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Lords Chamber

Volume 728: debated on Thursday 16 June 2011

House of Lords

Thursday, 16 June 2011.

Prayers—read by the Lord Bishop of Chester.

Telephone Hacking

Question

Asked By

To ask Her Majesty’s Government what further action they intend to take to prevent telephone hacking by newspapers.

My Lords, phone hacking is unacceptable and against the law. The police must be allowed to probe into all the evidence. The CPS will then assess whether any prosecutions should be brought in accordance with the tests laid down by the Code for Crown Prosecutors. Should Her Majesty’s Government launch another phone-hacking inquiry now, it would risk obstructing these investigations. We shall, in the circumstances, monitor closely all the results and consider whether any further action will be necessary.

My Lords, I thank my noble friend for that reply. There was a time when there was an attempt to write off phone hacking as the work of one rogue reporter. Does my noble friend recognise that in the last two weeks alone, News Corporation has paid out damages of £100,000 to the actress Sienna Miller and admitted misuse of private information, breach of confidence and harassment? News International has now set up what it calls a £15 million compensation fund for the victims of phone hacking, and evidence has emerged that the News of the World is not the only newspaper involved. Does she agree that all this represents a massive conspiracy against the public which the police and the Press Complaints Commission have been powerless to prevent, and will she give an assurance that once the criminal proceedings are complete—I emphasise, once they are complete—the Government will set up an independent inquiry to find out where the responsibility lies?

My noble friend Lord Fowler is extremely knowledgeable and experienced on this subject. I have read the details that he mentioned, but I need to make it clear from the start that my answers will cover only press regulations and not the criminal aspects. I know that your Lordships are well aware that the criminal aspects of hacking are covered by the Home Office. We do, however, fully understand my noble friend’s request for a further inquiry to be set up after the present cases are resolved. We are witnessing a revolution in the information and communications world, as in technology in general, of such galloping speed that I can only agree with my noble friend that constant monitoring is essential in case further action is needed.

With regard to the comments made by the noble Lord, Lord Fowler, I agree and understand the Minister’s case that she cannot do anything while court proceedings are possible. However, News International, and Rupert Murdoch particularly, have a history of avoiding publicity when there have been bad cases. There was another case of a former editor of the Sun—a very serious sexual assault case in the office. The editor was finally dismissed and large sums of money were paid, but nothing was public because it was hushed up by a conditional agreement in court by News International. There is a major problem about the way in which that group operates. I accept entirely that it has to be after the court case, but there really has to be some sort of inquiry.

The noble Lord, Lord Soley, makes an important point about BSkyB and News Corporation. The Secretary of State has to make a quasi-judicial decision about the impact of the proposed merger on media plurality. Going back to his pinpointing regarding one newspaper, it was interesting that in February 2010 the Culture, Media and Sport Select Committee published a report on press reporting that included the examination of the phone-hacking episode. It was critical of the News of the World and the police and stated that it did not find it credible that such an activity was limited to just one rogue reporter. However, according to recent press interviews, the noble Lord, Lord Mandelson, said:

“It really isn’t acceptable to keep pointing the finger at one newspaper when, clearly, the use of unlawful means of investigating was, or is, widespread”.

My Lords, this question is adjacent to a concern about super-injunctions. Is there not now a need to establish some means of deciding what the proper balance is between public interest, freedom of the press and personal privacy?

My noble friend Lord Elton hits right at the centre of this whole argument. The Attorney-General has announced a Joint Committee to look at all aspects of privacy and the use of anonymity injunctions and super-injunctions. We are currently looking at the terms of reference for the committee. To clarify, general injunctions stop the press reporting. With super-injunctions, the press are not allowed to say that they have been gagged, which is very rare.

My Lords, should a committee of inquiry be established, will my noble friend please take on board the need to ensure that it investigates the very close links between senior police officers and senior executives of newspapers? Indeed, it is alleged that during the initial inquiries into the main case that we are discussing today, police officers were entertained by the executives of that newspaper.

My noble friend Lord Ryder brings up a very delicate point about the inquiries. A number of investigations by the police are already under way. There are also several ongoing court cases, two parliamentary committees, and reviews by the Crown Prosecution Service and the Press Complaints Commission. At this stage it is hard to see whether another inquiry would be of any use, but the situation is constantly being monitored.

Does the noble Baroness agree that it is ludicrous to suggest that an editor of a national newspaper was not aware of where the information came from? In the past, as I believe one of my noble friends has mentioned, a journalist was given a custodial sentence for phone tapping. Is not the editor responsible for what goes in the newspaper, and therefore should he not also be given a custodial sentence, as well as, indeed, the proprietor and the board of directors?

I mentioned at the beginning that I was answering for the DCMS, which strays into the Home Office. When it comes to editors, I am afraid that I am unaware of what is happening.

Can my noble friend the Minister indicate why it took five years, from 2006 to 2011, with Rebekah Brooks of Sky having only just been notified, to inform the victims of hacking that they were on Glenn Mulcaire’s list of names and numbers? Can she assure the House that all known victims have now been notified and that in future such victims will be notified as soon as possible?

My Lords, the merger is being investigated on the basis of the effect that it could have on media plurality. As I said, phone-hacking allegations are very serious, but they are a matter for the criminal courts and may take a very long time. It would be impractical and quite wrong to delay a decision for such a long time.

Armenia: Genocide

Question

Asked By

To ask Her Majesty’s Government what is their timetable for recognising the Armenian genocide.

My Lords, there is no doubt that the treatment of the Armenians was horrific and caused the deaths of hundreds of thousands by force of arms, starvation or disease. They should not be forgotten, but we believe that it is for the Turkish and Armenian people to work together to address their common history. We encourage any process which helps them do so in an open, honest and constructive manner, but it would not be helpful for us to pre-empt their conclusions.

My Lords, France has already recognised the genocide. One and a half million people were massacred in 1915. I have just come back from Armenia where I visited the genocide museum. I am sure that many of your Lordships have visited the Holocaust museum. This is no less upsetting, shocking and dreadful than the Holocaust museum. There is so much evidence and it was known at the time that this was happening. Every newspaper from every country had headlines about this massacre. It is out of the question for Turkey and Armenia to decide. Nobody thinks of Armenia as a country worth thinking about. It is for us to recognise—

Thank you very much everybody. You are all helping me, which is very kind. Is it not for us to recognise this crime against humanity? It is time that we did that. Turkey has ambitions—I have the Turkish Review.

We all appreciate the noble Baroness’s feelings about what was clearly an horrific event in the distant past and one that arouses exactly the feelings of shock and horror that the noble Baroness has demonstrated. The Turkish and Armenian people are trying their best through a protocol procedure to normalise their relations and establish the right nomenclature and attitudes between each other so that these two countries can live in peace with a common border and continue to work for their joint prosperity. Now that protocols have been initialled and now that other Governments—the United States, France and other key countries—all take the same view as we do, this is the right way forward. Behind this is the other worry about Nagorno-Karabakh, and all that, which is being handled by the Minsk process of Russia, the United States and France. These two things together provide hope for the future and it would not be useful or constructive for us to take an issue and raise the heat of the matter by intervening in the way suggested by the noble Baroness.

Does my noble friend agree that after a century of taboo and silence Turkish journalists and historians are at last beginning to discuss the evidence of murder, enslavement, deportation and forcible transfer, rape, persecution and other inhumane acts of a similar character directed against the Armenian population of Turkey in 1915-16? Would it not help Turkey’s application to join the European Union if Turkish politicians acknowledged the crimes of their ancestors?

I repeat that the best way forward is for Turkey and Armenia, which have initialled detailed protocols, to work to sort this out. I believe that Turkey, which is a very dynamic and an increasingly key country in both the Middle East and in European affairs, is fully aware of this and is determined to push forward with an understanding. There are many people on the Armenian side who, while fully recognising the horrors to which my noble friend has referred, also believe that this is the right way forward.

My Lords, given that, as the Minister said, there is no doubt that genocide took place and that those who were killed should not be forgotten, can he say what is the official guidance on representation at the Armenian Genocide Memorial Day? I understand that there has been some reluctance of Ministers and others to attend the commemoration.

I will write to the right reverend Prelate on the precise wording of guidance on that. Behind it, there is always the concern that it is a matter to be settled between Turkey and Armenia. They are trying their best to do so and we must be very responsible and careful about any moves or acts of recognition or acceptance that would upset a delicate but very important process. I know that it is a natural impulse to feel, as the noble Baroness, Lady Flather, indicated, that we want to express our outrage at what occurred, but the best way forward is between these two countries.

Does the Minister recognise that Armenia and Turkey, as well as Azerbaijan, all work together very constructively in the Council of Europe and, at a political level, in the Parliamentary Assembly of the Council of Europe? That body, which serves such useful purposes on so many disputes that still exist in the wider Europe, is currently being starved of money by having much less generous settlements of its already meagre budget by comparison with the settlements that are being made for the European Union budget. Will the Minister look at that and make sure that the Parliamentary Assembly of the Council of Europe and the Council of Europe, with their roles in relation to the European Court of Human Rights, are getting adequate resources to do their valuable work?

Of course I will look at that. We recognise that at this time everyone is having to trim back on the availability of resources, but I am absolutely at one with the noble Lord on this matter. The Council of Europe is a very valuable forum in which the very long-standing and difficult disputes of the area can begin to be effectively resolved.

Is the Minister aware that there is a serious risk in Turkey of prosecution for journalists and writers who use the term “Armenian genocide”—some have been prosecuted—and that much educational material for schools has been produced by the Turkish Government denying the Armenian genocide? Does the Minister agree that such censorship in public discussion and education is unacceptable for a nation that hopes to join the European Union?

I do not want to comment on the detailed internal affairs of the Turkish Republic, but of course the values of freedom of expression are very important to us. We will continue to uphold our values and assert them wherever we can—and we do. The precise internal handling of the issue that Turkey and Armenia are now proceeding to handle is one that we have to leave to them.

East Jerusalem

Question

Asked By

To ask Her Majesty’s Government what action they will take following the publication in March by the United Nations Office for the Coordination of Humanitarian Affairs of its report on key concerns affecting civilians in east Jerusalem.

My Lords, we remain concerned about a number of Israel’s continuing policies in east Jerusalem, which the UK considers occupied under international law. These include ongoing settlements expansion, the demolition of houses and the eviction of Palestinian residents, the route of the barrier wall and restrictions on residency rights. In his public statement of 5 April, my right honourable friend the Foreign Secretary condemned plans to build 500 new Israeli settlements in occupied east Jerusalem as illegal and an obstacle to peace.

My Lords, I thank the Minister for his reply. He listed many of the points of deep concern. Does he agree that these harm the welfare and even the citizenship of Palestinians living in east Jerusalem? What is more, they prejudice, do they not, final status negotiations in a very damaging way.

Very many people would agree with the noble Lord’s sentiments. Of course, this area has been occupied since 1967 when—to get history right—Israel was attacked, broke through the Mandelbaum Gate and occupied east Jerusalem and many other areas as well. Ever since then, the handling of the occupation by the Israeli authorities has given rise to criticism. It is the clear view of Her Majesty's Government that the more heavy-handed and inappropriate the operations in the administration of east Jerusalem, with the kind of things that I described, the more we postpone the goal that we all want to achieve of proper peace negotiations to bring the two-state solution that will bring peace and harmony to the area.

I welcome what the Minister said about the Government's policy. Do not all the criticisms that he made, which I believe are valid, add up to the fact that it will be extremely difficult for east Jerusalem to become the capital of a Palestinian state?

Everyone recognises the whole Jerusalem issue, and the east Jerusalem issue is an enormously complex part of any future negotiations. We are talking about the goal of both Palestine and Israel recognising east Jerusalem as a joint capital. It is the capital of both countries and of many religions throughout the world. A degree of understanding is needed and is still missing between the Israeli authorities—although not among many highly enlightened and intelligent members of the Israeli community—the Palestinian people and the Palestinian Government, who are led in a very positive way at the moment, so that the very difficult concept of Jerusalem as the capital of both countries can be worked out and they can live together.

My Lords, may I, through my noble friend, congratulate our ambassador in Israel, Mr Matthew Gould, on the excellent practical work he is doing on the ground in east Jerusalem? Will my noble friend tell us whether the Foreign Office and DfID are jointly minded to implement some of the recommendations of the OCHA report, including prioritising zoning for Palestinians and building schools so that half the Palestinian children living in east Jerusalem who currently do not get free schooling are able at least to get an education so that they can move away from radicalisation? Will they please impress on the Israelis not to try to disfranchise the Palestinian population in this manner, or peace will never come?

I certainly agree with the last comment. As for the United Nations Office for the Coordination of Humanitarian Affairs’ report, which is a very long document—I think it is 118 pages—there are very positive ideas in it, which we are studying very closely with our colleagues in DfID. Where we can make a contribution and see these ideas carried forward, we will certainly do so.

What is the Government’s support for President Obama’s initiative? How do they see the issue of Jerusalem fitting into any follow-up process? How is that process being organised now, given the very negative reaction of the Israeli Prime Minister?

The answer to the question is in the noble Lord’s last comments. The reaction has been very negative indeed. The process we want to see remains the key to the future. There are elements in the jigsaw. One is whether, in joining with Fatah, Hamas can come forward with and deliver a responsible negotiating Government who renounce violence, accept the quartet principles and can go forward in good talks with Israel. Another is that the Israeli authorities recognise that there is no alternative to going forward in a positive away. Another is that they recognise that it is now when they should move, whereas the attitude in Jerusalem and Tel Aviv appears to be to wait and do nothing. We do not agree with that. We think this is a golden opportunity. All these matters must be fed into the process that President Obama tried to set in motion the other day but, so far, with not much success.

My Lords, the Minister will know the story of the three MPs, legitimately elected to represent areas of east Jerusalem, who were imprisoned by the Israelis because they had been elected. On release from prison nearly a year ago, they were told they were to be deported from east Jerusalem and would have to leave their homes and families behind. They have now been in an upper room in the Red Cross building in east Jerusalem for nearly one year. What are our Government going to do about it?

We are doing as much as we can, which is constantly to raise this matter with the Israelis. We do not at all approve of what has happened. We believe this is a wrong pattern. My noble friend has traced this evolution and development very closely indeed, probably as closely as anyone else in this House. Our pressure will continue. We are not the sovereign power, but we can explain our views and put them forward very strongly on a matter that is totally unsatisfactory.

NATO

Question

Asked By

To ask Her Majesty’s Government what is their response to the recent speech by the United States Secretary of Defence Robert Gates on the future of NATO.

Defence Secretary Gates’ speech was a warning that Europe cannot take for granted the security blanket provided by NATO and historically resourced primarily by the United States. It also says something about the changing position of the United States itself. To deliver the capabilities that ensure our security, many European countries, especially NATO allies that fail to meet the 2 per cent of the GDP target, which was reconfirmed as recently as March 2011, need to increase levels of defence spending and work together more efficiently and effectively, as demonstrated by the UK-France defence treaty. We also need to remember that effective security involves hard and soft power elements—in fact, smart power.

I am very grateful to my noble friend for that very comprehensive reply. Perhaps I may remind the House precisely what Secretary Gates said. He said:

“The blunt reality is that there will be dwindling appetite and patience in the US Congress—and in the American body politic writ large—to expend increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources or make the necessary changes to be serious and capable partners in their own defence”.

While we are very grateful for all that the United States does, does not its lack of complete commitment on the Libyan operation send a clear message to us? Is not American increasingly looking to the East?

Behind my noble friend’s question is of course the truth that the world is changing, the balance of power is changing, and the unipolar moment, as it is called, for the United States has passed. Nevertheless, it remains an immensely powerful and close ally that is playing quite a detailed and substantial part in the overall operation against Colonel Gaddafi’s Libya and against the hideous divisions of that country. The US case, and our case, that other countries in NATO could do more is widely accepted by everyone. Clearly, there is a great need for a fairer distribution of the burden of meeting the Libyan situation and many other situations that are bound to arise.

I do not think that we should be too gloomy about that adjustment. America remains our very close friend and one of the greatest countries in the world. We will work very closely with it on security, and the softer aspects of security, in trying to achieve global peace and stability.

Is the Minister as concerned as I am that some Ministers in the Scottish Parliament are publicly saying that they want to withdraw from NATO? This would be harmful to the Scottish people and to the whole of the United Kingdom.

Perhaps I should be but I am not as concerned as he is because I did not know that they were doing this. If Ministers in the Scottish Parliament think that they can somehow opt out of the collective security on which we all depend, and if any country thinks that it can have a free ride, they will need to think again because in this new world most of the operations in which we will be involved will now be completely interdependent, operating closely with a whole range of allies in different combinations. I am sure that the skills, the fighting spirit and the long traditions of Scotland will be just as much needed in global security as everything else. Perhaps these Ministers should think again.

My Lords, while I am sure that the noble Lord is right to point to the contribution of other European countries and the need for them to contribute more, does he not think that we have to look at our own capability? Last year, the Government undertook a very hurried defence review. In the light of the current commitments of our Armed Forces, does not the noble Lord think that another review is required?

No, I do not. After 2015 our budget will start expanding again. We are much the largest contributor in the European end of NATO. We are fulfilling our commitments. The operations in which we are involved are completely sustainable, contrary to some remarks we have all read about in the press. We believe that we have the dispositions, the patterns and the plans to meet as far as we can individually the crises of the future. The answer to the noble Lord’s question is no, but these are certainly fluid matters and anything could be coming around the corner. Great events could hit us and we always have to be ready to review the situation.

My Lords, this statement has come from the United States on many occasions before, but it has been expressed with exceptional candour and frankness in what I believe could have been the valedictory message of Secretary Robert Gates, who may shortly be retiring. It has done the credit of telling people quite frankly what the feeling is in the United States. Contrary to the suggestion that might have come from the opposition Front Bench, the United Kingdom is certainly not the laggard in this matter. A number of other countries in NATO have for years failed completely to make a reasonable contribution, which very much threatens the willingness of the United States to continue to make the effort it wants. In a very dangerous and uncertain world, would my noble friend recognise that while NATO can take on a certain amount of responsibility, when considering issues such as piracy in Somalia, we should welcome the opportunity for Russian, Chinese, Indian and other forces to get involved in what are in fact issues of universal concern?

My Lords, the first of my noble friend’s comments is based on his considerable experience and expertise in this area, and I totally agree with him. I agree even more strongly with his second point. These are becoming global issues on which all the responsible powers, or powers that wish to be responsible—that certainly includes great nations such as China, India, Russia and countries like Brazil—all have a responsibility, and they can no longer either enjoy a free ride while the western world tries to carry the burdens or stand aside, as we sometimes hear from Beijing, and say, “We are not going to interfere in anything. It is nothing to do with us”. They are going to find that this is something to do with them, and already we are seeing welcome signs that some Chinese diplomatic voices are raising that point and involving themselves in trying to resolve various ugly crises, such as that in southern Sudan.

Arrangement of Business

Announcement of Recess Dates

My Lords, we have reached 30 minutes, but I know that that Question was one in which many noble Lords wished to take part.

I should like to make a Statement on two matters. First, it may be for the convenience of the House to know that the usual channels have agreed that the speakers’ list for the debate on House of Lords reform next Tuesday and Wednesday will close at 6 pm on Monday evening, which is a little earlier than usual. In addition, the House will meet early on Wednesday, at 11 o’clock, in order to help accommodate the number of speakers currently on the list. However, Oral Questions on Wednesday will be taken at the usual time of 3 o’clock. We will start the day by resuming the debate, then break for Oral Questions, and return to the debate afterwards.

Perhaps it would be helpful if I remind noble Lords that paragraph 4.32 of the Companion provides that Members speaking in a debate should be present for the opening speeches and the winding speeches at the very end, as well as for the greater part of the debate. That does mean, of course, on both days.

I turn now to the Recess. I hear calls of “Hear, hear”, but we shall see how long that lasts. When I announced the long-term Recess dates on 21 October last year, I made it clear at that stage that the dates were subject to the progress of business. We have not made as much progress as is necessary, and I know that noble Lords around the House are well aware of that. I am now in a position to inform the House that we will return one week earlier in October. The House will return from the Summer Recess on Monday 3 October, not on Monday 10 October. That is a limited adjustment and I look to all sides of the House to achieve reasonable progress both before and after the summer to enable us to hold to the other dates already announced. Subject to the progress of business, we will still rise for the Summer Recess at the end of business on Wednesday, 20 July.

My Lords, I am grateful to the noble Baroness for the two Statements she has made, in particular the first one, which has been agreed through the usual channels and will, I think, be convenient to your Lordships’ House. I am grateful to her for confirming the arrangements.

I also thank the noble Baroness for telling the House about the Government’s plan to bring noble Lords back early for an additional week during the Conservative Party conference, which no doubt will be a relief to many, to deal with what I consider to be a chaotic logjam of government Bills. This is almost entirely without precedent. When we were in Government, it is true that we brought in September sittings, but that was done by agreement across the parties. Indeed, when we introduced the change back in 2002, we tabled a Motion on the matter for the House to discuss and determine. We have not been consulted about this and there is no Motion for the House to debate. When I advised Labour Members yesterday evening of the likely announcement, there was genuine anger. It disrupts long-planned appointments and arrangements, and treats the House with contempt. It says that the House is the plaything of the Government—a Government who have lost control of their legislative programme.

The truth is—in saying this I apportion no blame to the noble Baroness, Lady Anelay—that the Government are trying to force through a programme that is overlong, overprogrammed and overblown. In short, it is too long and they know it, and the House and the process of scrutiny are the sufferers. This is a crisis of timetabling, caused not by your Lordships’ rightful desire to scrutinise Bills but by political mismanagement, emanating from No. 10. This House has already had the farce of badly drafted Bills, such as the Public Bodies Bill, and still to come are the Armed Forces Bill, the Scotland Bill and the Office for Budget Responsibility Bill. We have been waiting for a health Bill that was promised to the House in May but will not be here until October or November at the earliest. We also have such complex Bills as the Welfare Reform Bill and the Protection of Freedoms Bill to come.

What assurances can the House have that, even with this extra week, we will complete our work without further incursions into Recess dates, longer nights and earlier starts? I also ask the noble Baroness to reconfirm all existing Recess dates, including those in February, and to do so with certainty. Will she also tell the House when it is intended that we shall have another Queen’s Speech, and when this Session—the longest any of us can remember—will end? How many more Bills do the Government expect to force through this House before the Session concludes? At my last count, we still had 16 in progress and another 12 or 13 to come, and had done only 16 so far. Just how many more Bills do the Government expect to bring?

May I perhaps give the Government a little advice before they embark on their next political programme? Will they ensure that, next time around, they have coherent, well worked-out Bills, and do not have more Bills in their programme than both Houses of Parliament can realistically manage and effectively scrutinise?

This a programme of legislation that has been poorly thought through, badly managed from the centre and forced on an increasingly reluctant Parliament in a timeframe that is wholly unrealistic. I urge the Government to think again about their programme, and to consult the House properly about their timetable and what they put in for the rest of the Session.

Well, my Lords, as my dear old Aunt Rose would say, the noble Lord has a bit of a brass neck. However, I will of course address each of those points. Perhaps noble Lords should not read everything on politicshome.com before they bring information to the House. For example, the noble Lord referred to my having apparently announced the dates of the February half-term. The noble Lord will know that I never have. I know that politicshome.com has said so and that it has been tweeted, but it has never been the case in this House. I do not refer to any Recess dates after we return in January; I never have. Like the noble Lord, I do not refer to the date of the end of the Session. That is not something that happens; it is up to noble Lords to make their own calculations. When we know the progress of business, we will make a Statement, as the noble Lord did when the Labour Party was in government.

This is a self-regulating House, with the implication that scrutiny of legislation cannot be curtailed except by the House itself. That is only right; it is one of the aspects of our work of which we have every reason to be proud. The corollary is that when the House chooses to dwell on a particular Bill, as it did on the Parliamentary Voting System and Constituencies Bill—on which we spent 17 days in Committee, which is more than double the usual maximum for the largest Bills—more time must then be found elsewhere if the scrutiny of the other Bills in a Government’s legislative programme is not to suffer as a consequence.

I should also make it clear that we have been used, over the past decade, to agreements by the usual channels to take a good number of the Committee stages of Bills in Grand Committee, off the Floor of the House. That kind of agreement has not been achievable this Session. This Session will have the lowest percentage of Bills in Grand Committee for nearly 10 years—since the Session of 2001-02. I know that because I was on the other side taking part in it all. As a result, pressure for time on the Floor of the House is acute and something has to give.

The Opposition Chief Whip will recall that the Opposition refused to put into Grand Committee a Bill that was eminently suitable for that place. I refer to the Postal Services Bill on which the Opposition spokesperson performed a very valuable role. The noble Lord, Lord Young of Norwood Green, steered the Opposition through that Bill with great skill and Labour Party Back-Benchers also acted with great skill and scrutinised it carefully. But it was not an appropriate Bill for the Floor of the House. The Opposition insisted that it should take time on the Floor away from other Bills.

There was consultation about business. Over the past five weeks, there has been consultation with the Opposition Chief Whip to seek certainty about how the Government could deliver their business without extending the sitting period and taking away a week from the summer Session. It is not normal process in this House to consult formally more widely, but I made sure that soundings were taken around the House. It was made very clear to me that, while noble Lords would not wish to extend the period beyond July, for some reason that I find quite difficult to understand, noble Lords on all sides of the House felt that it was quite appropriate for this place to be sitting during the Conservative Party conference, when my colleagues might wish to be elsewhere. That is indeed the final decision that was taken. The decision is not taken lightly. It is one to deal with ordinary business in an ordinary way. Scrutiny in this House, when it is done well, is a model for the world to follow.

My Lords, while my noble friend must have taken a great deal of effort to avoid using the words pot, kettle and black, during the noble Lord’s remarks, she should take it on board that it is a great pity that this Administration appear to be following the example of the previous Government by introducing too much legislation that has not been adequately thought through. It is a bad habit that was formed over the previous 10 years or so and we should be resisting it, not continuing it.

My Lords, it might be appropriate for me to be permitted to answer the questions as they are put. That might be helpful. I know that the noble Baroness, Lady Farrington, will of course have the opportunity to ask a question.

My noble friend has long experience in government. He will know that all Governments have to listen and learn and I will certainly do that.

My Lords, will the Government Chief Whip say what advice both she and the Leader of the House have given to the Government on the suitability of legislation for pre-legislative scrutiny? The Government have failed to use that procedure to the full. The Government are, as the noble Lord, Lord Tebbit, said, trying to achieve too much too quickly, often with proposals that are later withdrawn because they are unworkable.

My Lords, the Government have made it clear that they are very much in favour of extending pre-legislative scrutiny. That will happen. The Opposition will also be aware that in the first year of a new Government, as when I was sitting on the other side in 1997, it is not necessarily possible for a new Government to go through pre-legislative scrutiny without having a long hiatus. But it is the better model to follow and it is one that will be put within Government plans. I know that that will be welcomed by the House.

My Lords, how much will it cost to bring the House back for an extra week in October? If the noble Baroness is not able to tell us now, could she put that information in the Library?

My Lords, as I said earlier on, this should not have been necessary. I was perhaps not quite as blunt as my noble friend Lord Tebbit would have liked. For once, I will be a little more like my noble friend. Had we had a more appropriate approach to scrutiny of other Bills then we would not be sitting an extra week. If Members of the Labour party wish to know how much they have cost the House, I am happy to tell them.

My Lords, further to the comments made by my noble friend Lord Tebbit, will the noble Baroness undertake to use her best endeavours to ensure that her colleagues in the other place change or reform the introduction of the automatic guillotine for every piece of legislation that comes to your Lordships’ House? That places an extra burden on your Lordships’ House and clearly also on the Government Chief Whip. In the interests of democracy, the changes brought in by the Blair Government at the turn of the century are undemocratic and exceedingly harmful to British democratic traditions.

My Lords, my noble friend says what I hear from all sides of the House. There is a real anxiety, not just from those who have been Members of another place but also from those who have seen what happens there, that proper scrutiny is curtailed by a Government having control of the knife, as others opposite did in a Labour Government, or a guillotine. That is not the best way to run business. It is not the way that we choose to run business here. We came close to having to seek assistance from the House earlier this year. The House took a decision of which we can be proud that we want to move ahead without having guillotines in the House. As I said at the beginning, the corollary to that is that the House has to be self-regulating in the way that it carries through business. I feel, as I am sure does every Member of the House here, that that is the right way to go ahead; to have proper scrutiny but within a timeframe that is reasonable to deliver government business.

My Lords, all noble Lords will know the difficulties that are caused every time that one has to absent oneself from this place to attend to other business. There is such a continuous current of affairs going on in the House that every time one absents oneself as a matter of necessity one is apt to miss something important that one would have wished to participate in. When this happens in the middle of a term it is obviously one’s own responsibility, but when time is taken out of a recess in the way that has just been announced, the Chief Whip should be in no doubt as to the great difficulty that it causes.

As far as one is able, one arranges one’s other business to take place in the Recess. I arranged a major international conference for which I am responsible in the week before we were scheduled to return on 10 October. There is no way that I can cancel this conference. I shall have to miss the business in that week. I do not know at this stage how far the business will be business in which I wanted to take a major interest. It causes great difficulty when one is forced to miss business in the House because of other arrangements that one has made in the reasonable expectation that the dates will be free from House business. I do not know what soundings the Chief Whip took but she did not take soundings from me. I want her to be in no doubt as to the difficulty that these changes of arrangement can cause.

My Lords, I am perfectly in sympathy with the noble Lord Low. He is a hardworking Member of this House and certainly makes every best effort to be here for business. This is not like the stories that appeared in the press overnight—I do not know where they came from, as I certainly did not give any information to the press, and I state that very clearly for those who are tweeting this; I hope they will carry the rebuttal. This is not a matter of Peers being fed up—I shall not use the word that they used on the websites—with having to come back a week early because they were going to miss holidays or going skiing. That is the allegation being made.

Peers take their work here very seriously, and I understand what the noble Lord, Lord Low, said. That is why I was making every best effort to avoid doing this. It is why I sought to come to agreements with the Opposition to avoid coming back a week early, but the Opposition found it impossible to agree to put other business in Grand Committee, which would have meant that we did not have to take another week. In fact, on one Bill that was offered to us in February to go into Grand Committee, before Whitsun the Opposition said that they had to change their mind. I do not blame them for that—I appreciate that political imperatives from the Leader of the Opposition can change things—but that is now public and not a matter for the usual channels. Certainly, every best effort was made by the Government to avoid this step but, regrettably, it is necessary to come back early October.

Of course, we appreciate the difficulties caused by this backlog building up—and the noble Baroness has been very clear as to where the responsibility for that lies—but I wonder whether, for the benefit of those Peers who have other pressing engagements and who will find it very difficult to come back in that first week of October, she would consider consulting and timetabling business that does not involve critical legislation. Perhaps it could involve reducing the backlog of other business that does not require the attendance of all noble Lords in the manner that we attend regularly when we scrutinise legislation.

My Lords, I assure my noble friend that we will consult the Opposition in the usual way to schedule business that is to the greatest convenience to the House but that, of course, takes into account the availability of the opposition Front Bench. We will make every best effort to achieve an amicable resolution.

All Oppositions always accuse all Governments of introducing too many Bills, and too many bad Bills, so let us take that as read and as common ground between the Government and the Opposition. What is fundamentally different about the present situation in at least two respects is, first, that the Government have legislated to provide for a five-year Parliament. They did so, as anyone can see if they care to read the Committee and Report proceedings, to enable them to plan their programme over a five-year predictable period. Therefore, they can know exactly how many Bills they need to introduce in each of the five years.

The second thing that has changed as a result of a decision by this Government, despite strong opposition, is that this will be a two-year Session. I would think that is unique; it certainly has not happened for 40 years, and I doubt very much that it has happened since the Second World War, but perhaps the noble Baroness can tell us whether the period is any longer than that. In other words, were this a normal one-year Session, we would only just have had the Queen’s Speech; it would have been in May, and we would be starting the new Session now that would complete next April or May. Those are unique advantages that the Government have had.

I make no criticism of the noble Baroness, as she has a phenomenally difficult job—I know that very well indeed—so I offer her some very simple solutions to this problem. The Government know that they have five years, so why does not the Leader of the House and the noble Baroness, the Government Chief Whip, go to one of their friends in the Cabinet and do what she knows has to be done to explain the situation to one of the Secretaries of State who has a Bill about to be brought to this or to the other place—a Bill that will no doubt solve, as they all profess to, many of the problems facing mankind. She might suggest that it would not really be a disaster if that Bill, instead of being introduced in November or December this year, were introduced in May next year. That would not be a huge delay. The world will wait, and it would give her space in her programme. Alternatively, she can ask this House to carry over one or two Bills if the programme is in the kind of condition that she has described. I am sure the House would agree.

I suggest one very simple way in which the noble Baroness could save us quite a lot of time. We are about to embark on a two-day debate on the abolition of the House of Lords. I advise her that my judgment of public opinion is that should she announce that the Government have decided not to proceed with this in the immediate future, the nation would remain calm.

My Lords, the advice of the noble Lord, Lord Grocott, is always something that I listen to even if I do not agree with it. He always delivers it in a very urbane manner. As a government Chief Whip, he was always one to be highly respected and indeed it was he who helped the House by starting to give notice of government business way in advance. On the other side, when we got into a position when the noble Lord, Lord Bassam, wanted to come back a week early, we then made sure that we curtailed business so that we did not have to. We assisted the then Government.

The noble Lord, Lord Grocott, refers to unique circumstances. At the beginning of this Session the Government planned their business on the expectation of two things: first, that this House would carry out its normal procedure of scrutiny and would not take the 17 days in Committee that the Opposition decided were necessary on one Bill; and, secondly, that this House would accept the normal split of Bills between the Chamber and the Grand Committee in the usual way, which simply has not happened. That is why we have to return at the beginning of October. I am afraid that the House is going to have to observe the results of those two matters. We have tried for over five weeks now to reach an agreement with the Opposition. I have said three times that they have failed to come to that agreement and therefore we are in this position, which is regrettable for all of us.

I know that this debate has now gone on for some time and that the Benches behind me were emptying. I ought to say in defence of my noble friends, since I have noticed some comments opposite about this, sotto voce, that they are interested in business but it is, at this very minute, the memorial service for Lord Pilkington across the road. That is where they are.

Welfare Reform Bill

First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

Sports Grounds Safety Authority Bill

Third Reading

Bill passed.

Police Reform and Social Responsibility Bill

Committee (6th Day)

Relevant documents: 13th Report from the Delegated Powers Committee, 14th Report from the Constitution Committee and 11th Report from the Joint Committee on Human Rights.

Amendment 240M

Moved by

240M: After Clause 119, insert the following new Clause—

“Purchase of alcohol on behalf of children

(1) In section 149(7)(b) of the Licensing Act 2003, for “level 5 on the standard scale” substitute “£10,000”.

(2) The amendment made by this section applies in relation to offences that are committed on or after the commencement of this section.”

My Lords, this amendment, supported by my noble friend Lady Finlay of Llandaff, would insert a new clause in the section of the Bill that deals with selling alcohol to children. I first place on record my gratitude to the Minister for meeting me to discuss my concerns and for writing to me in detail about them. Nevertheless, I hope still that I might persuade her that my amendment merits further consideration and that she might agree to come back with something on Report.

I should declare various interests. I am a former chief executive of the Portman Group and a former member of the Alcohol Education and Research Council. I currently work as a paid adviser on corporate responsibility to two drinks companies whose names are listed in the register. I emphasise that I provide them with non-parliamentary advice, and I have had no discussion about the Bill with either company.

The Bill already proposes to double the maximum fine for persistently selling alcohol directly to children from £10,000 to £20,000. My amendment applies the same principle to the offence of purchasing alcohol on behalf of children, an offence that is often overlooked but which is regarded by many local police forces and local authorities as the more serious in terms of its prevalence. The offence of purchasing alcohol on behalf of children is commonly known as “proxy purchase” and occurs when someone over 18 agrees to go into licensed premises to buy alcohol in order to hand it over to a child aged under 18 waiting outside. The current maximum fine is £5,000, or level 5 on the standard scale. I suggest that if the Government believe that a strong message needs to be sent out on underage sales by doubling the fine for that offence by licensees, it follows logically and all the more strongly that a clear message needs also to be conveyed that proxy purchase by unscrupulous members of the public is completely socially unacceptable, immoral and illegal, and should attract rigorous enforcement with harsh penalties.

As I said in the debate at Second Reading, the incidence of prosecution and conviction for this offence of proxy purchase may be low but is nevertheless much higher than for illegal sales direct to children. In 2009, the last year for which figures are available, there were only four prosecutions for persistently selling to children, compared to 29 for proxy purchase. It would be a wasted opportunity not to take advantage of the Bill to ramp up the maximum penalty in the same way as is envisaged for direct underage sales.

I know that the Minister is rightly concerned that this legislation should be proportionate and consistent. I agree. I was a member of the Better Regulation Commission when it developed the five principles of better regulation, of which proportionality and consistency are two, and I believe that my amendment ticks exactly those boxes. If the Government think it is right, and therefore proportionate, on the basis of the prosecution figures I have just given, to double the maximum fine for persistent sales to children, then surely it would be consistent, right and proportionate to do the same for proxy purchase when we know that the level of harm and potential harm are at least as great.

We know quite a bit of detail about which children are gaining access to alcohol through proxy purchase. A survey in 2008 of 11 to 15 year-olds for the National Health Service Information Centre revealed that a total of 34 per cent of these young children, some of them not even yet teenagers, got their alcohol from other people buying it for them—in some cases people who were related to them—but 18 per cent of them got it from strangers.

When you look more closely at the figures, you begin to see just how worrying this behaviour is, how potentially vulnerable these children are and how important it is that we do everything we can to deter adults from agreeing to engage in proxy purchase. For example, although 18 per cent of children overall said that they had asked someone else other than a relative to buy alcohol for them, this figure rises to 41 per cent of 15 year-olds. Among the children who are drinking most heavily, defined as over 15 units a week, the figure rises to a staggering 88 per cent who used proxy purchase. When we compare the behaviour of boys and girls there are also significant differences, with 10 per cent of 13 year-old boys relying on proxy purchase but 14 per cent of girls. At age 15, that rises to 38 per cent of boys but 43 per cent of girls.

I am especially concerned about the potential danger in which these very young girls are placing themselves by approaching strangers in the street and asking them to buy alcohol. If an adult is irresponsible enough to agree to do that, what other dangers or risks might these vulnerable girls be exposing themselves to? I emphasise that this survey shows proxy purchasing to be a much more serious issue than under-18s buying alcohol for themselves. Only 6 per cent bought or attempted to buy alcohol from a shop, and only 4 per cent from a pub. The survey shows that the proportion of teenagers who manage to buy for themselves has declined significantly since 1996. I would not want to sweep that problem under the carpet, because it remains a fact that most of those few who do so are successful in achieving their purchase. The fact that some are not and that many more no longer even attempt to buy for themselves shows that the co-operative efforts of licensees, local authorities, the police and dedicated community groups promoting more rigorous use of proof of age at point of sale has been paying some dividends.

Even so, the Government have seen fit to include in the Bill the doubling of the maximum fine for licensees who still sell to the under-aged. Fair enough, but why ignore the more pressing issue of proxy purchase when it would be simple to include a similar amendment along the lines that I have suggested? Another piece of research was published only last month by the Drinkaware Trust, this time concentrating on where slightly older teenagers, aged 15 to 17, get their alcohol. Here, too, we see that those who are drinking in the most risky and potentially vulnerable situations—outdoors, rather than at home, at a party or a friend’s house—are the ones who most rely on proxy purchase, with 19 per cent—almost one in five—saying that they asked a passer-by to get them their alcohol from a shop.

On the basis of all this evidence—and the Government say that they are committed to evidence-based policy—I urge the Minister to agree that my amendment would be a sensible and justified logical extension to this section of the Bill. As I said at Second Reading, the penalties for these offences are relatively meaningless unless the law is rigorously enforced. I hope that the Government will also be doing something to encourage the police, local authorities, trading standards and the licensed trade to do even more to stamp out illegal sales to children and proxy purchase. It might be a little more complicated than underage sales because it involves indentifying and pursuing members of the public rather than slapping an extra fine on licensees. But if this is the offence which is doing most harm to young drinkers, especially those who are most vulnerable because of their age, sex and consumption patterns, surely we must do whatever we can. I beg to move.

My Lords, I have added my name to this amendment in support of my noble friend Lady Coussins. I am grateful to the Minister for all her interest and concern over alcohol as a problem. I know that she has expressed a view that this is not the direction in which the Government wish to go, but I hope that she may be persuaded to think again. When we pass legislation such as this, we need to send a clear social message to the rest of society.

There is some evidence that if you teach children to drink responsibly and socially at home they will be less likely to abuse alcohol. Sadly, that is now tremendously outweighed by the data of children being initiated into binge-drinking by adults proxy purchasing for them. Some of the statistics have already been alluded to, but there are many more. An interesting study from the Portman Group itself showed that one-third of adults have been asked to buy alcohol on behalf of someone under 18 and one-third of those have admitted to buying it. A quarter did not realise that it was an offence; 30 per cent did so because they felt intimidated by the young person; 30 per cent thought that it would not do any harm; and 70 per cent did not realise that they could be prosecuted for doing so. That demonstrates an enormous ignorance both of the criminality involved and of the harm that they are doing to children. It is also a terrible indictment of young people that their behaviour was so intimidating that they pushed someone into buying alcohol for them. As has already been said, the number of prosecutions is horribly light.

What about the impact on these young people in the long term? About 7,600 school-age children are admitted to hospital annually with alcohol-related conditions. These are not just minor conditions; some are admitted in coma with alcohol toxicity, liver failure and vomiting which may be so severe that they become severely dehydrated and need intravenous rehydration. We know that a car is more likely to be involved in an accident when the passengers have had too much to drink—even if the driver is not drunk—as their irresponsible behaviour may result in the driver not being able to concentrate.

These young people also suffer from chronic problems. They have a higher incidence of depression and mental health problems in later life, weight loss and chronic liver damage. It is clear from a study in the British Medical Journal that men who drink more than seven units a week at the age of 16 are one and a half times more likely than light drinkers to binge drink in their 30s and 40s. By not sending out a clear message to society, we are complicit in encouraging youngsters into a binge-drinking habit. We are saying, “It is okay, we will turn a blind eye to it”, but the size of the problem means that it cannot be looked at with Nelson’s eye. I commend the amendment to the Government and hope that they will take it very seriously.

My Lords, I support the amendment for the reasons set out so eloquently by the two noble Baronesses who have spoken to it. I realise that it is not a natural fit with the Bill and that it moves it into territory for which it may not have been originally designed. However, it provides the Government with an opportunity to reinforce the condemnation of the proxy purchasing of alcohol by adults for children. At one end of the scale this proxy purchasing can be due to chance and the stupidity of an adult responding to a request from a child or young person to buy the alcohol, but often it is more sinister. Some adults hang around young people and proxy purchasing of alcohol can be the beginning of grooming children and young people to draw them into inappropriate sexual behaviour, drugs misuse or even into membership of gangs on estates. Proxy purchasing by adults is a way of enabling them to talk to the youngsters and draw them into inappropriate behaviour. It is largely the result of stupidity and indifference but can be more sinister. As I say, although the amendment is not a natural fit with the Bill it provides the Government and the Minister with an opportunity to reinforce the message that we condemn this behaviour on the part of adults. I hope that they will find a way to support the aim of the amendment.

My Lords, we on this side of the Committee support the amendment in the name of the noble Baronesses, Lady Coussins and Lady Findlay. They have given us a very graphic set of reasons why it would fit well with the intentions of the Bill. We have also heard some very scary statistics. In essence, the amendment would close a loophole. The Government may, on reflection, agree that that is the case. We understand that proxy purchasing is now regarded by the off trade, the on trade and the trading standards groups as the biggest challenge facing alcohol sales. The amendment would also bring the fine into line with the current level imposed for persistently selling alcohol to children, which is why I think that it is a good way of closing the loophole.

However, we are advised that retailers are often frustrated with the lack of action being taken against those who deliberately buy alcohol to be consumed by those who are under age. Therefore, although we support the amendment and hope that the Government will consider it favourably, there needs to be a commitment to place greater emphasis on identifying these people and seeing through the legislative consequences of the amendment, which is that action must be taken. As we have heard from the previous speaker, that is an important aspect of what we are about. However, the amendment justifies itself in its own terms.

My Lords, we are legislating in Clause 119 to double the maximum fine available to punish the persistent sale of alcohol to persons under 18 from £10,000 to £20,000. The amendment seeks to go further in doubling the maximum fines available for two other offences in the Licensing Act 2003, from their current level of £5,000 to £10,000. The offences relate to where a person buys or attempts to buy alcohol on behalf of a person under 18, or where a person buys or attempts to buy alcohol for consumption on licensed premises by a person under the age of 18.

At a first glance, we can see merit in the proposed new clause. My noble friend and I are absolutely with the noble Baroness in her strong feelings about the proxy purchase of alcohol for minors, and we take this very seriously. I hope that the noble Baroness will recall how we have responded to related amendments in earlier discussions in Committee. However, it is important to maintain consistency in the sentencing framework.

In addition to the two offences that I mentioned, a number of other offences currently exist for offences in the sale of alcohol to those under 18 or the consumption by those under 18 on licensed premises. They include knowingly allowing consumption of alcohol on licensed premises by an individual under 18. For all these other offences, the penalty is a maximum sentence of £5,000—level 5 on the standard scale in the sentencing framework.

In our view, however, the offence of persistently selling alcohol to children is distinct and distinguishable from the other offences in the Licensing Act and merits separate treatment in the Bill. It is far the more serious offence, not simply a one-off sale to or involving a person under the age of 18. This is reflected in the higher fine that the courts can impose for it. The offence of persistent sales to a person under 18 was created specifically to target irresponsible businesses rather than individual offenders. Indeed, there is an alternative to criminal prosecution for such premises—a punitive period of closure.

The fine for the offence of persistent sales, which stands at £10,000, was always intended to be set above the level 5 fine in the sentencing framework. The fine was high to reflect the seriousness of the offence and to reflect the intention of targeting irresponsible businesses.

In the Government’s view, increasing the maximum fine for the offence of the proxy purchase of alcohol for children, but not for others where individual adults have been responsible for providing or attempting to provide alcohol to children, could blur the existing distinctions in fines under the sentencing framework between offences targeting individuals rather than premises. In summary, we believe that the existing penalty for the proxy purchase of alcohol—a fine not exceeding £5,000—is sufficiently punitive for an offence by an individual. Yes, it is a serious offence, but not one that should be singled out for the provision of a greater fine than those for similar offences in the Licensing Act 2003 relating to the provision of alcohol to minors.

For these reasons, and having thought about it carefully, we believe that the offence of persistent sales of alcohol to children is sufficiently separate and easy to distinguish from the range of other alcohol-related offences in the Licensing Act. We want to send a clear message to irresponsible businesses that the persistent sale of alcohol to children is totally unacceptable. This is why we want to double the fine. All that I have said, however, should not be taken to mean that we will not look at the other alcohol-related criminal offences and consider whether further changes should be made in cases such as those that noble Lords have raised. Indeed, the Government are committed to a full examination of sentencing policy across the board. I can also say that we will look at the points raised by noble Lords in the context of the alcohol strategy that will be published later this year. For the reasons that I have outlined, we ask that the amendment be withdrawn.

My Lords, I am grateful for the support expressed by other noble Lords for the amendment. I cannot say that I accept the logic that proxy purchase is an offence of such a different order from persistent sales to children as the Government suggest. I stress that I am not seeking to make the maximum fine the same, but just to apply the same principle of doubling that fine as a signal that the harm and potential harm behind that offence is recognised.

I do not accept that my amendment would blur the distinction between the offences. However, I am encouraged by the Government's signal that the dangers of proxy purchase will be looked at again in the context of the revised strategy that we are expecting in the autumn and of a more widespread look at sentencing policy in general. Perhaps we can return to the issue, because it will continue to cause harm, and there is a higher incidence of proxy purchase than of persistent sales to children. The issue will not go away but, for the moment, I am content to withdraw my amendment.

Amendment 240M withdrawn.

Amendment 240N not moved.

Clause 120: Early morning alcohol restriction orders

Amendment 240P not moved.

Amendment 240PA

Moved by

240PA: Clause 120, page 79, line 15, leave out “and club premises certificates”

I shall speak to all the amendments in this group, other than Amendments 240V and 240X, and also touch briefly on clause stand part. I nevertheless support Amendments 240V and 240X, which seem extremely sensible.

All my amendments in the group are designed to mitigate Clause 120, which radically alters the impact of Sections 172A through to 172E of the Licensing Act introduced by the Crime and Security Act last year, in that they can now be imposed from midnight to 6 am instead of from 3 am to 6 am, and on the say-so of the licensing authority, not the full council as before.

First, I take Amendments 240PA and 240PB, which are designed to remove private members’ clubs from the scope of the clause. The proposed amendments to the Licensing Act 2003 in the Bill—the late-night levy and the early morning alcohol restriction orders—are designed to tackle issues relating to licensed premises, largely on the high street, that sell alcohol for consumption on the premises to members of the public. In contrast, private members’ clubs are not selling to members of the public but are membership-based. They also, by and large, are not positioned on the high street or close to centres of the night-time economy, because their original remit, which has not changed, was to serve and be at the centre of the community in which they were located. They not only provide a valuable service to their members but have responsibility for the conduct of their members in the community. They have a self-regulatory process, which enables censure by the committee of individual members' conduct.

On the basis that there is self-regulation and the recognition that private members’ clubs do not contribute to the issues which have prompted the proposed provisions of the levy and restriction orders, the clubs should be exempt from the measures. Not only are they particularly onerous in the extra revenue that will be required to pay for the levy, which we will deal with later, the loss of facilities after midnight under the early morning restriction order provisions will further curtail the revenue stream which is critical for their survival. The membership of clubs is reducing and revenues are decreasing. DCMS statistics show that, as well as all the pubs that have closed, the net reduction in clubs operating with a club premises certificate has reduced by 300 per year from 2008 to 2010.

Younger members of the community in which the private members’ club thrived now have a much wider choice of venues, which are on the high street, and have other interests which do not include the traditional club environment. Nevertheless, those clubs and their facilities continue to be important, and we should protect them against changes which will have a significantly detrimental effect on their survival.

Moving on to Amendments 240Q to 240W, Amendment 240Q makes a modest proposal of a 1 am start time for EMROs, rather than midnight. Midnight is far too early in the circumstances and out of step with today's customer expectations. Frankly, putting the beginning of the EMRO at midnight could be a business-killer for many businesses. Amendment 240R removes the restriction on temporary event notices which an EMRO would impose.

Amendment 240T provides for personal licence holders to be included in the definition of affected person. A number of pub companies and breweries hold the premises licences for the premises they own and rent or lease out as individual businesses. While all tenants and lessees will be personal licence holders, they will not necessarily be premise licence holders and would therefore be excluded from the local consultation process under the current provisions. This amendment ensures that they will have a voice in any local consultation on the introduction of an EMRO.

Amendment 240W would ensure that the imposition of early morning restriction orders does not apply to New Year’s Eve and thus undermine the opportunity for celebration in those areas where they do exist.

Turning to Amendments 240RA and 240RB, there is no mechanism currently for a review to determine whether EMROs remain necessary or appropriate. If EMROs are to provide an opportunity to redress the problems that have arisen, such an opportunity will be lost if they are applied without limit. Without such a provision there will be no incentive for local authorities to undertake a review of an order or to determine whether it is still required. Businesses that suffer loss of income and value as a result of an EMRO, through, as it is admitted, no fault of their own, will be deprived of the opportunity to revisit the circumstances surrounding the placing of an order and will suffer permanent damage as a result.

Two years is a reasonable timeframe within which councils, police and the hospitality trade and others can work together to address the fundamental problems that have led to the imposition of an EMRO. EMROs will impose significant burdens on those businesses upon which they fall and it must be right for those businesses to be able to see an end to the restriction through the need to reapply after two years for a further EMRO which would have to be re-justified. As it stands, there is no incentive for a council to lift an EMRO once it is in place, given that the council will have to repeat the procedures contained under proposed new Sections 172A and 172B. This amendment ensures that the council cannot simply leave an EMRO in place without reconsideration of the need.

Moving on to proposed new Section 172C, trading hours that have been granted form part of the intrinsic value of a business and the permanent removal of later opening could damage the long-term value of a business. Were licences to be changed to reflect the removal of those hours, they could only be restored by a reapplication at the termination of the EMRO, when there would be no guarantee of the permissions previously granted. At the same time, conditions may have been placed on those businesses which reflect the later opening hours employed by them. A restriction of those hours would very likely change the nature of that business such that the conditions would no longer be necessary or appropriate. Given that those businesses could already have suffered a significant loss of business and shed employment as a result, a further burden of conditions that relate to the later opening could impose further costs on a business that might already be struggling. These amendments give effect to the suspension of such conditions.

I appreciate that such conditions will not always be readily identifiable as they might be more related to the nature of the business rather than specifically attached to the later hours. A nightclub that has had its hours restricted to midnight might need to reconstruct its business since the closing time makes it unattractive as a nightclub. In such cases the condition for door staff might be dispensed with or reduced without any detriment to the licensing objectives, while allowing the business to reduce part of its costs.

The need for the legislation to take account of the cost burdens imposed on the businesses that are affected, through no particular fault of their own necessarily, reflects the potentially unfair and untargeted nature of the proposed measures. I am not going to steal the thunder of the noble Viscount, Lord Astor, on clause stand part, but the number of amendments I have tabled regarding this particular clause demonstrates the very difficult nature of not only the current amendments but also the original legislation contained in proposed new Section 172A onwards.

The ministerial forwarded and the Government’s response to the consultation on the Bill recognise and acknowledge that the majority of premises are well run businesses. The Minister has stated that the measures to be introduced have been designed to be used flexibly by licensing authorities to avoid penalising the majority of premises that sell alcohol responsibly. Unfortunately, the early morning restriction orders do exactly that, in so far as businesses that have applied for and been granted hours beyond midnight, until 1 am or 2 am, for example, will be penalised, through no fault of their own, if such orders are imposed, despite the fact that those businesses have not been the cause of any trouble leading to the consideration of the EMRO. They will be simply swept up in a requirement to cease trading at midnight.

It is not clear that under this current clause, and indeed under the original legislation introduced last year, there will be satisfactory exemptions from EMROs. It is important that exemptions recognise best practice and social responsibility initiatives rather than being based solely on premises type. This would ensure that well run businesses that would not qualify for an exemption according to premises type are not unduly penalised by the provisions. Rather than introducing such a blanket measure, which itself risks large numbers of customers coming out on to the streets at the same time, just like the bad old days, would it not be more practical to tackle the premises that are the source of any problems rather than penalising responsible premises?

In terms of the flaws in the clause and in the original legislation, I very much hope that the Minister will agree to reconsider and come back with something far more satisfactory on Report.

My Lords, I added my name to the amendments moved by my noble friend Lord Clement-Jones and also to the clause stand part. I do not intend to go through the basket of amendments that the noble Lord has moved but will confine my remarks to clause stand part and to one amendment in particular, Amendment 240Q, which relates to proposed new Section 172A(3)(a) in Clause 120(3), where it says “begin no earlier than midnight”.

This amendment and this clause are so important because it seems to me that the Government are attempting to change the policy of late-night bars and how they operate. They are in effect saying, “We are going to make it very easy for anybody to close everything at midnight”. For operators who have a 3 am licence, it is an incredibly important part of their business, for a number of reasons. In fact, that is often the bit of the business that makes the whole operation profitable. In my experience there has been no great push from the police to bring everything forward to midnight. Indeed, as the noble Lord, Lord Clement-Jones, said, in many areas the police would prefer it to be 3 am because people start leaving from midnight onwards and there is a gradual trickle of people going home, as opposed to the ugly rush there would be at midnight, leading to all kinds of problems of disorder. At 3 am most people have gone, with a few stragglers remaining. Equally, there does not seem to be any evidence that local authorities have been pushing to bring everything back to midnight.

I ask my noble friend the Minister to explain whether this really is a change of government policy by the back door, because that is what it looks like to the industry—if so, the Government should be honest and open and say what it is—or an attempt merely to give more powers to close down operators who are seen to be operating either out of their licence hours or breaking their licence conditions. There is no evidence so far in the industry that local authorities have any problems with operators who should be closed down. It is quite easy for local authorities to close down an operator, although there is concern about the legal costs of doing so. But most operators regard their licence as so important to their business that the last thing they want to do is jeopardise it. We need some explanation from my noble friend of what really is meant by Clause 120, as well as a satisfactory reply to deal with the concerns felt by many operators in the industry—and indeed not forgetting the poor customers.

My Lords, if the analysis of the noble Viscount, Lord Astor, regarding a change in government policy is correct, I welcome it. It is what the public want and, although some in the business sector will be unhappy about it, I think that overall this set of amendments would undermine the Government’s attempt to respond to the clamour which has increasingly grown up among the public at large and has been reflected in some of the work done in the consultation. Therefore, I hope that the Government will not backtrack and that they will dig in firmly and hold to their course on this. The public will certainly support them in that.

My Lords, I agree with my noble friend—to the extent of New Year’s Eve, at any rate. I have Amendment 240V in this group, to which the noble Lord, Lord Stevenson, has added his name. It would provide for permitted exemption categories and exempted days, and is part of a continued conversation about how far local variances should be reflected and the extent to which they should be centrally prescribed. Noble Lords will not be surprised that I always find myself at the local end of the spectrum.

This matter was brought to us by the Local Government Association. It seems that licensing authorities should be able to determine the categories of premises to be exempted from EMROs in their local area. This would not be novel, even in the context of the Bill, as it would mirror the late-night levy exemptions that licensing authorities can decide locally. There seems to be no logic for having different systems, particularly as I understand from the LGA that the Home Office has proposed to use the same definitions for categories of possible exempted premises for EMROs as for the late-night levy. The broader point, as I said, is local determination.

My Lords, perhaps I may make a very brief gloss on the speech of my namesake, the noble Lord, Lord Brooke of Alverthorpe. Reflecting back to the debates on the Licensing Bill in 2003, I think it would be fair to say—and I hope that those who were in the Chamber at that time would agree—that the arguments against the then Bill were led very much by those who had a lot of London experience. People who have a lot of London experience endeavour to mobilise opinion through the civic trust across the country, but it took quite a long time for that communication to take place during the passage of the Bill. It would be fair to say that those away from London were disagreeably surprised by some of the consequences of the Bill when they arrived in practice. I cannot sense totally from the speeches of my noble friends Lord Clement-Jones and Lord Astor how far they are centring on London experience in their observations but I think it is necessary to realise that we are dealing with a national issue.

My Lords, I confess at the start that I have a bit of sympathy with my noble friend Lord Brooke of Alverthorpe and his feeling that midnight is a good time to draw a curtain across many outside activities. I certainly always try to be in bed at 10 pm, although perhaps that is a baby-boomer problem. I like to sit in bed with a cup of cocoa looking at “News at Ten”, reflecting on the events of the day and preparing well for the events in this House and other places where one has to play one’s part.

However, on reflection, I think that we are hearing too much of a puritan strand here. The amendments raise a number of questions on which we need to think hard about what we should be saying to the country in terms of how we reflect on the relationship between the nanny state and those who have to live here. If there is a change of policy, I think it is probably wrongly focused, and the amendments expose that. It is clear that one has to deal with bad operators—a point made by those who have spoken before—but there is a danger here that, due to the way in which the Bill is currently phrased, it will catch everyone, and that will be bad.

Surely a blanket EMRO running from midnight is not going to be effective. It will severely damage those businesses unfairly caught by the legislation and the consequences could be severe for the night-time economy. I am particularly concerned about small live music venues that operate with a licence past midnight. Capturing them in an EMRO would do enormous harm and could damage the UK’s rich cultural diversity, of which we are so proud. At this time, many small venues are struggling to remain economically viable, and for venues that might get caught in such a blanket provision, this extension comes at a very bad time.

An EMRO applied indiscriminately to all businesses in a given area, as opposed to being imposed on individual premises known to contribute to alcohol-related disorders, would surely unfairly discriminate against responsible pubs and clubs, which is why we are arguing for exemptions. I particularly welcome the amendment concerning New Year’s Eve, and not just because of my Scottish background.

Perhaps I may give an example that might highlight the problems. It is an imagined live music venue—a small jazz club. A licensing authority has issued an early-morning restriction order to cover the boundaries of the whole city centre. Around the corner from a few known trouble spots is a small jazz café, whose clientele is characterised by, let us say, a more mature music lover. It is a small venue operating on a very tight margin but is well loved by its regulars, and it is a place where jazz musicians enjoy performing and jazz fans enjoy congregating. The club is busiest between midnight and 2 am. However, let us say that also within the city centre is a hotel with a casino. As a result of an EMRO, the jazz club will be forced to stop serving alcohol at midnight. It will therefore be compelled to reduce the number of musicians that it books and could gradually lose its clients to other venues exempted from the EMRO. If its revenue falls, it will be forced to close. Meanwhile, the hotel with a casino sees a rise in its bar takings well past midnight. Is that what we are trying to achieve? I think not.

Like the noble Viscount, Lord Astor, and the noble Lord, Lord Clement-Jones, I think that the provisions in the Bill are too broad in application, too aggressive in what they are trying to achieve and perhaps too puritan.

My Lords, I suspect from what I have heard in this debate that I am going to end up having “nanny” in front of my name. However, I shall be a benign, jazz-loving nanny, so perhaps that will be all right.

An early-morning restriction order is an uncommenced power that already exists under the Licensing Act 2003 and will allow licensing authorities to restrict sales of alcohol in the whole or part of their area for any specified period between 3 am and 6 am. The fact that it is an uncommenced order made us look again at what needed to be improved in the previous legislation.

I was asked whether this was a change in policy on the part of the Government. These orders are a power that local authorities can use to restrict the supply of alcohol from licensed premises and clubs and at temporary events for a period of one or more nights beginning at or after midnight and ending at or before 6 am. We are committed to ensuring that licensing authorities and enforcement agencies are given the right tools to address alcohol-related problems, and we see this as a necessary tool to enable them to have more flexibility to deal with specific problems within their areas. At the same time, we need to balance this measure by promoting a healthy night-time economy to benefit businesses and the communities that they serve. I am confident that this proposal will provide the licensing authorities with an additional tool to deliver these aims. It will be up to them to decide whether they use it at all and how they use it.

I want to prevent any concerns that EMROs applied from midnight will unfairly penalise responsible premises that regularly trade between the hours of midnight and one o’clock. Those are not quite the same as the hours that the noble Lord mentioned in respect of his small jazz club but there are premises that go on beyond midnight. I acknowledge that the majority of retailers trade responsibly. However, I say to my noble friend Lord Astor that residents and residents groups have told us that the night-time economy generates a significant amount of alcohol-related anti-social behaviour and that these problems typically surface from midnight onwards. Indeed, not all serious crime is as a result of alcohol but 15 per cent of serious crime is committed after midnight.

There will be exemptions from EMROs set centrally by the Government in secondary legislation. These will ensure that retailers who operate responsibly are not unfairly penalised by the introduction of an EMRO, and we will of course be consulting on this. For that reason, I ask my noble friend not to press that particular amendment.

May I ask my noble friend a question before she leaves that subject because I know that she has a huge number of amendments to reply to? She spoke about crime committed after midnight, which is certainly true, but does she accept that the statistics show that the majority of crime is committed much later than that—at two, three or four o’clock in the morning? Therefore, to say that midnight is the cut-off which would help that is not correct or particularly fair to those operators. Does she also accept, which is very important, that if there is a tendency by the Government and local authorities to determine that midnight will be the new relevant hour, the effect will be to put half the operators out of business, which will create a much greater problem of social disruption and crime than there is at the moment?

I understand the point that my noble friend is making but I reiterate that this is a flexible option for local authorities. They will know where the hotspots are and whether things happen on a particular night of the week. They will have the flexibility to make sure that if they intend to exercise the option—it will be optional—to introduce an EMRO, they can scale the EMRO according to the problem that presents in their locality. It does not have to start at midnight or finish at 6 am but it is between those hours that an EMRO can apply. Just on that point, because I sense that noble Lords feel that this is a draconian measure, it strengthens the licensing authorities’ powers in the sense that it gives them an additional tool in the box, but to get that balance right it has the flexibility that I hope will not create the concerns that businesses might feel, as represented today. My noble friend Lord Clement-Jones mentioned that the full council would not decide to make an EMRO. It is the case with the existing legislation, and will still be the case that the decision will be made by the full council. That has not changed at all in the updating of the legislation.

Moving on to Amendments 240PA to 240SA and the question of private clubs, I recognise the intention of noble Lords to remove private club premises certificates from the effect of an EMRO. There are, of course, clubs and clubs. I am sure that in any private club, of which noble Lords are members, propriety is observed in their proceedings, whatever the time of the day or night. I see noble Lords trying not to catch my eye on this, so they may know. It is important to note that antisocial behaviour and crime and disorder are not necessarily attributed to one premises but a cluster of premises in a concentrated area. There is no evidence to suggest that clubs do not contribute to these types of problems in the night-time economy. The Government do not want to penalise those businesses that operate responsibly and as such, if the licensing authority decides to impose an EMRO in the local area, businesses, including all clubs, will be able to make a relevant representation and provide evidence that they do not contribute to late-night crime and disorder and anti-social behaviour.

At this point, I should say to my noble friend Lord Astor, that on many occasions as a Member of Parliament I went out on Friday and Saturday nights with the police in small Devon market towns where they have perhaps one or two clubs and some late-night licences. Although I completely admire the work that the police and other agencies do at that time of night, it has not been my experience as a Member of Parliament that all anti-social behaviour, including things that are well in the frame of criminality occur after 2 am or 3 am. I was prompted to go out with the police on one occasion because between the hours of midnight and one in the morning, small shopkeepers regularly complained that their shop fronts were kicked in. I would say to my noble friend that within the scope of EMROs and the procedure to be followed in a licensing authority introducing an EMRO into the area, there will be plenty of scope for businesses to make their case, if they feel that they have one. None the less we feel that it is an important tool that licensing authorities will welcome.

From these Benches, I support the Government and the way in which the legislation has been drafted, provided that it is enacted and applied with the flexibility that the Minister is describing. I do not do so in the spirit of being too puritanical, I hope. Living in the middle of the city of Chester and observing the streets in the early hours of the morning sometimes, and indeed relating to a whole new movement of what are called street pastors when churches seek to pick up some of the consequences of late-night activities in city centres, and contrasting the average experience in this country from what you find in many continental countries and the lack of civilised behaviour comparatively in this country, the Government are on the right lines provided that there is the flexibility to project the small jazz club, or whatever. Notwithstanding the anxieties expressed elsewhere, the Government can know that from these Benches, without a shred of puritanical spirit, we support them.

I am grateful to the right reverend Prelate. I am, of course, familiar with the work of street pastors who give up their time voluntarily, particularly to ensure that people who have consumed too much alcohol are able to get home safely. I commend their work. As a new Minister with a new responsibility for alcohol and drugs policy in my portfolio, it strikes me that I need to dig deeper than looking at the solutions to late-night drinking and look at the causes of why street pastors and others are now required to carry out this valuable work. It seems that we spend a lot of time talking about the consequences. I hope that in my time as a Minister at the Home Office I can try to dig deeper than that to see whether we can do something. It is a long-time ambition, I know. Nothing will happen overnight to change this culture, as I mentioned in a previous debate on the subject. Far too many people—not just teenagers kicking over the traces—believe that they have not had a good time or a good night out unless they get absolutely paralytic. We must try to address the cause as well as deal with the consequences for the rest of the community.

We on this side welcome that statement. Throughout this debate we have been trying to engage with the question that the issues we are addressing in the Bill are but a superficial aspect, important though it may be, relative to the point that she has just made about how the cultural effects are coming forward. Does she intend to take this forward, not in her nanny mode of course—this is much more in her policy advocacy role? Will she take into account the fact that we need to look again and will return later in the Bill to the question of how drugs, alcohol, and tobacco all interact? It is not just an alcohol-only problem.

I agree with that statement. We need to look at the combination of drink and drugs. Very often the consequences are exacerbated as a result of the combination of those two substances. I am almost beginning to sound in my own head like a nanny. I do not want to sound like that; I was young in the 1960s so I do not want to sound too prissy about all of this. However it is a serious problem and I welcome the opportunity to address it.

Moving on to Amendment 240R and particularly TENs, which hopes to prevent a situation whereby a temporary event has been organised in advance and has to be cancelled because an EMRO has been imposed. I understand those concerns, but I point out that the process of making an EMRO will not take place overnight or without proper consultation. It is also important to remember that EMROs will apply only to a specific area for a set time between midnight and 6 am. Anyone planning a temporary event could therefore choose to hold it in a different part of the local authority area, or restrict their TEN to include the sale of alcohol up to but not after midnight. Therefore, there is flexibility.

Amendment 240T concerns affected persons. I acknowledge that the amendment intends to include a personal licence holder as an affected person in respect of the early-morning restriction orders. I realise that this would enable personal licence holders to make relevant representations to the licensing authority on a proposed early-morning restriction order. However, there is already a provision for personal licence holders to make a relevant representation in relation to an early-morning restriction order. Relevant representations can be made by affected persons, responsible authorities and any other person: they would not be excluded. Personal licence holders will be entitled to make a relevant representation, as any other person will, and therefore the amendment is not necessary.

Amendments 240V, 240W and 240X concern exemptions, which several noble Lords mentioned. They are important. Although the exemption categories for EMROs will be set centrally by the Government, licensing authorities will still have discretion in other areas. For example, the licensing authority will be able to decide during which hours the EMRO will apply, whether it will apply on every day or on particular days, whether it will run for a limited or unlimited period and whether it will apply to all or part of the licensing authority area. There is a lot of flexibility there to deal with problems without the regulations being too heavy to apply.

The Government intend to exempt certain notable candidates from EMROs. My noble friends Lord Clement-Jones and Lady Hamwee in particular mentioned New Year’s Eve. We are also very conscious that more royal celebrations are coming up next year that might fall into this category. It is also important to note that the Government recently held a series of EMRO working groups with key partners to discuss possible categories of exemption from EMROs. We are considering the feedback from these working groups and intend to hold a public consultation in the coming months on exemption categories and dates. I am very confident that there will be every opportunity to make sure that the nanny state does not intervene too much at times like New Year's Eve and on special national occasions.

Amendment 240RA applies to licensing authorities. They will be able to use their discretion to determine whether an EMRO will apply for a limited or an unlimited period. This will ensure that licensing authorities will be able to consider the situation in their local area. We are trying to give flexibility, but it is not just a question of flexibility: it is about targeting hotspots. If the EMRO is too broad and brings too many people into the catchment area who are not running businesses that are in any way contributing to the problems of the night-time economy, the local authority will be best placed to identify this. I am concerned that the proposal to put in the Bill a two-year time limit for an EMRO would take away that flexibility. It is important to note that licensing authorities will be able to vary or revoke an EMRO at any time that they feel it is appropriate. For example, if a licensing authority sets a time limit on an EMRO and the problem is then resolved, there is no reason why it cannot revisit it and decide to lift it. This means that, in revoking an EMRO, a licensing authority can respond very particularly when a situation in its area improves.

Amendment 240RB concerns the requirement that licensing authorities must specify a date when the EMRO will cease. Licensing authorities are required to state the commencement date of the EMRO on the order. I recognise the intention of noble Lords to add a requirement for licensing authorities to state the date on which the order will cease. Of course, the licensing authority can specify whether an EMRO will run for a limited or unlimited period and will already be able to specify the end date of an order if it runs for a limited period. However, if the authority decides to impose an EMRO for an unlimited period, clearly there would be no end date. However, it has that choice, as well as the power of revocation. The amendment would deprive licensing authorities of the flexibility and discretion that we seek to achieve in the Bill.

This has been a useful debate. There is quite a lot of common ground in all parts of the House on some of these measures, and I hope that noble Lords will feel able to withdraw the amendment.

My Lords, before that happens—and I dare say that it will—perhaps I may ask about exemptions. The Minister talked about working parties: that is all to the good. However, I am not sure that she addressed Amendment 240V, which would allow local authorities to categorise their own exemptions—but I may have missed that.

My Lords, local authorities will be allowed to have their own exemptions, but that will be part of the consultation that is taking place.

My Lords, I thank the Minister for that very thoughtful and useful response, which helpfully went through the different amendments and added quite a lot to our interpretation of what is before us. I am very grateful to my noble friend Lord Astor for his support on the amendments and on the clause stand part debate. I am also grateful to my noble friend Lady Hamwee for her support at least for the New Year's Eve exemption, and to the noble Lord, Lord Stevenson, for his support on the stand part debate.

We have quite a lot of common ground, which revolves around flexibility. What worries me somewhat is that the flexibility is all one way. I will come to the issue of the consultation process, which will be extremely important. I do not think that there are any puritans in the House. Certainly, I would not regard the right reverend Prelate as a puritan in this regard. Perhaps the noble Lord, Lord Brooke, might just qualify on this ground. I do not see where the clamour is coming from—

My Lords, we have had a useful debate about exemptions and I would certainly exempt my noble friend Lord Brooke of Sutton Mandeville from that description.

I regard this as a very important debate because of the potential impact if these provisions are not applied flexibly. I took quite a lot of comfort from the fact that this provides a range of tools, timings and geography that will be very beneficial. I certainly would not accuse the Minister of being a nanny. However, there is something of a difference in philosophy. The powers of the local authority will be pretty wide. She said that she was not favourably disposed to an amendment—

I apologise for interrupting my noble friend and hope that he will forgive me: I wish to put something on the record. I was asked by my noble friend Lady Hamwee about whether EMRO exemptions would be decided locally and I am afraid that I gave her the wrong answer. It is levies that the local licensing authority will have an opportunity to issue locally: EMROs will be a centrally decided package. I apologise for that.

My Lords, I worry that there will be no review mechanism for these EMROs unless the local authority decides that there should be. Of course, local businesses will be able to make representations both at the point that the Minister described when the EMRO is being considered, and no doubt during the course of the EMRO in terms of demonstrating that the original problem has gone away or been dealt with or whatever. However, what worries me is that there will be no mechanism that the business can rely on, at the point where the EMRO falls due for review and when the time is up, to ensure that a full and proper debate can take place.

The most important issue here is how that consultation is going to take place. I was very interested in the way in which the Minister described the process; for instance, the consultation on exemptions. I do not know whether it will be statutory guidance or whether an order will come before this House or, indeed, who would be consulted in that process. It would be extremely valuable to get from the Minister an indication, even at this point, about which cohort of people would be consulted because there are strong views about this. The real, deep worry that people have is about the potentially blanket nature of these EMROs.

My Lords, that is deeply reassuring to us lawyers, but I am afraid it is not very reassuring to the owners of businesses because they will simply have to place themselves in the hands of my colleagues and myself in challenging these orders on the grounds that no reasonable council would have imposed them. That is a very tall order.

Far be it from me to try to deprive my noble friend of business, but does he agree that one of the problems is that almost no operators can afford judicial review unless they are part of a large chain?

Absolutely. That is only going to add to the burdens on business. Although I accept that the Minister has gone as far as her brief will allow her, I seriously ask her to give further consideration to this. I was delighted to hear what the noble Lord, Lord Stevenson, had to say about his enthusiasm for live music, but the reason why he was talking about it was the potential impact on small venues and live music in areas where local councils have decided that they do not like what is happening in other places—not necessarily in the small clubs but in the large boozers, so to speak. That is sweeping up everybody into one single pot with one remedy. Although I have heard quite a lot today from the Minister that was reassuring about the ability to deliver flexibility, I do not think we have heard quite enough yet. The least convincing response was on TENs. If you have a TEN, and an EMRO is opposed, you can have a bit of a consultation on it, but actually the remedy is to move your event in time or space. That seems pretty onerous and jolly unfair if you are a local community group and you have to shift yourself in that way after an EMRO has been imposed.

I look forward to further dialogue with the Minister and very much hope that we will continue that, even before Report, on certain areas of these reforms of the Licensing Act. In the mean time, I beg leave to withdraw the amendment.

Amendment 240PA withdrawn.

Amendments 240PB to 240RC not moved.

Amendment 240S had been withdrawn from the Marshalled List.

Amendments 240SA to 240X not moved.

Clause 120 agreed.

Clause 121 : Suspension of licence or certificate for failing to pay annual fee

Amendment 240Y had been withdrawn from the Marshalled List.

Amendment 240Z

Moved by

240Z: Clause 121, page 82, line 35, leave out from beginning to end of line 2 on page 83

My Lords, this takes us to the clause on fees and non-payment. I shall speak also to Amendments 240XB, 240XC, 240XD, 240XE and 240XG. These amendments are anti central prescription and pro local discretion. In many places, the Bill seems not only very prescriptive but unnecessarily prescriptive. For instance, it mandates the issuing of a receipt in a specific format in a set timescale. Is that really necessary? The word “nanny” was used, and rightly denied, but at this point, it would be an appropriate accusation. Other fee-paying regimes work out how to deal with these peripheral matters. We have a lot of legislation. This alone is a big Bill, but did it need to contain all this? At the most, it could be a matter for guidance, although I do not think that that should be required either. The Government are seeking to reduce regulatory burdens. This seems to be adding to them.

I shall be very brief on the detail of the amendments. Amendment 240Z would take out the provision for written acknowledgement of receipt of the fee—I cannot believe that that will not be done because people paying money require receipts—and the time periods to which I referred. Amendments 240XC and 240XD increase the grace period. Again, is this prescription absolutely necessary? The grace period is 21 days in the Bill, but I have suggested eight weeks. It is fairly obvious that I oppose my noble friend’s amendment in this group, Amendment 240XH. That follows from what I have just said. I support Amendment 241ZB, to which I think the noble Lord, Lord Stevenson, will speak. I am very glad that the Local Government Association spotted what, coming up to Wimbledon, I can perhaps describe as an unforced error in the legislation. I beg to move.

My Lords, I welcome what the noble Baroness, Lady Hamwee, said and support her amendments. The provisions in the Bill are very detailed and our amendments, taken together, are an attempt to try to tidy up some of that and to reflect on the regulatory burden that is being imposed.

I shall speak to Amendment 241ZB, which has been mentioned. Someone spotted what appears to be a simple error: at present, it does not look as though the costs incurred by some parts of the licensing system can be recovered, particularly in two-tier areas. As is well known, when a licensing application is made, copies of the licence are sent to those parts of the council classified as responsible authorities under the Licensing Act. In unitary authorities, including London boroughs, metropolitan councils and Welsh councils, all those bodies exist within the same council, which is also the licensing authority. Therefore, the costs would be recoverable under Clause 122 as presently drafted. However, in two-tier areas, the licensing authority sits within the district council, whereas social services and trading standards sit at the county level. As a result, in two-tier areas, the costs incurred by social services and trading standards would not be recoverable should the clause remain unchanged. Our amendment is therefore imperative to ensure that all costs are recoverable, regardless of the local government structure in the area, thus fulfilling the commendable approach which has been taken in the Bill to allow full cost recovery through licence fees.

My Lords, I should like to speak to Amendments 240XF, 240XH and 241ZZA, while supporting Amendments 241 and 241Y. These amendments seek to remove the lines of the Bill which give councils the power to charge licensees for more than just cost recovery in the licensing system. Businesses in the sector are concerned about the cost implications of the amendment in the other place on fees. In already difficult economic times, licensees will be facing significantly increased costs, which will be particularly difficult to bear for small businesses.

The wording of the Bill is extremely vague, stating that businesses will not only be liable for costs associated with local authorities discharging the licensing function but also the general costs of the licensing authority and other associated authorities, such as the planning department. These amendments seek to delete the provision that would allow licensing authorities to reclaim not only the cost of carrying out activities relating to licensing but also any other general costs. This wording would effectively give local authorities power to charge licensees for a whole host of alternative activities even if they are not related to the cost of administering the licensing regime.

The legislation does not explain what safeguards will be in place for businesses. There has to be a transparent process where local authorities would need to demonstrate why their chosen fee level is appropriate. Businesses would have to have an opportunity to feed into this process and to appeal the decision if the local authority was looking to set fees at a level that was disproportionate. There should also be a national cap on the level at which fees can be set to avoid local authorities applying disproportionate charges.

While the measure would have a significant impact for all premises, there is the concern that it could disproportionately affect smaller businesses. It could be the case in certain areas of particularly high licensing fees that independent businesses find themselves priced out of the local market and therefore unable to compete with larger chains. That would be to the detriment of the consumer who would find that their choice is limited. With reference to the off-trade, a significant number of licensed premises are grocery retailers, so this decrease in competition locally would impact on far more than just the ability to buy alcohol. Any increase must consider the effect on smaller businesses.

Amendment 240XH is designed to ascertain the Government’s intention on the introduction of a cap of the amount that local authorities can charge. Subsection (3) of the new clause to be inserted in the Licensing Act 2003 under Clause 122(2) provides,

“the fee is to be determined by the licensing authority to whom it is to be payable”.

Subsection (4) of the new clause allows the regulations to provide a constraint on the amount up to which local authorities can charge but this does not necessarily mean that such a limit must be set. Businesses have a real concern that some councils may charge excessive amounts based on their costs, which will be difficult and expensive to challenge. We know already that the level of enforcement activity varies around the country and such variation is not necessarily driven by need. Not all councils are driven by the Hampton principles of good enforcement and over-zealous enforcement can be expensive and unproductive. The wide range of fees collected by councils under the old public entertainment licence regime was one of the drivers of their being subsumed into the Licensing Act 2003. A repeat of the problems, discrepancies and costs to businesses should not be repeated. A national cap, such as that imposed in the Gambling Act 2005, is a not unreasonable request and should be specifically included in the Bill.

Amendment 241ZZA builds on previous amendments to ensure that safeguards are in place in the legislation to prevent businesses facing excessive and unfair licensing fees.

Amendment 241, to which my noble friend Lord Clement-Jones referred, is in my name and concerns fees. Subsection (7) of the new clause to be inserted in the Licensing Act under Clause 122(2) states:

“In determining the amount of the fee, the licensing authority must seek to secure that the income from fees of that kind will equate, as nearly as possible, to the aggregate”.

Paragraph (a) of subsection (7) states that,

“the licensing authority’s costs referable to the discharge of the function to which the fee relates”.

I do not see any problem with that clause, which seems enormously sensible and would collect most of the costs. However, paragraph (b) of subsection (7) refers to,

“a reasonable share of the licensing authority’s general costs”.

That seems to be a recipe for confusion because there will be endless arguments about, first, what is a reasonable share and, secondly, what are the licensing authority’s general costs. I thought that when local government—there are many noble Lords here who are more expert than I am on it—determined fees and collected them, those fees related to the actual things that it was doing. The idea that this can cover general costs, as my noble friend says, would enable a local authority to say that general costs in many other areas—whether for collecting refuse or whatever—could somehow relate to this and then collect the fees. So there is a concern.

I hope that my noble friend can give me some comfort that this will not allow local authorities, which, as we know, are always short of money, to use this to collect fees, which would mean a greater burden on the industry than there should be. [Interruption.]

My rising is not normally greeted with that amount of drama and my observations will not in any way warrant that dramatic attention. As a footnote to what my noble friend Lord Astor said, it seems that a local authority in assessing its costs in terms of this process will have both fixed costs and marginal costs. Although I totally understand that he is arguing for marginal costs, there presumably has to be some way in which the fixed costs are recovered as well.

I do not think that the Minister needs to apologise to the House for the line that she is taking. If I could catch her attention, I would congratulate her on being very bold. Perhaps I will be accused of being a Puritan today. I will come back to the noble Lord, Lord Clement-Jones, in a moment and try to prove to him that I am not. In Committee, I was invited by the noble Lord, Lord De Mauley, to raise questions I had raised previously about the Government’s philosophical approach to licensing and whether we are effecting a change of direction to what we have had during the past 15 years. I will not repeat them all. They are on the record and I do not suppose that at this time we have enough time to go into a philosophical discourse on it.

I hope that the Government are about a subtle change over time that will lead, one hopes, to a cultural change over time. It will not be easy, as the Minister rightly acknowledges. A good change that the Government have effected is that they are now prepared to allow local authorities at least to start recovering some of the costs that they have been incurring and have not been able to recover in recent years because of the failure on the part of government to allow them to update their recovery elements. There are some technical points and I support the amendments in the names of the noble Baroness, Lady Hamwee, and my noble friend Lord Stevenson.

As he might have anticipated, I am opposed to Amendments 240XF, 240XH and 241 in the name of the noble Lord, Lord Clement-Jones, which would move us back to the status quo and not go down the route which the Government are endeavouring to traverse. I can tell the noble Lord that I would be quite happy to support Amendment 241ZZA, which seeks greater openness and transparency in the way in which local authorities are working out and charging their fees. I would hope that, in drawing up a list and in giving guidance to local authorities, we might be prepared to give them the freedom to recover the costs that they might incur in trying to retrain some of their licensing authorities on how they should deal with the thorny issue that the Minister endeavoured to tackle in our previous session on the differences between the words “appropriate” and “necessary”.

I have been in touch with the LGA and, as the noble Lord, Lord Clement-Jones, has said, it is unhappy about this—not for political reasons but primarily for technical reasons. There would be a problem for the panels in dealing with the change in language without being given appropriate training in order to be able to handle it, but it fears it could not meet the costs. So I hope that the Minister will give favourable consideration to adopting Amendment 241ZZA and perhaps add to the list the training costs incurred by local authorities in seeking to implement fully the changes the Government are endeavouring to introduce in the legislation relating to fees.

I try to be balanced in my approach. Overall, the direction is correct but perhaps some changes need to be made here and there. I am therefore happy to support the noble Lord, Lord Clement-Jones, in his Amendment 241ZZA.

My Lords, I start by thanking all noble Lords for their thoughtful and constructive comments in connection with these clauses and amendments.

Clauses 121 and 122 address problems in the system of fees under the Licensing Act 2003. Local government has been calling for action on both these points ever since the Act was introduced. Clause 121 introduces the suspension of licences or club premises certificates for failure to pay the annual fee. Currently, an authority must pursue unpaid annual fees through the courts, and there is no other sanction for non-payment. The sanction of suspension will provide a considerable added incentive to licence holders to pay the fee on time. Clause 122 introduces locally set licensing fees. The purpose is to ensure that licensing fees properly recover the cost to licensing authorities of discharging their functions under the Act. Although this clause was introduced on Report in another place, it was not a decision taken in haste. We needed time to ensure that the clause achieved full cost recovery for licensing authorities in a way that is fair to fee payers, licensing authorities and council tax payers.

There are a number of amendments in this group, and I hope noble Lords will bear with me as I attempt to give each amendment the response it deserves. Amendments 240Z and 240XC would remove the requirement on local licensing authorities to provide a receipt. Amendment 240XA aims to reduce the burden of the requirement by requiring that the receipt must be provided only if it is requested. I recognise that these amendments aim to reduce what may look like excessive bureaucracy. At the outset, it is worth emphasising that the clause requires the provision of a receipt only in a case in which a licence or certificate has been suspended and is then reinstated when the fee is paid. We do not expect this to be a frequent occurrence, as we expect licence payers to be assiduous in avoiding suspension. It is not unreasonable for the licence holder to expect clarity as to whether the licence has been reinstated because carrying out licensable activities without a licence is a serious offence. The maximum penalty on summary conviction is six months’ imprisonment, a fine of up to £20,000, or both. Amendment 240XA is a compromise solution whereby licensing authorities will be required to provide a receipt only on request. Having considered it, I believe that this amendment would actually increase the bureaucratic process in terms of the correspondence relating to whether or not a receipt is required, with, I suggest, only marginal benefit.

Amendments 240XB and 240XD would greatly extend the grace period that applies in cases of dispute or administrative error. The period of 21 days is not set in stone as a matter of principle. However, three weeks seems to us a reasonable length of time in which to resolve a dispute or administrative error. It would allow evidence to be provided that the fee has already been paid or that the supposed due date was not the anniversary of the licence. I cannot yet see a case for extending this period by five more weeks, and I would be concerned that it would considerably weaken the sanction of suspension.

Amendments 240XE and 240XG remove references in Clause 121 to the Secretary of State’s powers to prescribe fees. I understand absolutely that the intention is to emphasise the Bill’s contribution to the localism agenda. However, the references which the amendments seek to remove are cross-references to the existing powers to set fees centrally. They are a necessary part of the mechanism by which Clause 122 introduces a power for the Secretary of State to provide that fees are set locally. So the result of the amendments would actually be that the clause no longer provides for locally set fees.

Amendments 240XF and 241 would remove the reference to the licensing authority’s general costs from the description of what fees must cover. I emphasise that there is no intention that locally set licensing fees will fund the general costs of local government in the everyday sense of the phrase, which means that they could raise money from fee payers for something unrelated, such as to help build a new swimming pool or, as my noble friend Lord Astor suggested, to collect refuse. That would mean that licensing fees had become a form of discretionary local taxation. This is certainly not permitted by Clause 122 through the insertion of Section 197B of the Licensing Act, specifically subsection (3), which defines general costs and limits them to costs referable to the discharge of functions under the 2003 Act.

Amendment 241ZA also seeks to reduce the costs that can be recovered by licensing authorities through locally set fees. In this case, it seeks to remove the costs incurred by the licensing authority under the Act, but in a capacity other than that of a licensing authority. The costs referred to are those of the responsible authorities that are part of the licensing authority. These costs were intended to be taken into account by the current centrally set fees. Not to permit these costs to be covered by locally set fees would be to impose a new burden on local government and would therefore be contrary to established government practice and the intention of the clause. Our intention in introducing locally set licensing fees is that they should cover the cost to licensing authorities of discharging their functions under the 2003 Act. The current fees, set centrally, were also intended to cover the general costs as they are defined in this clause, and the defined costs of a licensing authority acting as a responsible authority. To remove these costs would mean that fees did not achieve what they are supposed to do.

Amendments 240XH and 241ZZA seek to ensure that the power to set fees locally is constrained and subject to guidance. I can assure your Lordships that we do indeed intend to make locally set fees subject to constraints. Specifically, we intend to make each fee subject to a nationally set cap, and we will consult on the level of that cap. However, to impose a requirement for the imposition of unspecified constraints would be both excessive and, I suggest, ineffective. A future Secretary of State may, for example, have a legitimate reason to utilise the power to make different provision in respect of different authorities, or not to impose additional constraints on a particular authority. However, it must be remembered that such an authority would still be subject to the limitation that income from fees equates as nearly as possible to costs.

Amendment 241ZZA introduces a duty on the Secretary of State, when providing for locally set fees, to issue detailed guidance. Again, I can assure your Lordships that it is our intention, after consultation, to issue guidance covering all these points. However, I suggest that it is excessive to require all these specifically in the clause. Section 182 of the 2003 Act already requires the Secretary of State to issue guidance to licensing authorities on the discharge of their functions under the Act. It also enables her to make such revisions to the guidance as she considers appropriate. The addition of a new duty, that of setting fees, would therefore justify such a revision, and it is our intention to do so.

Amendment 241ZB seeks to ensure that the costs of social services and trading standards, in their roles as responsible authorities, can be taken into account within locally set fees even when they are located in an upper tier authority. Currently, the clause has the effect that these costs are recoverable only in a single tier authority, such as a unitary authority. I thank noble Lords for drawing attention to this. I know that many noble Lords will be concerned about the addition of any further costs that will be recovered by fees.

It should be noted that the amendment specifies that the costs that should be recovered are those of these two public bodies, but only in their roles as responsible authorities: for example, in considering applications and, in rare cases, applying for a review. This is expected to be a very marginal cost in the context of overall fee income. It does not incorporate the wider costs of these public bodies in dealing with licensed premises. We intend that locally set fees should cover costs that are not covered by the current centrally set fee levels. For example, the costs of the environmental health authority in respect of its wider statutory duties connected to licensed premises are not covered; only the marginal costs that arise from the 2003 Act are. Having said all that, I see sense in the intention of Amendment 241ZB and, if I may, I shall reflect on it further.

Amendment 241Y seeks to remove the provision in the Bill for regulations to be made providing that club premises certificate holders can make a free minor variation before a late-night levy is introduced in their area. It is consequential on a number of amendments that have the combined effect of removing members’ clubs from the application of the late-night levy. I hope that we will be able to discuss it later, alongside those amendments. For the reasons that I have given, I therefore ask that noble Lords do not press their amendments today.

My Lords, briefly, before my noble friend replies on her amendment, I welcome the Minister’s useful clarification of the definition of general costs. I shall certainly reflect on that before the next stage. The technical references were extremely helpful. The Minister was also very helpful in talking about the guidance on how fees are calculated and will be dealt with by local authorities.

I welcome the support of the noble Lord, Lord Brooke, for my amendment. It was like the first swallow of summer or something of that sort. On my Amendment 241ZZA, the Minister said that guidance will be published, which is helpful. However, as far as one can see there is no appeal mechanism in the proposed new section that is already incorporated in the Bill. Is it possible for guidance to deal with how that sort of thing should be dealt with as well?

My Lords, I am glad to hear that the Government will reflect on Amendment 241ZB. I am grateful to my noble friend for responding to a couple of amendments that I failed to explain. I have been a little distracted by a domestic crisis. One should not use a BlackBerry too much in the Chamber, but it has been jolly useful this morning.

If the receipt is intended as an acknowledgement that the suspension has ended, it seems rather a confusing mechanism. Simply providing that the authority must acknowledge that the suspension has ended would be a great deal clearer.

I shall say just a word about the general costs. There is a reference to a cap. I am puzzled by how a cap can be consistent when the fees must reflect actual costs. Perhaps we can pursue that outside the Chamber.

I shall also put one thought into the Government’s mind. The references to general costs seem very wide. I am not surprised that they have attracted amendments. They are justifiable if they are a proper proportion of overheads. I wonder whether some wording such as “directly or indirectly related to the particular application” might be more reassuring and appropriate. Although some of us are approaching this from different points of view, we might be able to share some thoughts before the next stage. I beg leave to withdraw Amendment 240Z.

Amendment 240Z withdrawn.

Amendments 240XA to 240XD not moved.

Clause 121 agreed.

Clause 122 : Power for licensing authorities to set fees

Amendments 240XE to 241ZB not moved.

Clause 122 agreed.

House resumed. Committee to begin again not before 2.46 pm.

EUC Report: Economic Governance

Question for Short Debate

Asked By

To ask Her Majesty’s Government what is their response to the report of the European Union Committee on The Future of Economic Governance in the EU (12th Report, HL Paper 124).

The crisis in the euro area has rarely been out of the news over the past year. Therefore, my committee decided to launch an inquiry into EU economic governance, especially after EU member states banded together to provide financial assistance to Greece in early 2009. Since then the crisis has continued to spread. Indeed, while we were taking evidence Ireland received financial support. Since the report was published, yet another euro area country—Portugal—has asked for and received a loan package. In the wake of these difficulties, the European Union has pushed ahead with proposals to reform its economic governance. The proposals are likely to be agreed at ECOFIN next week, so I thank the Government for providing an opportunity for this timely debate.

The euro area crisis followed the worldwide banking crisis in 2008. The interconnection between sovereign debt and the banking sectors was one of principal elements that contributed to the current crisis. However, it was not the cause of the current problems in the euro area; it was merely the trigger. Our report details two more fundamental reasons for the euro area crisis. First, there is an endemic flaw in the architecture of the monetary union: while monetary policy is centralised, fiscal policy remains fragmented among member states and is inadequately co-ordinated. Secondly, the past decade has seen a build-up of macroeconomic competitiveness imbalances among euro area member states. Within monetary union, states can no longer devalue their currencies to regain temporary competitiveness or adjust their interest rates to take account of variations between different economies.

These problems have been exacerbated by a failure of the markets, and member states themselves, to understand how the monetary union worked. The markets treated the euro area as a single entity, and did not distinguish carefully or sufficiently between the financial health of individual member states. This has meant that for most of the past decade the interest rate on Greece’s sovereign debt has not been much higher than the interest rate on German sovereign debt. It should have been.

Our report focused on a series of six proposals published by the European Commission in autumn 2009, which were designed to address these problems. The proposals would monitor and co-ordinate more closely economic policies among the member states. In parallel with the Commission, the European Council established a task force to consider these issues under the chairmanship of the President of the Council, Herman Van Rompuy. With only minor differences, the task force’s recommendations echoed the proposals put forward by the Commission.

The proposals focus on two distinct aspects of member states’ economies. First, they aim to improve fiscal discipline among member states. The Commission has proposed amending the stability and growth pact to broaden its surveillance of member states’ fiscal policies and, to ensure better compliance, it has suggested strengthening the sanctions regime. In addition, a proposed new directive would incorporate EU-level fiscal rules into domestic fiscal frameworks.

Secondly, the proposals would create new mechanisms to monitor and correct macroeconomic imbalances, such as divergences in current account positions, in competitiveness or in credit and house-price bubbles. In addition to these six proposals, we considered the Council's proposals for a permanent crisis resolution mechanism for euro area member states. The European Council agreed to establish such a mechanism in March this year, although the details of the mechanism are still to be confirmed.

Before I turn to the committee’s view of the Commission's proposals, I should briefly say why the UK should be engaged. After all, we are not a member of the euro area and many of the proposals related to sanctions or fiscal rules will not be binding on the United Kingdom as a result of its opt-out from the monetary union. Our witnesses, however, were unanimous in stating that the health of the euro area directly impacts on the United Kingdom. In 2009, some 60 per cent of the United Kingdom’s trade was with the European Union, the UK financial sector has substantial investment in euro area countries and the Government recognised the UK's substantial interest in Ireland by providing a bilateral loan above and beyond their contribution through the European financial stabilisation mechanism and the IMF.

The Commission's proposals may not all apply to the United Kingdom, but we have a vested interest—a vital interest—in ensuring that they are appropriate and will successfully contribute to the future economic and financial stability of the European Union. In addition to these hard, economic reasons, we believe that the United Kingdom should play an active role for another reason: solidarity. The EU is founded on solidarity and we believe that the United Kingdom should consider and support where possible the interests of other member states. I say to the Minister that it is surprising how often solidarity turns out to be far-sighted self-interest.

I now turn to the Commission's proposals. Taken as a whole, the committee concluded that they are a step in the right direction although they do not go so far as to enact the full fiscal union that some of our witnesses thought was necessary for the future stability of the euro area. Closer economic co-operation is necessary to foster greater economic stability in the European Union, particularly for those countries that have bound themselves together into a single monetary union. The proposals relating to fiscal discipline and co-operation should make it easier for euro area members to arrive at a collective fiscal stance that stands as an equal to a centralised monetary policy. Likewise, the proposals for a new system of macroeconomic surveillance and co-ordination will help to detect and address at an earlier stage excessive imbalances that threaten to destabilise the monetary union.

We also support the establishment of a permanent crisis resolution mechanism. In particular, we concluded that the inclusion of collective action clauses, setting out a formal mechanism for restructuring debt is essential. We felt that these should clearly establish the principle that the private sector should share the burden of any restructuring of sovereign debt. It is only right that, as they share in the rewards, they should share in the risk. The Government's response indicates that private sector involvement will be on a case-by-case basis. I would be interested to hear the Minister say under what circumstances the private sector might be exempted from the restructuring, and a reassurance that this would be the exception not the rule.

While the Government have made it clear that the United Kingdom will not take part in the new permanent crisis mechanism, we believe that there may be times when, as with Ireland, it is clearly in the UK’s interest to participate in financial assistance to member states in difficulties. We welcome, therefore, that the current proposal will allow member states outside the euro area to contribute to rescue packages on an ad hoc basis if they wish to do so.

Our primary concern with these proposals is the likelihood that they will continue to be adhered to rigorously as time goes on. Previous efforts to enforce fiscal discipline among euro area member states have been regrettably ineffective. Under the proposals, the Council will retain responsibility for enforcing responsible fiscal behaviour through sanctions. We concluded that this was indeed appropriate given the sovereign nature of EU member states. Only time will tell, however, whether the collective will of member states is strong enough to ensure that the sanctions procedure is applied when required and when the crisis is over.

In his evidence, Mark Hoban MP stated that:

“The cost of the crisis in the eurozone is a reminder to us that we must make these processes work much more effectively”.

The current crisis must indeed be remembered as a reason why member states should enforce the rules set out in these proposals in good times as well as bad. The ultimate responsibility for this lies with the political authorities of the EU, and the committee, I am sorry to say, remained sceptical that they will have the collective political will to enforce them effectively.

I thank all my fellow members of the committee and Professor Iain Begg—our specialist adviser—Antony Willot and Laura Bonacorsi-Macleod for their sterling work in helping the committee steer its way through a difficult report. I hope that the Minister will come back to this in time because we need constant updates on a very tricky situation that is of huge relevance to the United Kingdom.

My Lords, we have a rather tight timetable. I remind noble Lords that when the clock says four they are into the fifth minute and should sit down.

My Lords, the whole question of the economic governance of the EU is, in anybody's business, a very big topic, and our committee had to restrict itself somewhat. But it was a slight pity that we failed completely to address the whole question of the competitiveness of the EU, which is a subject that perhaps we should turn to at some stage. When you talk to people in Europe and in Brussels they rather like to feel that there is no global market out there at all and that the massive competitive forces building up in China and India can be ignored. The EU is incredibly introverted in the way that it looks at things. As it is, our report did look at the proposals produced by the Commission.

The Commission produced the stability and growth pact originally, and we are now armed with proposals for the stability and growth pact part 2. Of course, part 1 was a total, abject failure. The conditions were broken by the French and the Germans very early in its life. Have we really any confidence in this one? I suspect, although I cannot speak for all my fellow members of the committee, that we felt the chances of this second go from the Commission producing new stability and growth pact proposals was unlikely to be any more successful than the last lot.

We need to think slightly outside the box. I echo the words of the chairman of the committee, the noble Lord, Lord Harrison, that we should be very concerned about what happens in the eurozone. It would be nice if we could stand back and watch the whole thing implode, but if it did, such is the exposure of British banks and of the whole financial sector in Europe that the effect would be devastating. We would move into a serious banking crisis. We have to look to the success of the eurozone. We cannot stand back and watch Greece collapse either. That would have the effect of the collapse of Lehman Brothers, where the collateral damage was very serious indeed. It would have the effect of spreading all across the eurozone. Contagion is a big problem.

The eurozone has to address where it goes from here. I do not believe that there is any will among the nation states to see the eurozone collapse. But if they are not to see it collapse they must move forward into a much more federal structure. We have to see a much bigger role played by the European Central Bank and the eurozone reconciling itself to the fact that there will have to be fiscal transfers to some of these nations. A great date has been dreamt up of 2013. When that was originally dreamt up it seemed quite a long way away but it is getting nearer and nearer. Sovereign debt is guaranteed up until 2013 but one has to start asking now what will happen after 2013. Will places such as Greece and Portugal suddenly become competitive when they are not competitive today? The answer is no and there has to be a completely new construction of how the eurozone is managed. I am afraid that that all points to it becoming a much more federal organisation. Whether that means that the eurozone will succeed, I do not know. If it becomes federal, it will certainly survive for much longer than it otherwise would.

My Lords, as has already been said by the two previous speakers, in or out of the eurozone, effective economic governance in the European Union is important to all member states and particularly to us here in the UK. The noble Lord, Lord Harrison, has clearly set out the remit and context of the report from Sub-Committee A of the EU Select Committee, of which I am a member. In the short time that I have, I will concentrate on the role of sanctions in future economic governance of the EU.

As has been said, the Commission’s proposals on sanctions will not apply to the UK by virtue of its opt-out from membership of the euro. As the noble Lord, Lord Harrison, set out and as I indicated in my opening remarks, the UK has a vital interest in ensuring that these proposals succeed. Our sub-committee report recognised that the markets will play a key role in promoting sensible fiscal behaviour by member states by charging higher interest rates to those countries deemed to have lax fiscal policies. However, the markets have not always proven effective at this in the past. There is a need for a further mechanism to ensure compliance. This is where sanctions fit in. The Government have recognised this—and recognised it in our report.

The sub-committee concluded that the Commission’s proposals for a more graduated sanctions regime would help dissuade irresponsible fiscal behaviour. Sanctions will be easier to apply and more of a credible threat if they start off small and are available earlier in the process. Again, the Government have agreed with the committee’s assessment of this. As has already been said, one of the greatest failings of the current system of sanctions has been that member states have found it too easy to avoid sanctions when they have broken the rules. France and Germany breached the stability and growth pact in 2002-03 and this led to a conflict between the Commission, which wanted to impose sanctions, and the Council, which refused. In the end, France and Germany managed to persuade the European Council to relax the rules governing the stability and growth pact.

Several sub-committee witnesses argued that sanctions should be made fully automatic. This was the line taken by the European Parliament, which feels that automatic sanctions would prevent member states from negotiating their way out of sanctions. However, the sub-committee concluded that fully automatic sanctions were a step too far and would remove any room for judgment. We supported the Commission’s proposals for reverse-majority voting, which would require a majority to vote against sanctions to block them, as opposed to the current system where the majority have to vote in favour. While the sub-committee believes that this discretion is necessary given that the EU is a political union of sovereign member states, it is vital that the Council shows that it is willing to take tough decisions and levy sanctions when the stability and growth pact is breached. The Government agree in their response that the efficacy of the sanctions regime will depend on the degree of political will in the Council. Will the Council be willing to take tough decisions on sanctions when the crisis is over?

We considered various other suggestions on sanctions. At the insistence of Germany, the Van Rompuy task force report did not rule out the possibility of removing voting rights in Council from those countries breaking the stability and growth pact. The sub-committee did not believe that this would be an appropriate sanction and would raise significant questions about legitimacy and sovereignty. Can the Minister confirm that the UK will block this proposal from being taken forward if Germany proposes it once again? The Government also stated in their response that there are a,

“large range of other potential sanctions that could be more easily and swiftly implemented by the Council”,

rather than removing voting rights. Could the Minister indicate what those might be?

As I stated at the beginning, only member states within the euro area can have sanctions imposed upon them. However, the Van Rompuy task force report suggested that enforcement mechanisms should be extended to all member states, excluding the UK, in the multi-annual financial framework. The committee thought that this was quite inappropriate. The Government’s stated intention is that they would oppose these suggestions. Can the Minister confirm that they will stop any attempt to extend sanctions beyond the euro area by any such means?

My Lords, this is an important report and I take this opportunity to congratulate the noble Lord, Lord Harrison, on the way in which he has both shepherded his sub-committee into preparing it and set the scene in opening the debate today. Although he covered the ground thoroughly, I will emphasise two points.

First, standing outside the euro area, as the United Kingdom does, gave the sub-committee an interesting opportunity to view the issues raised in the Commission’s proposals in a rather objective way, while realising and acknowledging that we are not an island alone unto ourselves. That the UK’s financial investment sector had and has substantial investments in the euro area means that we are directly affected by whatever goes on there—that is apart from the fact that some 60 per cent of UK trade is within the European Union. The state of the economies of those trading partners has a direct impact. We need to be fully aware of and involved in all European Union policy developments in the area. In all fairness, this and the United Kingdom’s undoubted expertise in the financial sector have been acknowledged and welcomed. Not one witness who gave evidence to us suggested that we were in any way interfering in eurozone business.

Secondly, the report refers to the deepening problems and evolving policy responses. In the few short months since its publication, it is quite clear that things have moved on. The contagion theory has been proved. Ireland and Portugal have joined Greece in asking for help. We are looking at a moving target at the same time as trying to find ways to prevent any of this happening again in the future. Those who believe in the inevitability of the business cycle may well be proved right. This is unlikely to be the last report on the subject.

The main question I wish to ask the Minister relates to institutional reform. The sub-committee’s recommendation and the Government’s response indicate that, whatever happens in terms of strengthening and reinforcing institutions, we do not want any new institutions. I understand that there are some quite tricky negotiations going on between the Council and the European Parliament before next week’s 20 June meeting. This results from the European Parliament’s wish for a greater role in fiscal and macroeconomic surveillance, the right to call Governments to account and its support for the use of reverse-majority voting. Can the Minister confirm what, if any, objections the Government have to the European Parliament’s proposals? Is he concerned that the United Kingdom Government could be more sidelined as a result?

As has been said, in general our report broadly supports the six main proposals before us from the European Union. There can be no doubt that things will continue to change, that there will be more use of financial regulation in a more proactive way in future, or that there needs to be more co-ordination between monetary and financial policy. Although our report was published in March, today has turned out to be appropriate for our debate. Not only do we just precede the ECOFIN meeting next week but also we follow the Chancellor’s Mansion House speech last night. Today also sees the first meetings of the Bank of England’s new committee charged with spotting signs of danger in advance—just the sort of thing that we are talking about. I trust that the evidence collected for our report as well as the conclusions that we have drawn will make a useful contribution to their tasks.

My Lords, I, too, join colleagues on the committee in thanking the noble Lord, Lord Harrison, the staff of the committee and our special adviser for ensuring that an excellent report was produced on these important issues. I recognise the importance of the euro and the eurozone to the United Kingdom. I also recognise the various measures being put in place for strengthening Governments, dealing with short and long-term crises and establishing a new financial regulatory infrastructure are all extremely important institutional developments.

The markets appear to have considerable confidence in the future of the euro. I shall return to that in a moment. But—and there is a but in my mind—there is the position of Greece, certainly, and Ireland. I regard the sovereign debt situation in those countries as ultimately unsustainable. Our report draws attention to the distinction between solvency and liquidity, and there is a fundamental insolvency problem in Greece and probably in Ireland, too. Ultimately, that will have to be dealt with. Having a new institutional strength and institutional structures, and being determined politically to ensure that they work more effectively in future, will be constantly undermined if the markets simply do not believe that one or two countries are going to default. There is a real risk that that continued uncertainty will undermine long-term reform.

Sooner or later, that problem will have to be dealt with. I well understand, politically, why 2013, or a period two or three years hence, has been set, although I, like the markets, doubt whether the certainty of no default can bear fruit. There is an understandable reluctance for Greece to be seen to be getting away with what is seen as profligacy—of course I understand that. Any way in which that is dealt with, ultimately, will have to be seen in the context of major reforms and fiscal probity in Greece. Ireland is in a very different situation, indeed; there were entirely different causes. But ultimately, those countries in one form or another will have to have some of their debt written down, however that takes place.

I pose one or two questions to the Minister. The European Commission is reported to have examined the consequences of various ways in which Greek debt at least might be adjusted—although I have not had the opportunity to read it myself. Were Her Majesty's Government party to any consultation on the production of that document, and have they formed, or are they in the process of forming, any assessment of the possible consequences of the possible adjustments in debt of Greece and Ireland? It would be very helpful to the committee to know that.

I end where I started. The markets appear not to believe that the almost certain default by Greece will undermine the euro. They do not believe the mantra that if Greece defaults, the euro is under serious threat. That is not what they say. They have been wrong before and they may be wrong on this occasion. However, if they are right, ultimately Greece may be able to default in part, in a controlled way, and even Ireland may be able to do so—and I believe that the Irish and Greek politicians will be greatly relieved.

My Lords, when I was reading the Van Rompuy report last night, on the very day when Greece appeared to be on the verge of spiralling out of control, I had a feeling that we had all been sleepwalking through a surreal nightmare in the past few years and were continuing to do so.

I have always liked the expression, “Closing the stable door after the horse has bolted”. It seems as if this is what we are trying to do. But a number of horses have escaped from this eurozone stable and have yet to be recaptured. There is no point in making the stable secure if there are no horses inside. That is why resolving the immediate crises in Greece and Ireland, particularly, is so critical. Better economic governance is an academic exercise until that has been achieved. However, assuming—and this is a big assumption—that by 2013 the horses are all back in their stables, there is the question of whether the proposals from the Van Rompuy taskforce are sufficient to make the doors more secure or whether we might have to consider knocking the eurozone stable down altogether and rebuilding it into something called “fiscal union”.

There is one very good reason why the present proposals may work. That is, to coin another equestrian metaphor, “Once bitten, twice shy”. I do not believe that in the short term the various guilty parties will repeat the errors that they made which created the crisis in the first place—though having experienced three other banking crises in my business career, I am quite sure that over time the banks will behave badly once again.

The idea of a European semester is a good one, in which all member states would present, discuss and co-ordinate their fiscal policies on a regular basis. Early signs of misbehaviour within national economies will be identified and, consequently, the markets will react before it is too late. But I have reservations about the proposals to strengthen sanctions against breaking the stability and growth pact. I am sure that when some unfortunate Commission official turns up at the Élysée Palace to collect the fine for some French misdemeanour, he or she will get a pretty dusty answer. The most effective sanctions should, of course, come from the markets, which failed lamentably to do so in the run-up to the present crisis. Incidentally, I was very surprised to hear President Obama in Westminster Hall the other day speak about the crisis in the past tense. If the semester process is not opaque, the markets will be much better equipped to respond appropriately. There will be no more dodgy Greek statistics, no more skulduggery in the Anglo Irish bank, no more raising Greek debt as being of the same quality as German debt, and no more sleight of hand between Goldman Sachs and the Greek Government—as well as a greater understanding of the link between private, corporate and sovereign debt.

The Commission rightly wants to see more pressure on countries that run large deficits to reduce them, but I remain sceptical as to whether it will be able to bring much pressure on countries that run large surpluses, although I agree that excessive surpluses are not desirable.

I have two other worries about how events may be moving. First, let me quote from Monday’s Financial Times and a piece by Larry Summers, who was until recently President Obama’s European guru. He said that the financial crisis was,

“caused by too much confidence, borrowing and lending, and spending”,

but that ironically and paradoxically, it will be,

“resolved only by increases in confidence, borrowing and lending, and spending”.

Therefore, this may not be the time to raise their levels of equity too quickly. It is better to wait for the upswing—if, and when, it comes.

The noble Lord, Lord Harrison, had a very steady hand as the crisis migrated through Sub-Committee A, and we are grateful to him for that. Both the euro and the euro area are in crisis; they are both in a critical condition and need intensive care. The euro is, in my view, wildly overvalued and several of the member states are, as we know, on the brink of default. The European Central Bank is so loaded up with toxic debt that it is in danger. The Irish Finance Minister, Noonan, recently asked the IMF to get a haircut for the AngloIrish debt; that would not be very wise or safe for the ECB.

What I find astonishing is the undertaking given at Seoul at the G20 by several Finance Ministers, including my right honourable friend George Osborne, that there would be a guarantee of European sovereign debt up to 2013. We asked a number of our witnesses about it, and no one was able to spell that out. I really think that the Minister has a wonderful opportunity to enlighten us in that regard. Given that Her Majesty's Government are a part of it, we should know exactly what the commitment means and how it would work. Nobody appears to know.

The Government are absolutely right to say that the UK will not sign up to the EU permanent crisis mechanism. I congratulate the Government on setting up the Financial Policy Committee, with its twin remits: first, to reduce systemic risks and, secondly, to enhance the resilience of the UK financial system. Systemic risks, of course, cover both the fault lines in the financial system infrastructure and the cyclical threats from unsustainable levels of leverage, debt or credit growth. That is our solution and we are in that playing an important part in dealing with further threats to this country.

As so often, the EU's reach is greater than its grasp and Mr Trichet’s proposal for a European ministry of finance is such an example. He said that,

“a ministry of finance … would exert direct responsibilities in at least three domains: first, the surveillance of both fiscal policies and competitiveness policies, as well as the direct responsibilities mentioned earlier as regards countries in a ‘second stage’ inside the euro area; second, all the typical responsibilities of the executive branches as regards the union’s integrated financial sector, so as to accompany the full integration of financial services; and third, the representation of the union”—

the EU—

“confederation in international financial institutions”.

Personally, I do not think that really is a runner—certainly not as far as the UK is concerned. However, Mr Trichet is perfectly logical and having identified the fundamental flaw in the concept of the euro, he is sensibly putting forward what could help.

Personally, I believe what should happen is that individual euro countries should be enabled to leave the euro area without having to leave the EU but should be able to continue to use the euro, if they wish. It would probably be sensible for them to do so. Nobody is going to be prepared to buy recreated Mickey Mouse currencies. Finally, if China and the US, particularly China, are to be the world's economic locomotives we have to try to see that northern Europe, at least, can prosper and sustain those unfortunate countries in the south, which are going to suffer greatly from the inevitable deflation.

My Lords, first, on behalf of the opposition Front Bench I congratulate my noble friend Lord Harrison and his committee on an excellent report. It shows that this House can bring an intelligence and clarity to complex issues that are unusual in the political world, and I sincerely congratulate them on that. Secondly, when my noble friends Lord Woolmer and Lord Haskins make the point that the recommendations of the Van Rompuy taskforce do not address the fundamental crisis that the euro faces, they are of course right. In my view, it is a crisis of solvency not liquidity that at some stage has to be addressed.

This economic governance package is not about the immediate resolution of the present crisis but about trying to make sure that we prevent future crises happening. From our perspective, the proposals here are an advance on the stability and growth pact. The stressing of the need to monitor the debt to GDP ratio, not the deficit, is good. The new emphasis on economic imbalances is good, as it is on credit conditions, the risk of asset bubbles and the new streamlined processes for monitoring member state budgets. Where we have ended up on the sanctions regime, which was mentioned by the noble Baroness, Lady Maddock, is right as well.

However, we have some reservations about this and some questions to ask the Government. First, on debt, Mr Hoban’s letter says that the Government were concerned that on debt to GDP, the proposals might involve too much of a target-based, semi-automatic approach. However, they say that the proposals have been modified to make sure that that is not so. Could we have more of an explanation of how they have been modified? On this side of the House, we believe strongly that one should not take short-term actions on deficits which make the long-term position on debt worse, not better. It may be that that is what the present Government are doing in terms of their “too far, too fast” economic adjustment in this country but we would like to know more about avoiding that target-based semi-automatic approach.

Secondly, on the long-term challenges of debt to GDP, is there not a need for an emphasis on positive policies, social investment policies, to overcome issues such as the rising costs of ageing, so that we activate more people in the workforce and invest more in research, education and infrastructure to raise productivity? Is that not a positive absence from these proposals? Thirdly, are there not other measures that the EU could be taking to promote growth in the sovereign debtor countries—for example, bringing forward unused structural fund money or trying to develop, through the European Investment Bank, a cross-border infrastructure investment—which might help to revive the economies in countries such as Greece and Spain? What view do the Government have of that?

Finally, although I must sit down in a moment, the noble Lord, Lord Hamilton, made a very thoughtful speech on the role of the UK. I have disagreed with him on the EU Bill but his speech today was extremely thoughtful, as was that of the noble Baroness, Lady Hooper, about the impact on the UK. The Government have looked rather Janus-faced to me on these issues. They say at the start of their letter that economic shocks do not respect geographic borders and that it is very much in our economic and political interests to engage, but then they express reservations about engaging. What were the reasons for the Government deciding, for instance, not to join the euro-plus pact, where they might have been able to exert a positive influence on eurozone policies? What would be their attitude to future treaty changes that might lead to further steps towards fiscal union?

My Lords, may I ask a very short question? Being very much impressed by the speech that has been made, what is the position of the Opposition? I am not quite sure what the policy of the Government is, but with vast extraterritorial commitments now, should there be a moratorium until we can retrieve our debt without borrowing more money to pay the interest? I do not say that they should be excluded for ever. I am not expert on these things but I would like to know what the noble Lord has to say.

Given that that is not a short question, while I have the greatest respect for the noble Lord, Lord Campbell of Alloway, I cannot conceivably deal with a question of such complexity without breaking the rules of the House.

My Lords, I thank the noble Lord, Lord Harrison, and all the members of the sub-committee for their work on this issue and their excellent and timely report. I learn new things about the way in which this House operates on almost every occasion when I stand at the Dispatch Box. After seeing how the topics had been parcelled out and questions were fired at me from left, right and behind, I now understand what effective committee work is all about. In the brief time that I have, I will not be able to give detailed answers to all the questions. I thank all noble Lords who have contributed to this debate, in which the usual degree of repetition was absent; we have covered a very wide range.

The euro area has had and continues to have a very tough time. The weak economic growth of the euro area is a symptom of the fundamental problem that is faced: weak economic governance. That is the starting point that the noble Lord, Lord Woolmer of Leeds, and other speakers have drawn attention to. In answer to the noble Lord’s question about the current situation—there were also other references to restructuring packages—the Government’s position on possible further bailouts for Greece is unchanged, and, incidentally, is the same as that of the French Finance Minister, Madame Lagarde: we do not want to be part of any second European assistance package for Greece. Indeed, no such proposal has been made. In answer to the broader question asked by the noble Lord, Lord Harrison, it would be wrong to rule in or out the participation of the private sector in any package for Greece or anywhere else. This important issue continues to be debated, though, and it should be.

I was interested in and pleased by my noble friend Lord Marlesford’s discussion in this area, reminding us of what we are doing in this country, particularly with the proposals that the Government are bringing forward today to ensure that we have mechanisms in place to identify systemic risks and deal with them effectively. I thought for a moment that I had fallen asleep, it was 4.30 pm and we were already talking about the financial regulatory structure in the UK, which we will be doing later today. Following last year’s EU economic task force and in the context of the ongoing difficult situation, the Commission brought forward six draft pieces of legislation on fiscal and macroeconomic surveillance that aimed to strengthen current monitoring mechanisms and to give early warnings of economic problems in member states. It proposes tough sanctions for euro area countries that step out of line. I will come back to sanctions in a minute.

I stress that we are not part of the single currency but, as the committee’s report notes, a stable eurozone is firmly in the UK’s interests, as is ensuring the success of measures to bring it to economic stability. I trust that there is no doubt about that. I am sorry that the noble Lord, Lord Liddle, thinks there is anything Janus-faced about it; we are working hard and co-operatively to ensure that the measures are appropriate.

Many commentators agree with the committee that the euro area’s problems were caused by tensions between centralised monetary policy and decentralised spending decisions. The proposed legislation seeks to address that through increased co-ordination. In broad terms, the Government welcome the pragmatism of the proposals. We support the refinements to the stability and growth pact that will help to prevent countries from running unsustainable deficits in good times. As the committee report notes, a gradually escalating system of sanctions will mean that member states think twice before breaching the pact.

The noble Lord, Lord Haskins, rightly noted that the most effective sanctions will and must come from the market. A number of questions were nevertheless properly raised about sanctions. We agree that a limited use of reverse qualified majority voting should ensure that member states cannot avoid sanctions through political deal-making at ECOFIN of a sort that was seen from member states in the past. On the questions asked by my noble friends Lord Hamilton of Epsom and Lady Maddock, we think that reverse QMV is one way to address the sanctions question. There should be limits to the use of reverse QMV. We do not think that it would be right to remove voting rights more generally. That would require a treaty change, and the UK would have the right to veto any such proposals.

I reassure the House, specifically my noble friend Lady Maddock, that the UK is not subject to sanctions under the stability and growth pact. The treaty is clear that they apply only to euro area countries. In addition, the UK’s opt-out protocol that was negotiated at Maastricht is clear that we are exempt from such fines.

Another issue that my noble friend raised was the extension of sanctions in the next financial perspective. I assure her that the Van Rompuy task force report clearly stated this with regard to sanctions under the stability and growth pact and under the next financial perspective. Sanctions may be rolled out for other euro area member states but not applied to the UK, so I hope that the position is clear.

I should perhaps clarify a point regarding the fiscal proposals. The noble Lord, Lord Liddle, asked about this. The Government did not disagree with the principle of a benchmark for assessing the pace of public debt reduction. Getting debt on to a downward path is of course essential for the eurozone members just as it is for the UK. However, we had concerns that the original Commission proposal was too rigid and might not take sufficient account of debt dynamics that are beyond a member state’s control. I am pleased to report that we have sought amendments in council to clarify that the benchmark really will be a benchmark rather than a concrete rule.

The Government agree with the committee’s view that while fiscal discipline is important, it will not be enough to prevent or manage future crises. That will require the EU to have the right macroeconomic warning mechanisms to identify them and the right tools to manage them. Economic imbalances are already monitored under the broad economic policy guidelines and the Europe 2020 initiative, but that has lost momentum in recent years. The Commission proposes a more systematic way of identifying economic imbalances through a scoreboard of economic indicators. I am sure that noble Lords will agree that transparent analysis of member states is important, and these indicators will help to achieve that.

I understand the note of caution that the committee has sounded in its report. Yes, the success of this monitoring will depend heavily on the degree of political will in council, but ECOFIN will now be forced to consider the evidence from the indicators on the scorecard. The Government agree with the committee’s recommendation that the composition of the scoreboard should be subject to regular review, and we are negotiating to achieve that. The Government also agree with the committee that all these systems must be intelligently interlinked. We want to see Finance Ministers having realistic discussions of policy problems, drawing on evidence from Europe 2020, the stability and growth pact and European Systemic Risk Board recommendations, if necessary. We want clear, frank recommendations for member states, and help and support for them when they act to improve their economic position and boost growth.

Finally, the proposals for a euro area crisis resolution mechanism, or European financial stability mechanism—the ESM—as it is known, are being debated in parallel to these legislative discussions. The need for them was stressed by my noble friend Lord Hamilton of Epsom and the noble Lord, Lord Woolmer of Leeds. The Government very much support the ESM, which will provide euro-area countries with the financial equivalent of a parachute. We agree with the committee’s view that conditionality is vital and that there must be no question of this being free money for fiscally irresponsible member states. Like the committee, we welcome the explicit recognition that the IMF will play a technical and advisory role in all future uses of the ESM.

The Hungarian presidency wants to finalise this package of legislation by the time that presidency ends on 30 June. My noble friend Lady Hooper pressed me on the details of this. I regret to say that the ECOFIN discussion on this was at an informal dinner earlier this week that was not minuted. There are some difficult issues, of which my noble friend is clearly aware, which need to be resolved. The Hungarian presidency is working on them, and the European Parliament intends to schedule a vote on the package next week.

I emphasise again the importance to the UK economy of achieving lasting economic stability within and beyond the eurozone. This is the central aim of this legislative package. Throughout the negotiations, the Government have striven to achieve genuine strengthening of economic governance while preserving this Parliament's sovereignty over all aspects of economic and financial policy. I am satisfied that we are on track to achieve those objectives and that the report of your Lordships’ European Union Committee has made a most useful contribution to that process.

Sitting suspended.

Police Reform and Social Responsibility Bill

Committee (6th Day) (Continued)

Clause 123: Licensing policy statements

Amendment 241ZC

Moved by

241ZC: Clause 123, page 86, line 39, at end insert—

“( ) In section 9(1) after “of” insert “not less than”.”

My Lords, during the passage of the Licensing Act 2003, in a gesture that was helpful to local authorities as licensing authorities, the Government introduced in Section 9(1) a provision that:

“A licensing committee may establish one or more sub-committees consisting of three members of the committee”,

who would then serve as the licensing panel on an application. I do not know if the Government then foresaw the use that local and licensing authorities might make of this provision. A present consequence of Section 9(1) is that, on a particular interpretation, licensing panels can in practice be reduced from three to two. That has the effect of making the chairman, who has a casting vote, decisive, and thus has the effect of single-person decisions. This is habitual in one London borough licensing authority, which I am led to believe is Camden; and I declare an interest as I was once a member of Camden Borough Council. It is used regularly in others and even occasionally in Westminster, where I was a Member of Parliament.

I realise that my amendment to make it “not less than” three members may not be adequate to correct this situation, although I have taken advice. However, I hope that my noble friend the Minister can at least accept the spirit of my amendment. It is a stand-alone amendment, and the others in this group relate to Clause 125. Indeed, my concerns with Clause 125 standing part will follow smoothly on from Amendment 241C of my noble friends Lord Clement-Jones and Lord Astor. I will therefore defer my remarks on Clause 125 to follow on from that amendment, thus now yielding the Floor to the noble Baronesses, Lady Finlay of Llandaff and Lady Hayter of Kentish Town, whose Amendments 241D and 241DA are on a different issue. I beg to move.

My Lords, I wish to speak to Amendment 241A in this group and the subsequent amendment, which is in the name of the noble Baroness, Lady Hayter of Kentish Town, who is also supporting my amendment. I should make it clear that these two amendments have not been tabled because we disagree on this issue; we agree so totally and fundamentally that these two amendments are almost belt-and-braces measures. I would have liked to add my name to the noble Baroness’s amendment. They are very slightly different but in no way less important.

The Bill constitutes a very important opportunity to address drink-driving and the catalogue of deaths and casualties that occur on the roads because of alcohol consumption. We both would like to bring down the legal blood alcohol level from 80 to 50 milligrams per hundred millilitres of blood; that would bring us in line with many other countries in Europe. However, the best way forward seems to be to see whether all the measures to be implemented under the Bill have an effect on alcohol consumption—hence the concept of their being subject to a review—and for the review to look at legal limits specifically.

What is the size of the problem? It is estimated that nearly 12,000 reported casualties—5 per cent of all road casualties—are the result of someone driving when over the legal limit and that the number of such people who were killed in 2009 was 380 or 17 per cent of all road fatalities. It is important to remember that pedestrians are sometimes knocked over in these incidents and have a much higher risk of being killed than the person who is in the car, who is usually the person who is over the limit. The injuries sustained by pedestrians are more likely to be fatal as they suffer head or facial injuries, which tend to be more severe.

The number of hospital admissions due to road accidents in general is enormous. There were 39,000 admissions following road traffic accidents in 2009. Looking just at the drink-driving statistics, an average of 3,000 people are killed or seriously injured each year in drink-driving collisions, and nearly one in six of all deaths on the road involve these drivers, as I said. However, the biggest problem occurs with youngsters. Drink-driving among young men in the 17 to 29 age group is particularly high. Provisional figures from 2004 show that some 590 people were killed in crashes in which a driver was over the legal limit, 2,350 were seriously injured and 14,000 were slightly injured. The key group comprises the 17 to 24 year-olds, of whom 6.3 per cent who were breath tested after an accident failed the test. That compares with an average for all ages of 4.4 per cent. People in this age group seem particularly liable to drive when they have had too much to drink and to have an accident when over the drink-drive limit. Recent data from police checks in England and Wales show that one in 20 of under 25 year-olds who were stopped were over the legal limit. That translates into 1,746 young drivers because more than 27,000 people were stopped by the police in total.

How do we stop this catalogue of deaths and serious injuries, not only of people who are over the limit but among others? How do we stop the carnage of young lives that are wasted because they have been driving while over the limit? They may not even realise that they are over their limit but their ability to drive safely is seriously impaired. Fatalities often result from stupid little things such as not looking properly, having slightly slower reactions and driving a little too fast on a wet road. That is the background to these amendments. We cannot leave a Bill like this, which is trying to tackle a major social problem, without addressing this alcohol-associated carnage on our roads.

My Lords, I declare my interests as chair of the All-Party Parliamentary Group on Alcohol Misuse, and as a member of CADD, the Campaign Against Drinking and Driving. As I have already said in the House, members of that body have lost a relative through drink-driving.

I am happy to support the amendment moved by the noble Lord, Lord Brooke of Sutton Mandeville. I will take his wise words on how to tackle these matters back to Camden. I also support Amendment 241A, standing in the names of the noble Baroness, Lady Finlay, and myself, and Amendment 241B, standing in my name, which would have the effect of reducing the blood alcohol level for young drivers, should the review show a case for further reform action.

Statistics on death as a result of alcohol impairment are well known, if not acted upon. We tend to concentrate on death but life-shattering and painful injuries are also a major issue. Indeed, it is mostly thanks to medical advances practised by people such as the noble Baroness, Lady Finlay, and others, as well as the speed and expertise of rescue crews and paramedics, that many who would otherwise have died following these accidents have been saved. However, they are not necessarily saved from a life of pain and impairment. As the Select Committee in another place has emphasised,

“drink driving is a preventable activity … On average, … one person dies every day”,

because drivers were over the limit. The Transport Committee also agreed that,

“medical and statistical evidence supports a reduction in the current drink drive limit of 80mg … per 100ml blood”.

However, as we know, the Government do not support such a reduction, at least for the moment, and nor did the committee, despite the wise recommendation of a reduction to 50 milligrams by Sir Peter North, although the Transport Committee would prefer a 20 rather than 50 milligram limit, which is effectively zero.

Despite the lack of action, I do not give up hope. In particular, it is worth looking within the generality of drivers at the susceptibility of the young to the effects of alcohol. This would also help to achieve the Transport Committee's aim that the Government should work to achieve a 20 milligram level by first introducing a lower limit for young drivers. New Zealand has recognised that young bodies are more affected by alcohol. It therefore has lower limits for young drivers. As its data show, young people start with a relatively high crash risk. For drivers under 20, even at 50 milligrams their risk of having a crash is six times the level of a driver over 30 years of age with the same alcohol consumption. That is why the drink-drive limit in New Zealand is 20 milligrams per 100 millilitres for those under 20.

The evidence is clear: drink for drink, young drivers are more likely to have accidents than older drivers, quite apart from their level of experience. New Zealand is planning further action to deter young people from drinking and driving, with policies closer to those of America where the drinking age is 21. The Federal Highway Administration estimates that having a drinking age of 21 saves 1,000 young American lives a year, so New Zealand is going to raise the purchase age for alcohol to 20 years. The House will be delighted to hear that that is not where I want to go, but I want to protect our young drivers—and, as the noble Baroness said, their victims, whether they are on the streets or in the cars of those young drivers—from any temptation to drink before getting behind a wheel.

It is well recognised that driving impairment and crash risks increase with increasing blood alcohol levels. Even at levels of between 50 and 80 milligrammes, drivers with increased blood alcohol levels are six times more likely to be involved in a fatal crash than those who have not drunk at all. Among drivers killed or seriously injured in the United Kingdom, 87 per cent of those aged between 16 and 24 were over the limit compared with just 13 per cent who were under it. Looking at the figures for all drink-drive accidents rather than injuries, 900 of the 7,500 drivers were under 20—double the accident rate, in relation to the number of licence holders, of the 30-to-34 age group. In terms of miles driven, accidents are six times more likely to occur among that young age group compared with the number among those aged between 30 and 34.

Tens of deaths and hundreds of serious injuries could be prevented by reducing the limit. With this amendment we have a chance to start on the path of preventing these deaths and injuries by helping young people to say no to drinking and driving. Eight in 10 people in the United Kingdom already believe that if someone has drunk any alcohol they should not drive. Well over half the members of the AA—by which I mean the Automobile Association, not Alcoholics Anonymous—support a lower blood alcohol level. I am sure that the public’s support would increase further if they were asked about young people’s limits, not because we blame the young for their youthful drinking but because we do not want young lives to be lost, and because they are at greater danger to themselves.

Furthermore, because our ages are on all our driving licences—sadly, in the case of some of us—it is very easy to determine who would be covered by the new law. With the new digital roadside reading devices it becomes possible to have the exact reading at the point of testing, which has not been possible before, when later analysis of blood had to be relied on.

I hope that the Minister will in reply indicate the Government’s willingness to look at the possibility of a lower limit for young drivers or new drivers. It would be a sensible step that could save lives.

My Lords, I can be brief in speaking to Amendment 241C. I very much commend Clause 125, which sets in place a review of the effect of the amendments to the licensing scheme. It is common ground between us, whatever side we may be on, that the proposed amendments are highly significant. The Bill provides for a review to take place after five years. In view of the significance of these amendments, Amendment 241C is designed to make that review occur every two, not five, years. That would be much more appropriate, given the significance of the changes that will have been made by the Bill.

I support the noble Lord, Lord Brooke of Sutton Mandeville. There is a range of issues here that cannot wait five years to be reviewed. The amendment proposing a review after two years would be far more acceptable. I also want to draw the attention of Ministers to reports produced by this House way back in 2002, when the European Union Select Committee reviewed drinking and driving legislation and compared it with that of other European countries. The report pressed the case for the limit to be reduced to 50 milligrammes. The puritan Lord Brooke of Alverthorpe chaired that committee, so I recall it very well indeed. We must keep raising these issues, although time may pass by without speedy implementation.

It was interesting that when I was pulling out my papers on this issue, I came across a press cutting with the headline:

“MPs and peers cast eye on Lords reform”.

The article continued:

“A committee on Lords reform is today expected to seek to allay fears that the issue has been kicked into the long grass by agreeing a timetable to put forward proposals by October”.

That article was dated 9 July, 2002.

My Lords, given that Clause 125 is totally composed of reviews, I wanted to add a word on the review of ministerial guidance. I do that absolutely in the spirit of Amendment 241C, spoken to by my noble friend Lord Clement-Jones, in terms of acceleration.

Much of the way in which the Licensing Act 2003 has been interpreted has been by virtue of ministerial guidance required under Section 182 of that Act. While the currently proposed legislative changes to that Act have been widely welcomed, they will take time to bed down. If the ministerial guidance were immediately to be reviewed and rewritten—it was last reviewed in November 2010; it has been a running process since 2003—subject to public consultation, many of the concerns addressed in the coalition Government’s consultation could be dealt with by providing more balanced guidance to licensing authorities to support them in getting to grips as soon as possible with the adverse effects of licensing.

In terms of involving the community, there should be an explicit statement in the guidance that local people and their representatives have an important locus in formulating policies, and that the invitation to consult on local licensing policy should ideally be simple and jargon-free, backed up by something like a crystal mark. However, the best way to involve the community more is to improve public awareness of licence applications. The Government could help by revising the currently very prescriptive rules for advertising applications that often do not work. I give an example that was, I think, mentioned in our previous debates. There are fewer and fewer local newspapers, and the advertisements in them are usually in tiny print on inside pages. The responsibility for advertising the applications should be passed to licensing authorities that can decide the most effective way to advertise applications, including circulating notices by post, on the basis of full recovery from the applicant of their reasonable costs.

What I am about to say may go beyond the scope of this clause, but it would help greatly if local councils, in response to representations from the public and responsible authorities, were to be allowed to introduce policies controlling the cumulative impact of licensed premises—such a provision was precluded from the 2003 Act—whereby the licensing authority can prevent a build-up of problems, rather than waiting until they have occurred.

My Lords, those of us involved in this debate for some time are beginning to recognise there is a risk of Brookes to the right and Brookes to the left addressing us from slightly different perspectives, but with the common cause of improving the legislation. We should be careful to get our Brookes in the right order. We must also be careful, as we debate these issues, not to fall into the camps of the puritans or nannies. Labels are hard to get right on this. This group of amendments is particularly odd. It includes an important technical amendment tabled by the noble Lord, Lord Brooke of Sutton Mandeville. We should also be grateful to the noble Baroness, Lady Finlay, and my noble friend Lady Hayter for allowing us to debate drink-driving.

When I considered this issue some time ago, the wisdom that emerged from those who were looking at it was that the problem of drink-driving largely affected the older generations who had perhaps grown up when social conditions were different, whereas the young had got the message that you did not drink and drive. It was a bit like the success of the seat belt campaigns that resulted, after time and effort put in all round, in everyone, or at least the younger generation, getting the hang of the fact that you had to put your seat belt on as you got into the car.

Certainly, I do not have any problem with that; my children do not seem to either. They do that immediately. We borrow from that in the sense that the younger generations picked up that you do not drink and drive; it was something that you just did not do. They organised who was going to drive when they went out. The problem came with the elderly and retired, who perhaps felt that they could hold their drink and drive. The evidence that we have heard today, especially from the noble Baroness, Lady Finlay, is that that is not the case: far too much drink-driving is going on among those groups who previously have not done so. The figures are simply horrific. The catalogue of deaths is too much.

It is not just those who are driving. We have heard in this and earlier debates of the collateral damage caused by drinking. Those who drive cars where other people have been drinking find themselves less able to concentrate and drive well. Pedestrians and others who are not involved may also run into trouble.

The evidence is compelling. If you add to that the sense that the younger generation are taking harder drinks, spirits rather than softer drinks such as wines and beers, I wonder whether we have this the right way round. Should we not hear the argument for allowing people to drink and drive, rather than debating whether there is a safe limit at which people can drink and drive?

I realise that I am stepping a little further than my party has previously been on this, but we are in the delightful situation of having a policy review, so I am taking advantage of what I assume is a blank piece of paper. I sense a little support from my Back Benches. The evidence points us in one way, and we should examine the issue more carefully than simply trying to debate the niceties—although I accept that it is a serious point—of whether 80 milligrammes is right or whether it should be lower for younger people. Perhaps the Minister can add that to the list of issues that she will tackle while she remains in post—which in some ways I hope is not a long time, but long enough to allow her to make some progress here. Driving is a social condition to which we have a permissive approach, and we would not want to change that, but we recognise that matters such as the use of seat belts, phones, drugs, cigarettes and drinks all impact on safety. As a licence is issued to people to drive, it should be accompanied by other measures. The Minister is already building up a list, so I look forward to hearing her comments.

My Lords, Amendment 241ZC would amend Clause 123, which deals with local licensing policy statements, to amend the separate provisions in the Licensing Act 2003 about the composition of a licensing sub-committee. I am grateful to my noble friend Lord Brooke of Sutton Mandeville for his letter to my noble friend Lady Browning giving us advance warning of his contribution today. I understand that he has a specific concern that some sub-committees may be sitting with fewer than three members. We believe that the law is clear on this point, but I assure him that the guidance will clarify that sub-committees with fewer than three members sitting will not be quorate.

Clause 125 imposes a duty on the Secretary of State to review the effect of those clauses in Part 2 that impose a regulatory burden on businesses or civil society organisations. This follows the Government's commitment in the coalition agreement to,

“impose ‘sunset clauses' on regulations and regulators to ensure that the need for each regulation is regularly reviewed”.

My noble friend asks when the statutory guidance required under Section 182 will next be reviewed. I hope that he will be reassured when I say that we will be making a substantial revision of the guidance as part of the process of implementing the Bill after Royal Assent. I can also confirm that the statutory review will consider the effects of the measures on the scheme established by the Licensing Act, including consequential amendments to secondary legislation and guidance. We also intend to make regulations requiring licensing authorities to advertise applications on their websites. They must already do so in the case of reviews.

Amendments 241A and 241B would include the effect of drink-driving in the statutory review. They would also commit the Government to changing the law on drink-driving in particular ways if the review demonstrated an increase in drink-driving. I must say at the outset that I appreciate the intention behind these amendments. I assure the Committee that the Government are committed to take further action to tackle drink-driving, building on the long-term reductions we have seen in the toll of road casualties that it causes.

However, the proposed amendment would be difficult to implement in practice. It is not feasible to have an alcohol limit of zero, suggested by paragraph (b) in both Amendments 241A and 241B, for a particular class of drivers, because it is sometimes possible to detect the presence of alcohol in the bodies of people who have not consumed alcoholic beverages. Furthermore, it would be difficult to link any changes to the incidence of drink-driving directly to the provisions of the Bill. Indeed, it is challenging even to measure the incidence of drink-driving. It is not self-reported and offence data are influenced by enforcement practices.

The Government recently responded to an independent review with a package of measures to improve the effectiveness of the existing drink-drive limit. We have decided not to change that limit, for the reasons I have given: that would impose social and economic costs that are not matched by potential benefits. I also point out that other countries may have a lower limit, as the noble Baroness, Lady Hayter, mentioned, but even then they do not necessarily have a better record on reducing drink-drive casualties.

However, we consider this to be a very important area. We have announced a range of measures in the new strategic framework for road safety to help the police enforce the law against drink-driving more efficiently. These include: removing the option for drivers who fail an evidential breath test by 40 per cent or less to request a blood or urine test; mandating drink-drive rehabilitation courses for disqualified drink-drivers; and developing portable evidential digital breathalysers to make it possible for the police to get evidence at the roadside and other locations.

We do not suggest that any given quantity of alcohol is safe. To some extent, I am in line with the noble Lord, Lord Stevenson, on that point. Our message is clear: do not drink and drive. If motorists do not take that advice and exceed the limit, they deserve stiff penalties.

Amendment 241C, introduced by my noble friend Lord Clement-Jones, would require the Government to review the effect of the clauses after two years. The review date of five years, for which the Bill provides, fulfils the Government's commitment to review new primary legislation that imposes a regulatory burden on businesses or civil society organisations. This timescale has been established as a standard period across different review processes, including the post-legislative scrutiny we are addressing here. We have also announced our intention to review the parts of the alcohol measures that are not subject to statutory requirement in the same five-year period.

Furthermore, if there are warning signs that the legislation is having unintended consequences, nothing in the Bill prevents an earlier review on an exceptional basis. Such a review might be triggered, for example, if evidence from the licensed trade or civic society organisations demonstrates that a measure in the Bill is causing significant harm not matched by any benefits in targeting alcohol-related problems.

However, it would be a mistake to impose a two-year review as a statutory requirement. Five years has been established as a guideline supported by the practical justification of the need to gather sufficient information to enable the effect of the regulation to be properly understood. The production of statistics necessarily lags some time behind events, so a review within two years risks having too little information available on which to base its conclusions. I therefore ask that the amendment be withdrawn.

My Lords, I am grateful to noble Lords who have spoken in support of my amendment and remarks. I am never quite sure whether the penultimate “a” in the geographical title of the noble Lord, Lord Stevenson, is a long “a” or a short “a”, so I shall simply refer to him as Lord Stevenson.

For the avoidance of doubt, I refer the noble Lord to the Companion. He really ought to try it, because there are two Lord Stevensons, and it would be very confusing for me if he were in some way confusing me with the other Lord Stevenson, as the noble Lord did with Lord Brooke earlier.

I am grateful for that correction. I shall therefore refer to the noble Lord, Lord Stevenson, as Lord Stevenson of Balmacara, and he can tell me afterwards if I am right.

The noble Lord alluded to the contributions made by me and my namesake, the noble Lord, Lord Brooke of Alverthorpe. Investing $20 with a particular printer in the midwest gave me the telephone numbers of 18,000 people called Brooke spelt in the way that the noble Lord, Lord Brooke of Alverthorpe, and I spell it. I demonstrated that 5,000 of that 18,000—much the largest phalanx—were in West Yorkshire. By definition the noble Lord, Lord Brooke of Alverthorpe, is much more senior to myself. Only one-eighth of my blood is from West Yorkshire, but three-eighths is from Ulster, which in Gilbertian language passes for Yorkshire in the dusk with the light behind you, and indeed vice versa.

My principal gratitude is to my noble friend the Minister whose answers were entirely satisfactory and I am extremely grateful for them. I feel bad about adding one question to him. I am delighted to hear that the guidance will insist that licensing authorities print the applications on their website. However, that still leaves open the question that I raised with him under Clause 106 last week, on which he very kindly said he would write to me, about the difference between 28 days after the application is received and 28 days after the application is put on the website. I hope that I will get an encouraging answer on that subject between now and when the guidance is issued. I am grateful to him for nodding his head. I beg leave to withdraw the amendment.

Amendment 241ZC withdrawn.

Clause 123 agreed.

Clause 124 agreed.

Clause 125 : Review of effect of amendments on licensing scheme

Amendments 241A to 241C not moved.

Clause 125 agreed.

Clause 126 : Late night levy requirement

Amendment 241CA

Moved by

241CA: Clause 126, page 88, line 11, at end insert—

“( ) Nothing in this Chapter applies to holders of club premises certificates.”

My Lords, we now move to the very important part of the Bill relating to the late-night levy. The House may be relieved to hear that I shall speak extremely briefly to Amendment 241CA and to Amendments 241EA, 241GA, 241GB, 241KA, 241MZA and 241SA. The arguments about private members’ clubs have been made already under the EMRO discussion.

The Minister said there are clubs and clubs, but the arguments are very powerful for private members’ clubs to be dealt with differently under the EMRO and the late-night levy provisions. I hope that the Minister will give that further thought since private members’ clubs have a self-regulatory process, and if that process is not properly operative then they should not receive private members’ club premises certificates. It is as simple as that. They are subject to greater regulation than ordinary licensed premises and for that very reason should be excluded from the operation of the late-night levy.

Moving on to the next group of amendments, Amendments 241D, 241E, 241F, 241G, 241L and 241M, I am afraid that I will be slightly longer. Amendment 241D extends the ability of licensing authorities to determine the extent of the geographical spread of the levy area so that it need not apply to the whole local authority area. This is one of the great weaknesses of this provision for the late-night levy. It is a very blunt instrument, dealing with the whole of a local authority area.

Amendment 241E deals with Clause 126(4), which prohibits the licensing authority from applying the levy as it is currently stated in only part of its area. Removing this provision would allow licensing authorities to designate a particular town or city centre within its control as being liable for the late-night levy rather than being totally broad-brush in its approach. A large number of trade organisations are particularly concerned about the untargeted nature of the proposed late-night levy. A licensing authority may not decide that the late-night levy requirement is to apply only in part of its area, which means that community pubs in particular will be affected by a requirement which is presumably really aimed at addressing the challenges in town and city centres. The power can only be applied across a licensing authority district as a whole rather than a specific area, and its untargeted nature means that many responsible businesses will be caught.

A late-night levy can be imposed irrespective of whether a bar is a source of disturbance. Ultimately it is unfair that any licensed premises operating in a responsible manner should have to pay such a charge when the best course of action would be specifically to tackle the irresponsible operator or indeed individual members of the public who cause problems.

The Government justify this measure on the basis that the easiest, most effective way of dealing with the issue is to go for the whole council route because it is viewed as less bureaucratic, and that the levy must be attractive to licensing authorities by being simple to introduce. However, we must not put the levy on to properly run businesses. If they are forced by a combination of the levy and EMROs to close at midnight, as I said to an earlier amendment, this will simply mean that young people will spill out on the streets at 11 pm, as they always used to do, which is clearly not going to be conducive to public order. It is patently unfair, as was pointed out in Committee in the other place, to impose a charge on a business which may be 20 miles away from the source of the problem, and it cannot be justified.

It is understood that premises could apply to the licensing authority to reduce their hours without being charged a fee but it should be recognised that this option still places a cost on businesses, not just in their management time or legal fees in making such an application but also in potential lost revenue from reducing the trading time of their business.

Moving on to Amendment 241F, the levy will be applicable to any premises holding a licence to sell alcohol under the Licensing Act 2003 if it is open for just one day after the time stipulated in the late-night levy, which will most likely be midnight. This means that any pub, hotel, restaurant and so on which has permission to sell alcohol, even on just one night in the year, will become liable for the levy, and this will catch many venues with restricted late-night opening to cover such events as New Year’s Eve and bank holidays. That is the reason for inserting “15” instead of “one” in this amendment.

Amendment 241G is very similar to a previous amendment on EMROs. It ensures that premises that open late only once a year on New Year’s Eve are not required to pay the levy. This would alleviate an unnecessary cost burden on thousands of small pub businesses which would otherwise have to pay the levy. The Bill makes provision to impose a late-night levy on all premises licensed to sell alcohol between midnight and 6 am. The levy would be imposed at the licensing authority’s discretion across the entire local authority area. The funds raised would cover the costs of policing and other arrangements for the reduction or prevention of crime and disorder in connection with the supply of alcohol between midnight and 6 am. As it stands, the late-night levy unfairly penalises responsible retailers by applying to all licence holders and not just those who trade irresponsibly by contributing to alcohol-related disorder. This new measure will indeed introduce further costs for responsible businesses when powers to deal with irresponsible traders already exist.

I move on to Amendment 241L. As the Bill stands, licensing authorities could introduce an early-morning restriction order beginning at 12.30 am and running through to 6 am, and impose a levy on all premises that remained open until 12.30 am. Surely it is not intended that this combination of EMRO and levy should punish those caught out in this way. I beg to move.

My Lords, I have Amendments 241DA, 241H, 241J, 241K, 241N, 241R and 241S in this group. There is a concern that the late-night levy will not be used very much because of the bureaucracy and costs involved in the scheme, and because only a few local authorities have enough late-night venues to make it worth them running the scheme. We wait to see but, again, my concern is about central prescription.

I understand that the Government regard the levy as a tax and so say that it must be prescribed centrally. I wonder whether that is a bit circular. Can you be a bit circular? You either are or you are not—perhaps it is elliptical. If a local authority had discretion regarding the amount of the levy to reflect the costs, would that make it a charge rather than a tax? Therefore, to mix my metaphors, I am not sure which is egg and which is chicken in all this, but I firmly believe that the levy should be locally determined on the basis of full cost recovery.

I asked the Local Government Association about the costs associated with late-night operation, and your Lordships will not be surprised to learn that the list includes things such as street cleansing, taxi marshals and clearing up in the widest way after the large amount of activity late at night.

The consultation with local authorities on the regulations that relate to all this will be very important but there is a big cost. Because of that, I have transposed the 70:30 split so that in my amendment 70 per cent goes to local authorities to deal with things such as community safety initiatives, regulatory costs and other matters which I have already mentioned. After all, although I know that the police, too, could do with lots more money, they are already funded for areas of high-priority policing. The LGA has commented to me that police commissioners will be attracted to the idea of acquiring 70 per cent of the levy and may place significant pressure on their local authority to bring in the scheme. However, how the police’s 70 per cent should be spent or, perhaps more importantly, where, is not specified. The money could be raised in one area of the police force but used in another.

Amendment 241D reflects the concern of my noble friend in his amendment that local authority areas are not homogenous. If this new power is to be brought in it would be sensible for it to be focused and directed. Amendment 241H would take out the prescription of the amount of the levy. It is fair enough for it to be calculated by way of the formula, which is what Clause 129(1)(b) provides, but not the amount—Clause 129(1)(a) refers to that. I mentioned the 30:70 split which is referred to in Amendment 241N. Amendments 241R and 241S are about prescription and Amendment 241K is a proposed new clauseto provide a power for each licensing authority toset the levy for the reasons to which I have already alluded.

My Lords, we seem to be running into a little more difficulty with this group of amendments in terms of what the Bill is trying to achieve, and I look forward to the Minister’s response. Although, you can see where this idea has come from in the sense of the additional costs and other burdens on those with responsibilities in licensing areas, it seems to be a rather overbureaucratic approach. The overlap with the EMRO is not clear to understand—that point has already been made by other noble Lords. The reason why some aspects of this form of imposition are centrally determined and run by the Home Office and some are left to local areas is not at all clear. There is a problem about the scale and extent to which in any authority it would be sufficiently worth while for the licensing authority to introduce a local levy of this type. The case has yet to be made for a late-night levy.

Alongside that runs the argument that businesses already contribute to the community through their business rates. A proportion of revenue from business rates goes to fund local police and fire services—indeed all services—that will be drawn on in the sense that the Bill addresses this point. It seems to us that the late-night levy unfairly penalises responsible retailers by applying a levy to all licence holders and not just those who are trading irresponsibly. Funds raised in out-of-town centre premises will finance additional policing and other measures targeted at the late-night disorder in town centres because that is where it happens. Is it really fair for a village shopkeeper to pay for reducing disorder that they could not possibly have caused?

Businesses that sell alcohol and put on live music contribute to the community through their licence fees. Licence fees for selling alcohol and for regulated entertainment reflect the costs to the licensing authority of administration and enforcement of the licence. The point has been argued before and we think that it is fair. The proposed late-night levy would be a third tax—an additional cost and a stealth tax on the ability to operate at odd times of the day and night. It would affect small music venues that operate past midnight with entirely disproportionate consequences.

I wonder whether the Minister is aware that the CBI said recently that the late-night levy proposal contradicts the Government’s ambition for the creative industries to provide a key pillar of growth in the economic recovery and seems to be undoing some of the Government’s good work in supporting small live music venues.

My Lords, it might be appropriate if I begin by reminding the House that the late-night levy was a coalition commitment that we would permit local councils to charge more for late-night licences to pay for additional policing. Unlike other measures that we have discussed so far in relation to this licensing section of the Bill, which specifically give more tools to licensing authorities to deal with the problems that they experience with crime and disorder related to drinking and alcohol, this clause is quite different. I am well aware that the noble Lord, Lord Brooke of Alverthorpe, asked in our debate on an earlier amendment whether there was a change in the Government’s approach to this. If I say yes, it is clearly demonstrated in this particular clause because the clause is not about a measure under which licensing authorities would intervene to address specific problems of alcohol consumption. This is exactly what it says on the packet; it is a tax that is specifically for the repayment to the public services funded by taxpayers for the on-costs that they incur as a result of the late-night economy.

I welcome the opportunity to put on record the principles and thinking behind this levy. First, the levy, as set out in the existing framework, will provide a much needed power for licensing authorities. It will allow them to raise a valuable contribution toward policing costs resulting from the late-night supply of alcohol. To meet this purpose, it must be paid by all who profit from the practice, wherever they are placed. Secondly, the levy will be simple for licensing authorities to adopt; I do not agree that it will be bureaucratic. Thirdly, and finally, the levy will be a fair and proportionate contribution from businesses to enforcement costs. Processes will be transparent and local services will be accountable. In many of our towns and cities, the police experience considerable costs in keeping the late-night environment safe. Alcohol-related crime and disorder are rarely isolated to specific premises. Those on a night out will often visit a variety of premises. Just as businesses share the benefits of customers moving around, they should also share some of the costs generated by the supply of alcohol late at night.

The application of the levy must be as wide as possible. It will be paid by all businesses that profit from supplying alcohol late at night, subject to some exemptions and reductions. On this point, I will consider the lead amendment in the group. A wide variety of premises operate under club premises certificates. Removing all liability would exclude contributions from many businesses that also profit from selling alcohol in the late-night environment. We will consider exemptions and reductions in consultation before writing secondary legislation. I hope to explore the different types of business that operate under a club premises certificate before preparing our consultation. Therefore, we should not put this blanket exemption in the Bill. I say to my noble friend Lord Clement-Jones that I did not mean to be flippant in my earlier remark about club premises. I hope he will take it from me that while club premises benefit from the late-night economy, I accept that there are different types of clubs and I hope that he will take some comfort from the fact that we will consider very carefully in consultation the exemptions and reductions before secondary legislation is introduced.

If we gave a licensing authority the power to target the levy on a specific part of its area, this, too, would mean that fewer businesses would contribute. This would risk the levy raising barely enough to cover administrative costs and failing in its objective of raising a meaningful amount for the police. That is what we intend to do where the levy is applied: raise a meaningful amount of money for the police, who in turn must cover the costs of policing.

I am aware of concern that the levy is not sufficiently targeted. However, we must be clear that it is not designed to target specific pockets of crime and disorder. Clauses and amendments that we debated earlier focused on the need for the licensing authority to have the flexibility to target and focus on the areas that it deems have problems. The levy is not about that; it is about raising money for the police. I am still committed to helping communities tackle areas with specific alcohol-related problems, and I hope that other measures in the Bill will address that. We have already discussed early-morning restriction orders, which are there to address those sorts of problems. This power will enable licensing authorities to restrict the sale of alcohol in specific areas, at specific problem times on specific days. We have addressed the need to enhance the powers of the licensing authority, but that is not the purpose of the amendment.

Many other changes have been proposed in the amendments, and many ideas expressed. Some amendments would remove the burden of licensing authority accountability processes. The processes are necessary; licensing authorities should not worry about incurring costs from introducing the levy. They can deduct their administrative expenses from the levy receipts. As well as the levy funding the additional costs—not total or hypothecated costs, but as a contribution to the overall cost of policing—there is a facility for the local authority to deduct its administrative expenses from levy receipts.

A number of amendments seek to grant more local authority discretion, such as in setting the level of charge. However, we believe the charge must be nationally set to ensure that it is a standardised, fair and proportionate contribution from businesses. In light of the high policing costs that I have already described, I believe it is right for the police to receive the bulk of the contribution. We must also be careful not to create extra evidential burdens for licensing authorities in having to justify their choices of area and charge. The levy will not be another alcohol disorder zone, which was extremely bureaucratic. In fact, it was so burdensome that no local authorities adopted it.

One amendment considers corporate responsibility initiatives as a potential reduction from the charge and another looks at exempting New Year’s Eve. We mentioned these special exemptions and special days in other amendments. I can assure noble Lords that our upcoming consultation will consider exemptions and reductions in relation to members of business-led initiatives and special occasions. I am aware that many business-led schemes seek to mitigate late-night alcohol conditions and problems, particularly anti-social behaviour, and there will be an opportunity in the consultation period for representations from businesses that have already adopted them to make their views known. On this basis, these amendments pre-empt our public consultation.

With regard to other special occasions, I am confident that we have made good provision for premises to use temporary event notices. All these amendments reflect some of the wider discussions that took place during the development of the levy scheme and its ongoing analysis by our partners. I believe that we have struck the right balance. Significant administrative and legal burdens have purposely been avoided. We have created a tool which licensing authorities can easily use. The late-night levy will be a proportionate contribution towards policing costs shared by all businesses that profit from selling alcohol in a safe late-night economy. I ask the noble Lord to withdraw his amendment.

I shall make two points on the Minister’s comments. First, she said that the standard level of the levy needs to be set nationally to ensure that there is a proportionate contribution from business. Is it not the case that there will be different costs in different areas? That is in the nature of the diversity of the country and of local authorities. Therefore, to set a standard levy may not reflect that diversity.

My second point is about Part 1—that seems so long ago that I wrote down the title of the Bill and then realised that we are still on it. We talked a lot about the need for police forces and local authorities to work in collaboration and co-operation, and I hope we will come back to this on report. In proposing that more resources go to local authorities, perhaps the Government will see that in the context of local authorities working with their police forces to deal with the impact of some of the difficulties arising from the late-night economy.

I hope I can reassure my noble friend that this levy has been designed to raise money for the police, who bear the brunt of late-night enforcement costs. As such, we believe they should receive the majority of the levy revenue after administrative expenses have been deducted. The local authority now works with the police and in future will work with the police and crime commissioner, so there will be a very close working relationship between the two to identify whether a licensing authority wishes to apply the levy.

My noble friend mentioned disproportionality in the levy charges. They have yet to be set. We have published only indicative figures. We currently plan to structure the levy charges on the existing licence fee bands, which, as my noble friend will know, are predicated upon the rateable value, so although this will be nationally set, it will be indicative of regional differences in bandings. In that way, we hope to have fairness and proportionality in the way in which the charges are structured.

My Lords, I thank the Minister for her response, which I found to be rather a curate’s egg. Of course, I accept that the levy proposal was in essence contained in the coalition agreement. She will notice that no clause stand part debate is proposed from this or any side of the House. I do not think there is a great quarrel around the House with the principle of the levy. Certainly, I did not pick that up during the debate. It is all about the way in which the levy will operate and the interrelationship with EMROs. In particular, it is about the nature of the exemptions and the blanket nature of the levy.

I am pleased to hear that the Minister in the consultation will reflect the different types of clubs and will specifically look for different types of exemption, which is welcome. I would never apply the word “dusty” to this Minister’s replies, but I did think that the Home Office is erecting quite a brick wall to the idea that one can be rather more flexible about the way in which the levy operates. I know that the Minister said that it was not a crime and disorder provision but was all about policing. However, it seems grossly unfair that in a local authority with a mixture of rural and urban, the rural pubs, many of which are struggling, have to pay a levy when they will not see a policeman in a million years. Why on earth should they pay for this?

A huge issue is involved, which seems contradictory. This Government are, I think, the first Government to appoint a Minister with responsibility for community pubs, which was a great thing. He is doing a great job but in a rather different department from the Home Office. However, the policy does not seem to be joined up. Here we have a great deal of work going on in DCLG about planning and the various aspects of the survival of the community pub. We have the Government in a very welcome fashion supporting a Private Member’s Bill that I have put forward about live music, which is designed to preserve the community pub, and certainly the smaller community pub, in many ways. However, here we are with a provision that will directly impact on them if their local authority is a large one that includes a lively, to say the least, city centre. That is a major problem.

I have heard what my noble friend says, and I of course understand the situation for rural pubs, having represented 650 square miles of rural Devon for nearly 20 years. I will take away what he has said. I cannot make any promises today, but I hope he will remember that I said that there would be a consultation on exemptions. The point that he has made today will be noted.

My Lords, I thank the Minister for that reply. I knew that if I carried on talking for long enough she might respond. I will have to use that technique on more occasions. In the mean time, I thank the Minister for her response and beg leave to withdraw the amendment.

Amendment 241CA withdrawn.

Amendments 241D to 241E not moved.

Clause 126 agreed.

Clause 127 : “Relevant late night authorisation” and related definitions

Amendments 241EA to 241GB not moved.

Clause 127 agreed.

Clause 128 agreed.

Clause 129 : Amount of late night levy

Amendments 241H to 241J not moved.

Clause 129 agreed.

Amendment 241K not moved.

Clause 130 : Payment and administration of the levy

Amendments 241KA to 241MZA not moved.

Clause 130 agreed.

Clause 131 agreed.

Clause 132 : Application of net amount of levy payments

Amendments 241MA and 241N not moved.

Clause 132 agreed.

Amendment 241P

Moved by

241P: After Clause 132, insert the following new Clause—

“Accountability of police

(1) The local police force must provide a written report to the local authority at the end of each levy year where a levy is applied to the local authority area.

(2) The report is to be submitted to the local authority within 12 weeks of the end of the levy period.

(3) The report must contain—

(a) details of the amount received through the levy and the amount spent by the police in policing the areas covered by the late night levy during the hours that it applies; and(b) details of the impact of the levy on crime and disorder in the area covered by the levy.”

My Lords, I can be brief on this amendment and Amendment 241Q, which is grouped with it. These new clauses would ensure that there is accountability for the funds raised and distributed to the police and the licensing authority, which are not obliged under the Bill as it stands to apply the moneys to the late night levy area. They are able to use the funds within their general expenses as they see fit. These proposed new clauses will ensure that those who are subject to the levy are informed about the application of the funds, which are to deliver improvements in the area to which they are applied. I beg to move.

My Lords, while other amendments have tried to reduce administrative processes, these two amendments attempt to add a publishing requirement on the police and the licensing authorities. I hope that noble Lords will agree that transparency already exists in the late night levy design. I believe that the levy will achieve an appropriate level of transparency and no further reports are required. We will require licensing authorities to consult on proposals and publish the expenses they incur in administering the levy. The police are being reformed to make them more accountable.

Let me deal first with the police. The money given to the police from the late night levy will go into the police fund for the force area and be subject to the relevant scrutiny processes. We believe that it will be a waste of police resources and unnecessary bureaucracy to require the police to provide a report for the levy spend in particular. Further checks and balances will exist under police and crime commissioners. The PCC will be publicly scrutinised by the police and crime panel. Any data used in that scrutiny will be made public unless they are operationally sensitive, and PCCs will also be subject to freedom of information provisions.

With regard to the licensing authority, transparency is provided in the pre-levy consultation process. This consultation will consider, among other things, the services which the licensing authority intends to provide from its levy revenue. The authority will then write to all affected premises to inform them of its final decision. The public will not need yet another publication setting out how the licensing authority spends the levy funds. Further, the Bill will require licensing authorities to publish a statement of the administration expenses which they have deducted from the levy revenue. The licensing authority, as an integral part of the council, is of course accountable to the public.

The late night levy is light on administration and process. It has been designed as a contribution towards policing costs from those who profit from the sale of alcohol in the late night. To require an assessment of the impact of the levy on crime and disorder, as these amendments seek, would confuse the objective of the late night levy with tools such as early morning restriction orders which, as I have already mentioned in response to previous amendments, are specifically designed to tackle particular pockets of alcohol-related crime and disorder. I believe that necessary transparency is adequately provided for to ensure that levy receipts are spent in an appropriate way.

My Lords, I thank the Minister for that quite complex and useful response. Her argument is that there are many ways, other than those provided by the amendment, in which transparency is achieved. The amendment also seeks accountability, which is also an important principle that is involved. I shall read what the Minister said extremely carefully and consider whether the existing framework is adequate to explain what the levy is devoted to, and how useful it is in the context. I am very grateful to the Minister for her reply and beg leave to withdraw the amendment.

Amendment 241P withdrawn.

Amendment 241Q not moved.

Clauses 133 and 134 agreed.

Clause 135 : Introduction or variation of late night levy requirement: procedure

Amendments 241R to 241SA not moved.

Clause 135 agreed.

Clause 136 : Permitted exemption and reduction categories

Amendment 241T

Moved by

241T: Clause 136, page 94, line 24, at beginning insert “other”

My Lords, I shall not detain the House too long. It would be easy to spend time talking about some of the schemes that would justify an appropriate discount. However, I shall first move Amendment 241T. By a strange quirk of grouping, the Minister has already partly responded on the concept of a discount for these community-type schemes. The effect of these amendments would be to require the levy to be reduced by 50 per cent per premises participating in well established, recognised corporate responsibility initiatives—specifically, Best Bar None, business improvement districts, Purple Flag, Pubwatch, community alcohol partnerships and other similar watch initiatives, all of which demonstrably reduce the incidence of crime and disorder in town centres. These could be undermined if participating businesses were required to fund all these bespoke schemes and a more general levy. To acknowledge the contribution and investment that industry has made to improving standards and addressing challenges in the night-time economy, particularly in town and city centres, it is therefore appropriate that these high-profile initiatives are identified in the Bill as requiring a reduced levy. This will also safeguard the initiatives themselves and encourage further take-up in areas where such partnership approaches do not yet exist.

I dare say that many of us have received correspondence from some of the projects, particularly the business improvement districts. I have received several of those. The Nottinghamshire Leisure business improvement district experience is extremely interesting. Some of the correspondence relates to the community alcohol partnerships, which have also been very successful. I understand that the Government plan to recognise in guidance, and perhaps in regulation, the nature of these schemes and the fact that they will receive discounts. However, I hope that they can be a little more forward in the Bill by recognising that that will definitely be provided for. I beg to move.

My Lords, I support the previous speech and the amendments that it introduced. On this side of the House, we believe that premises that work with the police and local authorities to minimise crime and disorder should qualify for a reduction in the late night levy. I take the point made by the noble Lord, Lord Clement-Jones, that it would be helpful if this could be put in the Bill, not just because we like to see things in legislation but because it is so important that we recognise what they are doing.

In many cases, for example, these venues are safe havens for young people. If you put young people in a protected environment rather than having them out on the streets you are doing some public good. In a sense, that is something that we want to encourage and we would be grateful if it could be considered in that way. Well run and responsible venues already participate in voluntary schemes to combat anti-social behaviour, and if they are forced to close at midnight to avoid the levy then they will effectively be throwing their young clientele out of a safe venue onto the streets.

My Lords, licensing authorities will have the discretion to decide which of the exemption and reduction categories they will apply in their application of the levy. Although I am unable to accept these amendments, I welcome their overall intention. It is precisely these types of premises and the schemes that they run that we want to consider for reductions from the levy charge. However, the amendments would prejudge our public consultation on exemptions and reductions, which we will introduce through regulations.

We have already begun the design of that consultation through a number of working groups, with representatives of the trade, licensing authorities and the police. I would urge noble Lords to await this consultation so that we might have the opportunity fully to consider the views of our partners. There are many schemes, such as the ones mentioned this afternoon, that allow the business community to work together to address some of the negative effects of the sale of alcohol in the night-time economy. I support the principle that drives these local initiatives. However, there is a range of such initiatives and we need to consider the breadth of these schemes and how we might define workable categories for reductions. On that basis, I ask noble Lords not to press their amendments.

My Lords, I thank the Minister for that reply, which gives all the right signals in terms of the kind of scheme that would be included. Of course, I was trying to prejudge the consultation to a degree, but I elicited a response from the Minister that is helpful.

Having reached the last amendment dealing with the licensing and levy in Part 2, I must say that an awful lot of weight is now being borne on the consultation. On many occasions replying to groups of amendments today, the Minister has relied on the efficacy and fairness of that consultation to business, particularly, but also to residents and local authorities. I hope that she gets it right because it is of huge significance that the balance and outcome of that consultation are fair. I beg leave to withdraw the amendment.

Amendment 241T withdrawn.

Amendments 241U to 241X not moved.

Clause 136 agreed.

Clauses 137 to 139 agreed.

Clause 140 : Amendments of the Licensing Act 2003

Amendment 241Y not moved.

Clause 140 agreed.

Clause 141 agreed.

Amendments 242 to 244 not moved.

House resumed. Committee to begin again not before 5.10 pm.

Southern Cross

Statement

My Lords, I shall now repeat as a Statement the Answer given earlier today by my honourable friend the Minister for care services to an Urgent Question tabled in another place about the steps that the Government are taking regarding Southern Cross Healthcare. The Statement is as follows.

“The Government have made it very clear that the welfare of residents living in Southern Cross homes is paramount. We appreciate that recent events and media speculation have caused concern to residents in Southern Cross care homes and their relatives and families. I very much regret that. I would like to assure everybody that no one will find themselves homeless or without care. The Government will not stand by and let that happen.

Department of Health officials have been in frequent contact with Southern Cross’s senior management over the last three months and that will continue. We are engaged with the company, the landlords and lenders and are monitoring the situation closely. The Government are acting to ensure that all parties involved are working towards swift resolution, with a comprehensive plan for the future which must have the welfare of residents at its heart. It is for Southern Cross, its landlords and those with an interest in the business to put in place a plan that stabilises the business and ensures operational continuity of the care homes. That work is happening and we must let it continue. Let me be very clear: this is a commercial sector problem and we look to the commercial sector to solve it. All the business interests understand their responsibilities. The Government are also working closely with the Association of Directors of Adult Social Services, the Local Government Association, local authorities and the CQC to ensure that robust local arrangements are in place to address the consequences in the event that the company’s restructuring plan failed to put the business on a stable footing.

Yesterday, a meeting took place between Southern Cross, lenders and the landlords’ committee. They agreed to work together to deliver a consensual solution to the company’s current financial problems over the next four months. They also made clear that the continuity and quality of care to all 31,000 residents will be maintained and every resident will be well looked after. This is a welcome development and the Government are encouraged by this positive agreement by the main stakeholders. The exact details of the restructuring plan over the next four months will be set out over the next few days and the following weeks. The Government will continue to keep close contact with the process. I will keep the House informed.

Local authorities have a duty to provide care to anyone who has an urgent need for it. All parties are aware of their roles and responsibilities should that happen and will take decisive action to ensure that no resident is left homeless or without care. The statement released yesterday provides further reassurance that the continuity of care of the residents is at the centre of the consensual restructuring agreement”.

That concludes the Statement.

My Lords, I thank the noble Earl for repeating the Answer to the Question raised in the other place. While news of yesterday’s agreement is welcome and will, I hope, reassure Southern Cross’s residents and their families, a number of questions arise.

First, it is understand that Her Majesty’s Revenues and Customs is a major creditor. Has it been involved in the discussions and is it comfortable with the outcome to date? Secondly, will the Government ensure that both they and the Local Government Association—representing the interests of many of the residents, including but not limited to those who are publically funded—will be involved in any further discussions over the future of the company’s operations? Thirdly, what steps if any have the Government taken or will they take in relation to the company’s workforce, for whom this is also a most anxious time? According to today’s Times, 42,500 of them have already had their contracts ripped up and are facing the prospect of 3,000 jobs being lost.

As for the underlying, systemic issue, do not these events underline the folly of the previous Conservative Government in effectively driving local authorities out of the provision of residential care by deliberately financially disincentivising such provision in favour of the private sector? Can it be healthy for five or six private companies to dominate the market to the extent of around 36 per cent, with Southern Cross alone supplying 31,000 out of 170,000 places? Is it not totally unacceptable for frail and vulnerable elderly people to be treated like commodities, to be bought and sold as part of some ingenious financial engineering?

Did not Mr Hammarberg, the Council of Europe Commissioner for Human Rights, have a point, as reported in the Telegraph, when he singled out for criticism the UK model of privatised social hair combs—sorry, I meant to say care homes; I am not too familiar with combs these days. He went on to say that privatisation, “is not the solution”, with a high number of privatised care homes in crisis. Is he not right to express concerns that,

“the quality of services in these homes had ‘deteriorated to a worrying degree’”,

and that companies,

“running the care homes have reduced services in order to remain solvent”?

The Answer to the Question proclaims:

“this is a commercial sector problem and we look to the commercial sector to solve it”.

Is that not too narrow—one might almost say, too much like an accountant’s view of the problem? Would not the Minister agree that this is first and foremost a health and social care issue? Is not the commercial aspect very much part of the problem? Does not this in fact send out warning signals in relation to the role of the private sector in the provision of healthcare and whatever emerges as the reborn Health and Social Care Bill?

Finally, will the Government support and encourage co-operative, mutual and third sector organisations to engage in the future running of at least some of the Southern Cross care homes, if the rescue package does not succeed? In the longer term and in any event, will they promote a mixed economy of such care provision across the country to include local authorities and the private, voluntary and community sectors?

My Lords, I am grateful to the noble Lord, Lord Beecham, for his comments and questions. He asked a number of the latter. First, he asked specifically about the HMRC. I asked that question myself of my officials. It is quite clear that any discussion with Her Majesty’s Revenue and Customs has to be a matter for the company. HMRC makes its own judgments in any discussions with companies. It is a separate statutory body; it may not be lobbied by another government department, nor is it at liberty to discuss the detail of individual company tax affairs with anyone outside HMRC. So it is very much in the hands of the company if it so chooses to enter into the kinds of discussions to which the noble Lord alluded.

The noble Lord asked whether the LGA would be involved in the discussions over the company’s future. As is clear from the Statement, we regard the primary agents in this matter as being the company, its landlords and the lenders involved. They are the people on whose shoulders a restructuring plan depends. Nevertheless, he is right to suggest that the LGA is important in this context; it is involved with the discussions that we have had and will continue to have for some time—not only with the LGA, but with ADAS and the CQC, as well as the representatives of providers—to work through and define better the responsibilities of each party involved, so that if problems arise at a local level, either in this context or in any other similar context, the response will be appropriate. It is important to have that clarity of responsibility.

The noble Lord asked about the Southern Cross workforce. The key point here is the safety and well-being of the residents. We tasked the CQC to enter into discussions with Southern Cross when it announced redundancies the other day. The CQC’s role is to ensure that all care homes meet essential standards of quality and safety and it has confirmed that it will continue to require Southern Cross to demonstrate that all its homes are meeting these essential standards. Any failure to do so may result in enforcement action. I cannot go beyond that and comment on the prospects for the continued employment of the current workforce. All I would say is that the agreement reached yesterday will dispel a great deal of the uncertainty that they must have been feeling in recent days, because we now have the prospect of stability and certainty over the next few months as Southern Cross continues as a viable business with the support of its lenders and landlords.

The noble Lord moved on to suggest that it was the policies adopted by a previous Conservative Government in encouraging a diverse and plural market for care home provision that has brought us to this pass. I am slightly surprised to hear him say that because I think that one benefit of that policy has been a much greater array of choice open to individuals than there was before—and indeed a choice not just of location but of quality. To cite the problems of Southern Cross as a confounding factor to that is, I think, unfair. The problem with Southern Cross is not the quality of the provision of care but its business model.

I do not think that there has been any suggestion that the residents of Southern Cross homes have, as a generality, been badly looked after; rather, the issue is that the business model that the directors of Southern Cross adopted was unsustainable. We hope that the restructuring that is now apparently in prospect will address that and that the company can carry on giving the care that it has always done to its residents. Nevertheless, as we said last week when we had a Question in your Lordships' House on this topic, and in reply to the noble Lord’s comment about individuals being treated as a business commodity—if I may rephrase his question—that is of course a distasteful idea. To the extent that that has happened, we must acknowledge it. All I would say is that it has not affected the care that those residents have received. If it has disadvantaged anyone, it has been the shareholders.

The noble Lord suggested that because the Statement made it clear that we regard this as a commercial matter for the commercial organisations to solve, therefore this is not a health and social care issue. Again, that is a little unfair. The Government do not for one minute shirk their own responsibilities in this matter. We have been absolutely at the front in encouraging all parties to come together to reach this consensual agreement, to place the interests of the residents first and to put aside private interests and prejudices as much as possible. It is very encouraging that the statement issued yesterday did just that. There is consensus between the key parties that the interests of the residents are at the front of their minds. The restructuring is something that they are aiming to work through in as short a time as possible. I believe that that is cause for encouragement.

The noble Lord asked about the future and what might happen, not only in the case of Southern Cross but, I took him to mean, in the care sector generally. I am sure that as we go forward, if all goes well, we will see the kind of diverse market emerging in care home ownership that we have in domiciliary care where, as the noble Lord will be aware, there is a very diverse range of ownership by social enterprises, charities and private organisations of one kind or another that provide domiciliary care. There is scope to make the residential care home sector equally diverse over time. However, as we do that, we need to ensure that it is not just a diverse market but a stable one. I am the first to acknowledge that lessons will need to be learnt from this sorry episode over Southern Cross. If I have failed to answer any of the noble Lord’s questions, I shall certainly make up for that in writing.

My Lords, after 13 years of a Labour Government who were not in any way reluctant to diversify the residential care market, there is an even greater plurality of providers than there ever was before. One issue that has arisen out of this case is the capacity of the CQC to evaluate the stability and viability in the long term of a company that is owned by a private equity firm. That is a complex task that might challenge even the Financial Services Authority. Does the Minister agree that in order to reach the stable and viable market that he has suggested, there is a need to look at this in a much wider sense than just this case? Does he agree that the discussions that must inevitably follow the publication of the Dilnot inquiry in July should focus on the role of private equity-funded companies in the residential care market and, as he has also suggested, in the domiciliary care market?

My noble friend raises an important issue. As she knows, care providers have to be able to demonstrate to the Care Quality Commission that they have the financial resources needed to continue to provide services of the required quality. We have embarked on a wide-ranging programme of reform for social care. We are currently considering the Law Commission’s recommendations for modernising social care law and, as my noble friend mentioned, the report of the Commission on Funding of Care and Support is imminent. There are many lessons that have to be learnt from the events of recent weeks. We want to reflect on them as part of our wider reform agenda for social care.

On private equity finance, I simply make my own observation to my noble friend: I do not think that private equity finance is at the root of the problems that we have been seeing but the business model, which is rather a different issue. It was the choices and decisions made by the management of Southern Cross that made the business fundamentally unsustainable. I do not see that as a reflection directly on private equity providers. We have been clear that we were going to take action to ensure that there was proper oversight of the market in social care. That is why the Health and Social Care Bill specifically allows us to extend to social care, if we chose to do so, the proper financial regulatory regime that we are putting in place for the NHS. However, I suggest that regulation is not the only solution; we need to approach this in a measured way, not least because there are complex negotiations under way. We need to look at social care reform as a whole, which is exactly what we have committed to doing.

My Lords, on the question of the business model that the Minister just referred to, does not this whole sorry saga reveal how completely out of touch with the world of reality were the main board and executive directors of Three Delta, who advised the Qatar Investment Authority to spend billions buying property in the healthcare sector on the back of inflated and totally unrealistic rent levels paid by companies such as Southern Cross? Were the Qataris made aware of the huge risk involved? What were the so-called great and the good like Sir Peter Middleton, Nick Land, Sir Christopher Howes and David Mellor—a former government Minister—doing when any estate agent in the commercial property sector could have told them that the commercial care property market was both overgeared and overpriced?

Finally, will Messrs Scott, Murphy, Sizer and Colvin, formerly directors of Southern Cross, be prosecuted for insider dealing in Southern Cross shares when they privately promoted the sale of shares in the months immediately prior to their profits warning and collapse in the share price? Is this whole affair not riddled with greed and stupidity?

My Lords, I fear that I am unable to answer the noble Lord’s questions, for which I apologise, but I understand why he has asked them. If I have some concise answers that I can send him, I will certainly do so by way of a letter.

I think that the noble Lord and I agree that we are looking at a fundamentally unsound business model. As I understand it, it is a unique business model in the care home sector, where a deliberate decision was taken for the company not to own its own care homes but rather to pay the rent on them. The market clearly moved against it in more than one sense. The company’s problems are partly attributable to the occupancy levels of some of their care homes. Southern Cross occupancy levels have gone down, I understand, more than those of other care homes. It is not about fee levels; other providers of residential care are not in the same position as Southern Cross. I believe that Southern Cross’s problems relate to the rental agreements—the leases—that they entered into. It is those things that the restructuring aims to fix.

My Lords, I thank the noble Earl for his Statement. I listened carefully to what he said about the need for clarity on where responsibility lay. He also stated that there were lessons to be learnt. Will he say when the Government will conclude their review of these lessons, and when and how they will make them public? With the imminent privatisation of the Royal Mail, which has a lot of property worth quite a lot of money, will the Minister say whether some lessons learnt in this exercise might be useful in the context of ensuring that we do not run into similar problems there?

My Lords, I would love to be able to comment on the Royal Mail, but noble Lords will be sorry to hear that I have not received the necessary briefing. On the timescale of our review, as I indicated to my noble friend Lady Barker, there are a number of elements to our review of social care policy. One is the Dilnot report, which we are expecting at the beginning of July. Another is the Law Commission report. However, a third is undoubtedly the lessons learnt from this episode. It is fair to say that it would be rash of me to give the noble Lord a date on which we will conclude all three strands of that review. It is likely that we will be able to be more definite later on this summer.

If it becomes clear within a reasonable time that Southern Cross and others are unable to put the business on a stable footing, what will then happen, primarily to the residents but also to the workforce? Can the Minister suggest what he has in mind as a fallback position?

My Lords, the Department of Health is being very clear with the company that we expect it to maintain service continuity and quality of care while the restructuring process is going on. As I have said, our principal concern is for the safety and well-being of the residents of the care homes that might be affected. The CQC will pay particular attention to any care homes where there is a concern that quality may be at risk or inadequate. We are continuing to talk to ADASS, the LGA and the CQC to ensure that contingency plans are in place which will allow for the continuation of care under any eventuality. If the noble Lord will forgive me, I would rather not be drawn into hypotheses as to what might happen if the restructuring does not take place. We must encourage the company to believe that that is the prime and sole option before it. If there is ever a question of a change in the arrangements for providing residential care to any resident of a Southern Cross care home, or indeed any other, the rights of those residents remain absolutely clear in law. The duties of local authorities are absolutely clear in law. I believe that all residents in Southern Cross’s homes can rest assured that local authorities are well seized of those duties and processes.

My Lords, the Minister has reassured the House that he does not see Southern Cross as the first of many providers to go into crisis. Can he share with the House the advice that he has had to enable him to give us those assurances that Southern Cross is not just the first of a number of providers to go into crisis?

My Lords, I cannot issue a government guarantee on the continuing business health of every single care home provider in the country; that would be extremely rash. Of course, we know that over the years some providers have gone out of business. What we are seeing in the country at the moment is much more of a trend towards looking after people in their own homes rather than in residential settings. At the same time, the market is doing the opposite because there are more and more elderly people requiring care of some kind. This industry is not going to disappear overnight or, indeed, at all. Over the indefinite future we will require a residential care home industry, particularly as the number of elderly continues to increase. The key will be to ensure that the quality of provision is maintained. Competition will undoubtedly remain, but it is a telling indicator of the current state of the market that there is an overprovision at present of about 50,000 care home places nationally. That perhaps is a sign that local authorities are successfully meeting the wishes and needs of their service users in providing care in the settings which most people want; namely, their own homes.

My Lords, what safeguards are being put into place so that this situation does not happen again in other care homes and possibly in hospitals?

My Lords, I think I have already indicated that the Government are proactively engaged with all the key parties involved in this situation, not just Southern Cross but the LGA, ADASS, the CQC and others. The precise situation in which we find ourselves with Southern Cross is unlikely to arise again because my understanding is that the business model adopted by Southern Cross is unique. Nevertheless, every privately operated residential care home business will, no doubt, have its own level of business risk, whatever that may be—either slight or something rather less slight. However, the alternative that the noble Lord, Lord Beecham, seemed to desire was a return to the state provision of care homes. The noble Lord is shaking his head, and I am glad of that, because I think neither his party when in government, nor certainly ours, would wish that on the public. I think that all of us believe in choice for the individual, and this is what the current market provides. Nevertheless, there are risks.

The noble Baroness asked about hospitals. To the extent that NHS care is delivered in independent settings, a business risk is inevitably associated with that. However, we are clear in the Health and Social Care Bill that there needs to be a system whereby essential services are protected for the benefit of patients. When the Bill reaches us, we will no doubt debate those provisions.

I am sure that the noble Earl will be assured that my noble friend did not imply or say what the noble Earl thought he said. It is really important for us to focus on the business side of this issue and the economics of how it is run. The noble Earl is absolutely right to say that there is no complaint at all—in fact, all the carers of residents in those homes are distressed because they may be moved from somewhere that has taken care of their people. It is important, therefore, that none of us loses sight of the real issue—the care of these people, which has been good. Otherwise, the home would be in a very different state and, God forbid, we would be having a very different discussion if the issue was the care of the residents rather than the economics of running the home.

How deeply is the Care Quality Commission involved in this? My own trust has been talking to the CQC because, as the noble Earl will know, there are knock-on effects for hospitals all around the country when those homes are under threat, and on what might happen to elderly people who would normally be discharged from hospitals into those homes. We should all please remember—I am sure that the noble Earl is remembering—that the patients really matter in this, and we should ensure that we get them into safe places where they are looked after. The economics of this are very important, and I am not in any way dismissing that, but we need to measure that up against the care that has been provided for those people in Southern Cross homes, and, I hope, will continue to be provided. The care is valued. It is about the market that goes on out there, and any of us would be foolish to suggest that there is an alternative.

I am grateful to the noble Baroness, and I am also clear about the position of the noble Lord, Lord Beecham. She is of course right. Our first concern should be for the safety and welfare of residents. That is why, as I said earlier, some time ago we asked t