by the Financial Services Authority and Adair Turner—with great strength and resilience. It has been agreed, quid pro quo, that the college of regulators from the nation states will work closely with it.
I, too, praise not only the new President of the European Council, the Belgian Prime Minister, who is well known and highly respected in Europe—even if not in Britain or by the British press—but the noble Baroness, Lady Ashton of Upholland, and her work.
I am looking forward to hearing the winding-up remarks of our distinguished friend, the noble Lord, Lord Hunt of Wirral. He has always been an enthusiastic European and we were grateful for the way in which he handled the Lisbon treaty, because that was difficult for him, given some of the attitudes of his senior and other colleagues. He did that very well. He has a background in the English Speaking Union and has carried out a lot of good work in the glorious free trade of the English language throughout the world. Language also assists trade and, therefore, we are lucky that we are a major trading country.
The report rightly looks forward to further reform. As we know, from 2013 the CAP will be in a much freer system, depending on how the new single farm payment mechanism works. We must ask ourselves how the banking crisis will affect the resumption of world growth and free trade that we want. I conclude with a quotation from this very good report. We thank the noble Baroness, Lady Cohen, and other members of the committee for all their work. The noble Lord, Lord Mandelson, when he gave evidence on Thursday 6 November 2008—a long time ago—said:
“I regard the cause of world trade, the openness of markets, our ability to prevent the global economic machine rolling backwards under the pressure of protectionism as vital if not more vital now than it has ever been, but I also see trade as a huge opportunity for poorer countries in the world”.
We thank him for saying:
“The main feature of my approach to trade and development during the last four years has been to harness trade to the cause of development and that too will be undimmed as I exercise my responsibilities in my new role”.
I thank the Minister for coming here to conclude this debate and I ask him to reassure us all that the Government will stick to that approach. The rest of the world needs a place in the sun as far as free trade is concerned, but that has not happened yet.
My Lords, I declare the interests set out in my entry in the Register. I warmly echo the words of many speakers in paying tribute to what the noble Lord, Lord Roper, called an excellent report. It was extremely detailed and intelligent, and this debate has been a welcome opportunity to discuss its contents. Each and every speech has underlined the importance of the issue. I have to say to the noble Lord, Lord Kerr of Kinlochard—with whom I had the honour to work when he was ambassador and UK permanent representative to the EC/EU in Brussels throughout the five years that I was in the Cabinet, between 1990 and 1995—that he is not at his best when he embraces sarcasm and levity, but I join him in his tribute to the noble Baroness, Lady Ashton of Upholland, in her appointment.
While the development of EU trade and EU participation in worldwide trade is fundamental to our economic growth, in order to unleash full economic potential, we must ensure that every nation can benefit and fairly compete in the world market. For some 50 years, trade has been getting more liberal and much of the world has been getting richer. Global trade has helped lift entire nations out of poverty. Free trade is a progressive and powerful tool for social justice and offers the most sustainable path out of poverty for those in the developing world. That has been the key message of this debate, and I commend all those who have participated.
We must recognise, as I think we all do, the critically important role that the WTO plays in this area, ensuring that free trade is also fair trade, as the noble Lord, Lord Haskins, pointed out. We have to ensure that the WTO has the authority, support and status that it requires to carry out effectively its most vital role of insisting on fair trade and monitoring protectionist attitudes of nations. I know that the First Secretary of State will say, “Where are the Conservative policies?”, as he did the last time we exchanged views across this Chamber. I refer him to our excellent document, One World Conservatism, which stresses that a deal at the WTO would be an important firewall against backsliding in the face of protectionist pressures. Yet the talks remain deadlocked. Politicians and negotiators seem to trade insults instead of letting their people trade with each other. As long as that deadlock continues, the entire world trade architecture is in danger of losing credibility. That would be a tragedy for the world and particularly for the poor. I think that the WTO is a boon for poor countries. Even the smallest country has a veto on any deal and, as the excellent speech by my noble friend Lord Trimble pointed out, it makes argument more difficult but it represents the best way forward.
We on these Benches strongly believe that the utmost priority must be given to strengthening the status of the WTO with the intention of reigniting negotiations and reaching a successful conclusion to the Doha development round. Of course, as the noble Baroness, Lady Cohen of Pimlico, pointed out, the Doha negotiations had previously broken down. I think her words were “They did not succeed”. We would like to know from the First Secretary of State what hope he holds of having a successful Doha round in the future and what actions Ministers are taking to help to improve the chances of success. The noble Lord, Lord Haskins, said that it had all come to a shuddering halt. We now need to hear from the First Secretary of State what he intends to do in response.
In their response to that report, the Government have said that they agree that trade liberalisation remains important for economic growth and development both for the UK and for developing countries and that they will continue to press through the EU for that to be a priority. Will the First Secretary of State tell us exactly what measures the Government will use to ensure that? All speakers have agreed that retreating into a state of protectionism would have hugely negative effects on the recovery from recession. As the noble Lord, Lord Woolmer of Leeds, pointed out, fortunately very few trade restrictions have occurred but there is always that danger. The ultimate goal has to be the comprehensive dismantling of trade barriers at a pace which allows British producers and those in the developing world to adapt to a truly open market. I reiterate that free trade must also be fair trade. Without going too much into the history of what happened in 2005, it was sad that the Government balked at tackling the vested interests of some of the nations. Consequently, we made only nugatory progress on agriculture, far short of what is urgently required.
The majority of the world's poorest people live in rural areas. It is said that global income could increase by almost $300,000 million within five or six years if trade-distorting policies in the merchandise trade could be eliminated. Half of that would come from the eradication of agricultural protectionism in rich countries. That sort of reform could lift between 50 million and 100 million people out of poverty.
The Government have said that they will continue to press for further reform of the common agricultural policy. What new approaches are they going to take? What assurances can the First Secretary of State give us now that opportunities will not be wasted again? Can he explain what action is being taken to push for such reform? Are Ministers also engaged actively in talks with other rich nations outside the EU to try to persuade them to liberate their policies too? One step which the UK could push for would be an immediate end to all production-related support under the CAP to bring the rest of the EU into line with England, which has fully decoupled. Can the First Secretary of State tell the House whether this action is likely to be taken? Can he also give an insight into what he feels are the opinions and policies likely to be espoused by the new EU Agriculture Commissioner-designate, and in particular whether the Government support that appointment and look forward to working with the new Commissioner, and what will be on the agenda of their first meeting with him?
I commend all those who have participated in this debate and particularly the various points raised at various stages, which I think were exceedingly helpful. This has been a short but intense debate. I hope no one thinks that I am exaggerating when I say that I think that this debate has been the House at its best. Both the evident expertise on display and the generally co-operative and positive atmosphere have done all noble Lords who have participated great credit.
There is a natural human instinct, when times are hard and the future is uncertain, to pull up the drawbridge; as several speakers have reminded us, this has happened in the past. I suppose that there has always been a tendency in the Democratic Party in the United States to do precisely that. One great president, Franklin Delano Roosevelt, courageously overcame that instinct at a time of global crisis. We must all now hope that his most recent successor, Barack Obama, will prove himself to be a great leader, too, by following the same path.
For our part, we must ensure that the EU rises to the challenge of these troubled times by reasserting its belief in free and fair trade. Although I occasionally criticise the policies of the First Secretary of State—I think he understands why I do—I just want to commend him for the skill, expertise and effort he showed when he was the Commissioner for Trade. I think that all noble Lords who participated in this debate want to put that on the record. Consequently, however, an even greater challenge now faces the First Secretary of State. What is he going to do to follow up this report? The report points the way. Are the Government going to follow? What steps will the Secretary of State take in the right direction?
Before the noble Lord sits down, can he address the issue of how his party, if in government, would consider its position to be enhanced in influencing the European Union to follow the central recommendation of the report, to which I had the honour to be a signatory, that the Government should continue,
“to pursue further trade liberalisation through the EU as an important policy objective”,
having withdrawn from the largest political group within the EU? How does that strengthen his party’s negotiating position?
My Lords, I welcome the fact that the noble Lord has entered into the debate, but had he listened to every speech in the way that I have, I would have hoped that he would have accepted that no party-political points have been made. This has been a very good debate, with speakers from all sides, so I am not going down the road he invites me to, except to say that he should read One World Conservatism, which I strongly support. I will give him a free copy.
My Lords, I hope that the noble Lord, Lord Hunt, has not got only one copy and I look forward to receiving mine in the post. I am glad to have been translated to my new role at this Dispatch Box in time to make this timely and opportune appearance in order to comment on the report, to which I originally gave evidence when I was the European Union’s Trade Commissioner. Sitting through this informative and important debate, I feel as if I have just heard four years of my previous life flashing past me in what noble Lords said about the Doha round. Their contributions reminded me how complex and technically challenging trade and trade negotiations are. However, that makes eventual agreement all the more satisfying; when, on rare occasions, you reach an agreement, you can celebrate. It is true that my time as Trade Commissioner had its highs and lows. I was burned in effigy during mass demonstrations of farmers in the capitals of various European member states and my relations with the President of France experienced the occasional bumpy ride, but I am pleased to report that all those bumps have been removed and we now experience very comradely relations indeed.
I add my cheer to that of the noble Lord, Lord Kerr of Kinlochard, in respect of the treaty of Lisbon. I cannot agree entirely with the noble Lord, Lord Hunt, that the noble Lord, Lord Kerr, is not at his best when he is at his most sarcastic. I think most of us would agree that the noble Lord, Lord Kerr, has turned sarcasm into an art form and are constantly refreshed, if not reinvigorated, by his contributions to our debates. I add my own small half-cheer for the Conservative Party’s decision apparently to let the treaty of Lisbon now rest, it having come into force. That is fine, as long as the Conservatives do not contrive to create a succession of other pegs on which to hang their anti-European hat, should they ever have the chance to do so in future.
Let me try to dissipate some of the pessimism that has been contributed during this short debate. I shall make two preliminary observations. Last month, I said in a speech in Brussels that the European Union, which represents our weight and our negotiating leverage in international trade, is at a “What kind of Europe do we want?” moment. I argued that our economic dynamism in Europe would be critical to our future overall global influence. An open trade policy is clearly central to sustaining that economic dynamism across Europe. We in Britain are an international supply-chain economy. Our customer base is literally global. You only have to look at the car industry, to which other noble Lords have referred. We export more than 80 per cent of what we manufacture in that industry, so open markets and free trade are literally our economic lifeline in this country. We therefore need the European Union to be an ambitious persuader and lever of open trade in the world. It certainly has the weight to be so, but it also needs the political will, not least to remain open to others in the world on a reciprocal basis.
My second observation is that, in negotiating the Doha round on Europe’s behalf, I was acutely aware of how the international trading system has changed to reflect the new economic balance of power in the world. It is true, as some have observed, that in previous eras and during previous trade rounds it was almost as simple as the United States and the European Union deciding what they wanted and how they wished to divide the pie in international trade and passing down these tablets of stone to a grateful world, but the world has changed completely and utterly, and for the better. We now have very many more partners in the international trading system. They have taken their place in the WTO and, as the noble Lord, Lord Trimble, observed, they have many more interests and issues at stake to introduce to those negotiations. That, of course, complicates those negotiations hugely and makes them very much more difficult to complete.
On the other hand, those interests and issues also bring many more markets to the international trading system. Some of those markets are hugely populated and are expanding very quickly. They are becoming members of the WTO and observing the rules of that remarkable institution of global governance. They are therefore providing hugely important outlets for the export of the goods, services and technologies that we generate in our own economy.
Of course the complexity is great, but so too is the opportunity offered by this fast-expanding international trading system. We have to ensure that we sustain and strengthen the WTO and its system of world trade rules and bring more and more countries and economies into the membership of the WTO. That body must provide the vehicle for international negotiation, which it does ably, apply those rules more liberally and ensure that markets around the world are not only open but remain open by binding their tariffs and the commitments into which they enter in multilateral negotiations.
It is therefore important that Britain leverages the weight of Europe and that Europe leverages its collective strength in the world both to match those emerging economic powers and giants in the global economy and to engage them very seriously in a very practical way, using primarily the multilateral means at our disposal but also, I accept, the bilateral and plurilateral means when those opportunities arise. I will come back to those opportunities in a moment.
Let me also make a simple and obvious point: open trade and the resumption of international trade—at the level and in the way we observed and experienced it before the financial crisis that we are now going through came about—are central to our economic recovery. I am afraid that global trade has gone backwards so fast over the past 18 months and more that the only precedent for this contraction is when the global economy was shut down by world war. While many countries are starting to see signs of recovery from the economic crisis, world trade is still likely to shrink by 10 per cent to 15 per cent this year. That is grave. Foreign direct investment is down 30 per cent on 2008 levels.
We are facing quite a challenge to get a strong tide of trade going again that will lift all our boats. When I say “all our boats”, I mean the economic boats of developing and developed countries alike. I can assure the noble Lord, Lord Dykes, that the Government will certainly maintain their commitment and stick to their principles in harnessing trade to the cause of development to enable developing countries—the more advanced and the less developed alike—to take advantage as they need of the international trading system. We have to remain vigilant to achieving this end. I agree with those who have observed that it will also be an important means to unwind the current massive global imbalances that exist in the global economy, which are a key contributor to the current crisis. Bluntly, we need a few more American exporters and rather a lot more Chinese importers.
Our overriding priority is to make this contraction in trade temporary and reversible. While the foot is temporarily off the gas, the last thing we should do is to start dismantling the engine of trade. We have to resist protectionism. The UK has funded the Global Trade Alert—the global trade watch—to act as a worldwide watchdog on protectionism and we have strongly backed Pascal Lamy and the WTO in their efforts. The most recent WTO report observed that we have avoided a full-scale descent into protectionism, but we cannot be complacent. We have to exert peer pressure.
In response to the first question asked by the noble Lord, Lord Kerr, on this subject, it is very important that not only the G20 maintains its peer pressure to ensure that all its members live up to the standard that they voluntarily embraced in their original communiqué, but also that the European Commission is vigilant in overseeing the working of Europe’s single market. It is true that the Commission, I think rightly, decided to introduce some flexibility in the operation of the state aid rules during the course of the crisis—not in the case of the rules applying to competition, although even in those circumstances my former colleague, Neelie Kroes, experienced considerable pressure on her, which she withstood very well. I think that it is important, and the Government’s view is, that the state aid rules should revert to their original status and kind during 2010, a view that I repeated recently in an article in the Financial Times.
Let me move on quite quickly. Having congratulated ourselves collectively on avoiding the global mistakes of the 1930s, we now have to rise to the challenge of doing everything that we can to complete the multilateral trade round, the Doha negotiations. Here, I would like to compliment the noble Baroness, Lady Cohen, and the members of her committee on their report. If I may say so, they have offered a stern clarion call. The British Government will continue fully to commit ourselves by doing all that we possibly can to help the European Commission and our negotiator, the Belgian Commissioner, who is new to the trade portfolio, to carry forward these negotiations. I would say of the new Commissioner that he is a knowledgeable individual with plenty of international experience, as I well remember from when I worked with him in Brussels. I think that he will do an excellent job and I shall certainly support him.
Without question, however, the completion of the Doha round has to remain the top priority for the European Commission, even though we all recognise the competing pressures that are operating in Washington on the US Administration. Frankly, that is not helping the United States to come together with the European Union in the sort of partnership and leadership role that ideally we would like to offer the negotiations at this time. Trade and certainly the Doha negotiations are not taking centre stage on the US Administration’s radar, I am afraid. That is acting as a bit of a brake on the negotiations and, as others have observed, the political balance and climate in the US Congress are acting as quite an obstacle to achieving further progress.
Incidentally, I remain proud of the contribution of the European Union to the negotiations previously, even in the area of agriculture. I do not recall saying that I was not ashamed of the offer; I think that I meant to say that I am very proud of the fact that we got the EU’s offer on agriculture as far as we did—that might have been a better way of putting it. The argument that we have to make both in Washington and around the world is that the Doha round and its successful completion would be a major stimulus package and a very important and timely aid to the recovery of the global economy. That is why we have been consistent in putting Doha at the front of G20 commitments.
I would like to think that success at Copenhagen on climate change would inject a bit of multilateral vigour from which Doha might benefit, but I do not think that we are yet in a position to cheer the outcome of Copenhagen. Equally, however, open trade is an important tool for securing the change that we need in order to tackle the climate crisis by technology transfer through commercial solutions and in the way in which we trade. It is important that we look to the trading system in order to strengthen our combat against climate change, but equally it is important that we do not encourage the climate change talks unwittingly to lose their way and suddenly find themselves on a by-way or, as some would put it, in a cul-de-sac through the introduction of border adjustment mechanisms. They would be trade restrictions and therefore protectionism by any other name. We have to be careful to prevent the climate change negotiations from pursuing that route.
Let me now touch, briefly, on one or two other issues that have been raised. The noble Baroness, Lady Cohen, referred to the risk of bilateral agreements between the European Union and other countries and groups of countries in the world becoming a kind of spaghetti bowl in which we would see a glorious diversion of world trade without necessarily adding to its sum total. I was acutely aware of that risk. The Commission is avoiding the risk in its continuing negotiations with south-east Asia and with Latin America—with the central American and Andean communities and with Mercosur.
The noble Lord, Lord Kerr, raised the interesting question of whether, in addition to pursuing bilateral trade agreements, we should favour plurilateral negotiations that might lead to plurilateral agreements. I am not against a plurilateral approach. I agree with the importance of the trade G7 as a route to securing an advance in the DDA and I am ready to encourage work in the WTO and by its members on making progress through plurilateral negotiations and agreements as long as they do not undermine the multilateral system and the multilateral goal of a completed world trade round.
The noble Lord also made the interesting suggestion that we should welcome rules-based regional co-operation in east Asia and the possible creation of an east Asian market and currency. I do not think that that prospect is near—it is certainly not around the corner—but the ideas put forward are imaginative, stimulating and useful, not only in the context of regional relations in east Asia but also by injecting impetus into the international trading system via that plurilateral route. We are not against that.
The committee entertained some criticism of the way in which the Commission approached and handled the negotiations—taken on largely by me—with African, Caribbean and Pacific countries, which are among the least developed countries in the world. This is not the moment—we do not have the time—to go into the ins and outs and the whys and wherefores of these challenging negotiations with African countries but, in my experience, most of the criticism of our handling came from people who rejected the principle and concept of trade agreements between the European Union and the ACP countries. They did not want the negotiations to start in the first place because they have a backward-looking view of the role of trade in bringing about development. They saw liberalisation—gradual, of course, in the case of the least developed countries—and the slow integration of those countries into the international trading system as a threat rather than as an opportunity. I do not accept that world view. I ask noble Lords to take into account the fact that in most cases, but not all, the criticisms came from those who did not agree with the idea of trade being harnessed to development in the first place.
My next point concerns the European Parliament’s new role in European trade policy. I think that it is good: we need to engage colleagues in the European Parliament and help them to play a constructive role in supporting and shaping the Commission’s negotiating work. This new framework will be good for the legitimacy of the European Union’s trade policy as long as we can avoid the wider institutional process slowing down the wheels of policy advancement, as we have seen happen in the United States. I think that it would be damaging to our trade policy if we were to lose sight of our objectives and the urgency of what we are trying to do in the corridors and committee rooms of the European Parliament. It would set back the credibility of Europe’s trade policies and standing in the world if we were to find our mandates being blunted and feet being dragged in the European Parliament when it came to endorsing the results of our negotiations.
I conclude by apologising for not responding to all the points that have been raised. My noble friend Lord Woolmer raised an important point on services, which I shall be happy to write to him about. I would say only that in the context of the DDA the negotiation of services liberalisation is on a different timeline from that relating to goods, but it is absolutely essential for us not to lose sight of the importance of services liberalisation. This is not, as my noble friend pointed out, a matter of tariff reduction or elimination; it is a matter of coming to grips with legislative and other regulatory restrictions to trade. That is very difficult to negotiate but very important for us to do, particularly in the context of our bilateral negotiations and agreements when agreement on services liberalisation remains so elusive in the multilateral context.
I have always been a defender of open trade and I think that, in a sense, the banking crisis has been seen as a crisis of globalisation. I accept that what we have gone through raises questions about globalisation and its close cousin, the international trading system, but I do not think that that should lead us to the conclusion that it negates the huge benefits generated by both globalisation and international trade. Certainly, the banking crisis raises all sorts of problems relating to the openness of capital markets and how we manage them, but it has not undermined the basic case for openness and the free movement of capital, goods, services and people. As I said at the outset, those remain absolutely fundamental to our prosperity and standard of living in this country. That is why the Government’s policy, backed by the views of the whole House, with one or two notable exceptions, will remain committed to the openness and health of the international trading system, which your Lordships’ report has done so much to underpin.
My Lords, I thank everyone who has taken part in the debate for their very thoughtful contributions. In particular, I thank my noble friend Lord Mandelson. Most of us who have spoken in this debate had thought about trade, had taken evidence on trade and had read about trade, but my noble friend Lord Mandelson has actually done it—he has done the negotiations and the hard graft, and it is extremely valuable to have that experience.
My noble friend has not been able to give us any real reassurance on when negotiations can restart, or their likely success when they do. As he rightly pointed out, there are many difficulties in front of us—quite as many as when the talks failed to conclude in 2008.
I am well aware that in urging him to keep going I am preaching not only to the converted but probably also to the “saved” in this context. However, we all need international trade. If the opinion of this House can add any weight to my noble friend’s elbow in deliberations, we are absolutely in favour and wish him well in any negotiations, in the hope that he can get this round started again.
Social Security Regulations
Motion to Resolve
That this House regrets that the Social Security (Miscellaneous Amendments) (No. 4) Regulations 2009 (SI 2009/2655), the Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2009 (SI 2009/2678) and the Social Security Benefit (Computation of Earnings) (Amendment) Regulations (Northern Ireland) 2009 (SI 2009/2679) apply only to public authorities required by law to involve service users and carers, and not to organisations so required by Government policy guidance, nor to charities and voluntary organisations.
My Lords, anyone who has followed the campaign on easing barriers to involvement for people on benefits will realise what a milestone this legislation represents. The Minister has been fully engaged with it, certainly for as long as I have, and I pay warm tribute to him for his work on this issue.
I had originally tabled a “take note” Motion to this order to mark the end of this long campaign to allow all those service users on benefits who help public authorities to plan, design and monitor their services to be able to keep their reimbursed expenses without those benefits being affected. The orders under discussion remove two benefit rules: one on reimbursed expenses and the other on notional earnings. However, as my Motion explains, the new rules enshrined in these orders, although welcome, only cover involvement as prescribed by law, not by policy guidance, and could cause terrible confusion in Jobcentre Plus offices over the payment of benefits.
I shall try to explain the background to these orders as succinctly as possible. All kinds of bodies are required by law, or by policy guidance, to involve service users and, sometimes, their unpaid carers in the health and social care field. These bodies include local authorities, the NHS, universities which train social workers and undertake research, the Care Quality Commission, the General Social Care Council, Skills for Care, the National Institute for Health Research and many others. The rationale is, of course, that people who receive health and social care services are those best placed to make a contribution to improving standards by giving their views on the planning, design and monitoring of those services. The perspective that these people can bring is key to the development of good practice.
Service users assist in a wide variety of ways, such as inspecting residential care services or psychiatric hospitals, helping to train social workers and advising on research studies. They participate in all manner of committees which design and monitor health and social care services. Often, as a matter of policy, those with the greatest needs, such as those with severe recurrent mental health problems and multiple admissions to hospital, are invited to become involved. Government policy has for several years been to ensure that service users and carers are not left out of pocket as a result of involvement, to reimburse these expenses and to offer payment of a small fee where appropriate to incentivise participation. Travel costs from their home to their place of involvement are reimbursed, either for public transport or for their own, perhaps adapted, car. People with a learning disability may need a facilitator—perhaps a speech facilitator—to assist them, the cost of which is reimbursed, as is the cost of a personal assistant for some wheelchair users. So far, so good.
However, difficulties have arisen because many service users involved with public authorities in this way are on benefits, and there are, quite rightly, strict rules about the amount of money that a person can be paid while on benefits rather than in paid work.
When I moved an amendment on this subject during the Report stage of the Welfare Reform Act 2007, the Minister announced that the amount that people who are on means-tested or income-based employment and support allowance could earn for up to 16 hours a week of permitted work was being lifted from a maximum of £20 a week to the same amount allowed for those on contributory ESA, which is now £93 a week. That would apply for 52 weeks only, after which, as with Cinderella at midnight, the original amount of the disregard of only £20 a week would apply.
Welcome though the change that the Minister announced was, it did not alter the fact that, where a small payment was made and the reimbursed costs of travel and possibly of a replacement carer, a child carer, a facilitator or a personal assistant were treated as earnings and totalled with the payment, even the limit of £93 a week was in many instances too low to ensure that benefits were not affected. Many services users and carers who were not aware of the strict earnings rule found that their benefit the following week was reduced, sometimes to nil, simply as a result of their assisting with government policy.
In these instances, many service users and carers quite understandably dropped out of further involvement. If the service user understood the rules and declined to accept any payment or reimbursement, or a lesser amount than that offered, because it might interfere with their benefit payment, the notional earnings rule kicked in, and the amount that the person could have received was deducted as though it had actually been received. These two rules have now been changed by the instruments—hurrah for that.
That is the background in a rather large nutshell. However, not everything in the garden is quite lovely yet. The main problem identified by many consultees on the regulations is that there are public bodies, as well as charities and voluntary bodies, to which the legislation will not apply. This is the reason for my Motion to regret.
I shall give some examples, first, of public bodies to which the regulations do not apply. I gather that the legislation does not apply to involvement in research concerned with the protection and promotion of public health, and research undertaken in or by the Department of Health, its non-departmental public bodies and the NHS. It includes research undertaken by charities, the research councils and universities within the health and social care systems.
In 2005, the Department of Health issued the second edition of the research governance framework for health and social care, which requires that:
“[Research] participants or their representatives should be involved wherever possible in the design, conduct, analysis and reporting of research”.
The director-general of research and development for the Department of Health has written to all NHS trusts and health authorities saying that,
“the national ambition is to double the number of patients taking part in clinical trials and other well-designed research studies within five years”.
The NHS operating framework states that,
“the NHS must play its full part in supporting health research … All providers of NHS care will need to increase their participation in research”.
The Department of Health provides strong guidance for service user involvement, but involvement is not required by law.
Universities are required by law to involve service users and carers in the delivery of social work training courses, but where the same university or further education institution might undertake research or provide a degree-level course in, let us say, psychology, although it is considered good practice to involve people with experience of using mental health services, involvement is, again, not required by law.
A similar dilemma arises for not-for-profit organisations, charities and voluntary organisations that represent people who use health and social care services. The DWP has advised certain charities that where an organisation to which the legislation does not apply is commissioned by another organisation to which the legislation does apply to involve service users and carers in the piece of work, the benefit changes will apply—but not otherwise.
Let us say that Mind is commissioned to support service users to be involved in hospital inspections by a national body that is required by law to do this. Mind understands that benefit rules have changed, so it reimburses travel expenses and pays a small fee within the permitted work limits, and there is no problem. However, when it sets up a steering group of service users to monitor the development of guidance for those coming off medication, it runs into problems.
For example, Elizabeth and Jane are on benefits in view of their long-term mental health problems and are part of a steering group that also took part in the hospital inspections. They are given £12 travel reimbursement plus £20 for the second episode of involvement, although they were offered £40. When they tell Jobcentre Plus what they were offered, however, they have £20 notional earnings and the travel expenses deducted from their benefits because the second episode of service use was not required by law. This puts an enormous burden on Jobcentre Plus staff who have had to undertake research into whether a non-departmental body, institute for further education, not-for-profit organisation or charity is involving service users and carers because it is acting in accordance with its internal policy or on behalf of a public body that is required to involve service users by law.
In paragraph 8.1 of the Explanatory Memorandum to Statutory Instrument SI 2009/2678, under “Consultation outcome”, the department acknowledged that although the proposal is warmly welcomed,
“some have questioned the fact that it will only apply to service user activity in the public sector”.
We are then told that:
“The Department will evaluate the impact of this change before taking a view as to whether it should be extended beyond those service users who are engaged by public bodies”.
This may make service users and carers uncertain about their position, and may make some of them reluctant to take the risk if their benefit income could be docked. Will the department evaluate the impact of this change as soon as possible so that any confusion about which episode of participation by service users the benefit changes will apply to will be kept to an absolute minimum?
I note that the Social Security Advisory Committee minutes of August this year include a paragraph about this very matter. A member of the committee asked specifically about research, and was advised by a DWP official that research was not covered by the regulations, but that in the light of this the DWP would have to look again at payments with regard to research and come back to the committee.
I have three questions for the Minister. First, according to the DWP, the term “service user groups” is intended to cover individual service users and carers who are unpaid friends or relatives. However, public bodies are concerned that the term does not adequately describe the various circumstances of involvement that may often be arranged with individuals rather than groups, and that mention of carers is not always made. I think the noble Baroness, Lady Pitkeathley, will speak more on this in a minute. Will clear guidance be given to all Jobcentre Plus officers and benefit advisers so that this information is correct?
My second question is about the term “expenses”. I understand that the DWP has said that the definition of expenses is intended to include all expenses that are required for involvement, including those for travel, a replacement carer, childcare and the cost of a personal assistant, support worker or facilitator. However, social security legislation does not recognise these terms, so guidance to Jobcentre Plus decision-makers will be very important.
My third question is about the term “notional expenses” in the statutory instrument. Should that read “notional earnings”, or are the two terms the same?
Finally, the Minister does not have to urge me not to press the Motion. It would be against the spirit in which we have all worked to bring in these important changes. I reiterate my thanks to him for all that he has done about this so far, and I look forward to the debate and to his reply. I beg to move.
My Lords, the noble Baroness, Lady Thomas of Winchester, has raised an important issue. It is one that she has raised several times before in your Lordships' House. I congratulate her because, every time she speaks on this subject, the Government swing a little more towards her opinion.
During the passage of the Welfare Reform Act 2007, the Government started off in Committee completely opposed to the noble Baroness's suggestion, but by Report announced a raise in the earnings disregard level in response to her amendment. By the time the Minister spoke in May 2008 on the same issue when responding to the comments of the noble Baroness on the employment and support regulations, he teased your Lordships' House with a promise that the Government were considering her point further and that an announcement would be made by the end of the year. I assume that the provisions of these regulations dealing with payments made to service users are the result of that further consideration, more than a year and half on. If I have missed an important step in this long journey, I apologise to the House. It is not easy to track the Government’s policy development through Hansard.
It is remarkable that, despite the Government’s apparent U-turn on how payments to the service users covered in these regulations should be treated, the Government have still failed to meet the noble Baroness’s original concerns, many of which my noble friend Lord Skelmersdale, who participated in this debate, fully shared. Service users should be encouraged to participate in improving our public services and any uncertainty about whether that participation may result in the loss of their benefits is not helpful. Service users are, as I am sure we would all agree, a vital part of adjusting public service delivery to the needs of the public. However, instead of recognising that in the treatment of the payments that might be paid, the Government’s provisions today appear to establish a two-tier level of appreciation. Not surprisingly, such as step was criticised by many stakeholders during the consultation and I wonder why the Minister did not consider their concerns valid.
I am sure that the Minister will assure us that he and his department do not consider the contribution made by service users to charities or voluntary services to be in any way less valuable than that made to public authorities. I hope, therefore, that he will explain why such a distinction has been drawn. Are there differences in the levels of payment typically made to service users in each sector? Is there a variation in the amount or quality of work that they undertake? What difference do the Government see between the two groups? Does this distinction between the two different types of service user extend to the amount of hours they spend on this sort of work too?
On reading Hansard from 2007 to try to understand the Government’s thinking on this issue, I was struck most of all by the enormous complexity of the whole system of benefits, work-related activity and disregards. Noble Lords have the advantage of access to briefing papers, helpful diagrams produced by the department and the chance to quiz an extremely knowledgeable and approachable Minister on the subject, but still, some confusion always remains. Imagine how hard it must be for the general public to navigate these waters, chock full of grey areas, inconsistencies and the constant fear of taking a wrong step that might result in benefits being cut. These regulations add yet another complexity to the rules. How do the Government plan to explain to service users just which bodies they may work for and which they may not, without impacting on their earnings disregard?
The Government have managed, despite what I am sure are the very best of intentions, to make life just a little harder for some of the most vulnerable people in our country. I look forward to hearing the Minister’s response and hope that my pessimism as to the effect of these regulations will not be borne out.
My Lords, I declare an interest as vice-president of Carers UK. I want first to commend the progress that we have made with involving users and carers in consultation and all forms of policy development. I am long enough in the tooth to remember when it was very different and people looked askance at the idea of having service users and carers involved in policy development. Now it is absolutely up there; the progress that we have made is simply phenomenal and how we do it is the envy of the world. The orders before us today are further evidence of enabling carers and service users to participate in those consultation processes. I echo the noble Baroness’s “hurrah” for that.
Part of the problem that we face today, and which the noble Baroness has so eloquently set out for us, is precisely because of the progress that we have made. It is so much, as it were, in the rubrics of our policy and law now that we—including Ministers occasionally, and officials sometimes—forget how precise wording must be to cover all bases and ensure that service users and carers are not disadvantaged and excluded from claiming appropriate benefits and expenses; or, indeed, excluded from consultation itself. If we do not get these things right, they will vote with their feet and not participate at all. I must endorse how important it is that we cover all organisations and do not rely just on the law.
We have been here before. I remind noble Lords about the Health and Social Care Act, which originally referred only to service users and the public being consulted. We managed to get that changed here in the House of Lords. I am very proud of what we did. We got a very good amendment agreed and an absolute commitment from the Government to including carers in those consultations. However, the regulations before us today now partly contradict this by further limiting the ability of carers to participate.
The very clear definition in the Health and Social Care Act is that “service users” means people who use health or social care services, and “carers” means people who care for service users as relatives or friends. Yet with this clear definition on the statute book, the DWP seems to be using a different definition, which is now referred to as “service user groups”. I understand that the department has said that it intends that “service user groups” includes carers and, therefore, the regulations do not need amending. It has also said that the guidance for Jobcentre Plus would reflect that carers were supposed to be included in that term, but it does not yet do so. In any case, the guidance is insufficient. It is guidance only for Jobcentre Plus, which makes the decisions about whether to cut somebody’s benefit.
I believe that carers will not get that far in some circumstances, unless the regulations make clear that they are included. Local authorities and the other bodies to which the noble Baroness on the Front Bench has referred will look at the legislation and say, “We only pay service users, not carers”. There needs to be better guidance on this. The only way of ensuring that all organisations considering involving carers know that they can compensate them is by writing the regulations properly and including charities, research organisations and organisations such as non-departmental public bodies. We have come so far; let us be sure that we continue the admirable progress. I am sure that the Minister will be able to accommodate us in some way.
My Lords, I want to intervene briefly as I was intrigued by the Motion. My mind went back to 2007, when it certainly seemed that tremendous progress had been made. I congratulate the Minister on the fact that users and carers have been involved to a far greater extent than anybody would have thought when the Government first entered office. However, yet again, we have found an inconsistency. I hope that this debate will take us a step closer to achieving our goal, although I am never certain that another inconsistency will not be discovered. We very much congratulate the noble Baroness, Lady Thomas of Winchester, on the beautifully clear way in which she explained how the situation has developed. It seems totally mad that a Government who are so keen on volunteers, voluntary organisations and charities, and have done much to support them, should be responsible for introducing this differentiation, which is not in their favour any more than it is for users and carers. I very much hope that the Minister will be able to reassure us and move us close to parity—if not to complete parity—in all these areas.
My Lords, these regulations introduce very welcome changes, but they seem to have been drafted in rather a hurry and have left some unfortunate gaps which need to be plugged. This seems to be a case of cock-up rather than conspiracy. Nevertheless, they give rise to some unwelcome consequences that need to be addressed. Because I firmly believe that a conspiracy is not involved, I hope that the Minister will have sufficient wiggle room to make the small changes which are needed to make these very welcome regulations nigh on perfect.
Like others, I congratulate and thank the noble Baroness, Lady Thomas of Winchester, for having brought this Motion forward. She has put her finger on an important problem. Now that she has highlighted it, I feel fairly confident that the Minister will be able to take it away and get the necessary changes made to the regulations. Before I go any further, I apologise to the noble Baroness, Lady Thomas, the Minister and the House for the fact that I shall not be able to stay until the end of the debate, although I should very much like to, due to a long-standing commitment. I hope that the House will excuse me in the circumstances. That being the case, I shall try to be brief. The noble Baroness set out the position very fully and I do not want to weary the House by going over the same ground again.
As we have heard, all kinds of bodies are required by the law or policy guidance to involve service users and their sometimes unpaid carers in the health and social care field. As we have heard, people who receive health and social care services are in many ways those best placed to contribute to improving the standards of these services by giving views on their planning, design and monitoring. In my early campaigning days it was a major preoccupation of mine to get recognition for the contribution that service users had to make to the improvement of services. It is good to see that this principle is now widely recognised and firmly established in public policy. Indeed, it has been government policy for several years to ensure that service users and carers are not left out of pocket as a result of their required involvement in the development of services. It has been policy to reimburse their expenses and sometimes offer a payment of a small fee, where appropriate, to incentivise their participation.
However, as the noble Baroness pointed out, difficulties have arisen, because many service users who participate in this way with public authorities are on benefit, and there are strict rules on the amount of money that a person can be paid while on benefit, as opposed to when they are in paid work. Where a small payment is made, travel expenses, the costs of a carer, facilitator or personal assistant are treated as earnings, and the total may exceed the limit set on the amount that a person can be paid in a week while on benefit. These regulations allow the expenses of paid involvement to be ignored, rather than treated as earnings. The notional earnings rule, whereby a person who declines payment—because it might affect their benefit—can have an amount deducted as though it had actually been received, is abolished by these regulations.
This is welcome, but the department seems to have screwed up a bit in translating its good intentions into practice. Public bodies are concerned that the term “service user groups” does not make it sufficiently clear that individual service users are covered by the regulations and does not adequately describe the variety of involvement arrangements made with individuals, rather than groups. No mention is made of carers and others who may support the individual service user.
The main problem identified by many of those consulted about the regulations is that there are public bodies to which the regulations will not apply, or to which they will apply only for certain categories of involvement. They will also not apply to certain charities and voluntary bodies, unless the involvement is commissioned by a prescribed public body that is required by law to involve service users. Involvement in research is also not covered, although it has been recognised for some time that it is good practice to involve service users in research on services.
The Department of Health provides strong guidance for service-user involvement, but involvement is not required by law. Yet the regulations apply only where involvement is required by law. This will place Jobcentre Plus decision-makers in a difficult position. They will have great difficulty in differentiating between involvement required by law and involvement required only by policy guidance and good practice. Errors are bound to be made, and service users will risk their benefits being reduced because their expenses were treated as earnings or notional earnings were applied. The department acknowledges that some have questioned the fact that the regulations will apply only to service-user activity in the public sector. We are told that the department will evaluate the impact of this change before taking a view as to whether the policy should be extended beyond service users engaged by public bodies.
As noble Lords will know, I am vice-president of RNIB, and I declare my interest. We were consulted by an independent consultant about these regulations and we made a number of comments. However, we have been disappointed that they have not been taken into account in the framing of the regulations, nor have they been taken into account in the guidance. Our comments were to the effect that charities should certainly be included. Many of our service users are on benefits but they give inestimable assistance on our committees and working groups and, naturally, we reimburse the expenses they incur in those activities. It seems quite wrong to us that the regulations should not apply to those expenses as they apply to the other expenses where public bodies are concerned. The department has said that it will see whether the regulations should be extended. It seems to me that the case for their extension has been very well made already and I very much hope that the Minister will be able to take these comments into account and have another go at the regulations before they are finally issued.
My Lords, I thank the noble Baroness, Lady Thomas, for bringing forward this Motion which has given us the chance to talk about these important issues. I also thank all noble Lords who have participated in this short debate. No one has done more to campaign on easing the barriers to involvement of people on benefits than the noble Baroness, Lady Thomas. I have listened with great interest to the points that have been made and I would like to thank all the organisations which contributed to the development of this policy by meeting my officials and taking time to offer advice on the regulations and guidance.
I shall start by explaining how we set about defining what we mean by a service user group in these regulations. Clearly, it has exercised a number of noble Lords. I say in reply to the noble Lord, Lord Low, who, as he explained, has unfortunately had to leave us, that where we have ended up is neither a conspiracy nor a cock-up. I say to the noble Baroness, Lady Morris, who said that we were adding complexity by these arrangements, that I do not agree. I believe the ways in which we have constructed them means that the changes are simple. As noble Lords will have gathered from today's speeches, there is a wide range of what could be described as involvement activity. It is not always easy to cover all possible scenarios in regulations or guidance without sacrificing clarity and accuracy. We were keen to make the new rules simple enough for our customers and staff to understand and reduce as far as possible the scope for interpretation by Jobcentre Plus local offices. We also wanted to avoid an obligation on people to provide large amounts of information about their involvement or have to justify what they were doing. The best test is whether it sets out the full limits of the easement.
As a result, the definition in the regulations describes a service user group as a group of individuals who are consulted by, or on behalf of, a public or local authority in Great Britain or Northern Ireland for the purposes of monitoring and advising on a policy of that body or authority. The regulations go on to make specific reference to the key statutes that require such bodies to consult people. This list is underpinned by a catch-all reference designed to include any areas not covered by our list of statutes. It would have been ideal to have a full list of all the individual Acts that require public involvement or consultation but there are simply too many and such a list in our regulations would inevitably need regular updating.
We believe that this definition is clear and straightforward. Effectively, where there is a statutory duty to involve service users, any expenses paid to a service user are now completely disregarded for benefit purposes. It is worth reminding noble Lords that this improvement will help all service users, although this debate has focused much on disabled people for whom these provisions are especially welcome. Disabled people will have particular expenses connected with their involvement; for example, someone who is visually impaired may need someone to read to them relevant papers before an event. Others may need the help of a carer or personal assistant to accompany and assist them. Now every single item of expense will be completely disregarded.
In addition, we were made aware of situations where service users have had notional income scored against their benefit entitlement, as the noble Baroness, Lady Thomas, explained. Our notional income rules allow the department to assume an income in situations where it is reasonable to expect that a person would be paid for a service they have performed. The purpose here is twofold: both to protect people from being exploited and to prevent abuse of the benefit system. Until now, if an organisation wished to involve people as service users but offered a lesser amount of money to comply with the benefit earnings rules, they fell foul of these notional earnings rules. They also caused confusion for people in receipt of benefits who did not know how much they could accept without being at risk of losing their benefits. Our changes remove service users completely from the scope of our notional income rules.
Both these changes will make it much easier for people receiving benefits to come forward and participate without worrying about losing their benefits. We want to encourage that to happen and, under our definition, so long as the service provider tells Jobcentre Plus staff that their involvement is within this definition, that will be enough.
The Motion today is about people who may fall outside the definition. We have been told that some people can and do take part in a broad spectrum of involvement activity not required by law. The real question, therefore, is where we draw the line when it comes to our definition of service user activity. While involvement such as hospital inspections or health research may lack some of the more formal aspects of employment, people are performing a service for which they are often paid, in many cases on a regular basis and at a commercial rate, within the context of semi-formal work arrangements. There is a real risk that widening the definition to bring in more people could be seen as unfair to others who may be doing something just as useful, such as nursing or child minding.
There are other reasons for drawing the line where we have. First, our definition covers all areas where there is a requirement for public service involvement, including those which many will see as being key—for example, health, education, housing, policing, social care and local authority service delivery. Secondly, it sets out the full limits of the easement which will ensure clarity and accuracy for both our customers and our staff. There is extensive legislation that requires public consultation or involvement in this way across the piece, so what we have done will have a very wide impact.
The benefit system has always recognised the important role that third sector organisations play in our national life and already accommodates payments they may make to service users in a favourable way. For example, our rules allow us to disregard any expenses paid to somebody who is engaged by a charitable or voluntary organisation, or is a volunteer, provided that is all that they are paid. People who are being paid as service users would have the advantage of both our system of earnings disregards and, if appropriate, our permitted work rules. As we have heard, the former would allow, for example, a disabled person to earn up to £20 per week before their benefit was affected, and the permitted work rules would allow a person in receipt of employment and support allowance to earn up to £93 for up to 52 weeks before there is any impact on their benefit entitlement. In addition, a one-off involvement in a research project would not generally be treated as work for benefit purposes and any payments would either be treated as income or, in some cases, as capital.
The noble Baroness asked me three questions at the end of her speech, the first of which was whether the use of the term “service user group” is intended to cover individual service users. We cannot envisage a situation where public bodies would just consult a single individual and no one else over how they design and deliver their services. So even though a service user involvement may take place on a one-to-one basis, we would still see them as being part of a wider service user group so that we are content that our definition will be fit for purpose. However, we will ensure that our guidance is strengthened to address this particular point.
In addition—my noble friend Lady Pitkeathley was particularly focused on this point—the expense of engaging a carer or personal assistant to help our customers with their service user involvement is now being treated as a key expense that we would disregard entirely. The carer themselves would be able to claim all their expenses if they were giving their services voluntarily; otherwise any earnings they received from the service user would fall within the existing benefit rules.
The noble Baroness’s second question was about the definition of expenses. Again, I am happy to confirm that the changes we have made will now allow us to disregard all expenses paid or reimbursed to any of our customers who take part in service user activity, and our guidance fully reflects that position. It will cover each item that the noble Baroness instanced.
The final point that the noble Baroness made relates to the term “notional expenses”. She asked whether they are the same as earnings. I am sorry to say that there was a small drafting error in the Explanatory Note attached to the first set of regulations that form the subject of the regret Motion. The note should read that the regulations in question provide a disregard for any expenses and remove our service user group entirely from the operation of the notional income rules. Happily, this is exactly what the regulations themselves now deliver, and I will arrange for the small drafting error in the note, which does not form part of the regulations, to be rectified at an early opportunity.
We plan to evaluate the changes and will involve customers and customer groups, such as Mind, as well as those Jobcentre Plus staff who are administering the rules. As part of that evaluation, I will think further about the arguments put forward by noble Lords this evening for extending the rules and will consider whether anything further should be done. Crucial to that consideration will be that any widening of the rules does not undermine the policy intention, so that, for example, it brings in commercial organisations, or that it broadens unduly the definition of service users set out in the regulations. This will include the points raised by members of the Social Security Advisory Committee.
We believe that the changes these regulations have put in place will make a real difference to those of our customers who, as service users, come forward to take part in this important civic role. We believe that the changes will remove any concerns they may have on the impact of their involvement on their benefit entitlement.
There were a couple of specific points. My noble friend Lady Pitkeathley referred to the need for better guidance for carers. As part of our evaluation, we will consult carers’ organisations and make sure that we provide suitable guidance. The noble Lord, Lord Low, said that the changes will cause confusion. We will work with service providers and public bodies to put together guidance for service users to produce as much clarity as possible. To return to the issue of the treatment of carers, carers who are participating as service users in their own right within the rules are fully covered by our changes. Carers accompanying service users in an unpaid capacity will already have all their expenses disregarded.
I hope I have covered each of the points that have been made. I acknowledge there is a warm welcome for the progress we have made and still some concerns about those areas that we have not covered. I have explained that we will undertake an evaluation of this. I conclude by thanking the noble Baroness, Lady Thomas, for her engagement and support on this agenda. I know I do not need to ask her not to press her Motion as she has already said that she will not.
My Lords, I thank all noble Lords who have participated in this short debate. It is nice to see more than three or four noble Lords in the Chamber for any debate on a DWP matter. I thank the Minister and other noble Lords for their kind remarks. This has been a joint effort.
I am still a little unclear about why we cannot make more progress on research in this health field, which is urged at every turn by the Government. For example, Reward and Recognition, which was published in 2006, refers to effective involvement and states:
“Payment is also an option, and people should be offered reimbursement for any expenses incurred”.
This is all we are asking for: that out-of-pocket expenses are reimbursed in the field of health and social care and in no other field. The Minister talked about the police and all these other things, but we are talking only about the health and social care field and service users on benefits. That involves a narrow group of people and a narrow set of circumstances, but it does include health research, which will not be covered by the regulations.
Will the Minister consider our having another meeting with a Jobcentre Plus official just to see whether this is a real problem that is causing confusion? I note that he says he does not think that it is, but my advisers think that it really will cause a lot of problems. This is the last thing that we need, and I wonder whether he would be willing to consider such a meeting.
Northern Ireland Assembly Members Bill [HL]
My Lords, noble Lords will be mindful of the move towards independence in the setting of salaries and allowances for elected representatives here at Westminster. At present, the Assembly is responsible for paying salaries and allowances to its Members and for setting the levels of salaries, but it is currently prevented from delegating control of the salaries and allowances of its Members to an independent body. Section 47(7) of the Northern Ireland Act 1998 states explicitly that the Assembly may not delegate such functions. The Bill removes this restriction and enables the Northern Ireland Assembly, should it decide to do so, to confer the functions of setting salaries and allowances for Members of the Assembly on an independent body of its choosing. The Bill does not place a duty on the Assembly to change its system of determining salaries and allowances, and it leaves it to the Assembly to decide what type of system to adopt.
Presenting the Assembly with the power of delegation is not as straightforward as merely removing Section 47(7) of the 1998 Act. The Bill expressly provides that the Assembly may delegate the control of its salaries and allowances and makes a number of technical but important consequential amendments. None the less, the Bill is small, with only three clauses.
I now turn to the detail of the Bill. As I have said, it consists of only three clauses; it has no schedules. Clause 1 amends Section 47 of the Northern Ireland Act 1998 to enable the Assembly to delegate the power of determination in setting salaries and allowances. Subsection (3) introduces two new subsections to the 1998 Act. New subsection (2A) makes it possible either for the Assembly to determine salaries or allowances payable to Members or for those salaries and allowances to be determined by a person other than the Assembly. New subsection (2B) makes it clear that different salaries may be set for different jobs, such as those of Ministers or Whips.
Clause 2 makes consequential amendments to Section 48 of the 1998 Act. This clause deals with pensions, allowances and gratuities for persons who cease to be Members of the Assembly, or who cease to hold certain offices but continue as Members of the Assembly. Clause 3 deals solely with the Short Title and commencement; Clauses 1 and 2 of the Bill come into force by commencement order.
Noble Lords may also find it helpful if I outline briefly what is likely to happen following the passage of the Bill. It will of course be for the Assembly to take this matter forward in the way in which it sees fit, but I understand that a Bill will be brought to the Assembly that will set up an independent body to set salaries and allowances. I am told that the intention is to have the Assembly legislation through before the next Assembly election, which is scheduled for 2011.
The Northern Ireland Assembly is the only devolved legislature that cannot delegate control when setting its salaries and allowances. The Welsh Assembly has an independent review panel on pay and allowances. Although salaries for Members of the Scottish Parliament are currently linked to Westminster salaries, the Scottish Parliament already has the power to delegate the control of allowances.
There has been considerable debate already on the setting of salaries and expenses here at Westminster. I am sure that noble Lords will resist any temptation to use this debate for a rerun of the discussions on expenses in this House or in another place. Noble Lords may well be aware that in recent days there has been some press coverage in Northern Ireland on Assembly Members’ pay. While I do not intend to provide a detailed commentary on this coverage, I should make one point clear. While there will rightly continue to be debate in Northern Ireland about salary levels, the Speaker of the Assembly has stated that there is clear consensus among the Northern Ireland Assembly parties in favour of independent control of salaries and allowances.
Some may ask why we are giving the Assembly discretion in this matter. The Assembly has the ability to choose between maintaining the existing arrangements and delegating control to an independent body. The Government believe that this discretion is appropriate. The principle that the level of salaries, allowances and pensions for Assembly Members is a matter for the devolved legislature is not in doubt. Therefore, I also consider that the decision on whether those salaries and allowances are set by the Assembly or an independent body should be a matter for the Assembly itself.
The devolved legislatures in Scotland and Wales already have that discretion and I do not believe that Northern Ireland should be treated any differently. It is right that the Assembly is able to make such decisions, that we in this House should not restrict its choice and that in making such decisions Members of the Assembly are able to explain and justify such decisions to the people of Northern Ireland.
This Bill has the support of all political parties in the Northern Ireland Assembly and is not in itself a matter of political controversy. The Bill’s subject matter is narrow and I do not believe therefore that this is the appropriate moment to have a detailed political debate on Northern Ireland. However, it is important to confirm that the Government continue to believe that locally elected politicians should take responsibility for policing and justice in Northern Ireland. To that end, engagement with the First Minister and Deputy First Minister and the Northern Ireland political parties is continuing. I will of course report back to the House on any significant developments. If, as we hope, there is further devolution to Northern Ireland, the House will have the opportunity for a full debate.
I also think that it is appropriate to mention briefly the security situation in Northern Ireland. I am sure that the whole House will join with me in sending a message of support to the Police Service of Northern Ireland. It does outstanding work in meeting the threat of dissident republicans and in continuing to provide an excellent community policing service to the people of Northern Ireland. Those criminals who wish to drag Northern Ireland back to the past must not be allowed to succeed.
In conclusion, the Government are bringing forward this Bill at the request of the Assembly. We do not believe that it would be right to stand in the way of independent control of salaries and allowances in the Assembly. I therefore commend this Bill to the House. I beg to move.
My Lords, first, we wish to be associated with the comments made by the noble Baroness on the PSNI and the security situation, which, as we all know, is far from ideal at the moment. We in the Conservative Party support this Bill so far as it goes. The noble Baroness the Leader of the House has explained in her introduction that the Assembly is currently prevented from establishing an independent body to set its salaries and allowances, even if it wants to. This Bill will give the Assembly that power, which is available, as already stated by the Minister, to the devolved legislatures in Scotland and Wales.
Given recent events in Westminster, it is easy to see why such a move is appropriate. The power to set up an independent body is clearly keenly wanted by the Assembly. The Government have been good enough to share with me and other noble Lords certain correspondence between the Speaker of the Assembly and the Minister of State, which has gone on because of other things that have been happening. That help and correspondence has continued throughout this afternoon and I was able to clarify one or two things with the Minister of State, Paul Goggins.
The Speaker confirms that there is,
“support across the parties represented in the Assembly for the establishment of an Independent Statutory Body",
which would be able to give effect to the recommendation in Section 4 of the recent Assembly Commission's report. That report was due to be debated yesterday in the Assembly, but was withdrawn at short notice and thus was the cause of the necessary correspondence this afternoon. I was informed by officials that the Assembly had decided to return to certain areas for reconsideration. As a result, we have not yet been able to see a copy. However, other noble Lords will be aware that details, which are unconfirmed, about the levels of remuneration for MLAs were leaked and excited a good deal of interest in the media in Northern Ireland. I read those details on the way in to your Lordships’ House yesterday.
The very fact that we have had this small hiccup is a good indication of how controversial the matter of politicians’ pay and expenses is with the public. We have already seen that at Westminster. The parties in Northern Ireland are not immune to public opinion either. Our colleagues in the Ulster Unionist Party have been leading calls for an independent body to determine the salaries paid to MLAs. They and we endorse the principle of this Bill, although it would have been useful to have read the commission’s report before being asked by the noble Baroness to support the Bill today. We will support it and thank the Government for helping us understand what is and what is not in it. The noble Baroness has explained that the Bill does not require an independent body to be set up, it merely allows the option of doing so. But a copy of one of the letters sent by the Speaker of the Assembly to the Minister of State, Paul Goggins, states quite clearly that he Assembly will bring forward a Bill to establish “an independent statutory body”.
Given the widespread support for the move and the obvious eagerness of the parties in the Assembly for a body as expressed in the Speaker’s letter to the Minister of State, can the noble Baroness tell us why the Bill does not go further and set up the body itself? Can she also outline what plans have been discussed by the Government to help facilitate the establishment of an independent body once the Bill is on the statute book? If there are details in the pipeline, it is important for noble Lords to hear them. What plans are there for the appointment system to the independent body? How will its independence and accountability be guaranteed? How will it be paid, and within what sort of brackets? How will the chairman be selected? There are many thoughts of that kind which I suspect would have been debated in the Assembly or in the commission yesterday, but were not.
I said at the outset that we on these Benches support the Bill as far as it goes, but it does not go as far as it might. This would have been a timely opportunity also to look at the matter of “double jobbing”. That is how the problem is referred to in Northern Ireland and so it is the term that I will use, although the mischief really being described is that of double mandates. Some 16 of the 18 MPs that Northern Ireland sends to this Parliament are also MLAs in Stormont. My party and the Ulster Unionists are on record as opposing this state of affairs. At the very basic, practical level, the distance between London and Belfast makes it hard for us to see how Members who have been elected both to Westminster and to Stormont can give adequate time to the representation of their constituents in either.
On Monday 23 November in Stormont, the Ulster Unionists moved a Motion calling,
“on all political parties within the Assembly to commit to an end to ‘double jobbing’ by the next Assembly election in 2011, to protect the integrity of the Northern Ireland Assembly”,
a Motion that was substantially altered by an amendment moved by the Democratic Unionist Party and which it won by a vote of 34 to 23, that sought to extend the deadline until 2015.
The Kelly report, which we are committed to implementing, raises the question of double jobbing. It seems that the devolved national legislatures do not have the power to prohibit any of their Members also being Members of the Westminster Parliament. The power to implement the report’s recommendations therefore lies with Westminster. The committee’s view, which we share, is that double jobbing should be brought to an end as soon as possible. Why was no thought given to that by the Government when they had the Bill on their desk? The Long Title of the Bill is narrowly drawn but we will examine the possibilities of laying an amendment in Grand Committee which covers this issue. We await the publication of the commission’s report. We will scrutinise the Bill in its further stages with a rigour that your Lordships’ House would expect and we will continue to support the Government.
My Lords, I associate these Benches with the sentiments expressed by the Leader of the House in regard to support for the PSNI at this particularly difficult time in Northern Ireland. We urge the MLAs to earn whatever salary they are going to get by having police and justice incorporated in a full devolution so that, as I said last week, we can have a fully mature democracy in Northern Ireland.
I thank the noble Baroness for introducing the Bill, which we welcome with one or two reservations. It will allow the Assembly to devolve responsibility for setting salaries and allowances to an independent body if that is what it wishes. It is good to have the reassurance today of Mr William Hay, the Speaker of the Assembly, in his stop-press epistle to the Minister of State, that it intends to do so.
I have one doubt: why is it going to do this by 2011? When similar legislation was deemed necessary for the other place here in Westminster, the whole thing was done in a month. This kind of foot-dragging is not seemly. As I say, it is good to have the stop-press reassurance that it is to be done, but I urge the Assembly to spur its flanks and bring in the necessary legislation much sooner. It could certainly do it within the next year; it is absolutely absurd that it should drag on.
The noble Lord, Lord Glentoran, raised the question of double-jobbing. I am reassured to know that this is an Ulster phrase. When I was in Northern Ireland, people would often speak more generally of “doing the double” with regard to unemployment fraud and working in the black economy. Some politicians in Northern Ireland have been adept at “doing the treble”. It is particularly noticeable that among past masters are members of the Democratic Unionist Party. The practice should come to an end, and we support the noble Lord, Lord Glentoran, on this issue. We may well join him in amending the Bill in Committee to ensure that it is outlawed much sooner than 2015. To wait until 2011 to get the salary body set up and to allow double-jobbing to go on until 2015 strains credulity.
With that proviso, we support the Bill. Being a good devolutionist party we want the Assembly to take full responsibility for this and for its own affairs. We support the Bill at this stage, subject to the possibility of an amendment in Committee.
My Lords, I support the Bill on its merits and because we are at a moment of crisis in Northern Ireland, as several noble Lords have already acknowledged. It is entirely right that this House should support an initiative which has the common support of all the parties in the Northern Ireland Assembly. It is an issue upon which they are agreed at a moment when some of the parties appear to be talking themselves over a cliff and initiating, possibly, a major political crisis in the institutions of Northern Ireland over the next few weeks, a crisis which I devoutly hope will be averted. So I think it is entirely right that we respond sympathetically to what is, in effect, a request from the Northern Ireland Assembly, and I was very glad to hear the words of the Speaker in that Assembly this afternoon.
However, we have to bear certain considerations in mind. In her opening remarks, the noble Baroness the Leader of the House referred to a discussion that took place in recent days in Northern Ireland about Assembly Members and salary issues, and about the widespread unease that was expressed when it was reported that Assembly Members were seeking a salary increase of 17 per cent. As the noble Lords, Lord Smith and Lord Glentoran, said, there has been widespread unease about the delay in ending the double-jobbing system and the fact that it has been put off until 2015. These issues cause a great deal of tension, and therefore it is wise that the Assembly is taking action to move them into a more neutral sphere and create an impartial body which, it is hoped, will be able to deal with some of these questions.
However, in many respects, the most important and sensitive argument relating to the Northern Ireland Assembly concerns not so much the question of salaries, which after all are significantly below those of Members of the Scottish Parliament, but the size of the Assembly, which, in turn, is also a very sensitive point. An Assembly of 108 Members seems very large for a population as small as that of Northern Ireland. To have 108 Members seems generous, to put it mildly. On the other hand, there are serious political reasons why that number was reached. Two things come to my mind, and I have a question for the noble Baroness.
I believe, although I should like clarification, that the new independent body will deal just with salaries and conditions and not with the size of the Assembly. Whether it does so or not, the point is that all these issues in Northern Ireland, some of which seem quaint or unusual, are the product of a rather complicated political history. It is absolutely essential that any body formed to deal with this matter understands the pros and cons of the various arguments. I am not stating a view on whether, for example, 108 is the right or wrong number of Members of the Assembly; I am simply saying that there is a complicated political history which explains why that number was reached. Many other decisions connected with the Assembly have a complicated political back story. Therefore, it is vital that any new independent body dealing with this issue understands the back story so that it is able to reach the wisest possible decision.
My Lords, I support the Bill but I express a little disappointment that its contents were not enacted some considerable time ago. That is true both in respect of the matters that have been spoken about and in respect of one or two other issues that I wish to raise with your Lordships.
The failure of yesterday’s attempted debate emphasises the extreme sensitivity of Northern Ireland politicians, particularly Northern Ireland Assembly Members, with regard to public anxiety and concern—and, indeed, at times resentment—about Members’ payment, particularly in a context where full devolution has not been achieved and there is a degree of uncertainty and crisis, as the noble Lord, Lord Bew, said. In the light of recent discussions about matters in the other place—some people may find this surprising—I find myself struggling to persuade the Assembly that it really should accept the recommendations of the SSRB when they come through. The Assembly has repeatedly refused to accept any increase in Members’ pay.
The original proposition was that the payment of Assembly Members would stand somewhere between that of Members of the Scottish Parliament and that of Members of the Welsh Assembly. That was not unreasonable because that was pretty much where their various responsibilities lay. However, by a continued refusal to accept the recommendations of an independent body, Assembly Members’ salaries have now fallen to the point where they are the lowest, even though the Members’ responsibilities are—at least, in principle—greater than those of Members of the Welsh Assembly. That shows the extreme sensitivity of Members.
This matter could have been dealt with in other ways. For example, the Assembly Commission or the Assembly itself could have decided to peg Assembly Members’ salaries to a particular level in the senior Civil Service or some other professional group. There would then automatically be pay increases, changes in terms and conditions and so on in line with that. However, they did not do so, partly because of the failure to include the possibility of delegation of responsibility. I find it a little puzzling that, when the Northern Ireland Office was drawing up the legislation for the Northern Ireland Assembly in the first place, this and a number of other issues were not included in it.
However, I welcome this legislation now. The failure of yesterday’s debate simply shows how urgent it is. I associate myself with the remarks of my noble friend Lord Smith of Clifton—we hope that the Assembly takes this legislation, once it is through Parliament, and acts on it promptly rather than postponing and waiting around. There is no good purpose in that.
I have another specific question, which, as a former Speaker of the Assembly, I am perhaps more likely to be aware of than other noble Lords. I am absolutely committed, as I think many observers are, to the non-partisan position of the Speaker of a parliamentary assembly. That seems to me extremely important. I am sure that we will return to the question of the Speakership in your Lordships’ House at some appropriate point, but the position is clear in, for example, the other place. In a place such as Northern Ireland, the non-partisan position of the Speaker is absolutely crucial. It would be hard to believe otherwise.
However, the legislation failed to address two important areas that sustain the possibility of a Speaker being impartial and having the confidence to be so: the re-election and the pension of the Speaker. There is a standing convention in the other place that, when a sitting Speaker puts himself forward for election, he will not be opposed in the first-past-the-post elections. Although it is a matter of convention, it is largely observed, certainly by the major parties.
Of course, such a thing would not work in the context of STV. So, in the Republic of Ireland, arrangements are made under the constitution for the unopposed re-election of the sitting Ceann Comhairle, who, for those noble Lords who are not Irish speakers, is the Speaker of the lower house of the Oireachtas, the Irish Parliament. This ensures that a Speaker is in a position to act in an entirely non-partisan way, with no need to use the Speaker’s position to campaign or put himself or herself forward for re-election. What constituency would feel it worthwhile to elect a Speaker who was not partisan and not able to represent the people’s view, to canvass in any public way or to use their elected position? It would be entirely rational for a constituency not to re-elect such a person, even though they might by performing an extremely worthwhile job for the assembly or parliament as a whole—and, indeed, the community. So in the other place and Dublin, special arrangements are made appropriate to the electoral system that applies—convention in the other place and a change to STV in Dublin—to ensure that the Speaker does not have to act in a campaigning or partisan way in order to be re-elected.
However, this has not been made possible in Northern Ireland. It is not that the issue was not raised. Once I was in a position in which I could no longer benefit from it, when I had made it clear in 2004, at the time of the Leeds Castle talks, that I was standing down and would not be re-elected, I put in writing to the then Secretary of State, the right honourable Paul Murphy, that this issue ought to be raised. One of the difficulties, of course, is that such things are easier for those outside the system than those inside it to agree.
This is a question not just of the Speaker’s re-election but also of their pension. In the other place and in the Scottish Parliament, arrangements are made for a Speaker to have a full non-contributory pension if they have been elected. Why is that? It is essentially for the same reason—namely, that a Speaker does not then have to think about whether they are going to be re-elected and whether they will be able to continue on long enough to construct a contributory pension that will sustain them and their family when they choose to retire. I can see no good reason why such a provision was not included in the legislation for Northern Ireland. It was included for the Scottish Parliament; it was included for the other place.
This issue has in no way been raised with me either by my successor, Mrs Eileen Bell, or the current Speaker, Mr William Hay. I am in a position where I can raise it, because I can gain no conceivable benefit from it, but I have the experience of knowing something about the situation.
I am a little surprised that there was never proper consideration of this issue by the Northern Ireland Office when it was putting legislation for the Assembly in place. The Leader of the House may not be in a position to offer any clarification this evening, which would be absolutely fine, but I should welcome it if she seriously picked this question up, because, in the Northern Ireland context, in or outside a crisis, we need someone who can move outside of party politics. I do not suggest that any of those who are there or could be in that position would seek to do otherwise, but it is important that they are given what is seen as necessary in the other place, the Scottish Parliament and Dublin, to enable them to fulfil a properly non-partisan role in what, it would not be overstating it to say, is a difficult role at various times.
With those caveats, I welcome the Bill. I hope that not only we but the Northern Ireland Assembly will be able to move properly upon it.
My Lords, this has been an interesting, if short, debate on the future determination of Members of the Northern Ireland Assembly’s salaries, pensions and expenditure.
It was heartening to hear from the Leader of the House that there is cross-party support for an independent statutory body to advise on these matters. In view of the Bill before us today, the Assembly perhaps took the right decision to postpone the debate that was scheduled to take place yesterday on an Assembly Commission report on salaries. In the light of its determination to get it right and to appoint an independent body to look at the matter in its entirety, we do, as my noble friend Lord Smith of Clifton said, support and welcome this Bill.
It must be right that a democratically elected Assembly determines how to deal with its own pay and allowances. I feel sure that the people of Northern Ireland will have much to say on the matter of their Assembly Members’ pay and allowances, as has happened in Westminster. I understand that some anger, or at least unhappiness, was expressed in some quarters that a proper consultation process on the Assembly Commission’s proposals had not taken place.
We have heard that those proposals were to give MLAs a substantial pay rise after the 2011 elections—the noble Lords, Lord Glentoran and Lord Bew, both referred to that. This has now been deferred until further meetings take place to discuss these rather contentious issues.
As we know, there has been plenty of controversy in this Parliament about MPs’ and Peers’ expenses, which is why stringent new rules are to be put in place to encourage openness and accountability. The Northern Ireland Assembly will be able to do as we have done, should it so wish.
As we have heard, it is not possible at the moment to allow the Assembly to create a body similar to the Independent Parliamentary Standards Authority which will operate at Westminster, so the Bill will give it a right to determine its own members’ salaries and expenses and, if it so wishes, to devolve that responsibility to an independent body—that is quite right. The Assembly will be able to decide how it will operate and what its powers and responsibilities will be.
As my noble friend Lord Smith of Clifton advised us, it took little time to establish the Independent Parliamentary Standards Authority—in fact, less than a month—so there should be no reason why, should the MLAs decide to go down that route, there need be a lengthy procedure to enact the legislation.
At this point, perhaps I should mention my noble friend Lord Alderdice’s comments; he reminded us that the Bill makes no reference to the role of Speaker of the Assembly and its non-partisan position. Perhaps the noble Baroness will address that.
There are, as we have heard, interesting suggestions around the possibility of different provisions being made for different cases, and that throws up a number of possible anomalies. However, the holding of elected office in two different parliaments—or even, as has happened, three different parliaments, including the Assembly—means that Members will continue to have their Assembly salaries reduced. That is right and proper. The noble Lord, Lord Glentoran, and my noble friend Lord Smith also referred to this.
As we have heard, the Committee on Standards in Public Life was extremely unhappy about multiple mandates, and its report was unequivocal in its recommendation that they should end by 2011. That advice must be accepted. I am pleased to hear the noble Baroness say that legislation will be brought forward to enact this recommendation—
I express my delight and pleasure at what the noble Baroness has just said in supporting an early end to double-jobbing. I hope that it will send a clear message to the Alliance Party, with which the Liberal Democrat Party is sometimes regarded as having a relationship. Its members voted against an early end to double-jobbing, and I am glad that they have been reproved in this way.
I am sure that members of the Alliance Party, our sister party in Stormont, will take note of what the noble Lord has said.
I was also pleased to hear the strong support of the noble Baroness the Leader of the House for the PSNI in the security problems that it faces. We can only hope that when it arrives, the devolution of policing, which is being held up at the moment, will be enormously helpful in resolving these difficult and dangerous issues. I hope that the Assembly will accept, as we have done, that it is not appropriate now for the setting of salaries and expenses to be undertaken by ourselves through committees, and that an open, accountable and transparent process is now being offered in order that the people of Northern Ireland can see what their political leaders earn for the work that they do on their behalf.
My Lords, as is always the case with Northern Ireland legislation, this has been an interesting and constructive debate. I am grateful for the support of all noble Lords on the devolution of policing and justice and in expressing support for the excellent work of the PSNI. I am also grateful for the broad support throughout the Chamber for the Bill.
The noble Lord, Lord Glentoran, and others mentioned the report that was due to be debated in the Assembly yesterday but was withdrawn. Following press coverage of the leak of the report, we can see that there is clearly much interest in the pay and rations of Members of the Assembly. That is why the Bill is particularly important. If, as the Speaker suggests in his letter, the Assembly decides to go down the road of an independent authority, that will assist it greatly in its relationship with the public and in engendering more trust, just as we do in our legislature here. The noble Lord is right that it probably would have been useful to have seen the report before having the Bill before us, but it is clear from the Speaker’s letter that there is a real will to establish an independent statutory body.
The noble Lord asked many questions about the establishment of this body. It is for the Northern Ireland Assembly itself to set up the body and determine the selection of the chairman, the pay and rations and so on. That is what devolution is and I am sure that the Assembly will do it correctly.
Many noble Lords, including the noble Lord, Lord Smith of Clifton, have mentioned double-jobbing—rather a good phrase—or dual mandates, as we say here. I note that noble Lords may table an amendment to the Bill if that is within its scope. I have listened carefully to the points made on this issue, which is clearly sensitive in many ways. The Kelly report recommended that the practice of holding dual mandates in the House of Commons and the devolved legislatures should be brought to an end as soon as possible. Ideally, that would happen by the time of the scheduled elections to the three devolved legislatures in May 2011 or, failing that, by 2015 at the very latest. The Government have accepted the findings in the Kelly report and we are currently discussing with Sir Christopher Kelly and the Independent Parliamentary Standards Authority how best to take the report’s findings forward. That includes the issue of dual mandates.
It is worth noting that all Northern Ireland’s political parties represented here at Westminster have agreed that dual mandates should be brought to an end, as the noble Lord, Lord Trimble, told us. It may well be, therefore, that the issue is resolved in practice before long. For the time being, while we are still considering how to take forward Sir Christopher’s recommendations across the board, it would be difficult to take legislative steps in respect of Northern Ireland alone, because this affects the three legislatures.
No dual mandate operates with regard to the Welsh Assembly or the Scottish Parliament. It proved possible to achieve that objective quite some time ago informally by agreement between the parties. It has not been possible to achieve that agreement informally in Northern Ireland. Legislation, therefore, will be necessary. As we stand at the moment, legislation is not necessary with regard to Scotland and Wales, because it has been done by agreement. Of course, doing it by agreement means that things can be flexible, whereas legislation is not flexible. Unfortunately, there is no chance of being able to do this by agreement in Northern Ireland.
I note what the noble Lord says. He clearly has great experience in these matters. It is our hope at the moment that we will continue discussions with the parties in Northern Ireland. When we have considered further Sir Christopher’s recommendations, if legislation if necessary, we will bring forward the necessary provisions.
Does the opposition to double-jobbing apply to treble-jobbing as well? When Dr Paisley, Mr Hume and I were elected to the European Parliament, we were there, at Stormont and the House of Commons. Indeed, I spoke once in Strasbourg at eight o’clock in the morning, at Stormont at 2.30 in the afternoon and in the House of Commons at eight o’clock in the evening. I have still to write to the Guinness World Records about that one. Seriously, is the opposition to double-jobbing opposition to people having more than one salary or is it trying to tell people how to allocate their time?
My Lords, I have great admiration for the noble Lord. How he managed to fulfil three roles at once must be to do with his extraordinary agility, as my noble friend says from behind me. The issue of treble-jobbing is certainly out of the question in this day and age. In terms of double-jobbing, to be an elected representative in Westminster or the Northern Ireland Assembly is a full-time job in itself. This is to do with allocation of time, but it is also felt that, in this day and age, it is much better if one person has one job. That seems to be the issue. Treble-jobbing is now certainly out of the question and most people would query the need for double-jobbing.
The noble Lord, Lord Bew, is right about the desire and the need to take issues relating to salaries into a more independent sphere. He is also right that the new independent body will deal only with salaries and allowances; it will not deal with size.
I understand the frustrations expressed by the noble Lord, Lord Alderdice, about the refusal to accept the past recommendations of the SSRB. We know where that leads us because we can see what has happened in this Parliament as well. Clearly, the noble Lord speaks with great authority on the Speakership in the Assembly. He is right to say that it is much easier to address these issues from the outside than it is from the inside. That is why I take great heed of what he says. I know that the noble Lord has long had an interest in these issues. I will certainly take these matters and the question of pensions back to my right honourable friend the Secretary of State. I will write to the noble Lord in due course and copy other noble Lords in to that correspondence.
The noble Baroness, Lady Harris of Richmond, is of course right to emphasise the point that cross-party support is invaluable and to emphasise the issue about strict new rules and how these will assist the representatives in Northern Ireland with their interface with the public. I am sure that if, as the Speaker of the Assembly has stated, the Assembly Commission brings forward a Bill to establish an independent statutory body, MLAs will benefit enormously from that in terms of trust.
The noble Lord, Lord Smith of Clifton, and others have asked why it will take until 2011 to implement the Bill, especially as IPSA was done in a matter of months. The Assembly will need to legislate following the Bill and it may well wish to carry out a public consultation before doing so. That is, of course, entirely a matter for the Northern Ireland Assembly. There will inevitably be matters of detail to consider. I imagine that many in Northern Ireland, like noble Lords in this House, will be anxious to see legislation on the statute book as soon as possible, because that is probably what is best not only for the Members themselves but for the general public in Northern Ireland.
I believe that I have addressed all the points raised this evening. I am grateful to all noble Lords for their contributions and, much more important, for their support. Enabling independent control of salaries and allowances is the right thing to do. I certainly look forward to our further debates in Committee and I commend the Bill to the House.
Bill read a second time and committed to a Grand Committee.
House adjourned at 6.37 pm.